1.221J / 11.527J / ESD.201J Transportation Systems FALL 2002 ASSIGNMENT 2B: Transportation System Fundamentals Date assigned: September 16, 2003
Date due: September 30, 2003
Value: 18 points Each of the 30 Key Points is important in understanding transportation systems. In this assignment, you will write a paper which relates these key points to a specific transportation system.
The transportation system that you will examine is Amtrak, the intercity passenger rail transportation system in the United States. While Amtrak is the focus of this assignment, it is not simply “about Amtrak”. We urge you to take a broad view, considering its relationship to other transportation systems, such as the passenger air transportation system, and issues such as 1) why intercity rail is so successful in countries such as Japan, Germany, France and others and so unsuccessful in the U.S.; 2) how Amtrak relates to larger issues such as urban form.
Your task is to take some of the 30 Key Points and relate them to this transportation system. Of course, not all key points are equally relevant. Indeed, some may be irrelevant to this particular system. Choose the key points you think are most applicable. Explain your rationale for choosing the key points you select and clearly discuss how each selected key point applies in this case. In addition, discuss connections between your key points where appropriate, and the effects one may have on the other(s).
Use the article given in Assignment 2A, as well as several other articles attached here, as sources of information for your paper. Feel free to conduct additional research to aid in the formulation of your thoughts. Further information on the key points can be found in the lectures and the readings, while additional details on the U.S. rail transportation system can be found in many online resources. Lexis-Nexis (web.lexis-nexis.com/ universe) is an excellent searchable database for newspaper and journal articles. If you are unfamiliar with Lexis-Nexis, please see the TA for assistance.
The assignment has a maximum page limit of twelve pages (not including the reference list), 1.5- or double-spaced, using 12-point font. As with previous assignments, clarity and presentation will be factored into the grading of this assignment.
Amtrak under the Gunn By Guy Span
Railroad passenger trains were in trouble years before they were nationalized. In 1950, the larger railroads operated some 147,511 passenger route miles. By 1968, that fell to 58,130. Operating losses were huge. On the famed California Zephyr domeliner service between Chicago and San Francisco losses, rose to $2.6 million in 1969 on just the Western Pacific portion (with reasonably full passenger loadings). The Seaboard Coastline alone had $12 million dollars of out-of-pocket losses relating to passenger service in 1967.
The real problem was high labor costs for railroads and dwindling rider-ship from cheaper or faster alternatives. But even when the trains were full, they lost money. In short, one wonders how private passenger trains hung on as long as they did.
The answer is the United States government. The U.S. Post Office paid to have pre-sorted mail move in high-speed express cars on the head end of passenger trains. Railway Post Office (RPO) cars also carried mail workers who sorted en route, dropping off and picking up mailbags on the fly. This amounted to millions in revenue for the railroads and that helped offset (but not eliminate) passenger losses. Most railroads continued quality passenger service primarily as public relations. Great Northern Railway President John Budd said it best in TRAINS magazine in 1969 when he noted, "The world judges the railways by their passenger service. If this is the window through which we are viewed, we must wash it and shine it, or cover it with a dark shade."
But real trouble for passenger trains arrived around 1966, when the US Post Office introduced a harmless little mail expediter – the Zip Code. The Zip Code would lead to more pre-sorted mail and suburban sorting centers. Instead of sorting your mail at the local office and forwarding out-of-town mail to the downtown branch, all mail would be moved to a central sorting station outside of town (and not adjacent to a railway). Local mail would be returned and out-of-town mail would be either trucked or flown to destination. The large central downtown post offices next to the railway stations were closed as sorting centers. Airmail stopped costing extra.
Suddenly, the railroad passenger trains were bereft of their head end revenue and the losses became staggering. However, in order to eliminate a passenger train, a railroad would have to apply to a government agency, the Interstate Commerce Commission (ICC), for approval. This became a hot-button political issue, as people, even those who didn’t ride the train, didn’t want to lose their rail service. The ICC train-off petition became difficult to achieve and the losses continued.
In part, this led to the largest rail bankruptcy of all time – the Penn Central, which ran about 35 percent of passenger trains in America (by frequency). The government then turned to the Department of Transportation for a solution. In 1971, they came up with a short-term fix, originally called Railpax, and formally known as the National Railroad Passenger Corporation (NRPC).
Here’s how it worked: The railroad could join and buy shares of the NRPC by paying its 1969 full year out-of-pocket passenger loss. In turn, the NRPC would relieve the railroad from operating all passenger trains without ICC petitions and would pay a fixed access fee if it decided to operate passenger trains over that railroad’s lines. Later, NRPC would decide which passenger cars and engines it would buy from the contributing railroads.
