Hotline #627

Hotline #627
October 30, 2009

The Pew Charitable Trusts issued a “cheap-shot” report October 27 highlighting claims that Amtrak understates costs per passenger.  The Pew document, part of their Subsidyscope project, is short on explanations, but predictably generated a huge amount of bad publicity for Amtrak, epitomized by the New York Post’s screaming headline: “Amtrak’s a wreck on rails; Loses $32/passenger…41 of 44 nationwide routes lose money.” 

NARP and others have often stated that the best metrics for intercity service are “subsidy per passenger-mile” or “revenue-to-cost ratio” (percent of costs covered by the farebox).  Pew has passenger-mile figures in its table but not in its news release, and does not mention the ratio.  We also have pointed out that Amtrak’s routes work together as a network, both on the cost side due to sharing of common facilities and on the revenue side due to passengers connecting between or among multiple trains.  Thus, in the event a route is discontinued, the operating grant requirement would not go down anywhere nearly as much as a superficial reading of Pew’s tables implies.

But the truly bizarre aspect of Pew’s work is its handling of “depreciation and other overhead costs,” which it says constitute “an additional $697 million in net losses” that averages out to $24.29 per passenger or 75% of Pew’s claimed $32.31 systemwide average loss per passenger!  Without ascertaining the makeup of these costs—including, for example, how much is attributed to Northeast Corridor infrastructure—Pew allocated these costs to every route according to number of riders. 

Thus, the Cascades in the Pacific Northwest are assessed a portion of the interest on debt used to mortgage New York’s Penn Station.  Yet, since that debt was incurred to meet payroll and not to improve Penn Station, one should ask whether this interest expense should be allocated to any route.  It would also be interesting to know whether Pew (or Amtrak) allocates any depreciation or interest expense to Amtrak’s “profitable” contract work.

Amtrak responded to Pew in part by complaining that the leaseback deals Amtrak has done on most of its rolling stock (again, to meet payroll) means that the equipment and the related trains are being charged for depreciation as if nearly brand new when much of it is at least 15 years old.

In fact, Amtrak has not allocated depreciation and overhead costs because of the confusion it created.  Interest has also been a source of disagreement.  Importantly, however, in accord with the 2008 reauthorization law, Amtrak is working with the U.S. DOT’s Volpe Transportation Center on a better method for allocating costs, which likely will replace “interest and depreciation” with a synthetic capital charge calculated for all Amtrak business lines—including real estate and commuter.

One last word about depreciation: it is a non-cash expense whose assessment has no logic if no effort is being made to replace rolling stock.  Fortunately, or perhaps unfortunately, passenger cars last longer than cars, buses or planes.  Witness Amtrak’s single-level dining cars, the youngest of which is over 50.


The Southern California Regional Rail Authority (SCRRA) announced October 28 that it has signed a memorandum of understanding with Amtrak to provide crews for all seven of Metrolink’s Los Angeles commuter train lines.  A contract has not been finalized, but discussions involve a four-year agreement with an option for extensions, set to begin July 1, 2010. 

The board-directed change followed Connex Railroad’s decision not to renew their contract with the SCRRA after one of their crews was involved in the Chatsworth train crash from last August.  Connex has received criticism for lax oversight in the past, and when one of their engineers was found to have been texting on his cell phone moments before the deadly crash, they immediately became a center of harsh attention from officials and the media.

Amtrak crews operated Metrolink trains from the service’s 1992 inception until Connex took over in 2004.


Amtrak today wrote to Virginia Railway Express (VRE) challenging VRE’s notice of intent to contract with French-owned Keolis Rail Services to replace Amtrak as operator of the trains.

In a statement today, Amtrak referred to “potential improper scoring of proposals and such other bases as may not be known until we gain access to the relevant records previously requested.  The VRE request for proposal was to be scored 80 percent on performance/experience, but the foreign-owned Keolis has no experience operating a railroad in the U.S. or under this country’s strict rail safety and security regulations that are designed to protect the traveling public and the employees operating the trains.” 

Amtrak asked that its challenge be considered before final action is taken by the Northern Virginia Transportation Commission and the Potomac and Rappahannock Transportation Commission.”  That action had been expected November 5.

