Travel by passenger train in North America, as in civilized countries around the globe, can serve as an essential part of our domestic transportation network. We are just now entering a new Golden Age of Rail Travel. Not for over half of a century have so many opportunities for good, reliable passenger train service been available.
As every mode of transportation has its strengths, so, too, does passenger rail. Passenger trains work well for long, medium, and short distances of travel, both on a national and regional basis. Cities and States across this great nation are starting to understand the limitations of our highway and airway systems, and to see the profound and proven economic, social, and environmental advantages of railways.
The United Rail Passenger Alliance is dedicated to the viability of a new Golden Age of Rail Travel.
In regards the 29 December story, "Don’t Add to Amtrak’s Boondoggles", Andrew Selden of the United Rail Passenger Alliance offers the following reply.
To: davidshipley@bloomberg.net <davidshipley@bloomberg.net>
Sent: Wednesday, December 29, 2021, 04:54:38 PM CST
Subject: Amtrak
Mr. Shipley--
I read with despair Bloomberg's editorial on Amtrak. Nearly every statement in it was factually false, or materially incomplete or distorted. You did your readers a severe disservice, propagating myths and falsehoods about intercity passenger rail service.
Here are the relevant facts; all but the market share data below are drawn from the Amtrak website, and readily available public sources such as the US DOT's Bureau of Transportation Statistics. The market share information is computed from Amtrak, AAA, DOT and other public sources.
Amtrak has three operating divisions, the NEC, the regional corridors sponsored by states, and the inter-regional trains.
Of these, the largest and by far the most commercially successful by all objective metrics is the inter-regional group. They have by a wide margin the greatest output of annual passenger miles (last year, half-again the output of the NEC), the highest load factors, three times the market share in their respective corridors of Amtrak's NEC trains, and the same number of intercity passengers as does the NEC. (Three quarters of Amtrak's NEC passengers are commuters, not intercity passengers.) In many if not most years, the regional corridors also outproduce the NEC, leaving the NEC as objectively the smallest division Amtrak operates.
In the Covid epidemic, only the inter-regional trains have recovered to their pre-pandemic levels of demand, despite Amtrak's best efforts to drive away those customers (that would be the subject of a separate discussion; get in touch if you'd like to pursue that). Amtrak's regional corridors, except in California, and particularly the NEC continue to suffer severely degraded use.
Your editorial ironically made self-contradictory (and false) statements about the financial performance of the three operating groups.
The NEC is emphatically NOT "profitable" in any rational sense of the word. Amtrak's CEO himself lamented last year that the NEC had, pre-Covid, "almost" recovered its direct operating costs in the NEC for the first time in FY'19. "Almost" is not the same as "more than." In fact, despite its political propaganda suggesting otherwise, Amtrak has NEVER recovered its direct operating costs in the NEC.
Worse, Amtrak's claims, like your editorial, fraudulently omit from the financial reckoning of the NEC all of the costs associated with the fixed facilities of the NEC. These costs total in a typical year more than $1.5 billion, and even that does not cover another $300-400 million in deferred maintenance and purchasing that occurs every year in the NEC.
The only source of revenue Amtrak has to cover the enormous fixed facility (infrastructure) costs in the NEC is its annual federal subsidy. 100% of the NEC's revenues are not enough to cover its direct operating costs; no revenues remain for infrastructure costs. All or nearly all of the annual subsidy therefore is spent propping up NEC infrastructure.
Your editorial blithely asserts that Amtrak has a $38 billion maintenance deficit in the NEC. That is a very large deficit for a purportedly "profitable" enterprise, yet it passes without comment. In fact, the upkeep deficit in the NEC is the sum of decades of annual cost deferrals totaling up to a half billion dollars a year. Even Amtrak can't spend cash it doesn't have.
