Reauthorization: AMTRAK is a public service and EDA tool
August 12th, 2019
August 12, 2019 - Karl Ziebarth, Opinion -
The Reauthorization of AMTRAK (originally authorized under P.L. 91-518, as amended) provides a unique opportunity to create a responsive, lower cost, surface transportation service for the American voter, in all parts of the country. To begin with, we must recognize that all transportation is a service, not a profit-making function. Highways, subways, and airports are not profit-making ventures. They provide a platform for individuals and companies to make a profit, by providing the vital connectivity between home and work, plant and dock, farm and consumer. The users make a profit, or benefit in non-monetary (some difficult to measure) ways, but the infrastructure itself by definition, cannot be expected to do so.
The rail mode offers a lower cost alternative for this service, in specific areas. One is pretty obvious: corridor services in densely populated parts of the country -- the NorthEast Corridor, the California Corridors (north and south) the Pacific Northwest Corridor, and the Central Corridor (Milwaukee-Chicago-St Louis). Another is not so obvious, is providing actual transportation for people who live in remote areas – the so-called “flyover country” who do not have easy access to non-highway public transport.
An additional, really important, benefit, which is not generally recognized, is that attractive rail service in remote or scenic areas can be a critical driver of economic development and growth, from tourism. Railroads go many places that are not readily accessible to highway vehicles which are not specially equipped, and for people who are not as spry or athletic as they once were. The tourists they bring are a major source of employment and revenue for many areas, some of which are otherwise quite depressed.
So, the question becomes: How do we provide this service at the lowest net cost? We believe that the best way to do so is by a single national service provider, AMTRAK. But, it must have clearly defined functions/goals, which are interdependent and which serve different constituencies. In summary, they are:
Providing frequent, reliable, commuter services in the corridors
Providing a reliable (and expanding) national network to link together the densely populated parts of the country with the hinterland
Providing reliable and frequent local (under 750 mi) State-supported services
Providing attractive tourism and economic development services in an economy which is increasingly about experience rather than things
Providing occasional excursion, charter, and PV services which at reasonable cost which can offset part of the overhead costs of maintaining the national network
It is not the function or privilege of AMTRAK management to decide what they want to do; the organization should make an honest effort to meet these reasonable goals, set by the Congress, as outlined above. It is the obligation of the management team to provide these services on an attractive and cost-effective basis. The Congress, elected by the voters, makes those decisions, and the management of AMTRAK must fulfill and execute the task set out in legislation. This does not mean “making a profit”, nor just cutting visible expenses. The lowest true cost is NOT necessarily attained by cutting service and amenities. It is actually the difference between greatest revenue which can be obtained at a measurable cost. If revenues increase more than the costs, the NET cost is less.
Funding these services is a shared responsibility of the Federal government, the States, and local government units, whose constituents (voters) benefit from the existence of these services. Appropriations should be continuing in nature, so as to permit and encourage long-term, integrated investment and maintenance, which will lower cash costs and Federal appropriations.
In a very real sense, a significant part of the AMTRAK mission is not just “running trains”; it is in the hospitality business and to offset operating costs, it must make tis customers, the passengers, feel welcome and provide an enjoyable experience. It is certainly an established fact that the bar car on every commuter train makes a big contribution to minimizing cash costs, and thus providing a critical service at the lowest attainable net cost. AMTRAK management is determined to eliminate these services.
In fact, the national network services can and should act as an instrument of economic development, with the goal of attracting tourists to many areas of the country which do not have large urban populations. To do this, the services and amenities which make relatively slow long-haul travel attractive must be offered. This includes both comfortable day coaches and sleepers, with dining and club car services.
With that in mind, the AMTRAK Act must be amended in this reauthorization process to ensure that practical, realistic services which meet public needs are mandated, and that the myth of a “for profit” corporate goal is finally put to rest. AMTRAK management must respond to public needs intelligently and thoughtfully, and requires consistent financial support from the Federal government, including taking actions which increase revenues. Critical point: Most costs are in fact fixed, so attaining the lowest possible net cost is largely a matter of enhancing revenue.
Thus, the Act (as amended) must be reauthorized with specific provisions which deal with the issues raised above. A list of these provisions is attached for your consideration.
AMTRAK ACT AMENDMENTS
A finding by the Congress that for the public convenience and necessity, as set for in the original findings under P.L. 91-518, AMTRAK shall maintain the existing network of long haul (in excess of 750 miles between endpoints) train services which it provided as of 30 Sep 2017, without substitution of motor carrier (bus services) except in cases of physical necessity caused by weather or accident.
