Amtrak (National Railroad Passenger Corporation)

Fact Box

Amtrak


Formed on May 1, 1971
Government-owned corporation
Headquarters- Union Station, Washington, D.C.
President- Joseph H. Boardman
Employees- 19,000
Annual budget (2011)- $2.6 billion plus railroad fares
Website- amtrak.com

Overview
The National Railroad Passenger Corporation (Amtrak) is a government-owned corporation established in 1971 to provide intercity passenger train service throughout the United States. The name Amtrak comes from a combination of “American” and “track.” The members of Amtrak’s board are appointed by the President and are subject to confirmation by the Senate. Amtrak operates passenger service on 21,000 miles of track that connect 500 destinations in 46 states and select Canadian cities. Although the federal government owns all of Amtrak’s stock, it is widely considered to be valueless. In recent years, Amtrak’s financial struggles have led to Republican calls to privatize parts of the railroad and end federal subsidies that keep the railroad going. Attempts by Amtrak to improve its service in key parts of the country have backfired, resulting in more bad publicity for the beleaguered business.

History

Between 1920 and 1970, private passenger rail services in the United States were in an advanced state of decline. From the middle 1800s until 1920, almost all travelers in the United States went by rail. Each of the major railways was owned by a private company, and the system continued like this until 1929.  

Rail travel decreased sharply between 1929 and 1934, as the stock market crash and Depression curtailed available funds. To combat this, railroad companies developed new, diesel-powered streamliners such as the Pioneer Zephyr and Flying Yankee. But profits continued to dwindle until World War II when troop movements and shipping of supplies increased passenger traffic sixfold. 

After the war, railroads tried to rejuvenate passenger traffic and briefly enjoyed a revival. But the increased traffic was short-lived. Between 1946 and 1964, passenger numbers decreased significantly, and by the mid-1950s losses totaled $700 million. Equipment suffered and stations emptied as neighborhoods around them declined. Experts attributed these declines to several factors. Some claimed that the industry was hobbled by government regulation and labor inflexibility, which occurred just as airline and private automobile travel were expanding. By the time the Interstate Commerce Commission (ICC) approved the mergers of several existing railroads in the 1960s, the federal government had disinvested in Amtrak, and years of deteriorating equipment and station facilities had taken their toll. These mergers were unsuccessful. 

Railroads also carried a substantial tax burden (15% on passenger rail travel). Local governments charged additional property taxes on land owned by railroads, which also had to deal with antiquated work rules and unyielding trade unions. Meanwhile, the widening highway system (subsidized by the federal government) and ease of obtaining post-war automobile loans drew greater numbers to the roads. 

In the 1960s, several major railroads declared bankruptcy. The Pullman Company became insolvent in 1969. In 1970, President Richard Nixon signed the Rail Passenger Service Act, which was sponsored by the National Association of Railroad Passengers (NARP). The bill sought funds to ensure the continuation of train service in the United States. The National Railroad Passenger Corporation (NRPC) was originally a public-private entity that received taxpayer funding and assumed operation of intercity passenger trains. It was originally called Railpax, but before it began operations, the name was changed to Amtrak. 

The law provided as follows:

  • Any intercity passenger service currently operating could contract with the NRPC and join the national system.
  • These railroads bought into the national system based on recent losses. The purchase price could be satisfied with cash or rolling stock. In exchange, the railroads received NRPC common stock. 
  • Participating railroads were freed of the obligation to operate intercity passenger service after May 1, 1971. Some chosen by the Department of Transportation maintained basic systems of service that were paid for by NRPC with federal funds.
  • Any railroads choosing not to join the NRPC system were required to continue their existing passenger service until 1975 and then had to pursue the regular ICC approval process for any discontinuance or alteration of the service. 

President Nixon and his administration considered this an experiment that was likely to fail and wanted to give railroad travel one last chance. They expected public support to wane, and that Amtrak would quickly support itself, but neither proved true. Amtrak began operations in May 1971, and 20 out of 26 existing railroads joined the national system. After they switched over, Amtrak continued service on 182 of 364 trains previously in service. 

Amtrak inherited problems with the existing train stations. Maintenance had been shoddy, and in several cases, facilities were redundant. Merging trains, services, and train stations made train travel more efficient, and soon Amtrak had the opportunity to acquire additional railways. As several northeastern railroads went bankrupt in the early 1970s, Congress passed the Railroad Revitalization and Regulatory Reform Act of 1976. This law created Conrail, and also enabled the Northeast Corridor Railway to be transferred to Amtrak. This was a crowded route and generated much revenue for Amtrak. But the route’s costs were also higher. Federal subsidies increased substantially, but Amtrak fell far short of financial independence in its first decade, as ridership increased. Fuel shortages in the 1970s increased costs for automobile and airline travel, which helped drive even more customers to Amtrak.

