Weekly Wire
Memphis Flyer Rounding a Bend

By Paul Gerald

JANUARY 20, 1998:  Amtrak at 26 years of age remains a problem and a promise, a rallying point and a target. Despite having no competition and receiving $867 million in federal subsidies in 1997 alone, it is saddled with debt, it just avoided a crippling strike, its board of directors has been dismissed, and it has a temporary president. Even its most recent president said, “It is very clear that Amtrak cannot continue to go on as we have been.”

Its supporters say that the federal government, which created and still owns Amtrak and now insists on cutting it off, is acting like a puppeteer blaming the puppet for putting on a poor show. Its detractors say a national, government-owned railroad was a bad idea that has been poorly carried out, that it exists only because of politics, and that the time has come to pull the plug. Amtrak, under congressional mandate for self-sufficiency by the year 2002, is merely trying to avoid complete derailment.


They finally got some good news recently: There won’t be a strike, which looked probable last month, and Congress just committed $5.1 billion for five years of capital and operating expenses. The next challenge is to replace the board, which Congress did away with in the same bill authorizing the funding, and replacing president Tom Downs. Downs, according to a Washington Post story that Amtrak never denied or disputed, was forced out by the board over his handling of labor negotiations.

Meanwhile, it should come as either good news or bad, depending on your perspective, that the people in whose hands the rail system’s fate now rests are the same people who laid this mess on us in the first place: the federal government.

A Long, Tough Ride

It was an act of Congress in 1971 that created the national railroad from the ruins of America’s once-proud passenger-rail system. Since then, Amtrak has received $19 billion in subsidies, and in every year since 1988 expenses have exceeded revenues by at least $750 million. In 1995 Amtrak bottomed out, despite receiving $1 billion in subsidies. Trains and facilities were old and ugly, revenues and ridership were plummeting, and service was cut back across the board.

At least, Amtrak has tried to cut service back. It gives great joy to conservatives especially to point out that while the government was – and still is – telling Amtrak to tighten the reins and become profitable, congressmen also tell its officials, “Just keep it coming through my home state.”

Amtrak responded by reorganizing itself, working out deals with individual states to keep trains rolling, and developing many innovations and improvements to attract and keep customers. These include upgrading the infrastructure in the northeast corridor, where 56 percent of Amtrak’s revenues come from, to prepare the way for 150-mph trains that would make that operation more profitable and serve as a model for the rest of the country.

Other innovations are “Thruway” buses covering old, eliminated train routes; partnerships with airlines, hotels, and cruise operators to offer package tours; amenity-laden trains geared to specific areas, like a “party train” from Chicago to New Orleans for Mardi Gras and a wine-tasting cruise in California; and, the most controversial of moves, tacking mail and freight cars onto Amtrak passenger trains as a source of revenue. The latter action has infuriated the nation’s private freight railroads who don’t want to compete with something propped up by the government.

And yet in spite of all the new ideas, a Congress-appointed work group assessing Amtrak’s ills concluded, “Amtrak’s mission is vaguely defined, its funding has never been adequate for a true national system, and it has been burdened with expensive legal mandates.”

All over the country, especially outside the northeast corridor from Boston to Washington, Amtrak trains run over tracks owned by freight lines, making it tougher to ready the tracks to accommodate higher-speed trains. In many cases, track has been downgraded or taken away entirely, causing Amtrak trains to slow down or take time-costly detours, both of which make the train less attractive to potential passengers. On many of the lines where service was cut and states were called upon to pick up the funding slack, neighboring states have refused to participate, leaving Amtrak with either no train or a train with gaps filled in by Thruway buses.

Good News From Capitol Hill

Of the $5.1 billion Congress authorized last month, $2.3 billion is earmarked for capital improvements like new trains, track upgrades, and general maintenance. That money is stacked toward the next few years and is designed to be at $0 by 2002. The bill also gave Amtrak several key reforms the company says are needed to achieve self-sufficiency by 2002, which Congress has mandated.