The government would throw in $40 million (for its shares) and fund the losses (if any) until 1975. Railroads not electing to join had to run their passenger trains until 1973 and after that would face the ICC for any train-off petitions. All but a handful of railroads joined. The exceptions were interesting. Tiny Denver and Rio Grande Western was irked because its large competitor, Union Pacific, was not going to have its parallel mainline clogged with any passenger trains, so they decided to continue on their own schedules, forcing NRPC to move a train on the UP. Nearly bankrupt Rock Island couldn’t afford the entrance fee so they waived. The Georgia Road was afraid of losing its unusual tax-exempt status so they passed. Maverick Southern Railway figured that the new service would be so horrible that it would get kudos for running a superior service (they did) and besides, maybe more people would ride (they didn’t).
On May 1, 1971, the government nationalized rail passenger service. In the course, they changed the name from Railpax to Amtrak. Secretary of Transportation John Volpe, in answer to critics who said it would never make money, noted that if his department didn’t think it would work, they wouldn’t be working so hard to save it. Volpe went on to say (in a prediction he likely regretted), "It (Public Law 91-518) lays the foundation for what in my opinion is destined to be the all-time comeback in the history of American transportation." And that set the tone for Amtrak. It was always intended to be a for-profit organization, but profits proved elusive.
By 1973, Amtrak was not doing well (if you consider $100 million in losses as not doing well). It had trimmed the national rail map to a bare minimum (16 routes) only to find that politicians made them restore some services to another 5 routes (West Virginia, Buffalo–Chicago, Seattle–San Diego, Los Angeles–New Orleans, Norfolk–Cincinnati). But even with the additions, the national passenger map was shorn of lots of service. For example, 113 million passengers were carried in 1966 and just 45 million in 1972.
Fast forward to the Reagan Administration, where every year after his first year in office the President proposed a $0 budget for Amtrak (to get rid of it) and every year maverick Amtrak President W. Graham Claytor, Jr. would storm Capitol Hill and round up enough cash to keep it running. Interestingly enough, it was under the Democrat’s (Clinton) Administration that the issue of Amtrak’s profitability resurfaced. Amtrak was told it could have its budget if it promised profitability by 2001. So they dutifully promised and the government would almost provide what was asked, but always cut the budget.
The goal of profitability was just around the corner (in 2001). And when 2001 arrived, the GAO found that Amtrak had mortgaged Penn Station, owed millions and had a capital spending need to keep even minimum service going and no money to spend. Amtrak’s President Warrington resigned and its survival became a real concern. The new president, David Gunn, a maverick in his own right, has made changes and shown no fear of going toe to toe with anyone. When Congress threatened not to fill his admittedly minimalist budget, he said that since he couldn’t tell which parts of Amtrak Congress didn’t want to operate, he would just shut the whole thing down. And he nearly did, but the DOT and Congress blinked and found enough money to keep it going.
So right now, Amtrak is looking hard at its loss leaders, Congress is considering making the states contribute for service–who knows what is in the works? Maybe a move towards overnight service operated like cruise trains, similar to Australia’s Indian Pacific. That service is privately operated and runs twice to three times a week across the continent, connecting the Indian Ocean with the Pacific. And it makes money. So you can figure that on the block are long distance trains such as the Zephyr between Chicago and San Francisco, most of the overnight trains, and some corridor services.
If you were considering a long distance train ride, this summer might be a good time. The scenery between Sacramento and Denver is spectacular. Cuesta Grade outside of San Louis Obispo and the coast running down to Los Angeles is phenomenal. The northern route between Seattle and Chicago is the easiest introduction to the rugged parts of the northern states. Better do it soon though.
Mica: Amtrak's troubled financial picture can be fixed
By MICHAEL REED
WASHINGTON, D.C. -- U.S. Rep. John Mica, R-Fla., has a plan to fix Amtrak's financial problems.
Amtrak has an annual $1 billion deficit in operating costs, and it's asking Congress for $1.8 billion for next year that would fund capital projects such as repairing broken-down trains. The company also has $6 billion in deferred maintenance projects such as trains waiting to be fixed in storage areas, and it has run up $5 billion in debt within the last five years, said Mica, who sits on the House Railroad Subcommittee. Mica represents the Seventh Congressional District in Florida that includes St. Johns County.
Amtrak, he said, is in need of reform and Congress has been reluctant to give Amtrak additional funds because its management practices of its finances have been poor.
