|ON THE RIGHT TRACK?|
October 27, 1999
Amtrak issued a report recently on its financial
health, which is tied directly to the prospects for a new high-speed
train. Tom Bearden reports on that train and what's at stake.
TOM BEARDEN: It will do better than 160, will shave an hour and a half off the Boston to New York run, and the future of Amtrak is riding on it. This is Acela, Amtrak's new high-speed train going through its paces at the Transportation Technology Test Center near Pueblo, Colorado. Built in Canada by the Bombardier Corporation, Acela -- the name stands for acceleration and excellence-- is scheduled to begin regular service between Boston and Washington via New York next year.
RENE MEUSER, Acela Engineer: We think it's the most technologically advanced train in the world. It's going to be the fastest train ever in North America. It will certainly be the safest train, we hope, as well.
TOM BEARDEN: Meuser says what makes ACELA unique is that it can use the same rails as ordinary commuter and freight trains. European and Japanese high speed trains use specially banked, dedicated roadbeds that enable them to run more than 200 miles an hour. Amtrak is using existing tracks, because the cost of new construction is prohibitive.
RENE MEUSER: The fact that we're using conventional rail means that we need to be able to compensate for curves that we would generally not see in Europe. The tilt technology enables the train to, well, basically tilt the cars in the curve, therefore compensating for that centrifugal force that's pushing your coffee towards the window and basically giving you a much smoother ride.
|A run-away train?|
AMTRAK CONDUCTOR: Kansas city, Albuquerque, Los Angeles and intermediate stops. Amtrak welcomes you all aboard.
TOM BEARDEN: The government got into the passenger rail business in 1971, when private railroads abandoned the service as unprofitable. Congress created the National Rail Passenger Corporation, Amtrak, and has spent some $20 billion keeping it going. Over time, Congress tired of the subsidies, and in 1997 directed Amtrak to become financially self-sufficient by 2003, or face reorganization, or liquidation. Acela is the cornerstone of Amtrak's plan to meet the deadline. The company will spend $2 billion on it. But the tests have not been without problems. Acela was supposed to debut in the northeast rail corridor at the end of this year. Problems with excessive wheel wear forced a delay until next spring. Congressman Bud Shuster heads the House Transportation Committee. He was dismayed by the postponement.
REP. BUD SHUSTER: We are shocked. We are shocked that these kinds of problems exist. So that they tell us they're going to work out on them -- I think from a technological point of view they can. Certainly the technology is there to do it. This is very, very troubling. But once we get that behind us, I believe the northeast corridor will work. If it doesn't work, Amtrak's a dead duck.
TOM BEARDEN: No question about it.
REP. BUD SHUSTER: No.
TOM BEARDEN: Amtrak's president, George Warrington, says not to worry.
GEORGE WARRINGTON: I can assure Congressman Shuster, Chairman Shuster, as well as all of the leadership in the Congress and the administration and our board of directors, and most importantly our customers that we have gotten it right, we will get it right, and we are going to have a truly outstanding and superior service that will be extraordinarily competitive come this spring.
TOM BEARDEN: Amtrak believes Acela will be extremely profitable because its higher speed will cut more than 90 minutes off the travel time from today's metro liners running between New York and Boston, and about a half an hour off the ride from Washington to New York. Acela will also offer better seats, conference tables, plug-ins for laptop computers, and new and improved cafe cars and better food. Amtrak believes all these amenities, coupled with the fact that the train terminals are in downtown locations, will lure business travelers away from the airline shuttles. About 4.8 million people fly the route today, compared to two million who take the train. An Acela ticket will cost about $150, or 30 percent less than the air shuttle. But despite all that, these Goldman Sachs investment bankers traveling from New York to Philadelphia, were skeptical about the new service.
|An uncertain business plan|
TOM BEARDEN: Will that make a difference to you if it comes to deciding between the train and the plane?
HADLEY FORD, Investment Banker: A half hour, it probably won't.
IVAN ROSS, Investment Banker: It probably won't make much of a difference.
TOM BEARDEN: Joe Vranich is a former Amtrak employee, now a member of the Amtrak Reform Council, a group of experts formed by Congress to monitor Amtrak's progress and recommend changes.
JOE VRANICH, Amtrak Reform Council: The Acela is a good train and it's good that we're getting better trains, but it is not a great train. Amtrak does not fund its projects properly. It spends money on the wrong things and in the wrong places. One upshot of that is the Acela, when it's running between Boston and New York in the year 2000, will be only 50 minutes faster than the Boston - New York trains were in 1956. So Amtrak has mismanaged the project. It's several years late. It doesn't meet the goals that lobbyists like me wanted when we argued for high speed rail.
