September 10, 1996 Amtrak's Planned Route Eliminations

Thank you for scheduling this hearing. The route eliminations Amtrak announced August 8 and plans to implement November 10 are of great concern to us. Our non-partisan Association -- whose members are individuals -- has worked since 1967 towards development of a modern rail passenger network in the U.S. We appreciate this opportunity to express our views on Amtrak's situation generally and the announced route eliminations in particular.

I. DEMAND FOR THESE TRAINS--AND MOST TRAINS--IS STRONG!

Lest there be any doubt, the issue here is not lack of customer demand. Load factors on the Texas Eagle this summer are higher than they were last year and compare favorably with the system average. One Amtrak official told us the Pioneer may have the highest summer load factors of any long-distance train. Amtrak has told us that the Boston section of the Lake Shore Limited makes a positive financial contribution.

In general, Americans have responded positively whenever presented with decent rail passenger service, even though Amtrak and transit agency advertising is minuscule when compared with airline and automobile company advertising. From 1982 to 1994, travel on Amtrak rose 40% (from 4.2 billion passenger-miles to 5.9 billion) even though fare increases outpaced inflation.

One up-to-date indicator of Americans' great interest in rail travel is the response of readers of the Minneapolis Star-Tribune which, on Sunday (September 8) indicated availability of our association's free flier, "Amtrak Travel Tips." By 1:00 pm yesterday (Monday), we had received 100 requests by telephone. We don't have a toll-free number, and the Twin Cities doesn't have much Amtrak service: one departure a day to Chicago and four departures a week to Seattle and Portland via North Dakota and Montana.

In May, 1995, we commissioned Bruskin Goldring Research of Edison, New Jersey, an independent market research firm, to include two questions about Amtrak in their weekly "OmniTel" telephone poll of 1,000 U.S. adults nationwide. This poll found 63% favorable responses to questions about whether a penny of the federal fuel tax should be earmarked "for long-term Amtrak improvements" and whether states should get the right to spend part of their federal transportation trust fund money "for intercity rail passenger service."

II. FEDERAL TRANSPORTATION POLICY HAS AN AIR/HIGHWAY BIAS.

The root causes of Amtrak's problems are: (a) the high level of public investment in aviation and highways vs. the low level of rail passenger investment; and (b) our nation's mode-specific trust-fund system, which excludes intercity passenger rail but treats every gasoline and airline-ticket purchase as a customer "vote" for more investment in highways or aviation. In fact, many of those trips would be taken by rail if rail was available; many of those "user-tax" dollars would be earmarked for rail if the individual travelers (user-taxpayers!) could determine how their user taxes would be spent.

From a good-government standpoint, a consolidated transportation trust fund, such as some states have, would be better than a mode-specific system. The latter simply guarantees ever-increasing road and aviation investments, even where rail could do the job better, and -- as evidenced by Amtrak's proposed cuts -- ever-decreasing opportunities for people who prefer rail to use it. Even today, rail travel is not possible between Dallas - Houston or Cleveland - Cincinnati, although all four cities have some Amtrak service.

Moreover, highways and aviation enjoy subsidies beyond those inherent in the trust fund process, since government spends more on those modes than it collects in user fees, even before considering the environmental and energy-consumption costs of highways and aviation. A special U.S. DOT study of 1990 data showed that motor vehicle accident costs that year totaled $137.5 billion. A study released in April, 1995, indicates that New Jersey drivers enjoy a $733 million a year subsidy, which -- if reflected in the gasoline tax -- would boost that tax 25 cents a gallon.

Two more recent aspects of federal policy bear mentioning as well. First, the disappearance of the 10% aviation ticket tax for most of this year has made the competitive environment more difficult for Amtrak and likely depressed Amtrak's revenues. The problem is in danger of repeating itself next year, since the new legislation reinstating the ticket tax does so only through December 31, 1996.

Second, Amtrak has been put in a box by the dubious requirement that Amtrak move towards "subsidy-free" operation, coupled with the failure to pass legislative reforms that would allow Amtrak to operate on a more business-like basis and the failure to provide appropriations even at the level envisioned in last year's House-passed budget resolution and to create the capital funding stream Amtrak always has said was necessary.

