Amtrak

Amtrak is the trademark name of the intercity passenger train system created on May 1, 1971 in the United States. Formally known as the National Railroad Passenger Corporation, the trademark name Amtrak is a portmanteau of the words America, travel and track.

Historic background

In its original conception, Amtrak owned no track and thus was not truly a railroad. It acquired the majority of the Northeast Corridor, by far its largest area of owned tracks, in 1976, following the bankruptcy of Penn Central in 1970 and subsequent merger into the federally-owned Conrail in 1976. The failed company had been carrying a large portion of the nation's passenger rail traffic, adding to its massive financial losses.

Related Topics:
Railroad - Northeast Corridor - 1976 - Penn Central - 1970 - Conrail

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Relieving passenger burden, a right to share tracks with freight railroads

Amtrak was created to relieve private railroad companies of their previous legal obligation to provide passenger rail service as common carriers and allow them to pursue their interests in more profitable freight operations. It was planned from the outset that Amtrak trains would continue to use the existing network of tracks in the freight rail system. For the most part, this scheme still exists today, and in most parts of the United States Amtrak trains share tracks with the freight-oriented host railroads.

Related Topics:
Private - Common carrier - Freight

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Historically, on routes where a single railroad has had an undisputed monopoly, passenger service was as spartan and as expensive as the market would bear, since such railroads had no need to advertise their freight services. But on routes where two or three railroads were in direct competition with each other for freight business, such railroads would spare no expense to make their passenger trains as fast, luxurious, and affordable as possible, because it was considered to be the most effective way of advertising their profitable freight services.

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

As early as the 1930s, automobile travel had begun to cut into the rail passenger market, somewhat reducing economies of scale, but it was the development of the Interstate Highway System and of commercial aviation in the 1950s and 1960s that dealt the most damaging blows to rail transportation, both passenger and freight. There was little point in operating passenger trains to advertise freight service when those who made decisions about freight shipping traveled by car and by air, and when the railroads' chief competitors for that market were interstate trucking companies. Soon, the only things keeping most passenger trains running were legal obligations. Meanwhile, companies who were interested in using railroads for profitable freight traffic were looking for ways to get out of those legal obligations, and it looked like passenger rail service would soon become extinct in the United States.

Related Topics:
1930s - Interstate Highway System - Commercial aviation - 1950s - 1960s

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

The National Association of Railroad Passengers (NARP) was formed in 1967 to lobby for the continuation of passenger trains. Its lobbying efforts were hampered somewhat by Democratic opposition to any sort of subsidies to the railroads and Republican opposition to nationalization of industry. The proponents were aided by the fact that few in the Government wanted to be held responsible for the seemingly-inevitable extinction of the passenger train, which most regarded as tantamount to political suicide.

Related Topics:
National Association of Railroad Passengers - 1967

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

On October 30, 1970, President Richard M. Nixon signed a law creating Amtrak. At the time, it was thought that it would give passenger trains one last hurrah, and allow the President and Congress to save face, then quietly disappear. Many insiders, including President Nixon's aides, assumed that Amtrak would disappear within two years of its creation. However, popular and political support for Amtrak has persisted while subsidies from both federal and state governments have helped Amtrak to survive and grow.

Related Topics:
October 30 - 1970 - Richard M. Nixon

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

The fuel shortages of the mid-1970s on the nation's highways and increased air fares which also resulted in creating a renewed interest in passenger rail travel. Given that railroads used fuel very efficiently, passenger rail travel no longer seemed quite so outmoded. Consequently, Amtrak's ridership began to increase. Another rebound occurred after the September 11 attacks in 2001.

Related Topics:
1970s - September 11 attacks - 2001

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Conflicting goals

Amtrak was established to relieve railroads of their federally-mandated responsibility to transport passengers as a priority over freight. This was causing increasingly large financial losses for the railroads as the networks of federally-funded highways and airports expanded. From the outset, Amtrak was expected to pursue conflicting goals: Amtrak was supposed to provide a national rail passenger service while simultaneously operating as a commercial enterprise.

