Amtrak Fighting to Survive
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TOM BEARDEN: Amtrak, America’s national rail passenger provider, is fighting for survival again. It had three major derailments around the country this year. The new high-speed trains that were supposed to take Amtrak out of the red haven’t met revenue expectations and have major mechanical difficulties. And its long-distance trains that have connected major cities for more than 30 years continue to lose millions of dollars.
SPOKESMAN: In the 610 car, the first car, right there where that gentlemen is.
TOM BEARDEN: It’s so bad, that Amtrak wouldn’t even have met the payroll this summer, if it hadn’t been for a $200 million emergency loan from Congress. ( Gavel pounds )
SPOKESMAN: May we have order?
TOM BEARDEN: And now, teetering on the edge of disaster, Amtrak is embroiled in a funding battle on Capitol Hill. The agency has been sitting on the sidelines watching the House and Senate debate its future, perhaps even its existence.
SPOKESMAN: This will be final call.
TOM BEARDEN: Five years ago, Congress told Amtrak it had to be operationally self sufficient by 2002. That led management to focus on a revenue-generating plan that included starting a mail and express service, expanding Amtrak’s route system, and cutting costs wherever possible. That plan ultimately failed. Current president David Gunn says that left Amtrak in worse shape than anyone previously believed.
DAVID GUNN, President & CEO, Amtrak: Physically, we have some enormous problems. Well, the company was on this Congressionally mandated glide path for self sufficiency, which means it was supposed to produce a profit, which was a fantasy. To try to keep afloat, they deferred maintenance and they shut down all of our heavy overhaul facilities for our equipment; and also deferred a lot of heavy repair work on the northeast corridor, which is the one piece of railroad we actually own.
SPOKESMAN: The Acela Express.
TOM BEARDEN: Earlier management hung its hopes for self- sufficiency on new, high-speed service in the northeast rail corridor. It’s called Acela. The sleek, 165 mile-an-hour trains were supposed to lure people off the air shuttles, and the pricey tickets were to provide Amtrak with a steady new revenue stream. (Classical music playing) Amtrak spent millions on a dramatic facelift for rundown Penn Station in New York, a special Acela waiting area, and new escalators, among other things. But it took Bombardier, the Canadian manufacturer of the trains, a year longer than scheduled to deliver working equipment. The trains finally went into service in December of 2000. Eventually, when all 18 train sets were running, ridership increased, especially after 9/11. After a slight drop-off early this year, ridership continued to increase, but not at the rate Amtrak originally projected. Tom Till is the former executive director of the Amtrak Reform Council, the Congressional oversight committee that monitored Amtrak over the last five years.
TOM TILL, Former Executive Director, Amtrak Reform Council: Acela Express has been a marketing success in a lot of respects, but it hasn’t generated even one-third the amount of surplus cash that Amtrak was counting on.
TOM BEARDEN: The Senate let the self-sufficiency deadline expire without taking any action; Amtrak was allowed to continue operating. But in August, the situation got worse. Amtrak was forced to pull all the Acela trains out of service. A critical part, called the yaw damper, which controls the side- to-side motion of the locomotive, was cracking. Amtrak’s Gunn demonstrated the problem for us at Union Station, in Washington.
DAVID GUNN: The worst failure was the cracks right along there, literally through. The cracks that we’ve been picking up lately are hairline cracks from these weld holes. Also, this is the frame of the locomotive, that’s what it’s welded to, and we have had cracks migrate into the frame. And that actually is the most serious problem.
TOM BEARDEN: Florida Republican Congressman John Mica is a member of the house transportation committee.
REP. JOHN MICA: The Acela experience has been a disaster, lead by Amtrak. They put a tank on top of a Ferrari chassy, didn’t engineer even the catenary right, it’s going just a few miles faster than the previous metroliner service. It’s a disaster.
TOM BEARDEN: It has taken more than a month to get most of the Acela equipment back in service. Gunn is now asking Congress for $1.2 billion just to stay afloat in the next fiscal year. And the current Senate appeared to be sympathetic to Amtrak’s needs. Both the Senate Commerce Committee and the Senate Appropriations Committee overwhelmingly voted to give Amtrak almost everything it asked for. In fact, some Senators want to see Amtrak’s nationwide system grow. Texas Republican Senator Kay Bailey-Hutchinson wants to expand service in her state.
SEN. KAY BAILEY HUTCHISON: In Texas, we’re talking about a long-term plan of high-speed rail between Dallas and Houston, and Houston to San Antonio. That could be a very successful route. If you had an Amtrak system, that would be very helpful to it, and it would also be helpful to a successful Amtrak.
TOM BEARDEN: South Carolina Democratic Senator Ernest Hollings, who was also is the outgoing chair of the commerce committee, says it’s time to put some serious money into passenger rail.