VRE has not issued a response at the time of publishing.


The battle to require Amtrak to accept guns as checked baggage continues to heat up, eliciting passionate responses from both sides of the debate.

Senator Roger Wicker (R-MS)—the lawmaker who originally included the provision as an amendment to the Senate transportation appropriations bill—has been called out by Rep. Bennie Thomas (D-MS) who said the stipulation “adds another layer of vulnerability we can do without.”

While a number of key Democrats have spoken out against it, centrist members of the party appear unwilling to come out in opposition of what many of their vocal constituents view as a civil liberties issue.  If the provision makes it through the conference process, Amtrak would be required to meet the March deadline for allowing guns or lose all federal funding. 

“For us, it’s not about Second Amendment rights,” Amtrak spokesman Steven Kulm told the Clarion Ledger. “Our issue is that Congress wants us to do it by a date certain, which we don’t think we can meet. ... We want to do it properly.”

Rep. John Fleming (R-LA) added another element to the debate when he introduced the Amtrak Secure Transportation of Firearms Act of 2009 earlier in the month, which would make the gun-requirement permanent (Wicker’s amendment applies to FY2010).  The bill has not been scheduled for floor debate.

NARP has been consistent in saying that Congress must initiate a study to assess the impact and costs a requirement to carry guns would have on Amtrak, and that any bill that threatens train service which is so economically vital to so many regions of the country is unacceptable.

Acela riders will be able to log on to the internet starting next year when Amtrak introduces free Wi-Fi on the high speed trains.

“We must think big, be innovative and pursue opportunities and decisions that make good business sense because the competition is real,” Amtrak Chief Executive Officer Joseph Boardman wrote in a statement.

While a step forward, Amtrak is coming to Wi-Fi relatively late; airlines and boutique bus companies operating on the Washington, DC-New York City-Boston already offer internet access to passengers.

Amtrak has not yet announced what kind of Wi-Fi roll-out they are considering for routes other than the Acela, or whether it will remain free of charge (airlines charge passengers for access, while most intercity bus companies that have Wi-Fi offer it free-of-charge)


The advancement of the Philadelphia Phillies and New York Yankees to the World Series has led many to dub the contest the “Amtrak Series.”  Amtrak announced that Yankees and Phillies players will travel between the two cities by chartered trains. 

The last time these two teams met in the World Series in 1950, passenger trains were the dominant mode of travel in the region, and the ballplayers regularly used trains to travel back and forth for the games.  The Phillies paid homage to this storied connection between America’s pastime and trains by holding a rally at 30th Station on the afternoon of October 26th, to send the team off for game 1 in New York City (which Philadelphia won).

Amtrak has gotten into the spirit of the games, sponsoring a promotion that polled Acela Express passengers as to which team would win, with participants receiving t-shirts for the team they chose.

A long series (it is currently tied 1-1) would be good for Amtrak’s business on the already in-demand corridors.  Amtrak reports that during fiscal year 2009, New York was their busiest train station with more than 7.8 million passengers boarding or offloading at Penn Station, while Philadelphia’s 30th Street Station ranked third with 3.7 million passengers.

In an October 27 release, Amtrak said it operated 32 sports charters during fiscal 2009 (which ended September 30), including six for Major League Baseball teams.


In other train/sports news, the organizers of the 2011 Super Bowl are nearing an agreement with Union Pacific Railroad to run passenger trains on their tracks between Dallas/Fort Worth and Cowboys Stadium in Arlington, TX. 

“We are excited about this opportunity,” said UP’s director of public affairs Clint Schelbitzki. “The Super Bowl is such a huge event for this region. There are a few outstanding issues that we are going to have to work through, but we are very hopeful that we will be able to do so.”

Michael Morris, transportation director for the North Central Texas Council of Governments and acting lead for transportation logistics for the 2011 Super Bowl remained cautious, citing the continuing negotiations.

“Until we have a signed agreement on something as important as this, I don’t think we can talk about it,” Morris told the Dallas News.

The news would be a boon to fans; Arlington is the largest city in the U.S. to not have a mass transit system, and their have been complaints from Texans about the inaccessibility of the Cowboys’ new stadium.