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

There have been few times in history when any intercity rail passenger operation in the world has been truly profitable, even with respect to only its operating costs, and passenger trains have never brought in enough revenue to pay for their infrastructure costs. Even highly efficient private-sector railroads such as the Norfolk and Western Railway could not earn a profit, or even recover operating expenses for passenger service. The concept of Amtrak as a for-profit business was fatally flawed before the first passenger boarded.

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Amtrak is in many ways dependent on freight railroads. As it owns little track, it must rely on maintenance done by the freight owners, and sometimes has to cancel service over routes taken out-of-service by the host freight railroad (as occurred recently with service to Phoenix, Arizona) or pay to maintain the tracks.

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Politically-appointed leaders and congressional funding

Without a dedicated source of capital equipment and operating funding (except for competitive passenger fares and even less express income), Amtrak's continued operation has always been dependent upon the Executive and Legislative branches of the U.S. government. Both congressional funding and appointments of Amtrak's leaders are subject to political considerations, which have varied widely during its existence through seven U.S. presidencies and major shifts of power in the U.S. Congress.

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Because Amtrak's board and president are all political appointees, some have had little or no experience with railroads. However, Amtrak has also benefited from both highly skilled and politically-oriented leaders.

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

For example, in 1982, former U.S. Secretary of the Navy and retired Southern Railway head W. Graham Claytor Jr. brought his naval and railroad experience to the job. Claytor had served briefly as an acting U.S. Secretary of Transportation in the cabinet of President Jimmy Carter in 1979, and came out of retirement to lead Amtrak after the disastrous financial results during the Carter administration (1977-1981). He was recruited and strongly supported by John H. Riley, an attorney who was the highly-skilled head of the Federal Railroad Administration (FRA) under the Reagan Administration from 1983-1989. Secretary of Transportation Elizabeth Dole also tacitly supported Amtrak. Claytor seemed to enjoy a good relationship with the Congress for his 11 years in the position. Of course, politics aside, that may have also been because he did a good job. According to an article in Fortune magazine, through vigorous cost cutting and aggressive marketing, within 7 years under Claytor, Amtrak was generating enough cash to cover 72% of its $1.7 billion operating budget by 1989, up from 48% in 1981. http://static.highbeam.com/f/fortune/october231989/stillchuggingwgrahamclaytorjrfortunepeoplecolumn/

Related Topics:
1982 - Secretary of the Navy - Southern Railway - W. Graham Claytor Jr. - Secretary of Transportation - Jimmy Carter - 1979 - 1977 - 1981 - John H. Riley - Federal Railroad Administration - Elizabeth Dole - 1989

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Myth of a self-sustaining Amtrak

Two of the leaders who followed Claytor lacked freight railroad or private-sector experience. Further, they each inherited the goal of making Amtrak operationally self-sufficient, an idea which began under David Stockman and his successors at the Office of Management and Budget (OMB) while Claytor was Amtrak's president (circa 1986).

Related Topics:
David Stockman - Office of Management and Budget - 1986

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Claytor's replacement was Thomas Downs. Mr Downs had been City Administrator of Washington DC, and oversaw the Union Station project, which had experienced both massive delays and cost overruns. Under Downs, Amtrak began to claim that it could achieve operating self-sufficiency, and its leaders seemed to be increasingly misleading as to the prospects of achieving that goal when pressed by Congress and the media.

Related Topics:
Thomas Downs - Washington DC - Union Station

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

After Downs left Amtrak, George Warrington was appointed by the board as the company's next president. He had previously been in charge of Amtrak's Northeast Corridor Business Unit. When he took the helm of Amtrak in January, 1998, self-sufficiency was still officially a stated goal, although it was becoming elusive in the eyes of Congress. Under Warrington's administration, Amtrak was mandated by the Administration and Congress to become totally self-sufficient within a five-year period, and all its management efforts were directed to that goal. Passengers became "guests" and there were expansions into express freight work. Finally, at the end of the 5-year period, it became clear that self-sufficiency was an unachievable goal, no matter how much additional express revenue was gained or how many cuts were made in Amtrak services.

