ON MARCH 20 the Amtrak Reform Council released a scathing report accusing the National Railroad Passenger Corp of suffering from ’fundamental institutional flaws’. The document noted that Amtrak, set up in 1971, could not function both as a profit-driven organisation and as an arm of public policy. It called for the corporation to be split into an operating business and a federally-owned infrastructure company that would take possession of stations and infrastructure, including the Northeast Corridor. Overseeing the two would be a new government agency combining the passenger rail supervisory functions of existing organisations, including the Federal Railroad Administration, the Department of Transportation, and the Office of Management & Budget.
Set up in November 1997 under the Amtrak Reform & Accountability Act just before Amtrak collapsed in bankruptcy, the 11-member Reform Council was charged with continuous scrutiny of Amtrak, and with recommending ways to improve operations. Should all else fail, it would oversee Amtrak’s demise. In the meantime, Amtrak has received billions of dollars for capital and operating expenses in exchange for the promise of self-sufficiency. Alas, this looks impossible.
Despite renewed attempts to emulate the private sector, Amtrak is still far from the goal of reaching financial independence by 2003. Even if it should succeed in becoming self-sufficient in terms of operating costs, Amtrak says it will continue to need capital grants for new rolling stock and other equipment, as well as for the launch of services on proposed high speed corridors scattered across the USA.
The Council agrees with this, and its report suggests that Congress provide a ’stable and adequate source of federal funding’ for future capital needs and, separately, for the proposed Northeast Corridor authority. Among possible sources of cash were straight appropriations from the public purse, bonds, or a supplementary 1% petrol tax that could be matched by states wanting more passenger trains.
Amtrak President George Warrington, who received an advance copy of the report, lost no time in blasting the scheme. On March 16 he fired off a sharply worded letter to Council Chairman Gil Carmichael, claiming that the oversight agency would only create ’a new federal bureaucracy’. ’The ARC proposal clearly moves away from the statutory mandate to make Amtrak more businesslike and less reliant on the government’, he wrote.
Warrington pointed to record increases in revenue and ridership in recent years, but Amtrak’s financial picture is not encouraging. In the last fiscal year its operating shortfall exceeded $940m, and even if $350m is deducted for depreciation, the cash loss was $120m more than anticipated, despite increased revenue from mail and express freight. While Boston - Washington Metroliner services turned in a profit, all other trains were loss-making, with an average loss per ticket sold of $16·38. There are hopes that Acela Express services in the NEC will help profitability, but the extra income they generate will not suffice to bring about the turnround that is needed. Once again, inter-city and long-distance passenger rail in the USA is under threat.