SEN. ERNEST HOLLINGS: All of these so-called “reforms” to cure all the ailments of Amtrak, we got to cure the Congress. And what happens is, we never have made a long-term commitment for passenger rail service that’s going to cost taxpayer money. And it’s been limping along over the last 30 years, $500 million a year. And each year, they find out they need a billion, but they give them half of what they need.
TOM BEARDEN: Hollings believes Amtrak should get the same kind of subsidy that Congress gives to highways and airlines, a trust fund so Amtrak doesn’t have to fight for its funding every year on Capitol Hill.
SEN. ERNEST HOLLINGS: In the fiscal year 2002, we’ve committed $30 billion to the airlines. It was a $15 billion bailout and another $15 billion to the Airways and Airport Improvement act, and they just passed the bill over on the House side and then some four to five billion more. Whoopee for the airlines, whoopee for the highways, but not for the rails. They’re beginning now to understand we’re going to have to make a commitment for rail service in a similar fashion, otherwise were going to have to pave over the whole country.
TOM BEARDEN: In contrast, in the Republican controlled House there is considerable opposition to increasing Amtrak’s subsidy. In fact, the House Appropriations Committee voted last month to only give Amtrak $762 million, a half billion under what Gunn had requested. Republican Hal Rogers of Kentucky is the chairman of the House Subcommittee on Rail Appropriations. He wants to see a total overhaul of Amtrak.
REP. HAL ROGERS: The current year spending is $521 million that we provided. So in our bill for next year, we’re giving a huge increase, over $200 million. They’re asking for a billion, too, but we don’t think they need.
TOM BEARDEN: Is fundamental reform needed for Amtrak?
REP. HAL ROGERS: Absolutely. And that’s what really we’re after, more than anything else. And in our bill that we passed through the house subcommittee and the house committee, we do some reforms.
TOM BEARDEN: Rogers wants the Secretary of Transportation to oversee Amtrak’s appropriations. In the past, Amtrak didn’t need the secretary’s approval. He wants the money handed out quarterly, so Amtrak couldn’t spend it all at once. And Rogers wants to eliminate any long-distance train that is losing more than $150 per passenger; that would include a train called the “Kentucky Cardinal,” which runs through Rogers’ district. It loses almost $212 per passenger.
REP. HAL ROGERS: No one rides it. I mean, it runs from Louisville to Chicago, and the reason people don’t ride it, that’s A… it takes 12 hours to go from Louisville to Chicago on the “Kentucky Cardinal.” 12 hours. Well, you can drive it in half that, at least, and you can fly it in one for $69 round trip.
TOM BEARDEN: But Gunn says there is a clear need for long-haul trains.
DAVID GUNN: It provides a real local service. I mean, it’s… there are actually human beings who depend upon that train to move out of some of these small towns in northern… in the northern states there, North Dakota and Montana. The reality of the situation is, that if you were to tear… try to tear apart the national network and remove the Empire Builder and the Zephyr, one, you’re not going to save Amtrak, I mean, it won’t… the amount of money is diminimous. Secondly, it will create a political battle which will consume all attention, so far as Amtrak goes, and you’ll end up probably without any agreement on the proper role of rail passenger service in this country.
TOM BEARDEN: Gunn says Amtrak wouldn’t save any money eliminating the trains, because labor contracts require that laid-off workers must be paid for almost two years after the lines are cancelled. Congressman Mica and many members of the Amtrak Reform Council want to go beyond cutting unprofitable routes. They want privatization.
REP. JOHN MICA: I strongly believe that there should be a private component. We’ve always seen that the private sector does things a little bit better and more cost effectively, but we need dramatic reform. What we need to do with Amtrak is separate out some of the functions. We need long-distance services, and I think we have to adjust some of the routes. A route that subsidized $350 just does not make sense. Some of the money-losing routes need to be eliminated.
TOM BEARDEN: Gunn says there is no way Amtrak can be broken up into a privatized system, and succeed.
DAVID GUNN: Only in the northeast corridor do we run the infrastructure and manage to maintain the infrastructure. And I’ll ask you, where is the best service? Where is the best on-time performance? Where is the most economical service? Where we run the whole bloody thing. No, people who suggest that have never run anything. They are the chattering classes out there, who have lots of ideas and no practical experience. It is wrong.
TOM BEARDEN: At the moment, Gunn says he and his staff are trying to get back to the basics of moving people by rail, and at the same time, trying to convince a newly-elected Congress that rail must be an integral part of a national transportation system.
DVID GUNN: There’s tremendous problems in this country with mobility. I mean, all you have to do drive in and around urban areas, or go to these urban airports, like Reagan or La Guardia, and it’s obvious that we are… the facilities are strained to the utmost. We have the capability of solving some of these problems: The railroads.
TOM BEARDEN: In the meantime, Amtrak’s funding request is languishing on Capitol Hill. Gunn now waits to see if the lame duck Congress can push through his funding request before they recess in December. If not, he’ll have to convince a new Republican-controlled Congress that Amtrak needs his entire budget request if it is to survive.