Mica's comments Wednesday followed Tuesday's release of the National Transportation Safety Board's report on the Amtrak Auto Train 40-car derailment April 18, 2002.
The NTSB says inadequate track maintenance by CSX Transportation and heat problems probably buckled the track and caused the derailment that left four people dead, 36 seriously injured and 106 injured.
Though he said Amtrak was not at fault in the Auto Train crash, he said the issue of track and equipment maintenance are part of a larger problem and that is "our nation's investment in our railroad infrastructure."
Mica wants to separate long distance service from high speed rail. He wants to establish an interstate compact in the northeast corridor of the United States with a board that would contract with private companies. Amtrak would also lose exclusive control of specialty services such as the Auto Train.
"Amtrak would be left with long distance service," Mica said.
The northeast corridor's high speed service runs at a little more than 80 mph. Given the opportunity, private companies would invest billions to operate a high speed rail that runs at 120 mph, he said. Mica said he is a strong proponent of high-speed rail.
President George Bush wants to eliminate Amtrak's long distance routes and make states spend more money on service between cities to fix Amtrak's annual fiscal problems. The administration wants to separate Amtrak into three companies that would manage long distance, high speed rail and infrastructure needs, Mica said.
It would also set up a system of regional and state partnerships that would run the companies and allow for the privatization approach, he said. Mica said he supports the concept of Bush's plan, but the six years it takes to implement is too long. The Bush plan also pushes the privatization envelope more.
Mica wants the northeast interstate board to contract with private companies. He also wants private companies to be given the opportunity to contract with Amtrak for long distance routes. Amtrak employees would be inherited by the private companies, he said.
The company has 22,000 employees, more than 500 stations in 46 states and operates on 22,000 miles of routes. According to Amtrak, it owns 730 miles, about 3 percent of the tracks.
The Bush Administration released its proposal to Congress in July. The House Appropriations Committee had already voted to give Amtrak $900 million next year, half of what the company asked for.
It would be very difficult, if not impossible to get states to agree on the level of funding for Amtrak, making the plans tough to implement, said Amtrak spokesman Dan Stessel.
When the administration's plans were released, Amtrak President Davis Gunn released a statement saying Amtrak wasn't asked to work on the plans and the company wouldn't comment. He reiterated Amtrak's request for more funding.
"While federal policy makers and others debate the structure and funding of passenger rail service, Amtrak will continue to do its job," Gunn said "That's why we will continue to put every effort into securing the $1.8 billion in federal support needed next year to fund the capital projects that are needed right now to run safely and reliably."
The $1.8 billion is the first request in a five year plan to bring Amtrak to a state of good repair, Stessel said. The amount of funding in the requests will decrease until the Fiscal Year 2008 when Amtrak will ask for $1.5 billion, according to Amtrak.
Part of Amtrak's financial and operational status can be traced back to 1997 when Congress directed the company to be self efficient by the end of 2002, Stessel said. The old managers borrowed money and deferred maintenance projects to support the operational costs, he said.
It only made things worse, and when Gunn took over in 2000, he directed managers to develop a five-year plan to bring Amtrak to a state of good repair, Stessel said.
Critics of privatization say railroads will always need government subsidy.
Congress created Amtrak in 1971 because private businesses couldn't operate at a loss, said U.S. Rep. Corrine Brown, R-Fla., who is also on the Railroad Subcommittee. And she pointed out that taxpayers recently spent $18 billion to bail out the airlines.
"This isn't about fiscal policy, this is about providing a safe and reliable public transportation system that the citizens of this nation need and deserve," Brown said in a statement.
She said she was one of 219 members of the House, which is a majority, that signed a letter supporting Amtrak's request. Brown represents part of Northeast Florida.
Mica said the House committee's vote to give Amtrak $900 million is a sign that the House isn't going to fund the company's full request, and Amtrak is in for some tough times ahead.
Gunn said that in July, a train that runs between New York and Boston broke down and disrupted service for a day, he said. And years of deferred maintenance have resulted in the loss of two electric engines.
Also, two old movable bridges over the Thames and Niantic Rivers in Connecticut are in danger of failing, he said. That would stop service between New Haven, Conn. and Boston.
"The importance of spending money on capital projects cannot be overstated," Gunn said.
Brown said the federal government shouldn't shift responsibilities to the states.
"We have a choice, we can either improve a system that serves our need for passenger rail service, or we can let it fall apart and leave the country's travelers and businesses with absolutely no alternative form of public transportation," Brown said.
Mica said he doesn't mind subsidizing transportation. But you want good service and accountability, he said.