Your editorial also claimed, without factual basis, that the inter-regional trains lose large sums of money. That claim is false. Several Amtrak CEOs have publicly stated otherwise. Some 35 years ago, W. Graham Claytor, Jr. publicly stated, unequivocally, "The long haul trains operate in the black." Later, David Gunn made a similar statement when he told congress in writing that without the full annual subsidy he had requested, Amtrak would have to immediately shut down not the inter-regional trains but the NEC. More recently, Wick Moorman told congress in writing that if all of the inter-regional trains were eliminated, Amtrak's annual loss and subsidy need would increase (not decrease) by $423 million in the first year. Shutting down a money-losing venture does not increase the enterprise's net loss.
Amtrak fraudulently asserts that the inter-regional trains lose large amounts based upon reports generated by its APT (Amtrak Performance Tracking) route accounting system. APT, however, does not conform to Generally Accepted Accounting Principles, and therefore is categorically incapable of--and does not--reflect the financial results of operations of any train or route in a given period of time. APT cannot and does not produce financial statements, and its results are not statements of profit or loss as those terms are properly understood. Amtrak's representations that they do are false and fraudulent. (APT uses management-determined algorithms to allocate and assign costs to numerous activities, but it largely omits capital and fixed facility costs; what it reports, therefore, is no more than what management thinks or would like costs to be, not what they are under GAAP.)
Because the inter-regional trains on an annual basis consistently operate near the limits of the artificially and intentionally-capped capacity they offer, turning away thousands of would-be passengers every year, they are the most under-capitalized trains in the Amtrak system. Because the NEC trains never sell more than about half of their annual inventory (they run statistically half-empty, according to Amtrak's published data), the NEC is plainly over-capitalized. Amtrak produces in the NEC twice the inventory that they are able to sell. (In the current epidemic, the empty seat miles are much higher). Squandering new capital on an operation that is already over-capitalized and consistently under-utilized (by half or more) is foolish beyond comprehension, and is understandable only as the fruit of political influence hat defies economic sense.
As a leading business publication, Bloomberg has displayed appalling ignorance and gullibility on the subject of Amtrak and its misuses of public capital resources. You owe your readers far better.
Cordially,
Andrew Selden, President
United Rail Passenger Alliance
Minneapolis
United Rail Passenger Alliance (URPA) respectfully submits this Statement to the Committee, for the record in the captioned hearing. URPA is an independent national research and education organization on rail passenger transportation issues.
Amtrak’s response to the Covid-19 epidemic has been schizophrenic. At the same time it undertook a campaign to clean its stations and trains and a masking requirement for employees and customers to reduce the risk of virus propagation, it has also prejudiced the mobility needs of the American public by withdrawing the majority of its train services in the only part of its business where Americans have returned to using trains in large numbers. It makes no sense for Amtrak to reduce operations in its largest, most productive and most commercially-successful business segment, the national system of inter-regional trains, just as demand for these services has rebounded much more strongly than demand anywhere else in the system.
URPA applauds Amtrak’s cleaning, masking and social distancing initiatives. But URPA condemns Amtrak’s abandonment of the demonstrated transport needs of the American public at a time of crisis brought about by the Covid-19 epidemic.
Amtrak has deceived the Congress in respect to the performance and prospects of its three operating divisions, the inter-regional trains, the state-sponsored intra-regional corridors, and the federally-subsidized Northeast Corridor (NEC).
Contrary to Amtrak’s misrepresentations, by all objective measures the inter-regional group of trains is Amtrak’s largest, most productive and most commercially-successful segment. These are also the trains to which Americans have turned during the Covid-19 epidemic.
The inter-regional group of trains (sometimes referred to as “long-distance” trains) is Amtrak’s largest business—it carries the most intercity passengers of any segment of Amtrak’s operation. NEC trains’ passengers consist predominantly (as much as 75%) of customers who are classified by the Department of Transportation as commuters, not intercity passengers; the intercity component of Amtrak’s NEC traffic is no more numerous than the intercity component of the inter-regional trains, and in some years, less. (In many years, the state-sponsored corridor trains also carry more intercity passengers than do Amtrak’s NEC trains, leaving the NEC—in terms of true intercity passengers—as Amtrak’s smallest division.)