A finding by the Congress that to fulfill this mandate, AMTRAK shall offer attractive and reasonably priced amenities, such as meal service, beverages, and sleeper services, so that the passenger has a comfortable and attractive experience conducive to building tourism in many areas
A commitment by the Congress to provide reliable, long term funding to support such services, which shall include authorization for AMTRAK to enter into long-term lease agreements with private sector sources to provide new and rebuilt equipment on financially attractive terms.
A finding by the Congress that the additional revenues derived from seasonal and one-time charter, excursion, and private equipment (PV) moves makes a real cash contribution to the overhead costs of the national network.
A determination by the Congress that the Federal Railroad Administration shall be funded and directed to retain consultants unaffiliated with AMTRAK or any Class I railroad to develop a transparent and reliable accounting system, which AMTRAK shall implement, to allocate costs between national network, State-supported, and corridor services on a realistic and site-specific basis
Authorize and direct AMTRAK to identify, cost, and establish additional national network services, such as the Sunset route between New Orleans and Jacksonville where such services enjoy local support and where some part of the route could be contracted to third party carriers not part of the Class I carriers. AMTRAK shall seek to institute daily services on all routes now operated.
Authorize AMTRAK to subcontract the operation of selected National Network and State supported services to third party independent operators, or to any certificated carrier that wishes to do so, when such operators can provide the services at a lower cash cost than AMTRAK itself and in so doing shall provide access to its stations, repair and maintenance facilities and reservation system at a cost no more than 15% above Amtrak’s actual cost to provide these service(s).
Extend the liability coverage afforded the Class I carriers to any such third-party independent operators, who act as subcontractors to AMTRAK, without additional cash cost to said operators. Such subcontractors shall adhere to the same safety standards as those which apply to AMTRAK, but shall not be subject to AMTRAK control or inspection.
Provide that the AMTRAK Inspector General shall be independent of the management of AMTRAK, reporting directly to the Secretary of Transportation and funded as part of the Secretary’s office.
Karl Ziebarth is a Director of Texas Rail Advocates. He is a professional transportation consultant, assisting investors and lenders to rail, truck, and port enterprises. Ziebarth is also an owner of a short-line railroad in New Mexico, Santa Fe Southern.
The Reauthorization of AMTRAK (originally authorized under P.L. 91-518, as amended) provides a unique opportunity to create a responsive, lower cost, surface transportation service for the American voter, in all parts of the country. To begin with, we must recognize that all transportation is a service, not a profit-making function. Highways, subways, and airports are not profit-making ventures. They provide a platform for individuals and companies to make a profit, by providing the vital connectivity between home and work, plant and dock, farm and consumer. The users make a profit, or benefit in non-monetary (some difficult to measure) ways, but the infrastructure itself by definition, cannot be expected to do so.
The rail mode offers a lower cost alternative for this service, in specific areas. One is pretty obvious: corridor services in densely populated parts of the country -- the NorthEast Corridor, the California Corridors (north and south) the Pacific Northwest Corridor, and the Central Corridor (Milwaukee-Chicago-St Louis). Another is not so obvious, is providing actual transportation for people who live in remote areas – the so-called “flyover country” who do not have easy access to non-highway public transport.
An additional, really important, benefit, which is not generally recognized, is that attractive rail service in remote or scenic areas can be a critical driver of economic development and growth, from tourism. Railroads go many places that are not readily accessible to highway vehicles which are not specially equipped, and for people who are not as spry or athletic as they once were. The tourists they bring are a major source of employment and revenue for many areas, some of which are otherwise quite depressed.
So, the question becomes: How do we provide this service at the lowest net cost? We believe that the best way to do so is by a single national service provider, AMTRAK. But, it must have clearly defined functions/goals, which are interdependent and which serve different constituencies. In summary, they are:
Providing frequent, reliable, commuter services in the corridors
Providing a reliable (and expanding) national network to link together the densely populated parts of the country with the hinterland
Providing reliable and frequent local (under 750 mi) State-supported services
Providing attractive tourism and economic development services in an economy which is increasingly about experience rather than things
Providing occasional excursion, charter, and PV services which at reasonable cost which can offset part of the overhead costs of maintaining the national network
It is not the function or privilege of AMTRAK management to decide what they want to do; the organization should make an honest effort to meet these reasonable goals, set by the Congress, as outlined above. It is the obligation of the management team to provide these services on an attractive and cost-effective basis. The Congress, elected by the voters, makes those decisions, and the management of AMTRAK must fulfill and execute the task set out in legislation. This does not mean “making a profit”, nor just cutting visible expenses. The lowest true cost is NOT necessarily attained by cutting service and amenities. It is actually the difference between greatest revenue which can be obtained at a measurable cost. If revenues increase more than the costs, the NET cost is less.