The Amtrak debate will continue when Congress returns to session in September. Mica plans to launch a campaign on Capitol Hill to support his plan.
Mica will be in St. Augustine today as part of a tour of his district. He will be at the St. Johns County Public Library on U.S. 1 at 9:30 a.m. to discuss housing issues and at the St. Johns County Health Department at 2 p.m. to talk with veterans.
Dukakis criticizes president over Amtrak board vacancies
By Keith Reed, Globe Staff, 9/3/2003
Michael S. Dukakis, the former Massachusetts governor, criticized the Bush administration yesterday for not acting to fill vacancies on the Amtrak board of directors that are expected to leave the board with only three members, one less than the legally mandated quorum.
"From the standpoint of corporate governance, you don't have a full board, you're not doing the things that a board should do, and you don't have the oversight that you should have," said Dukakis, whose term as Amtrak vice chairman ended in June. The term of a second member, John Robert Smith, the former chairman, ended at the same time, and terms of two other directors will expire this month.
"The president hasn't nominated anybody to succeed me or John Robert, let alone the two that are about to leave," said Dukakis, who teaches at Northeastern University. "The question is: When you don't have successors, what do you do?"
Appointees to the board of the struggling rail operation must be nominated by the president and approved by the Senate.
A White House spokeswoman would only say: "The White House is working to fill the vacancies." The spokeswoman, who asked not to be named, declined to set a time frame for nominations.
Amtrak was set up by Congress in 1971 to operate the nation's intercity passenger rail service. It runs like a private company, with its own CEO appointed by a board that also oversees auditing, executive compensation, and other fiscal matters.
The board must have at least four members to conduct official business, a requirement mandated by Congress in a 1997 overhaul.
The five-year terms of two Amtrak directors, former Virginia Governor Linwood Holton and Amy M. Rosen, a veteran of the transportation and financial services industries, expire Sept. 24, leaving three directors.
Regulations in the District of Columbia, where Amtrak is incorporated, allow sitting board members to designate an "executive committee" to handle oversight of the company in the event a legal quorum isn't reached.
Amtrak's board set up the committee before Dukakis and Smith left, naming chairman David M. Laney, vice chairwoman Sylvia de Leon, and Transportation Secretary Norman S. Mineta -- the remaining directors as of Sept. 24 -- to the committee.
Cliff Black, an Amtrak spokesman, said that will let oversight of the company, including the implementation of the $1.8 billion budget for fiscal year 2004, continue unimpeded.
"We've fulfilled the provisions of the law that will allow the board to operate," he said. "We would anticipate that the administration would nominate some people soon."
That doesn't satisfy Dukakis and others, who are concerned that Amtrak, which lost a record $2.2 billion in fiscal year 2002, can ill afford to operate without a full board.
"It seems to me it's very difficult that the management wouldn't be able to work without a board that wasn't functioning," said Holton, who served as Virginia governor from 1970 to 1974.
Dukakis, a onetime Democratic presidential nominee and current supporter of Senator John F. Kerry's presidential campaign, used the Amtrak board impasse as a chance to level criticism at Bush.
"You can't do what a board of directors is supposed to do with three people. You can rest assured that if we had a president who cared about rail, we wouldn't have this problem," he said.
Specialists said it is possible, though not usually desirable, to operate a major company without a full slate of directors.
"Can the three of them oversee the company? Sure. They just don't have the diversity of background and skill that they would have had with seven people," said Jay Lorsch, a professor at the Harvard Business School.
Jeff Rudman, chairman of the corporate and securities litigation group at the Boston law firm Hale and Dorr, was more skeptical, saying that three directors are too few for any corporate board to function effectively. Still, he acknowledged that a board like Amtrak's might be judged by a different standard. "If this were the board of a publicly held company, one would be very skeptical," he said.
Critics say Amtrak plan would increase costs, burden states
PHILADELPHIA - Critics of a Bush administration plan to privatize Amtrak say the proposal would effectively kill the passenger railway system by shifting its costs to the states, which say they don't have the funds to run it.
Under the administration proposal sent to Congress on Monday, Amtrak would become a private passenger rail company under contract to states, which would form multistate compacts to run passenger railroads. The states would pay for the operating costs, although those costs weren't outlined in the plan.
Backers of the legislation say it would improve service through competition and encourage private investors to build railroads and promote high-speed rail service between cities.
Critics wonder who will guarantee the consistency of the safety and maintenance of the lines and how states with budget troubles will pay for it. Some say the legislation is meant to kill Amtrak.
