May 22, 2003 Subcommittee on Transportation, Treasury and General Government

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Statement of

Ross B. Capon, Executive Director

National Association of Railroad Passengers

Submitted for the record to the

Subcommittee on Transportation, Treasury and General Government

Committee on Appropriations

U. S. Senate

The Honorable Richard C. Shelby, Chairman

Department of Transportation Fiscal Year 2004 Appropriations

May 22, 2003

The National Association of Railroad Passengers is a non-partisan organization funded by dues and contributions from approximately 16,000 individual members. We have worked since 1967 to support improvement and expansion of passenger rail, particularly intercity passenger rail.

We strongly support Amtrak's request for $1.812 billion in fiscal 2004. We recognize the constraints placed on your ability to find funding for all transportation needs while forced to operate in an environment dominated by guaranteed spending programs. Nevertheless, we believe the committee has an obligation to develop a policy that puts more balance in the nation's transportation system. Minor (or even major) reductions in Amtrak's route structure would not yield any meaningful savings for a couple of years but would drain energy -- at Amtrak, on Capitol Hill, and in the executive branch -- away from the productive efforts David Gunn has initiated to "reform" Amtrak from within.

One cannot overstate the importance of his efforts to get Amtrak to a "state of good repair" for the first time ever. This effort -- combined with capital improvements such as recent track work on the Chicago-St. Louis line and signal improvements on part of the Chicago-Detroit line -- could produce very impressive ridership, even before there are any results from the much-needed higher speed rail program that we expect the authorizing committees to approve outside the regular appropriations process.

We appreciate that the Bush Administration's request for $900 million is 73% higher than its $521 million request for FY03, but this would be a 14% cut from what Amtrak received in FY03, and is only half of what Amtrak says it needs in FY04. It has been said that $900 million nonetheless represents an increase over "average" funding levels of the past ten years – but Amtrak's delicate financial situation today is a direct result of inadequate funding through much of that period, and Amtrak's 2004 request of $1.812 billion is meant to start to make up for those past deficiencies. Looked at another way, $900 million is 40% below the inflation-adjusted average for 1982-1984.

More recently, between FY 1997 and 2002, Amtrak averaged $1.1 billion a year in federal funding, with much of that coming through the Taxpayer Relief Act of 1997 (TRA), which provided Amtrak with $2.2 billion outside of the appropriations process.

I. Public Wants More Travel Choices, Not Fewer

Although public support for passenger rail was well established before September 11, 2001, as reflected in polls discussed near the end of this statement, the 9/11 catastrophe focused and energized public interest in having more transportation choices, not fewer, and thus in retaining and improving our national passenger rail network.

Because of the combined impacts of the "airport hassle" factor and fear of flying, people who formerly flew to avoid four-hour ground trips now accept ground trips of about eight hours in order to avoid flying. Ironically, the majority of those trips are by car even though plane travel remains far safer than driving. Where good train service is offered in such markets, business is thriving even in the face of a weak travel and tourism industry. The public -- by its purchase of tickets -- has shown that it will ride conventional-speed services in large numbers in many markets. Such trains need not come anywhere near the speed of a TGV; they need only be reasonably fast and reasonably frequent to be attractive to many travelers. This is not to deny the importance of continuing to work towards world-class high speed rail, particularly in longer corridors.

During the first seven months of Fiscal 2003 (October-April), the following services posted travel increases in the face of extraordinary weakness in the travel and tourism markets. The percentages shown are increases in passenger-miles compared with the year-earlier period. (The passenger-mile -- one passenger carried one mile -- is the standard measure of intercity travel.)

[* Primarily the result of restructuring the train to run at "passenger-friendly" rather than "freight-friendly" times.]

Reflecting the relationship between an aging population and interest in alternatives to driving, the American Association of Retired Persons in its new "Public Policies 2003" states: "Congress should support nationwide passenger rail service that is integrated and coordinated with regional, state and local passenger rail [and should] establish a dependable funding mechanism that insures continuing passenger rail service."