On May 23, 1996, the Senate voted 57-43 in favor of a "sense of the Senate" resolution endorsing the half cent, but enactment is vital to Amtrak's long-term survival.

III. AMTRAK'S REACTION TO THE "SUBSIDY-FREE" MANDATE

In March, Amtrak President Tom Downs spoke at a National Press Club luncheon. While he made Amtrak's legislative and funding needs clear, it is not surprising that -- in this age of "sound bites" -- what stuck in many minds was his description of Amtrak as a "recovering corporation." Consequently, many who do not work the passenger train issue full-time may have been surprised that Amtrak on August 8 announced the second-biggest slashing of the route structure in Amtrak's history and the removal of rail passenger service from 42 communities, some of which have made investments in the affected services. The cost of restoration would be high, particularly if the freight railroads immediately remove passenger-related facilities. The cost of replacing these facilities may make service restoration prohibitive.

The biggest slashing, implemented in late 1979, was not a surprise. It followed a year-long process that included public hearings and negotiations between Amtrak and key committee members. The present plan followed a brief and nearly-closed planning process. In that respect, Amtrak certainly is behaving more like a private corporation.

However, we are concerned that Amtrak did not make it more clear in advance how drastic the results of existing and prospective law would be -- both with respect to routes and communities at risk and with respect to fares. (The fares issue arises because it appears Amtrak is moving towards running smaller trains with ever higher fares.)

One way to measure the damage is to consider Amtrak service to the 41 consolidated metropolitan statistical areas (CMSAs) and metropolitan statistical areas (MSAs) with populations over one million. [What follows are July 1, 1992, population data from Houghton Mifflin's 1995 Information Please Almanac, which cites U.S. Bureau of the Census and uses areas defined by the Office of Management and Budget as of June 30, 1993].

Today, Amtrak serves 38 of the 41 areas. [In the 1970s, Amtrak served all 41. In late 1979, Amtrak left Columbus, Ohio, (population 1.4 million, the 29th largest metro area) and Nashville (1.0 million, #41). Earlier this summer, because Southern Pacific downgraded some track, Amtrak left Phoenix-Mesa (2.3 million, #19).]

If the plan announced August 8 goes forward, Amtrak would leave ninth-ranked Dallas-Ft. Worth which, with 4.2 million people, would become by far the largest unserved metro area. Now, we hear Amtrak may be about to leave Cincinnati (1.9 million, #23) and Indianapolis (1.4 million, #28), even though the August 8 announcement said nothing about this.

Amtrak has said the Sunset Limited also could be gone within a year if nothing else changes. That would add Houston (4.0 million, #10) and San Antonio (1.4 million, #30) to the list of big unserved metro areas; that also would mean that within about a year the number of unserved "super-metro" areas would have risen from two to eight. Loss of the Sunset also would leave Texas completely unserved and badly damage revenues on the New York-New Orleans Crescent, which shares much connecting traffic with the Sunset. New Orleans terminal costs then would be redistributed, causing such costs to rise substantially for the Crescent, the Chicago-New Orleans City of New Orleans, and the experimental Mobile-New Orleans Gulf Coast Limited, if it is still running.

In other words, the cuts Amtrak has announced could start a death-spiral, particularly if the Eagle's demise has a negative impact on the Sunset (see discussion of Eagle below).

Obviously, we believe Congress should appropriate additional funds for this year and Amtrak should reverse the planned cutbacks. However, we understand that House-Senate appropriations conferees apparently are poised to pick figures tomorrow well below the Senate-passed numbers. If that happens, we believe at the very least that Amtrak should make selective reversals of its announced decisions, as discussed below, even though that increases the borrowing needed at the end of Fiscal 1997. For the FY 1998 appropriations cycle, we will have a debate about Amtrak's future in which there will be far less ambiguity about what is at stake. It is simply not acceptable to move so quickly from a situation where the general public is unaware of the threat to Amtrak to a situation where service is gone and very difficult to restore.

As part of the forthcoming debate, Congress should direct Amtrak to report soon -- perhaps by April 1, 1997 -- on what it regards as a true national system, the resources necessary to provide that system, and how and when it would implement such a true, national system. The report should include what specific services can be provided at several significant funding levels short of that required for a true national system -- including what funding is required for long-term operation of the present system (both as is and with all less-than-daily long-distance trains running daily).

