Amtrak a “failure”? Hardly. Here’s how we see it

Written by Stephen Gardner, Senior Executive Vice President, Amtrak
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Stephen Gardner

Over the past eight months, Railway Age has published 31 op-eds about Amtrak—many more than it published on the freight railroad, railroad supply and transit industries combined. The majority focused on long-distance trains, which account for only 15% of Amtrak ridership, and their dining car food. Most of the others depicted Amtrak as a “failure” facing “the sword of Damocles,” to quote one op-ed author. They urged privatization of Amtrak’s operations and Northeast Corridor infrastructure, and “open access” to freight railroads’ lines for new passenger rail operators.

These op-eds ignored important facts that might surprise readers of Railway Age:

  • Amtrak’s financial performance in fiscal year 2018 was the best in its 47-year history. Amtrak generated record revenues and has carried more than 30 million customers for each of the past seven years. Its $168 million operating loss was its lowest ever, without adjustment for the more than 500% inflation since operations began in 1971, and a 53% reduction from just five years ago.
  • Amtrak covered 95% of its operating costs from revenues last year. That’s a much higher cost recovery than any of the U.S. commuter rail services provided by the four “private sector” companies repeatedly touted as Amtrak replacements (two of which are actually owned by foreign countries). Amtrak’s cost recovery also far exceeds the 7% cost recovery reported during the first nine months of 2018 by the Miami – West Palm Beach Brightline/Virgin service that several op-eds cite as a model.
  • Amtrak’s financial performance compares favorably to international railways that receive much higher levels of public funding. France’s national passenger railroad lost $3.4 billion last year despite receiving $16 billion in subsidies—more public funding in a single year than Amtrak has received in the past decade.
  • When Amtrak acquired the Northeast Corridor (NEC) from its private owner, the bankrupt Penn Central Railroad, revenues covered less than half of its operating costs. Last year, the NEC generated a $526 million operating surplus for reinvestment in NEC assets.

The “privatization” schemes advocated in the op eds – giving subsidies to private operators to take over select Amtrak services, and soliciting bids for turning NEC infrastructure over to a private company—have been tried, in both the U.S. and internationally. They haven’t worked.

  • A Midwestern state’s 2015 privatization of equipment and food service on an Amtrak state-supported route ended when the private service provider sought increased subsidies after only 17 months.
  • Two Congressionally-mandated DOT solicitations for development of high-speed services on the NEC, and a FAST Act-required solicitation that offered large subsidies to entities willing to take over Amtrak long-distance routes, did not attract a single private sector proposal.
  • Great Britain embraced both privatization approaches advocated by the op-eds. It turned its rail infrastructure over to a newly formed private entity, but without the $40 billion government “loan” that proponents of the similar AIRNet-21 proposal for the NEC are seeking. It also contracted-out passenger train operations to multiple operators. The infrastructure company quickly became insolvent, triggering renationalization and massive expenditures to repair unsafe tracks—a scenario no responsible person would want to risk for the NEC. Recent service failures by private operators have created a national crisis, leading many to advocate renationalization.

Despite limited funding, Amtrak is growing ridership, improving its financial performance and investing in its service. It is beginning to attract the public and private investment it needs to advance vital capital projects, such as the Gateway Program, which will replace and improve vital infrastructure to ultimately double rail capacity between New Jersey and New York Penn Station. Privatization proposals do not change the reality that providing the United States with the passenger rail system it needs requires adequate public funding.

In his 2012 book Amtrak: Past, Present, Future, Railway Age Contributing Editor Frank Wilner chastised those who make “spiteful arguments against Amtrak subsidies” and advocate “piecemeal privatization” of Amtrak’s services. Instead, he said, Congress should give Amtrak “predictable multi-year funding” and “a clear and leading role in providing the nation with world class intercity passenger rail service.”

We couldn’t agree more.

Stephen Gardner is Senior Executive Vice President, Amtrak

Editor’s Note: This is the first time since former Delta Airlines CEO Richard Anderson was appointed Amtrak President and CEO that Amtrak has responded with something to contribute—of its own accord (as is the case here), or if asked—to Railway Age commentaries or requests to participate in feature stories. Both Anderson and Gardner refused to be interviewed for Frank Wilner’s November issue cover story. We are pleased to see that the wall of silence—in our opinion, erected by Anderson, not Gardner—appears to be coming down. We hope the wall is dismantled completely. In any case, our purpose as an industry publication is to facilitate constructive dialogue and debate. We are glad that Amtrak has finally decided to participate. Let’s keep the dialogue going. — William C. Vantuono

Categories: Commuter/Regional, High Performance, Intercity, Passenger Tags: ,