Amtrak President Alex Kummant spoke with Reuters Boston Bureau Chief Jason Szep this past week about a variety of issues affecting the railroad. While not groundbreaking, the exchange nonetheless afforded Mr. Kummant the chance to cover some issues in more detail than most news stories permit. The whole discussion is worth reading if you follow these sorts of things, but I include a few excerpts and my own comments below.
Szep led off with gas prices and their role in Amtrak’s record ridership increases. After suggesting that 10 or even 11 percent growth might be possible this year, Kummant also notes, “we would say roughly that system-wide about half of our growth is because of overall gasoline prices.” He also points out that ridership retention is improving, which is a very encouraging trend. He also gets the chance to note that Amtrak’s on-time performance measures on the Northeast Corridor (NEC) are “significantly better than the airlines and on a tighter window” – that latter point is often overlooked in Amtrak coverage.
Szep then moves to Acela and increasing its market share. Kummant here notes that in the combined air-rail market between New York and Washington, Amtrak now has 63%. One real hurdle Amtrak has to overcome as it tries to increase that already high figure is the lack of excess capacity on the NEC. Kummant suggests that as Amtrak moves three million people per year on its twenty Acelas, which hold about 300 at any one time, less than 10% of additional capacity remains. He also indicates the Regional trains have about 15 to 17% additional capacity. That may be true using Amtrak’s current fleet numbers, but there are numerous Amfleet cars that could be returned to service so I think that there is more capacity in the current fleet than Kummant gives it credit.
The next topic is fleet recapitalization. Amtrak’s NEC fleet consists of Acela trains and 30 year old Budd Amfleet cars. The heart of Kummant’s reply here, overlooked in nearly every discussion of Amtrak in the mainstream media, is the long lead time between the decision to acquire new cars and the time when they enter revenue service – 6-8 years according to Kummant. In other words, service in 2015 requires decisions today. Without the political and financial support to proceed, the nation will be unable to prepare its passenger rail fleet for future service and growth. In the past, Amtrak has gone into debt for its fleet renewal programs, and the firm still labors under those decisions. It makes sense to me that Amtrak look to the Federal and state governments to chose a policy and decide how to fund that.
Referring to last week’s House reauthorization, Amtrak’s first authorization in nearly ten years, Szep asks Kummant how much of the $14 billion over the next five years Amtrak expects to receive. Kummant says the annual capital grant should increase from about $600 million to $1 billion, but he notes, “We could easily spend twice of that if you look at the state of the repair backlog.” It is precisely that backlog – caused by decades of Federal neglect – that would be reformers ignore in their calls for privatization (more on the absurdity of this here). If the physical plant calls for over $700 million of work per year for the next ten years to return to a state of good repair, who imagines a private firm willingly seeking out responsibility for that $7 billion obligation? Any firm that shows interest is anticipating government support, and if they say otherwise they are either fools or liars.
The $7 billion backlog also means that the increased capital grant is, in Kummant’s words again:
“…an important and significant increase. But it still doesn’t leave that much headroom for additional equipment. So if you are still talking about a multi-billion type of acquisition program to replace all the equipment in the Northeast Corridor I think we have to look at more than that.”
Moving beyond the NEC, Szep asks about high speed rail elsewhere in the country. Kummant makes a point here that he’s made previously (here for example), and it is the heart of this interview:
Clearly, we would all love to have TGV-style 200 mph trains. But there are a couple of things there. Those are tens of billions of dollars of investment. So the question becomes: How do we find the public, financial, and political lift for that? We get beaten up every day over raising an appropriations request for $40 million. And in the next breath we are asked ‘Well, when are you going to go high-speed?’ And the answer is, ‘If you have $40 billion we will talk about it.’
So there has to be a genuine political will and genuine political headroom to do that. Not to go too far afield here, but it begs the overall question on when is the federal government going to get serious about fundamental spending on infrastructure in this country like it did in the 1950s and early 1960s. We are way below the GDP levels of spending as a percentage of the federal budget. That’s a question for people that are in a higher pay grade than I am in terms of the political realities here. But that’s still what it comes back to.
Ultimately, these decisions need to reflect a long-term, coherent and coordinated national transportation policy that works hand in glove with a national energy policy to ensure mobility for people and commerce. Amtrak is not the entire solution, but it can be a useful component if it is not starved.
Szep next raises the dreaded p-word: profitability. Kummant’s reply:
I think it is absolute mythology that there’s any national system that is profitable. And I think the naysayers just have to get over it. There is no example. If you peel apart the British rail privatization, there were a tremendous numbers of problems with that. People say ‘Oh look at these wonderful new trains running around here. It’s all because of the miracle of the private market.’ That’s complete nonsense. There’s a bunch of new trains running around there because they spent five times as much tax money today as they did in 1990.
And actually if you look at the subsidy structures, we are awash in subsidies for all modes of transportation. There’s a $10 billion a year cash transfer from the general fund to the Highway Trust Fund. FAA gets $2.7 billion. We pay all security at Amtrak and yet there is a $1.5 billion subsidy that goes beyond any user fees for security in air travel. There’s $8 billion that goes into security and life safety for cruise ships. There’s four-plus billion dollars that goes to waterways. Let’s not even get into airport construction which is a miasma of state, federal and local tax breaks and tax refinancing and God knows what. And then there’s private aviation which gets huge subsidies in accelerated depreciation loss for small aircraft.
So I always get a good chuckle, if I’m in a good mood, when people talk about subsidized Amtrak. It’s always a lot of fun then to reel off every other mode that is subsidized. And one final point. If you actually look at the amount of public capital that flows into the rail network per passenger, it’s like $40 a passenger for Amtrak and $500 to $700 per automobile out there through the highways.