Amtrak breaks ridership records, but Congressional attacks continue

Amtrak announced this week that it has experienced 11 consecutive monthly ridership records in the current fiscal year, setting its highest ever single month ridership record in the month of July.  However, that good news didn’t stop Congressional critics from going through with a hearing attacking Amtrak’s involvement in commuter operations a day after the announcement.

Amtrak issued the release on September 10, the day before House Transportation & Infrastructure Committee Chairman John Mica (R-FL) held a hearing titled “Amtrak Commuter Rail Service: The High Cost of Amtrak’s Operations.”  The release—which may have been designed to preemptively counteract criticism leveled against the company—highlighted the decade of unprecedented growth experienced by the railroad:

Through 11 months of FY 2012 (October 2011 - August 2012), total Amtrak ridership is up 3.4 percent as compared to the same period last year. When the current fiscal year ends on September 30, Amtrak expects a new annual ridership record will be set, surpassing the current record of 30.2 million passengers established in FY 2011.

From FY 2002 to FY 2011, Amtrak ridership increased 44 percent and set new annual records in 8 of those 9 years. This long-term growth is occurring across the Amtrak national network and on all Amtrak business lines, including the Northeast Corridor, state-supported and other short-distance routes, and long-distance services.

The good news didn’t find its way into the statements made by Chairman Mica, who blasted Amtrak for its involvement in the commuter rail market in his prepared statements.

“Amtrak is a highly subsidized, Soviet-style rail system, but despite every ticket being underwritten nearly $50 by the taxpayers, Amtrak is an absolute failure in competing with the cost-effectiveness and level of service provided by the private sector,” Mica said.  The Chairman went on to say that “Amtrak needs to get out of the commuter rail business, the private sector should be given more opportunities to save taxpayers money in operating rail service, and federal funds should never be used by Amtrak to sue private entities for competition-related lawsuits.”

The hearing featured Amtrak’s President & CEO, Joseph Boardman, as well as representatives of independent rail operators and organized labor.  Boardman pushed back against the Chairman’s claim that Amtrak was operating monopolistically, pointing out that Amtrak only operates three commuter services out of the 26 commuter carriers in America listed by the American Public Transit Association—with Mica conceding that point.  Overall, Boardman seemed philosophical about the company’s place in the market:

From Amtrak’s point of view, the contract commuter business has both costs and benefits. It can generate net revenue, which allows us to reduce our dependence on Federal operating support. Because we do not use Federal funds to cross-subsidize these agencies, our bids can be more expensive than those of private companies that may underbid to enter the market or to build a market for other services such as capital replacement. Whatever the cause, profit margins have decreased significantly in recent years. 

Liability is also a major challenge. As you know, while Amtrak must maintain $200 million in liability insurance, other commuter operators are not subject to this requirement. When we take on a service, we must ensure that we don’t take on a liability obligation that could leave us vulnerable to a judgment or an award that could impact our financial viability. There are a lot of companies competing for the commuter business, and we are finding that agencies are increasingly asking them to take on much greater liability exposure in the event of an accident rather than having the agency purchase its own insurance to cover the risk. Amtrak cannot assume that risk. When responsibility for liability exposure is passed to a private commuter service operator that does not have adequate insurance, and can be constructed so that it can escape an unaffordable liability judgment through bankruptcy, the risk is in effect transferred to the riding public. If Amtrak assumes that liability, then the costs generated by a single commuter operation are transferred to the federal taxpayer, an option we do not believe is in our best interest.

The liability issue recurred throughout the hearing.  However, a solution was not evident.  When Representative Peter DeFazio (D-OR) asked about the objections leveled by independent operators against a recent Senate proposal that would’ve extended requirements placed on Amtrak to all rail operators, Joe Giulietti—Executive Director of the South Florida Regional Transportation Authority (Tri-Rail)—stated that the cost of acquiring $200 million in liability insurance was prohibitively high for most passengers rail companies.  When DeFazio shot back that $200 million was necessary—pointing to the settlement sums involved in the 2008 Metrolink crash in Chatsworth, California—Giulietti demurred, saying only that the liability reform needed to be addressed in an open manner that involved stakeholders.

