Is This Any Way to Run a Railroad?

Judging by the gaggle of travelers pouring onto trains over the Thanksgiving holiday, you might think that Amtrak is finally enjoying a smooth ride. But you would be wrong. Three decades after Congress created this poor stepchild from the remnants of the freight railroads' money-losing passenger business, Amtrak is closer than ever to derailing.

The Amtrak Reform Council, a federal oversight board, last month formally concluded what most observers have known for years: the nation's floundering passenger-train operator has no chance of becoming self-sufficient by the end of 2002, as Congress mandated five years ago. Now that it's clear Amtrak can't go it alone, Congress and the Bush Administration will have to decide whether to invest up to $100 billion in the kind of high-speed trains that glide along at up to 180 m.p.h. in Europe and Japan--or essentially give up on intercity passenger service altogether.

To many rail enthusiasts, the coming debate is long overdue. "Sept. 11 highlighted an existing problem: we don't have a balanced transportation system," says James RePass, president of the National Corridors Initiative, a nonprofit pro-rail group. "One of the reasons we have government is to do things we need that private business won't. No transportation system in the world really makes money."

And U.S. trains, compared with other modes of transportation, don't get much help. Passenger trains receive only 4% as much in federal subsidies as the $13 billion pulled in annually by airports. And highways get even more: $30 billion a year. Speedy, reliable passenger trains could help relieve congestion on the nation's highways and at its airports, especially for trips of 100 to 500 miles. If their railbeds were upgraded and widened to allow them to run faster, they could speed travelers between the business districts of cities such as Los Angeles and San Francisco, or Chicago and St. Louis, as quickly as the tag team of taxi-airplane-taxi. Trains are also two to eight times as fuel efficient as planes.

That doesn't mean that Amtrak, a creature of pork-barrel politics, is the right entity to revive rail travel. Burdened by the conflicting missions of providing comprehensive nationwide service and making a profit, Amtrak has failed at both. Now many experts are concluding that Amtrak as we know it will probably have to be scrapped--perhaps to be replaced by semiprivatized, regional passenger-train networks.

Since its inception, Amtrak has been saddled with entrenched bureaucracy, outdated equipment and high labor costs for its unionized workers. Thanks to its inconsistent schedules, for example, Amtrak pays heavily to put up stranded crews in hotels. In the past decade, passenger trains have not significantly increased the number of riders, which stands at 22 million a year--about 1% of all intercity travel. Only one Amtrak route, from Washington to New York City, makes money, and many trains amble along as slowly as they did 50 years ago.

In the most recent fiscal year, which ended Sept. 30, Amtrak had an estimated operating loss of $365 million (which doesn't include capital expenses) on total revenues of around $2.5 billion. This summer it took out a $300 million mortgage on New York City's Penn Station to keep the trains running. When the nation's skies were shut down after Sept. 11, Amtrak did enjoy a brief spike in traffic, especially on its faster, new Acela trains between Washington and Boston. But with leisure travel across the country slipping, Amtrak's overall September ridership was actually 6% lower than last year's, and security costs are rising.

Getting more people to consistently climb aboard is going to take a major commitment of both public and private dollars. Passenger trains, after all, didn't die a natural, market-driven death. In the 1930s and '40s, a consortium of General Motors, Firestone, Standard Oil and others bought up popular electric street trolleys in various U.S. cities only to shut them down, and lobbied for highways at the expense of rails.

Both airlines and highways have dedicated sources of federal funding: gasoline and ticket taxes. Until rail gets its own lifeline--like an extra penny of federal gasoline tax, which would bring in more than $1 billion a year--Amtrak may have to continue "fighting for table scraps," as CEO George Warrington puts it.

Members of Congress have proposed a host of bills to fix that, by giving Amtrak and the states anywhere from $20 billion to $70 billion in tax-exempt bonds and loan guarantees. But despite a diverse coalition of passenger-rail supporters, from Senate majority leader Tom Daschle to his Republican counterpart Trent Lott, it's unlikely that Amtrak will control all the funding or that it will survive much longer in its current form.

The Amtrak Reform Council will probably recommend that Congress create a new entity to take over Amtrak's responsibility for managing the busy, 700-mile Northeast Corridor, from Washington to Boston. The corridor is the only part of the nation's rails that Amtrak actually owns--the freight rails control the rest--and it costs $400 million to $600 million a year to maintain.