"It's like dropping a nuclear bomb on the intercity rail passenger business," said Ross Capon, executive director of the National Association of Railroad Passengers. "It's going to be sold to the public as a way to reduce the cost, and
the only way I see to reduce the cost is if the service disappears."
Amtrak President David Gunn, in a memo Wednesday to Amtrak's board of directors, wrote that the only thing he's seen similar to the administration's plan is the privatization of Britain's rail system in the 1990s.
"In that case, it took years to accomplish and it consumed billions of dollars in government funding," Gunn wrote. "You have been given one year and no money."
Gunn, in testimony to Congress last year, called proposals to privatize or restructure Amtrak "exercises in problem-avoidance."
Many critics argue that, like highways and the air transport system, railways don't stop at state borders and thus require federal oversight and funding.
Sen. Joe Biden, D-Del., in a telephone interview Wednesday, asked what a train traveling from Washington, D.C., to New York would do if Pennsylvania, for instance, didn't have the funds to operate its portion of Amtrak.
"Can they still run through Pennsylvania?" Biden asked. "Who maintains the signals in the tunnels? Who maintains the safety?"
Mike Cox, a spokesman for the Texas Department of Transportation, said his agency hadn't yet studied the plan, but said Texas doesn't have enough money to pay for its current transportation projects.
"We think rails are important, but thinking something is important and being able to pay for it are two different things," he said.
Tom Hickey, a spokesman for Pennsylvania Gov. Ed Rendell, said states needed to see more financial details. "It's difficult to see how states could take on this kind of cost right now," he said.
Florida Department of Transportation spokesman Ian Satter said his department thought interstate services should be run by the federal government.
Republican senators on Wednesday announced a six-year, $60 billion plan to help Amtrak, countering the Bush administration proposal. Their plan would give Amtrak the $2 billion in annual operating subsidies it has requested. The plan also calls for issuing $48 billion in bonds to raise money for repairs and track construction.
Biden said he didn't know if the Bush administration legislation would find support in Congress. He said he thought that constituencies connected to airlines and the highway system - which he said would benefit from an increased passenger load if Amtrak ceased to exist - likely support the legislation.
"This is just designed to kill Amtrak," Biden said. "It gives up on a national rail system at a time when the population is growing, at a time when the airways are overly subsidized."
Half the passenger trains in the U.S. made their final runs on May 1, 1971, Amtrak's first day of operation.
By John Kelly
Today you can ride across the United States aboard long-distance Amtrak trains such as the Lake Shore Limited, Silver Star, California Zephyr, or Texas Eagle. The dining cars serve tasty, regional cuisine and the double-deck Sightseer Lounge cars offer a superb platform for viewing America.
However, 30 years ago passenger trains in the United States were almost finished.
Declines in passenger train ridership can be traced back to the 1930s, when the automobile began its formidable challenge to the new streamliners introduced by the railroads. The rise of commercial aviation in the 1950s took significant numbers of long-distance travelers away from passenger trains, while burgeoning highway systems, subsidized at the municipal, state, and federal levels attracted short-distance travelers.
But the final blow came in October 1967, when the U.S. Postal Service cancelled its lucrative first-class mail contracts with the railroads in favor of trucks and airplanes. (Second- and third-class mail continued to be hauled on long-distance passenger trains.)
One by one, trains that had survived the onslaught of highway and air competition began to disappear.
From Railpax to Amtrak In 1968, a young attorney named Anthony Haswell founded the National Association of Railroad Passengers (NARP), a Washington lobby group whose purpose was to save the passenger trains. NARP began lobbying Congress, the Department of Transportation, and the Federal Railroad Administration on behalf of passenger trains.
After much effort the NARP lobbying worked, and from that success came the Railroad Passenger Service Act (Railpax), which Congress passed on October 14, 1970. On October 30, 1970, President Nixon signed Public Law 91-518, and the National Railroad Passenger Corporation (NRPC) was created.
All railroads that operated passenger trains when the new law was signed had until May 1, 1971 to become members of the NRPC, or continue to run their own passenger trains. The NRPC membership price was either cash, or passenger equipment/services based on half the road’s passenger losses for the last full year of operation (1970), or purchase of common stock in the new company. The biggest advantage to joining NRPC was of course, relief from the financial burden of maintaining passenger service.
Most railroads joined, although four opted out and continued to operate passenger trains on their own: Southern, Rio Grande, Rock Island, and Georgia Railroad.
Southern Railway ran the New Orleans-Washington Southern Crescent (with a connection to New York via Amtrak) until it became an all-Amtrak train on February 1, 1979 and the name was changed to Crescent.