II. Analyzing Route Financial Performance

DOT Inspector General Kenneth Mead, in February 27, 2002, testimony before a House appropriations subcommittee, called operating grants needed for long-distance trains (what we call national network trains) "chump change" compared with "the annual capital subsidy required to continue operating" Northeast Corridor trains. He said national network operating losses are only about 30% of NEC capital requirements.

We offer the following comments about measurements:

First, the passenger mile--one passenger traveling one mile--is the standard measure of intercity travel. Trip lengths vary widely and use of the passenger-mile reflects that. Thus, subsidy per passenger-mile is a more meaningful way to measure the relative efficiency of Amtrak's routes. To illustrate how results can differ, the FY01 data in the Amtrak Reform Council final report showed that the Southwest Chief had the fifth best operating ratio but the fifth worst subsidy per passenger. (Operating ratio -- costs divided by revenues -- is another good way to measure economic performance.)

Second, the absolute numbers that have been widely quoted, though they exclude depreciation, are based on fully allocated costs (including, for example, a share of the Amtrak CEO's expenses) and thus exceed savings that might be realized by discontinuing a specific route.

Third, the Sunset Limited in particular has been hampered by exceedingly poor on-time performance, much of which is related to heavy track work on a largely single-track railroad as Union Pacific has worked to eliminate deferred maintenance on former Southern Pacific lines. There is hope for improvement. Union Pacific Chairman and CEO Dick Davidson, Railway Age magazine's "Railroader of the Year," is quoted in their January issue saying, "We do want to be a good partner with Amtrak, and we're doing our best to get our railroad upgraded on the Amtrak routes and work with them to improve performance."

Finally, our Association strongly believes that the existing network is a skeletal foundation, from which the system should grow, and that all the routes that 'should' be discontinued -- and some that should not have been -- have already been discontinued. Thus, the only purpose for ranking routes would be to identify where special actions might be needed to improve performance, not to identify routes for discontinuance.

We question the relevance of the planning process used to restructure the Northeast rail freight network in the 1970's. That network was dense and arguably overbuilt, so that it was easy to take out many route miles without harming major markets. The Amtrak network by contrast is skeletal. The ability to take out individual routes without collapsing the system is limited because of the interrelationships among the routes in terms of shared revenues (connecting passengers) and shared costs (common facilities).

III. Examples of Improved Efficiency at "Gunn's Amtrak"

Gunn and his key people have impressive knowledge specific to railroading and to budget discipline, which appears to be paying off already.

One change visible to passengers is the now-consistent, dining-car requirement that sleeping-car passengers sign their names and room numbers. Meals are included in the sleeping-car charge, but not in coach fares.  Reinstitution of the signature process -- and  an audit (comparing dining car checks with passenger manifests) -- aims to determine more accurately food/beverage revenues and costs and to help eliminate abuse (e.g., coach passengers getting free meals).

Amtrak is fixing, scrapping or selling equipment that has been out of use, realizing that there is a cost to the indefinite storage of such equipment. Elderly, costly-to-maintain coaches have been kept in service (especially on the New York-Philadelphia "Clockers") while modern equipment that needed only minor repairs was sidelined; Amtrak is undertaking those minor repairs.

Amtrak is making good use of sizable inventories left over from previous projects cut short by funding shortages.  For example, Amtrak has found orange upholstery to use when overhauling coaches with ratty old upholstery of the same color. The end result may not be the color one would have chosen for the new century, but it will be clean and new -- and did not require any new purchase.

Amtrak is covering a lot of old carpeting with plastic, which is easier to clean and doesn't hold dirt, odor, or splashed coffee.

A new frequency -- the 10th Acela Express on the New York-Boston run -- was added January 27 without increasing crew costs.

Amtrak's organizational structure has been flattened by elimination of the Eastern and Western general manager positions, so that the seven divisional general superintendents now report directly to the vice president of operations.

Amtrak announced January 24 that it would close its Chicago call center, the smallest of its three centers, at the end of December. Even if the number of agents added at empty desks in Riverside and Philadelphia equals the number of agent positions eliminated in Chicago, Amtrak expects to save $3 million a year in management, facility and technology costs. Any net reduction of agents -- such as might be possible because of the continuing migration of business to the internet -- would increase the savings.

