Passenger Rail Outlook: Building Back

RAILWAY AGE, JANUARY 2021 ISSUE: First, getting through the pandemic—then, building a new normal. Amid uncertainty, there is cautious optimism for passenger rail in 2021. That was the general consensus of industry experts Railway Age interviewed in December.

President-elect Joe Biden said he was “heartened” by the compromise in Congress, noting it was “a first step and down payment on more action that we’ll need to take early in the new year to revive the economy and contain the pandemic.”

Addressing the dire financial needs of transit agencies and helping to keep their systems running is what this round of funding will attempt to do. New York MTA, for instance, will receive $4 billion, allowing it to avert drastic service cuts of up to 50% and layoffs of some 9,400 in 2021. It still faces deficits in subsequent years.

The $25 billion of appropriated CARES Act funds for public transportation can only go so far. As of Dec. 3, 2020, public transit agencies had obligated 94% of those funds through 763 grants totaling nearly $23.5 billion; 59% of these funds had been fully expended, according to the Federal Transit Administration.

“This $14 billion of desperately needed emergency transit funding is vital to the industry’s survival and is a much-needed immediate step in bolstering an industry ravaged by the coronavirus pandemic,” American Public Transportation Association (APTA) President and CEO Paul P. Skoutelas said in a statement as Congress worked to pass the omnibus bill. “APTA and the public transportation industry will continue to advocate for additional emergency funding in the new year, with at least $32 billion needed to serve essential workers and help our communities recover.”

But even that figure may fall short in saving service and jobs. “That’s simply because we can’t hazard a guess right now as to when we’ll hit the final apex of the pandemic,” says KellyAnne Gallagher, Executive Director of the Commuter Rail Coalition (CRC). “We simply don’t know when everyone will be vaccinated, or what vaccination levels in the country are going to restore rider and employer confidence. We just don’t know what that tipping point is.”

And while the new relief package funding is important, adds Nicole Brewin, Vice President of Government and Public Affairs for the Railway Supply Institute, just continuing to provide the “bare minimum,” means that at some point, agencies “are not going to be able to invest in their maintenance, their capex. This should be the time that they’re taking advantage of ‘building back better.’”

Where Transit Stands

Managing the pandemic’s impact will remain a top priority for transit agencies in 2021. “The magnitude of this is second to none,” says AECOM Executive Vice President and Americas Transit Leader Tom Prendergast, who spent more than 25 years at New York MTA, including as Chairman and CEO. “There is unsureness. Ridership is starting to come back albeit slowly, but the revenues that an agency could depend on in terms of ridership are not there, the subsidies to support the operating budget in terms of revenues from real estate or sales taxes are nowhere near what they were before the pandemic.” This is due, in large part, to states’ targeted shutdowns. And then there are the added costs of cleaning and sanitization and other safety measures to protect employees and customers, Prendergast says.

As the pandemic continues, he says, transit leaders must continue to focus on:

• Safe, reliable service. “We have to make sure we protect employees and customers, and find ways to ensure the reliability of the services we provide are very, very high.”

• Funding streams. “Find those immediate funding resources to keep the systems running through the crisis stage—money you need to survive today without massive reductions in services and people,” he says. “And at the same time, work expeditiously to find new, longer-term funding sources as you go forward that help sustain these systems”—not only for continued operations, but also to provide for state of good repair and expansion. “You will see congestion pricing, real estate development, third-party finance,” says Prendergast.

Taking care of transit systems’ “most important asset” is also critical. “I’m talking about the rank and file who operate trains, maintain the equipment, do the maintenance on the infrastructure,” Prendergast says. “It’s essential that we provide them with opportunities, especially as the nature of the workforce changes with new technology” and service levels.

Will Ridership Return?

Prendergast predicts that it will be “well into calendar year 2021 before appreciable improvements occur on the ridership side.” At the start of the pandemic, ridership for many systems was down to 10%. “Now, it’s probably closer to 20%-30% [for some systems], so there is still a long ways to go,” he says.

In New York, for instance, subways are carrying about 1.8 million riders per day—about 30% of pre-pandemic volumes. Los Angeles County Metropolitan Transportation Authority reports that ridership is about 50% of its pre-pandemic levels with remaining transit riders predominantly essential workers; and that vehicle traffic is returning faster than transit ridership, with travel patterns changing and many regions seeing increased car purchases.

“The big question out there is the pace and rate at which people will come back,” says Tom Waldron, Senior Vice President and Global Transit Market Sector Director at HDR. “[Transit agency leaders] are watching the numbers—not only on ridership, but also what’s going on in their community, in terms of COVID-19 spikes, in terms of people out of work, in terms of real estate moves for residential and commercial. They are taking this entire sphere of information to formulate ideas on how they are going to operate service effectively and provide mobility to the people who need it, in an affordable manner.”

CRC members, like others in the industry, are gathering data to prepare for change using their apps to survey pre-pandemic riders about system safety and their plans to return to the rails when offices reopen; talking with subject matter experts like the National Association of Realtors, who can interpret migration patterns, including potential new ridership bases; talking with regional employers on reopening plans, in terms of timing and format; and researching changes in corporate leasing, according to Gallagher. With that data, transit and passenger rail agencies can also plan further marketing campaigns that target rider needs—and build rider confidence. (See p. 34 for more CRC 2021 goals.)

COVID-19: An ‘Accelerator’

Staggered work hours and telecommuting, and how to spread the rush hour to accommodate them have been industry considerations for years, says Prendergast. “What’s happened with the pandemic, those things have been accelerated, because instead of it being a nicety or the right thing to do from a policy perspective, it’s the right thing to do in terms of a safety and social requirement,” he says.

