It has been an honor to serve on the Amtrak Board for the past decade. I am extremely proud of the hardworking employees at Amtrak who keep America moving. Our current circumstances remind us of just how fortunate we are to have their commitment and dedication. It is because of their efforts that Amtrak began 2020 in the strongest position since we were created nearly 50 years ago. Ridership, revenue and financial performance were at record levels. With the support of our state partners, Amtrak was on track to generate revenues exceeding operating expenses for the first time ever. The company began preparing for next-generation Acela trains, and had a bold vision of expanding train service in new and existing corridors across the country.
When the COVID-19 pandemic hit the nation in March, Amtrak quickly reacted to protect the health and safety of our customers and employees and maintain services for essential travelers and trips. We, like all transportation providers, were hit especially hard by the pandemic, with ridership plummeting by 97% in only a matter of weeks. We took immediate actions to stabilize the company and reduced capacity across the network in order to conserve resources for the uncertain future ahead. Emergency funding from Congress helped us survive this initial shock, but the continued 80% reduction in our ridership and the lack of any additional federal support so far has required us to make very painful decisions to temporarily reduce our workforce and long-distance train frequencies.
These furloughs and service reductions represent the single-most difficult decision we have made as a company in the past decade. I know that our Board and management are fully committed to recalling employees and restoring service levels as soon as we can. We are hopeful that our federal stakeholders will recognize Amtrak’s importance to communities across the nation and promptly provide the support we need to restore and recover.
In this context, I would like to provide some perspective on the Board’s view regarding the future of Amtrak, and address suggestions that Amtrak’s focus is on “profitability” and concerns about the future of long-distance service.
Let me start with the notion of making Amtrak “profitable.” Profitability is not Amtrak’s mission. Our mission, as defined by Congress, is “to provide efficient and effective intercity passenger rail mobility consisting of high-quality service that is trip-time competitive with other intercity travel options.” As our governing statute has recognized since the 1970s, Amtrak will never generate enough revenue to be profitable from an accounting perspective, i.e., to fully fund its operating and capital needs.
“Profitability is not
Mobility is not a moneymaker if you have to pay for 100% of the cost of getting from point A to point B. No mode of passenger transportation fully pays for itself. Airline tickets, the cost of driving, and commuter train and bus fares would all be prohibitively expensive if users had to fund all costs associated with them. Even our roads and interstates, which road advocates used to love saying were “user funded,” require billions in subsidies each year, with the feds now providing more than $157 billion in general revenue subsidies for the insolvent Highway Trust Fund since 2008. And, of course, airlines don’t build airports, and government at various levels provides substantial subsidies to transit systems. The costs of intercity passenger rail just happen to mostly run through Amtrak, and as a result the full expense of our mode is easier to see. Given this, Amtrak funding has always been a target by critics and competitors that like to forget the subsidization that occurs across all modes.
Facing such an environment, Amtrak has had to try to make the best possible use of its limited resources in order to advance vital capital projects and make a case for greater investment to support our mission. As long-term observers of our business, many of you know that Amtrak has never been provided the necessary public investments we’ve needed to truly serve our nation and thrive. We’ve always been forced to prioritize keeping the railroad running over making improvements, expanding the network and modernizing our services. When you hear us talk about improving the economics of our services and our company, it is not because we are trying to “turn a profit,” but rather because we must try to stretch our woefully limited funding further, so we can keep our trains running safely and address urgent investment needs.
“No mode of passenger
pays for itself”
Additionally, when we demonstrate good efficiency and the ability to be effective financial stewards, we create a stronger company that more easily attracts public investment. It is too easy for detractors to point to examples of inefficiency as a reason to not invest in the future of Amtrak and we need to take away that argument every day. By virtually eliminating operating losses prior to the pandemic, we have been able to use federal dollars for record amounts of capital investments in new rolling stock and critical improvements instead of operating losses, as we had to in the past.
Amtrak’s goal isn’t to declare dividends, but to expand service to the millions of Americans who are underserved today across our nation. There are many communities that have no Amtrak service at all, including major cities like Phoenix, Columbus and Nashville. This is just plain wrong. These cities and their residents produce substantial tax revenues for the federal government, but they get none of that back in the form of Amtrak service, despite having the population and other conditions to warrant it. Our plan to expand the system is not a substitute for long-distance service, but a desire for our national network to become more viable and more meaningful to the whole nation.
“We need additional
federal funding to cover
the massive revenue losses
that Amtrak and our
state partners are experiencing
due to COVID-19”
We recognize the critical role that long-distance routes already play in communities across America. These trains provide essential transportation and contribute to both economic opportunity and quality of life in places that have long ago been abandoned by the airlines and bus carriers. By creating corridors around the nation that are interconnected by current long-distance routes, we can enhance the viability of long-distance service and make the national network more essential, not less. It is important that we all work together to make sure this happens. We can’t let protectors of rural services provided by our long-distance network be indifferent to the many cities we fail to serve today. And, our Northeast Corridor can only achieve the stable investment levels it needs if leaders from that region find a way to replicate its success in other growing corridors in the nation.
We need all stakeholders to both protect our existing routes and provide the capital for expansion. We need additional federal funding to cover the massive revenue losses that Amtrak and our state partners are experiencing due to COVID-19. We need investment in stations, infrastructure and a modern fleet to replace equipment that Amtrak received when I was in high school. These are Amtrak’s priorities in the years to come. Our hope is that government stakeholders, our host railroads and the public can share these commitments, and we can see a new era of passenger rail unfold in the United States.