“What [was] at stake is basically that capital funding, but also something more than that,” says John Wolf, Amtrak’s manager for government affairs. “Passing the bill [sent] a positive signal to our creditors that the federal government stands behind Amtrak and the idea of intercity passenger rail.”

To comply with the goal of self-sufficiency by 2002, Wolf says, “We need a dedicated source of capital funding, which this $2.3 billion begins to get us. We have suffered from 26 years of undercapitalization.”

Wolf also points to several critical reforms in the law which Amtrak needed “to decrease expenses and enable ourselves to become more efficient.”

These include:

  • giving a stamp of approval to Amtrak’s handling of mail and express packages, a somewhat controversial practice the rail had been engaging in for years. “They want us off federal operating support,” Wolf says, “and if mail and express is the way to make our trains viable, we should take advantage of that opportunity.”

  • giving Amtrak the ability to negotiate with its unions for the right to contract out services, such as meals, to seek the best price. “As our authorization numbers go down, down, down,” Wolf says, “something has to give. We have to run a more efficient railroad, and this is one way to do it.”

  • a $200 million cap, per accident, on liability damages for accidents involving Amtrak trains.

  • the right to renegotiate a requirement that any worker laid off by Amtrak is entitled to up to six years salary as severance pay. Those negotiations are ongoing.

As that piece of legislation was being worked out in Congress, Amtrak was hit by threats of a strike by the Brotherhood of Maintenance of Way Employees (BMWE), which represents workers who maintain Amtrak’s track, bridges, and tunnels. The majority of Amtrak’s 2,300 union employees are concentrated in the Northeast Corridor, where Amtrak owns and maintains its own infrastructure.

That strike was averted because Amtrak’s board stepped into negotiations after president Downs, according to the Washington Post, refused to meet with union leaders.

Wolf says that even though passengers won’t tend to notice the kinds of capital improvements Amtrak is now embarking on, the plan will result in “a better Amtrak. That money is going to go to upgrading the system – new cars, improving track or stations, this sort of thing. We will have a more reliable, more modern, more efficient service than we have had for number of years.”

If nothing else, Amtrak at least knows it will be around for a while. Had the reauthorization not passed, things would have gotten real tight real quick.

“We have a clear idea of our fiscal picture for the next two or three years,” Wolf says. “We’re no longer looking at the potential for bankruptcy. Now it’s much more a vision of, ‘Okay, we’ve been given some of the tools we need, so let’s get out there and do this thing.’ We have a new lease on life.”

Still, A Limited Role

The greater reality of Amtrak right now is that even in its busiest and most profitable area, the Northeast corridor, it’s a small-time player in the national transportation scene.

The Cato Institute for Policy Analysis performed a well-publicized study that whipped Amtrak like a rented mule. It concluded, among other things, that the outright disappearance of Amtrak service in the Northeast corridor would result in no additional airline flights. The study said, in fact, that based on airline averages, all of Amtrak’s passengers wouldn’t fill the unused portion of Northeast corridor airplanes. As for the supposedly congested highways a strike would create, the Cato study determined that Amtrak’s downfall would add approximately one car every 1.3 minutes on roads that are built to handle a car every 1.5 seconds.


That study also found that nationally, Amtrak carried .007 percent of American commuters to work, 1/25th of the number that walk to work, and that intercity buses – in other words, the Greyhound – are actually more fuel-efficient than Amtrak’s trains. Ouch.

That picture from the Cato Institute looks, in the end, like the most damning of all images of Amtrak: It is, in the grand scheme of national transportation, nearly irrelevant. The report states, “Amtrak’s fundamental problem is not so much insufficient revenues ... as it is excessive costs. If Amtrak could shed some of its worst money-losing routes, reorganize management, and reform its Byzantine work rules, hundreds of millions of dollars in savings could be realized. [This will happen] only when subsidies are discontinued and competitive forces are brought to bear on Amtrak.”

That boils down to one word – privatization – and privatization is what many people feel is the inevitable long-term future of intercity rail travel in the United States. Whether Amtrak is turned over to its employees, puts all its services up for bids as was done in Great Britain, or simply sold off as a unit, as was done with the now-profitable freight line Conrail in 1987, one has to wonder how much longer the current relationship between the U.S. government and the passenger-rail system it created can possibly last. Amtrak itself is, under congressional mandate, now trying to take itself off federal subsidies anyway.