Denver & Rio Grande Western operated the tri-weekly domeliner Rio Grande Zephyr between Denver and Salt Lake City until April 25, 1983. (After Rio Grande cancelled the service, Amtrak shifted its own Chicago-Oakland San Francisco Zephyr from Union Pacific’s line across Wyoming and Utah to the Rio Grande route, and changed the train’s name to the California Zephyr.)
Rock Island operated two pairs of intercity passenger trains, one between Chicago and Rock Island, and one between Chicago and Peoria. The service lasted until January 1, 1979.
The Georgia Railroad ran four pairs of mixed trains: Atlanta-Augusta (formerly the Georgia Cannonball), Camak-Macon, Union Point-Athens, and Barnett-Washington. The last mixed train ran on May 6, 1983, operated by Georgia Railroad’s successor Seaboard System.
The original Amtrak planners included eight Presidential appointees, and select members from the Federal Railroad Administration and Department of Transportation, led by Secretary John Volpe.
The group was charged with setting up a nationwide passenger railroad system that would take over operation of all intercity passenger trains. Amtrak’s planners managed to achieve something the freight railroads would not have until 1980: freedom from regulation. The Interstate Commerce Commission had no say over how Amtrak was formed and how it was to operate.
The group established a system of 21 key routes, or “city pairs” that formed Amtrak’s initial nationwide passenger network:
1.Boston to New York
2.New York to Washington
3.New York to Buffalo
4.New York to Chicago
5.New York to Kansas City via St. Louis
6.New York to Miami (and Tampa/St. Petersburg)
7.New York to New Orleans
8.Washington to Chicago
9.Washington to St. Louis
10.Norkfolk/Newport News to Cincinnati
11.Detroit to Chicago
12.Chicago to St. Louis
13.Chicago to Cincinnati
14.Chicago to Miami (and Tampa/St. Petersburg)
15.Chicago to New Orleans
16.Chicago to Houston
17.Chicago to Seattle
18.Chicago to San Francisco/Oakland
19.Chicago to Los Angeles
20.New Orleans to Los Angeles
21.Seattle to San Diego
Rail service was divided into short-haul and long-haul categories. Short-haul trains would run 300 miles or less between intercity terminals; long-haul trains covered distances greater than 300-miles. Both long-haul and short-haul city endpoints had to have a population base of at least one million.
One determining factor used for establishing the short-haul routes was the existing rail and roadbed between city pairs, which had to be of sufficient quality to allow operation of passenger trains without additional capital improvements.
The planners established which trains were to be operated, frequency of operation, train connections, and through car service between city pairs. In addition, it was decided which trains would have sleeping and dining car services, and lounge and parlor car services. Train names and numbers were also assigned.
The advertising firm of Lippencott & Marguiles created the name for the new passenger carrier, AMTRAK (American Travel by Track), and developed the corporate colors of red, white and blue and the well-known Amtrak inverted arrow logo. Amtrak’s arrow logo was replaced in 2000 with its wave-like “travel mark” introduced concurrent with the launch of its satisfaction guarantee program, and in anticipation of the inauguration of the high-speed Acela Express.
Amtrak's first days For passenger train lovers, May 1, 1971 was a day of reckoning, as Amtrak began its first day of operation, and many privately operated long-distance trains made their final arrivals. The first day saw 184 Amtrak trains running on a 23,000-mile network that served 314 communities.
Sadly, this was half the amount of some 440 passenger trains that had run the day before. Even factoring in the 34 additional trains still privately run by freight railroads after May 1, the loss of service was staggering, and many large cities and small towns suddenly had no passenger service at all.
Overnight, all passenger trains on the Baltimore & Ohio, Central of Georgia, Chicago & North Western, Delaware & Hudson, Grand Trunk Western, Norfolk & Western, and Northwestern Pacific disappeared.
Discontinued trains on other railroads Chesapeake & Ohio’s Pere Marquette (Chicago-Grand Rapids-Detroit), Milwaukee Road’s storied Hiawatha trains (Chicago-Twin Cities), and Louisville & Nashville's Pan-American (Cincinnati-New Orleans) and Georgian (Atlanta-St. Louis). Casualties were big in the west. All Union Pacific Cities trains including City of Los Angeles, City of San Francisco, City of Portland, and City of Denver were discontinued. Previously, all the Cities trains had been combined into one large train (No. 232).
Santa Fe’s San Francisco Chief (Chicago-Oakland) was discontinued, as were Burlington Northern’s Western Star and Mainstreeter (St. Paul-Seattle).
