Third in a Series: Is It Money, Or Ideology?

Written by David Peter Alan, Contributing Editor
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Beginning Oct. 1, Amtrak is reducing service on its entire long-distance (L-D) train network from daily to three departures per week, except for the two trains that already run only tri-weekly-only schedules, and the Auto Train.

Amtrak CEO William J. Flynn told Congress on May 25 that if it did not give the railroad a supplemental appropriation of $1.475 billion, on top of its $1.02 billion grant from the CARES Act, the Oct. 1. Service cuts would be implemented.

In our previous article in this series, we examined the economics of rail transportation and noted that cutting service costs more in the long run, as fixed costs do not go down, but revenue does because there are fewer riders. Amtrak learned that the hard way from the cuts suggested by Mercer Management Consulting in the mid-1990s. After about two years of reduced service, most of the L-D trains were restored to daily operation in 1997. In 2000, the late former Amtrak President George Warrington told a Congressional committee that the Mercer cuts of the 1990s aggravated Amtrak’s financial woes. There are managers who remember that experience, and they can still be found, including at Amtrak.

Recent numbers show that Amtrak’s historically three-day-a-week trains, the Sunset Limited and the Cardinal, are the worst performers by far, both financially and in terms of ridership. So Amtrak managers today should know that the threatened service reductions could aggravate the railroad’s financial woes, as well as cause a great deal of ill will among customers. So why would Amtrak want to slash service, when milder reductions in the past made things worse? It appears that Amtrak’s latest threat is ideological.

Throughout its history of nearly 50 years, Amtrak has never operated more than a skeletal network of L-D trains. The overall network is the essentially the same size now as it was in 1971.

For decades, advocates around the nation have repeatedly called for a larger national Amtrak network, with more than one daily frequency on each route, and some elected officials have joined that call. For at least 20 years, they have wondered how Amtrak would keep its national network going, with limited and now aging equipment. Some feared that Amtrak would eliminate the L-D trains someday, using the lack of equipment as a reason for doing so. Amtrak is citing drastic ridership declines resulting from the COVID-19 pandemic, but at the same time has announced plans to replace its aging locomotive and rolling stock fleet (new diesel-electric locomotives are on the way). However, it still appears that the advocates’ fears have been confirmed by Amtrak’s latest actions.

All Amtrak L-D trains are tenants on the national freight railroad network. Once a train is cut to three departures per week, it may be difficult get operating slots back, especially as freight traffic, which has been down more than 20% during the pandemic, begins to recover—even though Amtrak has statutory operating rights.

Do the people who run Amtrak want to get rid of the L-D trains by phasing them out? A recent announcement about conditional L-D service restoration, supported by answers to questions posed to Flynn and his deputy, Stephen Gardner, by Railway Age Editor-in-Chief William C. Vantuono during a Rail Group On Air podcast, seem to suggest otherwise. Yet, this writer, along with many other advocates, is highly skeptical.

Before Flynn arrived on the scene, former President Richard Anderson, Stephen Gardner and Board Chair Anthony Coscia had disparaged the L-D trains, calling them “experiential” and “tourist trains,” with the implication that they were not useful for a person who was merely attempting to go somewhere, for whatever reason. Thus, there is a divide between the Northeast Corridor (NEC) and the L-D trains within Amtrak and in the advocacy community. This is lamentable, and it can bring defeat in the struggle to preserve the national Amtrak network.

Other commentators have noticed management’s pattern of conduct, especially over the past several years. In a memo to private railcar owners, Private Cars, Charter Trains and Amtrak: A Backgrounder, prepared for the American Association of Private Railroad Car Owners, Ross B. Capon said: “The new 2018 policies appear to be part of an overall Amtrak plan to eliminate many operations and amenities in order to simplify operations—allowing staff and cost reductions, while sacrificing revenue sources, good will and public service. In addition to the private-car issues, Amtrak first class services were reduced, and some dining car services downgraded, and the Long-Distance Network in general came under attack.”  Capon had served as Executive Director of the National Association of Railroad Passengers (NARP, now the RPA, or Rail Passengers Association) for decades.

Some advocates outside the Northeast claim that the NEC is sucking up so much money that it impairs the reported financial performance of the L-D trains. Their argument may have merit, but few “outsiders” can penetrate Amtrak’s accounting sufficiently to determine that to a reasonable certainty. Maybe Congress or USDOT, including the FRA, could do something to address that.

Even if the L-D trains actually make a profit (“above the rails” at least), which some advocates contend is possible if different accounting methods are applied, there is no reason to believe that it would matter to the people who run Amtrak today.

If there is hostility toward those L-D trains at the top of Amtrak’s management pyramid, it is most likely based on ideology, and managers might consider a policy favoring a long-term objective of that sort to be worth the price of a short-term revenue loss. Even though Amtrak now claims that cutting back on L-D trains would save money, managers possess knowledge to the contrary. Their predecessors may not have known in 1994 that eliminating half or more of the service days for a train would drive riders away, but they know that now, in 2020. They knew it in 1997, too, because they restored most of the trains to daily operation.