Funding these services is a shared responsibility of the Federal government, the States, and local government units, whose constituents (voters) benefit from the existence of these services. Appropriations should be continuing in nature, so as to permit and encourage long-term, integrated investment and maintenance, which will lower cash costs and Federal appropriations.
In a very real sense, a significant part of the AMTRAK mission is not just “running trains”; it is in the hospitality business and to offset operating costs, it must make tis customers, the passengers, feel welcome and provide an enjoyable experience. It is certainly an established fact that the bar car on every commuter train makes a big contribution to minimizing cash costs, and thus providing a critical service at the lowest attainable net cost. AMTRAK management is determined to eliminate these services.
In fact, the national network services can and should act as an instrument of economic development, with the goal of attracting tourists to many areas of the country which do not have large urban populations. To do this, the services and amenities which make relatively slow long-haul travel attractive must be offered. This includes both comfortable day coaches and sleepers, with dining and club car services.
With that in mind, the AMTRAK Act must be amended in this reauthorization process to ensure that practical, realistic services which meet public needs are mandated, and that the myth of a “for profit” corporate goal is finally put to rest. AMTRAK management must respond to public needs intelligently and thoughtfully, and requires consistent financial support from the Federal government, including taking actions which increase revenues. Critical point: Most costs are in fact fixed, so attaining the lowest possible net cost is largely a matter of enhancing revenue.
Thus, the Act (as amended) must be reauthorized with specific provisions which deal with the issues raised above. A list of these provisions is attached for your consideration.
AMTRAK ACT AMENDMENTS
A finding by the Congress that for the public convenience and necessity, as set for in the original findings under P.L. 91-518, AMTRAK shall maintain the existing network of long haul (in excess of 750 miles between endpoints) train services which it provided as of 30 Sep 2017, without substitution of motor carrier (bus services) except in cases of physical necessity caused by weather or accident.
A finding by the Congress that to fulfill this mandate, AMTRAK shall offer attractive and reasonably priced amenities, such as meal service, beverages, and sleeper services, so that the passenger has a comfortable and attractive experience conducive to building tourism in many areas
A commitment by the Congress to provide reliable, long term funding to support such services, which shall include authorization for AMTRAK to enter into long-term lease agreements with private sector sources to provide new and rebuilt equipment on financially attractive terms.
A finding by the Congress that the additional revenues derived from seasonal and one-time charter, excursion, and private equipment (PV) moves makes a real cash contribution to the overhead costs of the national network.
A determination by the Congress that the Federal Railroad Administration shall be funded and directed to retain consultants unaffiliated with AMTRAK or any Class I railroad to develop a transparent and reliable accounting system, which AMTRAK shall implement, to allocate costs between national network, State-supported, and corridor services on a realistic and site-specific basis
Authorize and direct AMTRAK to identify, cost, and establish additional national network services, such as the Sunset route between New Orleans and Jacksonville where such services enjoy local support and where some part of the route could be contracted to third party carriers not part of the Class I carriers. AMTRAK shall seek to institute daily services on all routes now operated.
Authorize AMTRAK to subcontract the operation of selected National Network and State supported services to third party independent operators, or to any certificated carrier that wishes to do so, when such operators can provide the services at a lower cash cost than AMTRAK itself and in so doing shall provide access to its stations, repair and maintenance facilities and reservation system at a cost no more than 15% above Amtrak’s actual cost to provide these service(s).
Extend the liability coverage afforded the Class I carriers to any such third-party independent operators, who act as subcontractors to AMTRAK, without additional cash cost to said operators. Such subcontractors shall adhere to the same safety standards as those which apply to AMTRAK, but shall not be subject to AMTRAK control or inspection.
Provide that the AMTRAK Inspector General shall be independent of the management of AMTRAK, reporting directly to the Secretary of Transportation and funded as part of the Secretary’s office.
Karl Ziebarth is a Director of Texas Rail Advocates. He is a professional transportation consultant, assisting investors and lenders to rail, truck, and port enterprises. Ziebarth is also an owner of a short-line railroad in New Mexico, Santa Fe Southern.