We also urge Congress to ask Amtrak to report on whether the goal of operational self-sufficiency by 2002 is realistically attainable, or whether the absence of certain assumptions underlying that commitment makes it unattainable. If unattainable, Amtrak shall indicate why, and suggest alternate efficiency-related goals.

If it comes down to a choice, we believe that the public interest would be better served by an adequately capitalized Amtrak system with a growing market share and a stable revenue-to-cost ratio than by a system that is operationally self-sufficient but whose market-share is declining and whose rapidly-rising fares effectively bar use of the system by the "average citizen."

To some extent, history is repeating itself. In the 1980s, then-Amtrak President W. Graham Claytor Jr. made a commitment to become "subsidy-free." That commitment, like Downs' today, was conditioned on a significant increase in capital investment. Downs' commitment, in addition, is conditioned on passage of a reauthorization bill with reforms that would permit Amtrak to operate more like a business and -- crucial, from our point of view -- to cut costs in ways other than by cutting service.

Then, as now, people have tended to focus on the "subsidy-free" part of the commitment and to forget capital investment and the other reforms.

IV. THE TEXAS EAGLE

We think it is a strategic mistake for Amtrak to withdraw from the huge Dallas-Ft. Worth metropolitan area.

I have heard Amtrak people say: "We wish we could serve Dallas-Ft. Worth but the Eagle isn't the way to do it." I am familiar with some of the alternatives and would be happy to answer questions about them. Indeed, in the interest of helping Amtrak find a possibly cheaper way to serve Dallas-Ft. Worth, we suggested study of an alternative via Memphis that would end service on the existing Eagle route between St. Louis, Missouri, and Bald Knob, Arkansas, but retain service at Little Rock and points west.

When someone indicates that a particular alternative is superior to what exists today, be sure to ask them how much it would cost to establish and operate that alternative. Today's Eagle evolved from a series of more costly alternatives and should not be discontinued before a clearly superior alternative is firmly in hand. Any interim period without service would make it vastly more difficult to restart service in the future.

Also, we fear that discontinuance of the Eagle may have a negative impact on the shaky Sunset Limited, which conveys Eagle cars between San Antonio and Los Angeles. With the Eagle cars gone, for example, 100% of station costs between San Antonio and Pomona, California, would be assessed against the Sunset rather than shared between the two trains.

The Eagle has run very late much too often, particularly eastbound due to late arrival of the Sunset in San Antonio, this largely due to slow orders on the cash-poor Southern Pacific. The merger with the strong Union Pacific should improve operations on SP lines and thus reliability of the Sunset and Eagle.

The Eagle has suffered from lack of equipment, particularly this summer, and lack of advertising. This partly reflects the problem of limited resources: Amtrak's managers give first allegiance to the company as a whole and therefore put equipment and advertising dollars where it can do the most good. The result, however, is not helpful to the Eagle. Our members in Dallas and Little Rock say the ad Amtrak recently ran apologizing for the planned end of service is the largest ad Amtrak ever ran in those cities.

V. BOSTON-ALBANY SECTION OF THE LAKE SHORE LIMITED

As noted above, Amtrak told us this makes a positive financial contribution. Amtrak says "equipment shortage" is the main reason for cutting this, but we think Amtrak could find the equipment by improving cooperation between Amtrak's Northeast and Intercity business units. Interestingly, some of the loudest complaints about this have come from the West -- people who want to reach New England without having to change trains in Philadelphia or New York. (If absolutely essential, on an interim basis, a Boston-Albany coach train with cross-platform transfer in Albany would be vastly preferable to the 170-mile bus journey Amtrak proposes to inflict on people in an often harsh climate.)

VI. ELIMINATING THE SUNSET LIMITED BETWEEN MIAMI AND SANFORD

It makes no sense to terminate this Los Angeles-Miami train at Sanford, Florida, just 24 miles short of Orlando, the train's biggest market in the East. Amtrak has been looking at the possibility of running to Orlando, but apparently has been stymied by the costs of a second engineer. The time required to run from Jacksonville to Orlando and deadhead back to Sanford (where the train is to be maintained) slightly exceeds four hours, and Amtrak's contract requires a second engineer in the cab on runs over four hours. We have asked Amtrak to ask the union for an exception here, in the interest of saving substantial revenue. It is not realistic to say passengers will change trains in Jacksonville and ride the Silver Meteor within Florida; the latter train (whose capacity is being reduced as part of the November 10 plan) will not have adequate capacity north of Orlando.