Airlines and passenger railroads compete for travel dollars from specific segments of the riding public. Many travelers who take a trip from one city to another on an L-D train would not take that same trip on an airliner. A plane provides point-to-point service, while a train does not. A train makes intermediate stops, and ridership patterns are different. The two modes have different economic, marketing and operational constraints. Does Amtrak’s current top management recognize these fundamental differences?

There are some things that Amtrak managers should know, one that applies to trains and planes alike, and one that contradicts arguments about low ridership and saving money. Amtrak is currently offering discounts on fares on the premium-fare Acela trains on the NEC. As long as these trains are operating, it is better to get some revenue for a seat than none. This is because that the fixed cost of not running a train on a given day is the same as running an empty train.

Amtrak’s ridership numbers since the COVID-19 pandemic hit the nation bear this out. An informed source told this writer that Amtrak’s report of ridership and revenue for May 2020 demonstrated the economic viability of running trains long distances between end points. According to the report, L-D trains can accumulate larger passenger loads than shorter-distance trains, because they serve more city pairs, even with reduced demand. The report goes on to say that L-D routes retained 22% of year-over-year ridership—three times better than the 7% on short-distance state-supported services, and nearly eight times better than the 3% on the NEC. The report also said that, using passenger-miles per train-mile as a metric, L-D trains outperformed short-distance trains with average passenger loads 1.8 times greater than short-distance routes, and 1.6 times greater than the NEC. If the L-D trains are outperforming corridor trains at the moment, why has Amtrak started reducing frequency?

This suggests that Amtrak’s plan is ideologically based, rather than economically based, at least to the level of a prima facie case. In a litigation, that is the legal standard that a plaintiff must demonstrate the “burden of going forward.” It is now up to Amtrak to defend its decision to deprive the riding public of so much service, a decision that appears unjustifiable on the financial grounds that Amtrak claims.

Chicago-based advocate Fritz Plous provides some commentary: “An article in [the Wall Street Journal from June 16] predicts that business travel won’t take off soon because executives are rethinking the value of face-to-face meetings. The expense account business traveler is the lifeblood of Acela service, and I suspect a primary foundation of Northeast Regional service. Yet Amtrak plans to cut frequency on the NEC by only 30% vs. nearly 60% on federally funded interstate routes. Amtrak’s executives are giving the finger to the 85% of Americans who don’t live in or use the NEC. Perhaps it is time for the 84 Senators from the 42 states outside the NEC to give a wake up call to the 16 Senators from the 8 NEC states (Massachusetts, Rhode Island, Connecticut, New York, New Jersey, Pennsylvania, Delaware and Maryland) that they ain’t buying this deal. Essentially, these numbers–which are Amtrak’s own–directly contradict Amtrak’s decades-long claims that the NEC is the most heavily used part of its system and the one most worthy of saving when Amtrak’s budget is threatened.”

There is  another irony here: The environmental and social benefits of rail travel, compared to travel in a single-occupancy motor vehicle are well-known, but the only train that Amtrak will continue to offer every day is available to motorists only—the Auto Train, which makes no intermediate stops (except to change crews). The charge for a vehicle is part of the fare, with a separate fare for passengers arriving in that vehicle. The Auto Train’s passenger fare is lower than a comparable coach fare on train where non-motorists are welcome. So Amtrak will continue to offer a train for motorists every day, while non-motorists will only have the option of taking a train three days of the week.

There are a number of reasons why Americans might not use or have access to an automobile: age, a disability, not enough money to own a vehicle (which does not preclude being able to afford a train trip from time to time), or choice of the urban lifestyle that includes getting around the city on transit. Many of Amtrak’s riders whose trips originate in cities belong to the latter. Whatever Amtrak may claim as its motive for the drastic cuts, the result would discriminate against millions of Americans who either have little choice in transportation modes, or who are doing the best they can to reduce their personal carbon footprints.

Whatever its motive, Amtrak’s plan to subject non-motorists for a significant loss of mobility while preserving its current long-distance service level only for motorists is wrong and should not be tolerated.

David Peter Alan is Chair of the Lackawanna Coalition, an independent non-profit organization that advocates for better service on the Morris & Essex (M&E) and Montclair-Boonton rail lines operated by New Jersey Transit, and on connecting transportation. In New Jersey, Alan is a long-time member and/or board member of the NJ Transit Senior Citizens and Disabled Residents Transportation Advisory Committee and Essex County Transportation Advisory Board. Nationally, he belongs to the Rail Users’ Network (RUN). Admitted to the New Jersey and New York Bars in 1981, he is a member of the U.S. Supreme Court Bar and a Registered Patent Attorney specializing in intellectual property and business law. Alan holds a B.S. in Biology from Massachusetts Institute of Technology (1970); M.S. in Management Science (M.B.A.) from M.I.T. Sloan School of Management (1971); M.Phil. from Columbia University (1976); and a J.D. from Rutgers Law School (1981). The opinions expressed here are his own.

Categories: High Performance, Intercity, Passenger Tags: ,