Monday, February 22, 2016

Is Robert Serlin Amtrak’s Merlin?

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Is Robert Serlin Amtrak’s Merlin?

Boston to Washington, D.C. It’s a megalopolis of technology innovators, prestigious universities, corporate headquarters, a global financial hub, a score of professional sports teams, tourist attractions, Congress and a maze of executive branch and independent regulatory agencies—a region of 56 million whose productivity and quality of life depend significantly on efficient intercity transportation.

Within this megalopolis are eight of the nation’s 26 busiest airports; I-95, whose auto traffic grows persistently; and Amtrak’s 457-mile Northeast Corridor (NEC), carrying some 12 million passengers annually.

While Amtrak dominates the air/rail market, a dozen intercity bus operators are poaching significant numbers of Amtrak passengers with lower fares, more frequent departures, competitive trip times and more convenient service. Almost 70% of NEC bus riders are between the ages of 18 and 34, whereas Amtrak’s NEC riders are predominantly older.

Improving Amtrak’s NEC appeal to a broader demographic is constrained by budget limitations, choke points and timid initiative. A $52 billion price to lift NEC rail infrastructure to a state of good repair—new tunnels, bridge replacement, renewal of catenary, smoothing the washboard ride—depends on a reluctant congressional majority.

It doesn’t help that recent legislation requires cash-strapped Northeast states shoulder more of the NEC rail infrastructure cost burden. Their 7,500 daily commuter trains—vs. some 1,200 for Amtrak—may make them the predominant NEC user, but squeezing from them significantly more money is a long-run fool’s errand.

All is not despair. Some 19 years ago, a congressionally created study group suggested a public-private partnership separating NEC rail infrastructure from Amtrak passenger train operations, returning Amtrak to as it was when created in 1971. Not until 1976 was ownership and the financial burden of the NEC transferred to Amtrak.

After Congress failed to implement the study group’s proposal, a participating Wall Street banker enlisted leadership from Robert Serlin—Wharton School MBA, background in regional development and experience in railroad finance—whose American Intercity Rail Network for the 21st Century (AIRNet-21) proposes that Amtrak-owned infrastructure be spun off into a separate federally owned National Railroad Infrastructure Corp. (NRIC).

The NRIC would be funded and managed by a private-sector infrastructure management organization (IMO) that would acquire a 50-year revocable lease to improve and maintain NEC infrastructure and dispatch its intercity, commuter and freight trains.

Amtrak would be freed of its infrastructure burden, which Serlin says “accounts for the majority of Amtrak’s financial losses and poses a major threat to the sustainability of a national rail passenger network.”

A $30 billion private-sector-guaranteed loan from the Railroad Rehabilitation and Improvement Financing (RRIF) fund—with no impact on the federal budget—would partially fund NEC infrastructure renewal and track expansion to serve five airports directly.

An additional $30 billion—none through congressional appropriations—would be invested in the NEC over 50 years, allowing faster and more frequent passenger trains, many operating non-stop, point-to-point, with shorter trip times and competitive ticket prices. Amtrak would receive from the NRIC a one-time $1 billion for equipment and service enhancement.

“The IMO would charge for use of NEC operating slots and stimulate growth through a host of new rail services on top of the current center-city to center-city model,” Serlin says. “Commuter access fees would not exceed avoidable costs. The for-profit IMO will earn its return by doubling NEC train miles within 15 years and creating new transportation opportunities.”

“Greater entrepreneurial inventiveness would be encouraged,” Serlin says, “stimulating Amtrak to respond creatively to competition from other rail passenger operators.” Legally binding safeguards will preserve Amtrak’s existing labor arrangements.

This is not a Republican ploy to demolish Amtrak. Democrat Jim Florio, a former House Transportation Subcommittee chairman and New Jersey governor, advises AIRNet-21. Frank Mulvey, a former economics adviser to House Rail Subcommittee Democrats, most recently an STB member, a frequent NEC bus rider and unaffiliated with AIRNet 21, calls the plan “transformational.”

As Congress renews debate on the size of the public purse, the AIRNet-21 proposal may gain traction. Amtrak’s survival as “America’s Railroad” may depend on it.

 

Frank N. Wilner, Contributing Editor

Frank N. Wilner is author of six books, including, Amtrak: Past, Present, Future; Understanding the Railway Labor Act; and, Railroad Mergers: History, Analysis, Insight. He earned undergraduate and graduate degrees in economics and labor relations from Virginia Tech. He has been assistant vice president, policy, for the Association of American Railroads; a White House appointed chief of staff at the Surface Transportation Board; and director of public relations for the United Transportation Union. He is a past president of the Association of Transportation Law Professionals. Wilner drafted the railroad section of the Heritage Foundation’s Mandate for Change (Volumes I and II), which were policy blueprints for the two Reagan Administrations; and was a guest columnist for the Cato Institute’s Regulation magazine.

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