In the East, many Penn Central Boston-New York-Washington trains continued to run on the Northeast Corridor. At start-up, the Broadway Limited was Amtrak’s only New York-Chicago train (with a connection serving Washington, D.C.), and in 1972 was the first Amtrak train to receive the new red-white-blue colors. Amtrak discontinued the Broadway Limited in 1995.
From the start, the new carrier was also plagued with equipment incompatibility, train crew and operation problems, and passenger complaints.
One major problem the railroad faced was with the equipment pool, which numbered nearly 300 locomotives and 1200 cars.
Amtrak began operations by leasing motive power and rolling stock supplied by the freight railroads. In the East, most of the railroads had operated older, dilapidated coaches and sleepers, while western railroads had invested heavily in new dome cars and coaches. When this equipment was put together, many inconsistencies arose. For example, the eastern repair shops were unfamiliar with maintenance procedures on the western cars, even though most cars were built either by Pullman-Standard or Budd.
Amtrak’s early years are often called the “Rainbow Era,” which refers to the arrangement of hand-me-down engines, coaches and sleepers from the various railroads that formed the colorful consists of early Amtrak trains. By mid-1971, the passenger carrier began purchasing some of the equipment it had leased, including 286 second-hand E and F units, 30 GG1 electric locomotives, and 1290 passenger cars, and continued leasing even more motive power.
The “Rainbow Era” was short-lived, and by 1974 the new color scheme was painted on most Amtrak equipment. Newly purchased locomotives and rolling stock began appearing, too — SDP40Fs from EMD in 1972, French-built Turboliner trainsets in 1973, and new Amfleet coaches from the Budd Company in 1975.
Air/Rail Collaboration: Heaven or hell?
Martina Priebe, director of the Air Transport Action Group (ATAG), Switzerland, which represents the airline industry worldwide, believes in a virtuous circle of intermodality between air and rail in which air diverts short-haul traffic to rail to free up capacity for airlines.
Rail has even more to gain because the increasing number of high speed rail connections to airports in Europe provides the opportunity for more than short-haul traffic. These were among the issues discussed at Air/Rail 2001, a recent conference conducted by the International Air Rail Organization at Heathrow Airport, London. There may be some lessons here for U.S. rail operators considering cooperation with airlines.
Priebe explained that ATAG has three goals: sharing traffic with other modes, sharing efficiency with other industries and parties, and sharing wealth with communities around airports. "Intermodality is an intelligent way to shift demand to other modes where limited air transport infrastructure could be used more efficiently by the airlines," she said.
It will only work if there is enough readiness on both sides of the industry. Priebe believes air and rail have more in common than meets the eye. "I am looking forward to the day when air and rail are perceived as industries serving one market, rather than limiting the cooperation to defined processes," she said.
Priebe’s definition of air/rail intermodality combines different modes of transport in a seamless travel experience. "We propose combining two systems that have developed in isolation from each other. It is still unknown territory and we don’t know whether working together will be heaven, hell, or both," she said.
There are synergies, but they depend upon the willingness of both industries to open the door and accept each other as equal partners. Airlines and railways would agree on intermodality more easily if they could see the immediate financial benefits–if there were any–from cooperation. ATAG has concluded that the costs of fully integrating railway codes and destinations into airline computerized reservation systems is prohibitive. "The search for global solutions demands changes in culture and mentality within both industries," said Priebe.
Railway connections provide the opportunity for in-town check-in and, possibly, check-out. But there were divergent views expressed at the conference on whether it would be worthwhile. "Just show me the money" was the airline view, with British Airways pointing out that check-in facilities for Heathrow at London Paddington station cost them three or four times more per passenger than those at the airport.
Trains have replaced air between Frankfurt and Stuttgart, Germany. The number of rail "flights" has doubled, and customs facilities have been provided at both Frankfurt Airport and Stuttgart’s railway station, with real passenger benefits generated by air and rail working together.
Express Rail Link (ERL) in Kuala Lumpur, Malaysia, due to open in April 2002 on a 35-mile route between Kuala Lumpur City Air Terminal (KLCAT) and Kuala Lumpur International Airport (KLIA), has boldly adopted both check-in and check-out at KLCAT to provide a choice for airline passengers.
The Frankfurt to Stuttgart journey is designated as a flight sector with a Lufthansa flight number. ERL is challenging the need for its operation to function in similar fashion. ERL Vice President-Systems Integration and Operations Management Zulkifi Alias told the conference that ERL had conducted extensive studies to create a model for air/rail intermodality that could accommodate through-labeling of baggage without needing an interline ticket.