Political battles over funding followed over the next decades. The federal government, as Amtrak’s only investor, demanded greater accountability and trimmed budgets. By 1997, Amtrak faced a serious cash crisis. As part of the Taxpayer Relief Act of 1997 (pdf), Amtrak received a $2.3 billion tax refund that temporarily resolved the cash crisis. George Warrington, the next leader of Amtrak, ran into trouble with Congress when his lavish spending and extensive borrowing resulted in him trying to mortgage Penn Station in New York. After this elicited a firestorm of controversy, Warrington was forced to step down. This set in motion a series of political maneuverings with Congress that culminated in Amtrak having two managers over the next three years (David Gunn and Alexander Kummant, both former agency president & CEO).

Ridership increased again in the 2000s after capital improvements were made to the Northeast Corridor, Amtrak set ridership records in seven of the last eight fiscal years. During FY 2010, Amtrak reported more than 28.7 million passengers, which was its highest total to date, and it predicted 30 million riders for 2011. Although the federal government has invested a total of $36 billion in Amtrak during the 40 years that it has been in operation, recent years of under-funding have caught up with the agency. Congress issued increased funding and instituted a new path to financial self-sufficiency, but these plans failed. Amtrak’s express freight delivery caused problems with competing freight operators and the trucking industry. As a result, Amtrak was not able to add enough revenue, or cut enough expenses, to break even. Although it was clear that Amtrak was unlikely to achieve financial self-sufficiency, Congress again approved funding in 2002 and released Amtrak from its requirement to become financially independent. 

As of 2011, while still operating at a loss, Amtrak succeeded in covering 85% of its operating costs with ticket sales and other miscellaneous revenue, with the balance paid for by the federal government. That year, the American Recovery and Reinvestment Act provided $1.3 billion in funding. In May 2011, President Barack Obama proposed placing Amtrak under federal agency budget—so that it receives funding under the Federal Railroad Administration—rather than continuing to depend on direct Congressional appropriations. Many Republicans are opposed to federal government financing of the agency, with House Transportation Committee Chairman John Mica (R-Florida) calling Amtrak a “Soviet-style operation.”


What it Does

The National Railroad Passenger Corporation (Amtrak) is responsible for operation and maintenance of a national rail network. The agency serves more than 500 destinations in 46 states on 21,000 miles of routes. Amtrak employs nearly 19,000 people and welcomed more than 28.7 million passengers in 2010. 

The Boston-New York-Washington portion of the Northeast Corridor is Amtrak’s busiest with more than 10 million riders in 2010. The next three routes also had ridership over a million each:

Pacific Surfliner Service (San Diego-Los Angeles-San Luis Obispo) 2,613,604

Capitol Corridor Service (San Jose-Oakland-Sacramento-Auburn)                1,580,619

Keystone Corridor Service (Harrisburg-Philadelphia-New York City)         1,296,838

Amtrak owns 1,518 Amfleet, Superliner, Viewliner and other railroad passenger cars, 459 locomotives, 80 Auto Train vehicle carriers and 101 baggage cars. State-owned equipment includes 140 railroad passenger cars and 22 locomotives. 

Amtrak also owns property, including 363 miles of the 456-mile Northeast Corridor connecting Washington, Philadelphia, New York, and Boston, as well as three heavy maintenance facilities in Wilmington and Bear, Delaware, and Beech Grove, Indiana, and other maintenance facilities in Washington D.C., New York City, Rensselaer and Niagara Falls, New York, Boston, Hialeah, Florida, Chicago, New Orleans, Los Angeles, Oakland, and Seattle.

Approximately 70% of Amtrak travel is done on track owned by other railroads. Amtrak pays these host railroads for use of their track (more than $136.9 million in 2010) and other resources required to operate Amtrak trains. Host railroads also receive incentives for on-time dispatching. 

The six largest host railroads for Amtrak trains are:

BNSF Railway

6.8 million train miles

Union Pacific Railroad

6.19 million train miles

CSX Transportation

5.90 million train miles

Norfolk Southern Railway

2.49 million train miles

Canadian National Railway

1.46 million train miles

Metro North Railroad

1.34 million train miles

Fifteen states contract with Amtrak for operation of trains that supplement the national Amtrak network. State and regional agencies pay for most of these services and continued operation of these routes is subject to annual contracts and legislative appropriations. These supplemental train routes include:

