Amtrak’s “faulty route accounting”: RPA

Written by William C. Vantuono, Editor-in-Chief
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A white paper issued by the Rail Passengers Association, “Amtrak’s Route Accounting: Fatally Flawed, Misleading & Wrong,” contends that Amtrak’s fully allocated cost methodology “grossly exaggerates the cost of operating the national passenger train system. This, in turn, has lead to the conclusion adopted by many elected leaders and other affected stakeholders that abandonment of key long-distance trains will save Amtrak significant sums and lead to a more financially secure national passenger operation.”

“As we have demonstrated in the white paper, this is completely contrary to RPA’s conclusion,” says RPA New Jersey Councilman Albert L. Papp, Jr. “RPA analyzes and explains the history of Amtrak accounting procedures and recommends that if a more precise, fair and avoidable cost accounting methodology is adopted by our national rail passenger carrier and applied to evaluate each route, frequency and on-board service amenities, a completely different—and more transparent—train performance calculation would be revealed. This will enable Amtrak to identify and respond to the demands of 21st century rail travelers.”

Following is RPA’s white paper summary:

“The RPA strongly believes that the ongoing debate concerning the future shape of Amtrak’s national network has been distorted by its use of fully allocated costs rather than avoidable costs as required by statute. The adverse outcome of using fully allocated costs is the widespread and incorrect perception that Amtrak’s Northeast Corridor is financially self-sufficient and that Amtrak’s need for taxpayer funding results entirely from its operation of passenger trains in the rest of the nation—the National Network, which consists of state-supported regional and federally supported long-distance routes.

“Fully allocated costing combined with Amtrak’s catastrophically flawed route accounting system grossly misrepresents and exaggerates the public cost of providing passenger trains as a mobility choice for the entire nation. Faulty route accounting has, in turn, led to the popular misconception that the abandonment of long-distance trains will eliminate Amtrak’s need for taxpayer funding. Nothing could be further from the truth. The funding needed for the Northeast Corridor dwarfs that of what’s needed for the rest of the nation. RPA’s white paper explains the history of Amtrak’s route accounting methodology and demonstrates that if Amtrak applied the more economically sound avoidable costing methodology to assess the performance of its various routes, Amtrak’s leadership team would not be working to replace the current national network with disconnected groups of short-distance regional trains serving only a small number of major metropolitan areas.

“The RPA asks Congress to require Amtrak immediately to halt all route, schedule and frequency reductions as well as recent on-board service modifications; then require Amtrak’s leadership team to explain to, and gain the approval of, Congress, the states and stakeholders of its vision of the passenger train system and service they envision for the future. Cover, concealment and stealth tactics are appropriate for a military operation but not for a Government Sponsored Enterprise whose purpose is to provide passenger train service to the nation.

“For more than 13 years, Congress and other federal agencies have called for more accurate, precise and transparent reporting of Amtrak’s component routes. Numerous arms of government including the Federal Railroad Administration, the USDOT Office of Inspector General (OIG) and the General Accountbility Office have all found Amtrak’s route accounting system deficient and not compliant with federal statute requiring disclosure of avoidable costs. The end result has been a false framing of Northeast Corridor services as ‘profitable’ and the rest of the system as ‘unprofitable.’  Neither can exist without federal taxpayer support.

“Congress should demand that Amtrak comply with the already-in-place laws, regulations and Congressional mandates and make public the financial performance of each individual route employing the avoidable cost methodology.  In the interim, Congress should require Amtrak to refrain from any further route and on-board service changes until it reveals its plans for the future system and the economic analysis underlying it to public scrutiny, analysis and agreement. Congress must assert oversight of Amtrak—a Government Sponsored Enterprise – and not allow Amtrak to operate by stealth and deception. “Sunlight is the best disinfectant.”

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