"In order to support the development of air/rail intermodal transport and sustain the growth and viability of the business, the existing airline-to-airline arrangements of the International Air Transport Association need to be looked at again from a fresh perspective," said Alias. "Changes to some of the airline procedures may have to be made to suit the new concept of air/rail intermodality."
ERL aspires to be the first rail operator to implement a city check-out facility, but faces the challenge of finding a way to get the origin airport to label the baggage through to KLCAT without the need of an airline ticket, which is currently a requirement under IATA baggage interlining arrangements. "There are some fundamental legal and technical issues here," said Alias. "And there is also the question of whether it is going to be worthwhile for the airlines."
Railways, no doubt, must feel the same way.
Amtrak, Inc.: A possible panacea
Robert L. Banks
Readers of this publication are familiar with the never-ending tale of Amtrak’s travails. Given a political imperative of nationwide service, which precluded potential profits, the story hasn’t varied much in 30 years. Though many have wrestled with this problem, no one has come up with a palatable permanent solution.
In part, this is due to the persistence of the myth that U.S. railroading is superior to any overseas model, accompanied by a reluctance to observe and benefit from experience elsewhere. Despite these built-in barriers, there is reason to imagine that some U.S. adaptation of a foreign rail passenger arrangement holds promise for eventual delivery of Amtrak from its perpetual thralldom to a petulant Congress.
It’s certainly worth exploring whether the interesting mix of commercial and non-profit policies that drive the 20-odd private railway corporations of Japan may be the key to a self-sustaining future for Amtrak. These mostly-passenger railways were largely constructed in the first two decades of the 20th Century. They have never been owned by the government. Most important, they are highly profitable, and recognized as such by the investing public which, on the Japanese security exchanges, trades in their equities at price-earnings ratios far higher than typical of U.S. rail stocks. They operate about 4,500 miles of road, and are distinctly separate entities from the six privatized railways carved out of
Japanese National Railways in the early 1990s.
The key to their financial success is conglomeration. Where the U.S. has measured Amtrak’s finances against the standards of profitable freight railroads, the Japanese, by contrast, have recognized the handicaps of the high labor inputs inherent in good passenger rail service and moved to offset them by the exercise of institutional ingenuity that, through a corporate umbrella, uses the profits from enterprises with high operating margins to cross-subsidize the operations of activities with lesser margins. This is, of course, contrary to U.S. practice, where exactly the opposite strategy has been followed. Here, corporate activities having higher returns typically pursue divestiture of affiliates with less promising futures, like the separation of Kansas City Southern Railway from Stillwell Financial.
Because of its special circumstances and the public need for rail passenger service despite its unattractive economics, the opposite course should be followed with Amtrak. While private companies aim to maximize returns to their owners, Amtrak’s goal is instead to minimize losses incurred by its owners, the U.S. taxpayers. Instead of sloughing off relatively less profitable entities, Amtrak should be affiliating, under a corporate umbrella, with more profitable enterprises then it can, by itself, ever hope to.
Many obstacles have hindered Amtrak’s introduction of new product lines. Japanese policy, on the other hand, encourages diversification. What began as pure railway companies have been transformed over the years into the core enterprises of what might be termed railway-based conglomerates. The Odakyu Electric Railway Co., for example, is the centerpiece of the Odakyu Group’s 110 companies that, besides public transportation, are involved in retail, real estate, construction, maintenance, hotels, restaurants, and tourism.
Amtrak does pursue businesses other than passenger train operations–mail and express, fiber optics, real property development, of which Washington Union Station is the most prominent. In recent years, its mission has been to bring passenger rail revenues and expenses into balance. With the higher profit margins found outside the rail industry, conglomeration may be the way to make Amtrak profitable.
How do we get to where Amtrak is self-sustaining? The initial step rests with the U.S. DOT, which must embrace the not-so-simple idea that it serves everybody’s interest if airlines stop trying to serve markets under 500 miles when, in most cases, rail can do it more efficiently, freeing up airport slots for the longer trips and affording an alternative to congested highways. The next step is to amend the Amtrak laws to cut the umbilical cord to the feds and establish it instead as a "quango" (a term coined by The Economist to describe quasi-autonomous non-governmental organizations like airports and port authorities).
There will be those who find objectionable the concept that a quango can compete with private enterprise. But the precedent has already been well established by convention centers and sports stadiums constructed by special-purpose authorities, all preempting development by private-sector entrepreneurs. Isn’t a viable intercity passenger service as worthy a public purpose as baseball?