Appendix I. Polls Indicate Public Support for Passenger Rail

Polls over the years have consistently shown public support for faster, more frequent, and reliable passenger trains, including two national polls last summer. A poll conducted by CNN/Gallup/USA Today near the height of Amtrak's June, 2002, cash crisis (June 21-23) found that 70% of the public support continued Federal funding for Amtrak. Similarly, The Washington Post found that 71% of Americans support continued or increased federal funding for Amtrak (August 5, 2002, article reporting on July 26-30 poll).

An October 27, 1997, nationwide Gallup Poll sponsored by CNN and USA Today asked whether "the federal government should continue to provide funding for the cost of running Amtrak, in order to ensure that the U.S. has a national train service, or the federal government should stop funding Amtrak, even if that means the train service could go out of business if it doesn't operate profitably on their own." Favoring continued funding were 69% of respondents, with 26% against (and 6% other responses). State-specific polls also have been positive.

Wisconsin: A poll by Chamberlain Research Consultants of Madison, released by the Wisconsin Association of Railroad Passengers in June, 2002, indicated that

The survey, which was conducted over a week-and-a-half ending in mid-February, took place as the future of Amtrak and the need for a nationwide rail passenger service was being debated by Congress, and as Wisconsin state government wrestled with its most serious financial crisis ever. More information is available at the Wisconsin Association of Railroad Passengers web site.

Ohio: The Ohio State University Center for Survey Research (OSU-CSR) released a poll ("Tracking Ohio") on March 8, 2001, which found that 80% of Ohioans want the state to develop passenger rail service.  The following question produced a 74% positive response: "If Ohio had a modern, convenient and efficient passenger rail network, do you think it would improve the quality of life in Ohio or would it have no effect?"

About two-thirds (65%) of respondents said state money should be used to attract federal passenger-rail funding to Ohio, if such federal funding were available. More than half (53%) said the best way to relieve road traffic congestion is to "improve all forms of transportation including mass transit and high-speed rail." The statewide poll was conducted by telephone January 2-31, 2001, as part of the OSU-CSR's monthly Buckeye State Poll. The margin of sampling error was no more than +/-4.3%.

New York: In 1998, the Marist College Institute for Public Opinion (Poughkeepsie) released results of a poll it conducted of New York State registered voters regarding state investment in intercity rail passenger service (trips longer than 75 miles one way). Findings: 82% believed that having modernized intercity passenger train service is at least as important as having good highways and airports (of this figure, 12% felt rail service was even more important); 87% favored an increase in government spending for intercity passenger train service. The poll was based on approximately 600 responses with a margin of error of  no more than +/-4%. It was commissioned by the Empire State Passengers Association and the Empire Corridor Rail Task Force.

Appendix II. Benefits of Amtrak and Passenger Trains

In crowded corridors, passenger trains represent vital people-moving capacity and help relieve air and road congestion. This benefit will grow over time as travel demand continues to grow while airport and highway construction face more intense local opposition and ever-tighter limits on funding and sheer availability of land.

Amtrak is far safer than auto travel.

During inclement weather, Amtrak is safer and usually more reliable than airplanes and buses. Amtrak was the only thing going in the Northeast in the recent President's Day storm.

In most cities, Amtrak helps mass transit, downtown areas and transit-dependent people by serving -- and increasing the visibility and economic viability of -- transit-accessible downtown locations. Amtrak feeds connecting passengers to transit. Amtrak shares costs with transit at joint-use terminals and on joint-use tracks.  Positive impacts have been observed even in small cities with minimal Amtrak service. Mayor John Robert Smith of Meridian, Miss., on Amtrak's New York-Atlanta-New Orleans run (one train per day in each direction), says property values have tripled in recent years around the railroad station, site of a relatively new intermodal terminal.

By contrast, new airports intensify energy-inefficient suburban sprawl and stimulate auto-dependent development.

This leads to the social costs of getting transit-dependent people to work, or the need to address the consequences of their not working.