VII. THE PIONEER

One oft-cited benefit of long-distance passenger trains is the access they provide to small communities with limited transportation options. The Pioneer fits this definition as much or more than any other train.

In 1994, Amtrak opted to preserve the tri-weekly Pioneer and to reduce the frequency of the Empire Builder from seven to four days a week, so that together the two trains provided daily service between Chicago and the Pacific Northwest, the Pioneer via Denver, Wyoming, southern Idaho and Eastern Oregon, the Empire Builder via Minnesota, North Dakota and Montana.

Now, Amtrak plans to restore daily service on the northern route and eliminate the southern route. We presume the main justification is the hope of getting the once-significant mail business back on the Empire Builder. Other factors may include the more efficient crew-turns possible with daily service, the strong demand for daily Empire Builder service in the summer, and the ability to eliminate the inefficient Chicago-St. Paul train that runs on days when the Empire Builder does not operate west of St. Paul. We can only assume that Amtrak has balanced these factors against those which produced the opposite decision in 1994.

There are two Pioneer alternatives worth considering, but probably not practical at current funding levels:

(a) restore the original route via Salt Lake City. The Pioneer would run as a separate train only between Salt Lake City and Seattle, not Denver-Seattle, and thus would not serve Wyoming. It would run combined with the California Zephyr/Desert Wind between Chicago, Denver and Salt Lake City. The disadvantages include an unattractive, early-morning departure from Seattle required to connect with the California Zephyr and -- because of the steep grades in the Rockies -- a limit on the capacity of the California Zephyr.

(b) create a Seattle-Boise-Salt Lake City-Las Vegas-Los Angeles train that would link the big markets in the Pacific Northwest and southern California with a number of popular tourist destinations, while preserving service to many remote communities.

VIII. THE DESERT WIND

Until 1995, this train operated as a Salt Lake City-Las Vegas-Los Angeles section of the Chicago-Denver-Salt Lake City-Bay Area California Zephyr. The two trains ran daily and were consolidated between Chicago, Denver and Salt Lake City.

Now, they run separately--the Chicago-Denver-Salt Lake City-Las Vegas-Los Angeles Desert Wind three days a week and the California Zephyr four days a week. The result is full daily service on the same schedule between Chicago, Denver and Salt Lake City, and the ability to operate both trains as "full-consist" trains over the Rockies.

Amtrak proposes to eliminate the Desert Wind and make the California Zephyr daily. We suspect this may reduce the load factor on a year-round basis, particularly as loads west of Salt Lake City frequently seem larger on the Los Angeles leg than on the Bay Area leg. We can only assume that Amtrak has taken this into account, along with the factors mentioned above for the Empire Builder, i.e., daily service permits more efficient crew and equipment turns and makes development of mail revenue possible.

IX. IN CONCLUSION

Enactment of the half-cent is critical to the future of nationwide rail passenger service. We believe preservation of Amtrak's existing system is critical. We fear the planned cutbacks may lead to the demise of that system. We have proposed the following specific steps, as noted above:

• an increased appropriation for FY97, to permit Amtrak to continue to operate the existing system, pending completion of the following steps;

• a directive to Amtrak to report during 1997 on what it regards as a true national system, the resources necessary to provide that system, and how and when it would implement such a true, national system;

• the Amtrak report also to include what specific services can be provided at several significant funding levels short of that required for a true national system, including what is needed for the existing system as-is and for the existing route structure with all routes served at least once a day;

• the Amtrak report also to include state whether the goal of operational self-sufficiency by 2002 is realistic and, if it is not, alternate goals to help insure efficient operations and responsible use of taxpayer dollars; and

• direction by Congress that Amtrak's mission is to provide efficient rail passenger transportation services that become an ever-increasing factor in the movement of people in the United States.

If additional funding is not available, Amtrak should at least modify certain of its plans consistent with the above route-specific comments.

Thank you for the opportunity to testify.