Representative Corrine Brown (D-FL) attacked the hearing itself, calling it inappropriate given its coincidence with the 11th anniversary of the 9/11 terrorist attacks.  The Ranking Member argued that the committee should be focusing on unresolved security issues facing transportation.

“But we’re not holding a hearing on rail security … we are having a hearing, once again, criticizing Amtrak all while members of Congress are gathering on the East front steps of the Capitol,” said Congressman Brown.  “The fact is on this very day 11 years ago Amtrak and its employees worked around the clock to provide one of the only traveling options for many of this country.”


0 #10 edd 2012-09-17 18:44
0 #9 Richard Wise 2012-09-16 04:19
If I remember, it was the private railroads that ,wanted out of the rail assenger bujsiness because they were losing money. Now that the passenger trains in theNortheast corridor are making money, they wan those passenger train s back - but not the passenger rail outsude the northeasrt corridor. Are these the same people that call government funded passenger trains "Soviet Style railroading? Having the government hand back to private operators a profitable running railroad is no risk capitalism cronyism which to me is as bad as soviet style railroading.
0 #8 edd 2012-09-14 22:41
This guy needs to be voted out this fall. It might be a long shot because of the way his district is but we need to fund his opponent heavily as much as we can.
+1 #7 Mel H. Miller 2012-09-13 15:16
This is typical of Republicans. They HATE rail for whatever reason. While they complain about rail's cost, they make no bones about subsidising other modes which costs are much greater. Perhaps tn
heir oil buddies aern't getting as much benefit as far as more oil consumpion which increases their profits.
0 #6 Dennis Montone 2012-09-13 10:25
"Tail Gunner " John Mica....interes ting.
+3 #5 Larry Krieg 2012-09-13 03:17
Calling Amtrak a "soviet-style" railroad is a dangerous attempt to elicit knee-jerk reactions. Dangerous because it is perilously close to the tactics of Sen. Joseph McCarthy (R-WI) in the early 1950s, who instigated "witch-hunts" using the words "communist", "socialist", "red", and "pinko" to attack his political opponents and achieve his own "fame".

That said, the vast majority of passenger rail service in the world is run by government-owne d corporations. Two exceptions stand out: The United Kingdom and Japan. These countries have systems that put private operators in charge of trains. They are very different systems and they merit study, *but* they depend on the fact that the government owned the right-of-way and was able to legislate how it is used. The EU has also legislated that trains be run by entities separate from the track-owners, but again the tracks were (and largely still are) owned by government corporations. I don't know of any country other than the US where a government corporation (Amtrak) runs trains over privately owned tracks. The certainly wasn't the case in the Soviet Union!
+1 #4 Chris Cline 2012-09-13 00:27
What happens to AMTRAK if the GOP takes over the White House next year?
+1 #3 DavidNice 2012-09-12 23:16
Mica's comments puzzle me. Does he think airlines have been providing great customer service in recent years? If so, he must not have done any flying in recent years. The Stalin remark is bizarre; no one is compelled to take Amtrak, and no one is shot or sent to Siberia if he or she criticizes Amtrak. Amtrak's presence in commuter service is a result of its expertise in running passenger trains. Does Mica think that God intended for all of us to drive on the freeways, one person per car, regardless of the congestion, pollution, and cost of oil, especially imported oil?
+1 #2 DavidNice 2012-09-12 22:52
Congressman Mica thinks that other transportation modes provide better service than Amtrak??? Has he flown an airline lately? They lost interest in customer service years ago. The Stalin crack is especially foolish; nobody is forced to ride Amtrak, and nobody gets shot or sent to a prison camp for criticizing it.
+1 #1 James H. H. Lampert 2012-09-12 22:41
Well of course the Congressional attacks continue. Not in spite of Amtrak's ridership growth, but because of it. Not because it's a "highly subsidized, Soviet-style rail system," but because it competes, and competes successfully, with more heavily subsidized highway and air transportation, cutting into their profitability.

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