Amtrak is important to those who cannot fly due to temporary or permanent medical problems, and to those for whom physical and financial considerations rule out driving long distances, for example, seniors and students. (The editor of Frequent Flier, forced by doctor's orders to take the train to Florida, wrote a favorable column about the trip.) Indeed, some of those medical problems have come about as a result of flying.

Amtrak serves many communities where alternative transportation does not exist, is not affordable or only serves different destinations. Trains can make intermediate stops at smaller cities at minimum cost in energy and time. This is apparent in corridors -- where benefits go to such cities as Jefferson City, Lancaster, Trenton, Kalamazoo, Wilmington, Bloomington / Normal and Tacoma. It also means, for example, that the Empire Builder can stop at eight small cities in Washington (plus Seattle and Spokane), 12 in Montana and seven in North Dakota without compromising the train's appeal to those riding between Chicago or Minneapolis and Seattle or Portland. Similarly, the California Zephyr serves five Colorado points (plus Denver) and five points each in Iowa and Nebraska. Also, Amtrak serves 14 North Carolina points.

[Here is an example of long-distance travel that I encountered on the Southwest Chief: a mother and her 14-month-old child rode from Garden City, Kans., to Barstow, Cal. The family was moving to California; the husband was driving the U-Haul; the wife and child were on the train "so the move would not be so traumatic" for the child. They did not consider the plane because they felt it would be too cramped for the child. Also, airfare out of Garden City was prohibitive.]

Amtrak is part carrier (like United and Greyhound) and part infrastructure. Thus Amtrak provides important passenger-moving capacity, unlike airlines and bus companies. In much of the Northeast Corridor and a few other places, Amtrak is the rail equivalent of the air traffic control system, airport authorities and airlines. (Among the "other places": the Chicago terminal, part of the Chicago-Detroit line and the track between Albany, New York, and the Massachusetts state line.) Elsewhere, Amtrak is the only carrier with legal access to freight railroads' tracks -- a quid pro quo for relieving the railroads of their passenger-train obligations in 1971.

Amtrak's national network trains are transportation "melting pots." Intercity travelers by all modes had an average annual income of $70,000.  The comparable figure for travelers on Amtrak's national network trains is $51,000.  [This is 1999 data inflated to 2002 and thus probably good for 2003 as well.] However, the majority of passengers on these trains ride coach. Surveys available to us six years ago indicated that, for 30% of coach passengers traveling over 12 hours, average income was less than $20,000 (for 11%, it is less than $10,000). Obviously, most standard- and deluxe-room sleeping car passengers have considerably higher incomes and pay much higher fares.  Nonetheless, anyone who characterizes these trains as land versions of cruise ships should try walking the coaches, especially at night.

Trains, especially on longer trips, offer a form of social contact almost lost in this country today -- the opportunity to meet and relax with total strangers that one may or may not ever see again.

Amtrak over much of its network enables one to enjoy gorgeous scenery in total comfort. Some examples: the Connecticut and California coastlines, the Hudson River in New York, the Colorado Rockies, the mountains of Vermont and northern New Mexico, Glacier Park in Montana and West Virginia's New River Gorge.

Amtrak uses only 79% of the energy airlines use to move a passenger a mile, and only 22% of the energy general aviation uses (to do the same). This statement is based on the following 2000 data from the Oak Ridge National Laboratory's annual Transportation Energy Data Book (Edition 22, published September 2002) and available on-line: Amtrak 2,902 British thermal units per passenger-mile; Airlines 3,666; General aviation 12,975.  Just two years earlier, in 1998, Amtrak was at 2,441. Amtrak is much less polluting than airplanes. (Energy efficiency is a good proxy for air pollution.)

Thanks to a growing array of connecting buses available with train travel in a single ticket transaction, Amtrak puts people on intercity buses who would not otherwise have considered using them.  "Thruway" is Amtrak's copyrighted name for connecting buses that can be booked and ticketed through Amtrak’s reservation system.  Thruways first developed in a big way in California, where the state underwrites an impressive network of dedicated, feeder buses. Elsewhere, depending on the situation, Amtrak or the private bus companies themselves bears the financial risks for many Thruway runs themselves.

Appendix III. Subsidies

Virtually all federal spending on highways is generated from user fees. However,

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