Related Topics:
George Warrington - 1998

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

In fairness, while both Downs and Warrington had extensive experience in government, neither had the non-governmental cost accounting or practical experience in private-sector railroading that Claytor had had. Claytor also enjoyed the benefit of serving during the Reagan Administration when increases in federal spending on military items was drawing a lot of the political attention in Congress.

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

The efforts to expand Amtrak's express income were unpopular with the host freight railroads, who did not want the additional Amtrak traffic it brought (or the competition). The express work also brought Amtrak new political enemies in the powerful trucking lobby before Congress. Warrington also had the burden of delays in implementation of the new Acela Express high-speed trainsets, which promised to be a strong source of income and favorable publicity along the Northeast Corridor between Boston and Washington DC.

Related Topics:
Trucking - Acela Express - Northeast Corridor

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Gunn administration: reality check

When David L. Gunn was selected as Amtrak president in April 2002, Amtrak self-sufficiency had largely fallen out of favor as a realistic short-term goal. He came with a reputation as a strong, straight-forward and experienced operating manager but with a style sometimes putting him at odds with others. Years earlier, Gunn's refusal to "do politics" put him at odds with the WMATA (Metro) board, which includes representatives from the District of Columbia and suburban jurisdictions in Maryland and Virginia during his tenure from 1991-1994. His work as president of the New York City Transit Authority from 1984 to 1990 and as Chief General Manager of the Toronto Transit Commission in Canada from 1995-1999 earned him a great deal of operating credibility, despite his rough handling of politics and labor unions. The two agencies were each the largest transit operations of their respective countries. Prior to 1974, Gunn also gained private-sector railroad experience with Illinois Central Gulf Railroad, the New York Central Railroad System (before their 1968 merger into Penn Central) and for the Atchison, Topeka and Santa Fe Railway. Before that, he had experience with the U.S. Navy in the Naval Reserve. Supporters consider Gunn's credentials to be the strongest at the head of Amtrak since W. Graham Claytor came out of retirement by request in 1982.

Related Topics:
David L. Gunn - April - 2002 - WMATA - Maryland - Virginia - New York City Transit Authority - Toronto Transit Commission - Illinois Central Gulf Railroad - New York Central Railroad System - Penn Central - Atchison, Topeka and Santa Fe Railway - U.S. Navy

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

So far, Gunn has been polite, but very direct in response to congressional criticism. He is also seen as more credible by Congress, the media, and many Amtrak supporters and employees. Perhaps more than any past president of Amtrak, Gunn seems willing to publicly oppose the policy and budget positions of the President of the United States who appointed the board at whose pleasure he serves.

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

A more realistic view of Amtrak under the Gunn administration is that no form of mass passenger transportation in the United States is self-sufficient as the economy is currently structured. Highways, airports, and air traffic control all require large expenditures to build and maintain, although some of those taxpayer dollars are gained for other modes under the guise of user fees and highway fuel and road taxes. Before a Congressional Hearing, Gunn answered a demand by leading Amtrak critic Arizona Senator John McCain to eliminate all operating subsidies by asking the Senator if he would also demand the same of the commuter airlines, upon whom the citizens of Arizona are much more dependent. McCain, usually not at a loss for words when debating Amtrak funding, did not reply.

Related Topics:
Arizona - John McCain - Airline

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Some of Gunn's actions have been seen by many as politically wise. He has been very proactive in reducing layers of management overhead and has eliminated almost all of the controversial express business. He has stated that continued deferred maintenance will become a safety issue which he will not tolerate. This has improved labor relations to some extent, even as Amtrak's ranks of unionized and salaried workers have been reduced.

~ ~ ~ ~ ~ ~ ~ ~ ~ ~