There has also been a movement to provide more timely and detailed information to riders. “You can show people that if they move their departure time up by 15 minutes, they will have far less crowded stations and less crowded trains, for example,” says Prendergast. “People are saying, basically, ‘I need that information to make informed decisions.’ And agencies are stepping up.”

Waldron adds that TNCs (transportation network companies) such as Lyft and Uber have started to take a greater hold. Going forward, it will be about “how they factor into the transportation mosaic, providing first mile, last mile service,” for example, he says.

“There’s been a big push for blended service, as well, so there is not just one provider but several,” Waldron notes. “And making it seamless to a user, who wants to get from point A to point B in the least amount of time [and using one fare structure]. I’ve always maintained there are the three Cs: comfort, being safety and service quality; convenience, being service frequency and connectivity; and cost, the all-affordable bottom line. I think as the industry continues to strive to provide these, we will all be better off.”

Waldron estimates a “three-to-five-year leveling period before we get to a normal or a more predictable, stable transit environment. There’s a lot to shake out from COVID-19, and that will take time—shifting modal demand, shifting residential and commercial real estate markets, politics, agency finances and funding, changing work/life balance perceptions—the list goes on.”

Moving Forward

Throughout his campaign and the transition, President-elect Biden emphasized climate change and investing to rebuild “America’s crumbling infrastructure—from roads and bridges to green spaces and water systems to electricity grids and universal broadband”—and to provide “every American city with 100,000 or more residents with high-quality, zero emissions public transportation options through flexible federal investments with strong labor protections that create good, union jobs and meet the needs of these cities—ranging from light rail networks to improving existing transit and bus lines to installing infrastructure for pedestrians and bicyclists.”

“They call the President-elect Amtrak Joe for a reason,” says APTA Vice President-Policy and Mobility Art Guzzetti. “He has always been a fan of passenger rail, partly because of his own experience, but based on that experience, he sees its importance, the connectivity it provides, the importance of connecting cities. Beyond that, it’s an economic strategy, it’s an environmental strategy; all of those things are important to him as he takes office, so the picture looks good.”

A comprehensive infrastructure bill may be among the first things out of the gate when the new Congress convenes. How would it be structured? “Reauthorizing the FAST Act could be [the basis for an] infrastructure bill, but other people would say, ‘Oh no, infrastructure means broadband, water,’” Guzzetti says. “But it could go either way. We will have to see what gets combined. Some people talk about there being energy efficiency legislation. Might there be elements of that in an infrastructure bill? Might there be an initial economic stimulator and job bill? In the end, will that be the same? It depends on how they shape it. All are in play, so there’s reason for optimism. Some combination is going to work.”

Included in it could be a bigger investment in Amtrak and commuter rail and money dedicated for the development of high speed, according to John Cline, an independent consultant/lobbyist and CRC Government Affairs Director. 

The CRC is optimistic about the new Administration. “Longer term, I’m heartened by the Biden Administration’s vision and the President-elect’s choice of [former Presidential candidate and South Bend, Ind., Mayor] Pete Buttigieg as his Transportation Secretary, which prompted a closer look at his own campaign’s $1 trillion infrastructure plan,” Gallagher says. “If President-elect Biden were to have the advantage of both the House and the Senate aligned with a Democratic Party majority, he has got a much better chance of making big transformational change. There are a lot of priorities that need to be dealt with to recover from the pandemic, but building infrastructure puts people to work, and spending on infrastructure has returns on those dollars, and spending on transportation specifically has returns.”

Another ray of hope: “The fact that transit and Amtrak survived a very contentious relief bill negotiation signals a recognition in Congress that these two beneficiaries are vital to the U.S. economic and social recovery, and the overall U.S. mobility infrastructure, and bodes well for robust federal funding, be it in the new transportation bill or a separate infrastructure measure,” says Waldron.

“They’ve got a big task on their hands in terms of what they’re going to be able to accomplish in first 100 days around infrastructure,” adds Brewin, who notes that RSI is interested in working with the Biden Administration on its Buy America plan.

The priority now: “We have to live to fight another day,” says Guzzetti. “And the crisis is such that we run the risk of really backsliding unless we can continue operations. You’re already starting to see this now—transit systems and passenger rail cutting back. And how are you going to hire those engineers back that you’re going to need in another two months? How are you going to hire those operators who we’ve been in a struggle to find in recent years? We think it’s critical to get the relief we need to continue to serve our communities short-term, and then tackle longer-term issues.”

Consultant, former FRA Deputy Administrator and Railway Age Contributing Editor Don Itzkoff agrees. “To avoid erosion of the nation’s public transportation service core and its supply chain, policymakers must continue to address ongoing transit and passenger rail deficits,” he says. “Then, more opportunities for the rail and public transportation investments that fit so well with economic recovery and climate goals can be advanced.”

Opportunities Ahead

“There are a lot of suppliers, consultants and contractors out there making some really hard choices right now about where they see business in the next fiscal year,” says Waldron. “We are very optimistic, and I think it’s founded in reality, that there will be movement on the infrastructure front and the projects we already have on the books will proceed. There is going to be some retooling, readjustments and reprioritization, but overall, it’s an optimistic outlook.”

Prendergast shares that view. “We’ll see a continuation of programs that are already under way,” he says. “And state of good repair is going to continue if not increase.”

As for expansion, Prendergast and Waldron say it may be limited for a while.

“We need to get to a place of stability before we can look ahead to capital expansion, and the like,” Waldron says. “We need to know where we’re wanted and needed, and that’s going to take time. But there are geographies that are forward-looking like Austin, Tex.; the San Francisco Bay Area; Los Angeles; Seattle; Broward County, Fla.; Atlanta; and the New York metro area, to name just a few.”

How will agencies come out stronger? “Do all of the things we can to give the customer a better ride,” says Guzzetti, “and make sure everything we do is through a lens of social equity.”