The inter-regional trains are also Amtrak’s most productive. Inter-regional trains have the highest load factors in the entire system (50-60+%, in a sector where an annual load factor of 65% is a sold-out condition due to the large number of stations served and the regular turnover of passengers en route on each trip; on the western inter-regional trains, it is customary for each seat and berth to turn over on average 2 ½ times per trip). The annual load factor in the NEC by contrast rarely exceeds 50%, and south of Philadelphia and east of New Haven Amtrak’s NEC trains arithmetically cannot have annual load factors that exceed 28%--i.e., more than two-thirds of their proffered inventory goes unsold, a most unproductive use of scarce federal subsidy capital. In the traffic vacuum in the NEC during the Covid-19 epidemic, these NEC load factors are even lower.
The inter-regional trains also always produce 150-200% more transportation output annually than do the NEC or state-sponsored corridor trains. Output is measured in annual revenue passenger miles (not “ridership,” which merely measures transactions). This is the most important index of size and productivity of a passenger transportation network, and nothing else that Amtrak does comes even close to the inter-regional trains in producing annual passenger miles. This is doubly so in the Covid-19 epidemic. (The state-sponsored corridors produce about the same output each year as does the NEC.)
The interregional trains are also the most commercially successful trains that Amtrak operates, measured by their market share for intercity passenger transport. In their respective corridors, the inter-regional trains ordinarily generate market shares of 5 to 6%. In the NEC, Amtrak’s market share (not the air-rail end-point modal split that Amtrak sometimes publishes) for intercity passenger transport in the region rarely reaches as high as 1 1/2 %, and that has shrunk for decades. Unsubsidized intercity buses carry more passengers in the NEC than do Amtrak’s trains.
In the current Covid-19 epidemic, Amtrak’s transaction volume (“ridership”) and output (passenger miles) plummeted. But they did not do so uniformly across the system. Amtrak has tried to deceive the public and the federal government by emphasizing its system totals rather than breaking out the separate performance in the epidemic of its three operating divisions. The inter-regional trains initially fell far less than did the shorter corridor trains, and the NEC fell the furthest. At the same time that Acela demand dropped to zero, the inter-regional trains initially retained 15% of their demand, and then quickly rebounded, in some cases to near-normal levels.
As the system struggles to recover—as Americans regain their confidence to make intercity trips—the inter-regional trains have recovered far faster than the corridors, and especially the business travel-dependent NEC, which remains severely depressed. URPA research suggests that the western inter-regional trains, by sharp contrast, recovered to normal, pre-epidemic, traffic levels during the late Spring and Summer peak period.
This finding is corroborated by the fact that in the four months ending July 31, 2020, the inter-regional trains brought Amtrak more revenue, and more revenue passenger miles, than all of the other trains (including in the NEC) combined.
Based on these objective and relevant criteria, therefore, the inter-regional trains are, and remain during the epidemic, Amtrak’s largest, strongest, most successful, and most relevant group of trains. The inter-regional trains, in fact, appear to be the trains that serve the demonstrated demand of a clear majority of American travelers for rail transport during the Covid-19 epidemic, just as in more normal times. Yet these are the very trains that management chose to slash.
Against this background, Amtrak’s decision to use two billion in federal subsidy dollars to charge ahead with procurement, testing and deployment of costly new high-speed Avelia trains for the business market in the NEC—a market for which demand has dropped to and remained near zero—while eliminating even once-a-day services in its largest, most productive, and highest-demand segment, the inter-regional routes (except Auto Train), is bizarre, biased and irrational. Amtrak could not have more disserved the American public during the Covid-19 epidemic or more misused federal financial support than by reducing the frequencies of its inter-regional trains.
Amtrak’s coy hints that the interregional trains might be restored if only Congress appropriates massive new subsidies is exactly the same ploy, in almost exactly the same terminology, that Amtrak used in 2002 after the roll-out of the Acela program in the NEC exhausted the company’s cash and rendered it insolvent. Congress should not allow itself to be taken in again. Instead, Congress should insist that Amtrak use its existing resources first to sustain the trains that customers are actually using: the heavily-used national network of inter-regional trains.
Respectfully submitted,
United Rail Passenger Alliance
Minneapolis, Minnesota
Andrew C. Selden, President