  • California: Capitol Corridor Service (San Jose-Auburn), Pacific Surfliner Service (San Luis Obispo-San Diego); and San Joaquin Service (Bakersfield-Sacramento/Oakland, plus an extensive system of connecting Amtrak Thruway Motorcoach routes.
  • Illinois: Hiawatha Service (Chicago-Milwaukee), Lincoln Service (Chicago-St. Louis), Illini & Saluki (Chicago-Carbondale) and Illinois Zephyr & Carl Sandburg (Chicago-Quincy)
  • Maine: Downeaster (Portland-Boston)
  • Michigan: Blue Water (Port Huron-East Lansing-Chicago) and Pere Marquette (Grand Rapids-Chicago)
  • Missouri: Missouri River Runner (Kansas City-St. Louis)
  • New York: Adirondack (New York City-Montreal, Quebec)
  • North Carolina: Carolinian (Charlotte-New York City) and Piedmont (Raleigh-Charlotte)
  • Oklahoma: Heartland Flyer (Oklahoma City-Fort Worth)
  • Oregon: Amtrak Cascades (Eugene-Portland-Seattle-Vancouver, British Columbia)
  • Pennsylvania: Keystone Corridor (Harrisburg-Philadelphia-New York City)
  • Texas: Heartland Flyer (Fort Worth-Oklahoma City)
  • Vermont: Ethan Allen Express (Rutland-New York City) and Vermonter (St. Albans-Washington)
  • Virginia: Extended Northeast Regional (Lynchburg) and additional Northeast Regional (Richmond)
  • Washington: Amtrak Cascades (Vancouver, British Columbia-Seattle-Portland-Eugene)
  • Wisconsin: Hiawatha Service (Milwaukee-Chicago)

Several states, including Connecticut, Delaware, Maryland, New Jersey, New York, Pennsylvania, and Virginia, make payments to Amtrak through transit agencies or state transportation departments for use of the Amtrak-owned Northeast Corridor facilities by commuter trains. Amtrak operates more contract commuter services than any other company. These agencies or states also provide other funding on the Northeast Corridor, including capital funds for infrastructure and/or stations. Amtrak currently provides commuter service for the following state and regional authorities: Caltrain (California); MARC (Maryland Area Regional Commuter); Shore Line East (Connecticut); and Metrolink (Southern California).

Amtrak provides equipment maintenance services for the Sound Transit in Seattle, dispatching and maintenance of way service to the Massachusetts Bay Transit Authority and dispatching services for the South Florida Regional Transportation Authority's Tri-Rail operation.

In September 2010, Amtrak announced plans to build a Northeast Corridor “Super Express” rail—a 426-mile system reported to cost $117 million, with a targeted completion date of 2040. The agency predicts a near-tripling of ridership and the creation of 160,000 jobs as a result of this project. In 2011, a proposal surfaced in Congress for the privatization of the Northeast Corridor, which would take it out of Amtrak’s hands.


Where Does the Money Go?

As a federally funded corporation, National Railroad Passenger Corporation (Amtrak) expenditures go toward costs associated with the operation of its passenger train system, and fall into one of three large categories: operating costs, capital, and debt service. Eighty-five percent of Amtrak’s operating costs are paid for with ticket sales and other miscellaneous revenue; the balance is paid for by the federal government. The agency’s FY 2013 budget proposal includes $450 million for operations to support the national network of corridor, state-supported and long-distance trains; $1.435 billion for national capital and infrastructure projects; $212 million for debt service; and $60 million for Northeast Corridor (NEC) development projects, the Gateway Project (total project cost is $13.5 billion, which is for the building of two new tunnels into Manhattan and expanding New York Penn Station capacity), and the high-capacity 220 mph high-speed rail system from Washington D.C. to Boston.

Amtrak’s FY 2012 budget proposal included $1.285 billion for capital investments to improve infrastructure and existing lines, including in the NEC; $616 million to operate more than 300 daily trains nationwide, and $271 million for debt service. Also included was a request for funds to purchase 40 Acela Express coach cars to add capacity to the high-speed rail line from Washington to Boston, which would be ready to roll in 2014. There was an additional $50-million request to begin preliminary work on the Gateway Project. In its Grant and Legislative Request, Amtrak reported that it had $5 billion in deferred maintenance costs, including 140-year-old tunnels in Baltimore, and 224 bridges that have exceeded their designed lifespan.

In the past, Amtrak has purchased some of its passenger cars from Talgo, a Spanish manufacturer of railway cars. When it set out to create a billion-dollar, high-speed service for cities in the northeast, Amtrak turned to a joint project involving Bombardier (75%), a Canadian conglomerate and largest maker of passenger cars in the world, and Alstom (25%), a French multinational conglomerate.

Data on Amtrak

Amtrak Route Map as of 2013 (Source: Amtrak website)
Amtrak Ridership 1972-2014 (source: Amtrak)
Graphs source: September 2003 Congressional Budget Office Study. Unfortunately, later data does not appear to be available.
For reference, below is Amtrak's ridership from 2009-2013 (Source: Amtrak FY2014 Budget Justification)
For reference, below is a graph of Amtrak's operating deficits throughout its history (Source: Amtrak FY2014 Budget Justification).


Source
  • http://www.allgov.com/departments/independent-agencies/national-railroad-passenger-corporation-amtrak?agencyid=7344

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