TOM BEARDEN: The General Accounting Office's Phyllis Sheinberg is also skeptical.
PHYLLIS SCHEINBERG, General Accounting Office: We reported that last fiscal year Amtrak lost $930 million. This was the largest net loss that Amtrak has had in the last ten years. What we found was Amtrak would have to achieve five times the financial gains in the next four years, compared to what they have achieved in the last four years.
TOM BEARDEN: And you're very skeptical of that?
PHYLLIS SCHEINBERG: Well, we're not optimistic.
TOM BEARDEN: Warrington says Amtrak isn't relying on Acela alone to reverse its fortunes.
GEORGE WARRINGTON: We are a success story in the making, and by 2003 we will meet our targets. As a matter of fact, over the past two years-- we have a five year business plan, the first two years of which we recently concluded within the past week. And last year we were right on plan, and this year, as a matter of fact, we closed our books several days ago and we ended up $8 million ahead of plan. So I have absolute confidence that based upon our performance over the past two years, both operationally and financially, that we will make it.
TOM BEARDEN: The corporation now offers other business services, like a new express mail service that brought in $83 million last year. Warrington projects it will reach $100 million this year. Amtrak also will continue their partnership in the operation of commuter rail lines around the country, and claims to have reached new agreements with 80 percent of their unionized workforce to cut costs.
|A future on the rails?|
AMTRAK CONDUCTOR: On behalf of the crew and myself, welcome aboard the California Zephyr.
TOM BEARDEN: Amtrak needs revenue from Acela and other businesses if it is to offset the massive losses on their long distance trains, like the California Zephyr that runs between Chicago and Sacramento, California. On average, passengers pay about $190 one-way for a coach seat, $314 for a sleeper car. But critics say those prices don't even come close to covering Amtrak's costs. Vranich says some long distance passengers receive a federal subsidy of as much as $1,000 a trip, and says some of these trains ought to be discontinued.
JOE VRANICH: Amtrak is a huge, rolling pork barrel express. Let's call a spade a spade. You can't take a train off in this town because this mayor fights for it or that congressman fights for it. The sad thing about that is we don't get trains where we really need them because we're running trains for emotional reasons because no town wants to see its depot without a train anymore.
TOM BEARDEN: Vranich points out that half of Amtrak's total ridership comes on just four lines, in the Northeast and the West Coast.
AMTRAK CONDUCTOR: You'll be in the 610 car, the first car right there where that gentleman is.
TOM BEARDEN: But Amtrak says ridership across the nation grew about 4.5 percent in 1998, 2 percent this year. Rail advocates argue there is clearly a place for long- distance passenger service, particularly in an era when airlines are suffering persistent delays because of airport and air traffic control problems. Ross Capon is the executive director of the National Rail Passenger Association.
ROSS CAPON: I think that the demand for passenger rail is very strong. We've seen this year that the aviation system has collapsed in a way that I think no one was projecting a year ago, and I think the public, every time the air system collapsed, the public is getting more and more eager for passenger trains.
TOM BEARDEN: Rail fans say the nation would be poorer without long distance trains.
What would your reaction be if this kind of train were to be discontinued?
CLARK KYLE: I think it would be a shame. I don't think it's losing this type of transportation in this country would a mistake by any means.
JANEL HENNING: I think it would be a shame too for them to discontinue this. The trains been around for a long time. I mean, it's what built this country and I think it'd be bad to see them go.
ERIC ROTH: I think it would be unfortunate. I mean, this is... it's beautiful. It's very peaceful. And it's an opportunity everybody should take.
TOM BEARDEN: Senator Frank Lautenberg, a member of the Transportation Committee, believes passenger rail service clearly has a place in America, and that it deserves taxpayer support.
SEN. FRANK LAUTENBERG, (D) New Jersey: I think that the future for America must include Amtrak or some equivalent. We cannot continue to function as we are. There is no alternative, and we are the only country in the world that doesn't say, "hey, we really need this stuff." We have to have it. So, there's no choice, so we just have to continue investing, and the problem has been that we just haven't invested enough to date. That's where it lies.
JOE VRANICH: I've written in the past that the federal government should get out of this business, because the United States does not have a national airline. We do not have a national bus line. The evidence is now in that the national railroad passenger system cannot survive.
TOM BEARDEN: Meanwhile, Amtrak continues to test its new high-speed equipment. Its board of directors is so convinced that Acela will be a success, that they will ask Congress for $10 billion over the next ten years to begin bringing high-speed rail to areas beyond the northeast corridor, even as they try to beat Congress' deadline for eliminating the existing operating subsidy.