The Cato Institute report concludes:

“If private owners could increase revenues on long-distance routes ... the red ink might be erased. Ultimately, the decision of which routes should remain and which should be terminated is for the market to determine. Amtrak can be profitable, but only if Congress puts it back on track by weaning the railroad from federal subsidies.

“For two decades, Amtrak’s supporters have promised that self-sufficiency is ‘just around the corner.’ Now is the time for Amtrak to turn that corner.”

On Track at Home

Assuming there will be an Amtrak, it looks all set to stay in Memphis.

by Paul Gerald

In the world of Amtrak, there are many questions. But one that seems to have a relatively positive answer regards the train’s future in Memphis. As long as there is an Amtrak, it will come through Memphis.

The city of Memphis’ $24 million renovation of Central Station was delayed for a few months by bad weather, but MATA general manager Will Hudson says the Amtrak loading platform will be ready for passengers by the end of February. The ticket office is part of phase 2, with work planned to start this month.

That project contributed to Amtrak’s decision to bump service on its Chicago-to-New Orleans route back to seven days a week this summer.

“We have a 25-year contract with Amtrak to remain in that building,” Hudson says.


Whether Amtrak will exist in 25 years is another question, but Hudson says Central Station will be fine without it.

“Amtrak at this point is just a small percentage of what we’d like to take place in Central Station,” Hudson says, “so if they were no longer there, there are certainly other businesses we could move in. According to the information we receive from the federal government, Amtrak will be around. This is a viable route and a good mail route. When they were cutting services all over, they only cut one train per day here, so Memphis is important to them and vice versa.”

Amtrak spokes-man Mark Magliari adds that the timing of the train’s arrivals in Memphis is getting more attractive, as well. Because it’s between New Orleans and Chicago, Memphis will always be an early-morning and late-night stop, but right now the southbound train comes through at 7:54 a.m., and the northbound leaves at 10:57 p.m. That’s a lot better than 5 a.m. in the old, unrenovated station.

Magliari says that as much as one-third of passengers on the City of New Orleans get on or off the train in Memphis. “How well we do in Memphis is an important factor in the success of that train,” he says, “and certainly the station renovation is going to help that.”

What about the possibility of an east-west route through town, say from here to Atlanta, or a Washington-Dallas line?

“There’s certainly nothing imminent,” Magliari says. “We’re always looking at ideas, and that may well be a suggestion, but most route expansions have come through help from states.”


Translation: Amtrak is in no position to expand service right now, so if Tennessee and Georgia want a train from Memphis to Nashville to Atlanta, then like so many other states, they’ll have to pay for it.

Hudson says Central Station, meanwhile, is looking at a December 1998 completion, and he adds there’s a waiting list for commercial establishments trying to get in.

As of right now, Greyhound won’t be part of the station, as was previously planned. Hudson says the bus company decided to stay put since they own their current Union Avenue facility. Hudson says Greyhound is looking for a new home because of the new baseball stadium, but adds, “We have only had one call from them, and it was nothing of any great magnitude.”

Last week, after a press conference announcing the naming of the new baseball stadium, Memphis Redbirds’ owner Dean Jernigan said he hoped the bus station would move, allowing space for the Radison Hotel to expand eastward.

Greyhound officials, however, say they’re staying put.

“We have not been approached by the city or any other group or entity expressing interest in our land or our property,” says Greyhound public-relations manager Katherine Williams. “Until that happens, we have no intention to move.”

Meanwhile, Central Station has no room for them, anyway.

“We’ve already finished all our plans, so we would have to look for a site on the property,” Hudson says. “But since this is an intermodal transit hub, we will work with them any way we can to get them in there.”

Hudson says other plans for the station include a police precinct and retail establishments on the first and second floors, including “several restaurants that don’t want to be mentioned right now,” and 51 apartments in floors three through eight.

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