Bloomberg Businessweek - USA (2019-11-25)

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AMTRAK

Bloomberg Businessweek November 25, 2019

y journeyfromNewYorktoNewOrleanson

theAmtrakCrescentbeganforebodingly.I

wasstowingmybagsinthesleepingcar.As

thetrainleftthestation,theAmtrakatten-

dantwho’dbetakingcareofmeonthetrip

stoppedby.“Settlein,”headvised.“We’regoingtobehere

fora while.”

“Yeah,”I said.“Thirtyhours.”

“Allthat,”herepliedknowingly,“andmaybemore.”

The Crescent is one of Amtrak’s tardiest trains.

Southbound,it leavesNew York’sPennsylvaniaStation

everydayat2:15p.m.Around9 thenextmorningit pulls

intoAtlanta,wheremanypassengerseitherdepartorstep

offfora long-awaitedcigarette.It amblesthroughsomehyp-

noticallybeautifulAlabamacountrysideandsomnolent

MississippitownsbeforearrivinginNewOrleans,accord-

ingtotheschedule,at7:32p.m.Almostthree-quartersof

thetime,however,theCrescentis late,oftenbytwohours

ormore.Lastyear,Amtraklost$39millionontheline,which

comesasnosurprise.Howmanypeoplewanttotakesuch

anunreliabletrain?

ThepeopleI spokewithinthediningcarallhadstories

abouttheCrescent’sdelaysandwhytheyenduredthem.A

semiretiredcottoncompanyexecutivefromMontgomery,

Ala.,wasa trainloverandjusthappy tobeaboard.“I

enjoyit,”hesaid,“evenwhenit’slate.”Weatedinnerwith

anAtlantadentistreturningfroma weddinginNewYork.

Normallyhewouldhaveflown,buthe’dhadkneesurgery

andcouldn’tsitstillforseveralhoursona plane.

I hadbreakfastthenextmorningwithDavidandSarah,

LongIslandersintheirmid-20s.Davidwasterrifiedofflying.

“It’sa completelyirrationalfear,butI standbyit,”hesaid.

SarahoncewaitedeighthoursfortheCrescenttoleaveNew

York,butshe’dgrownuptakinglongtripsonAmtrakand

enjoyedtheirquirkymoments.Beforethemealwasover,a

congenialdiningroomattendantnamedClaudeMitchellled

usallina renditionof“HappyTrainRidetoYou,”dedicated

toa 4-year-oldtakinghermaidenrailexcursionwithher

grandparents.Wewouldn’thavedonethatona plane.

f youwantedtocreatea railroadfrom scratch,

you’dneverdesignonelikeAmtrak.It had 32 mil-

lionriderslastyearandrevenueof$3.2billion.But

it hadanadjustedoperatinglossof$171millionand

hasneededfederalsubsidiestostayafloatevery

yearsinceCongresscreatedit in1971.Themostfunctional

pieceofAmtrakis the457-mileNortheastCorridorbetween

BostonandWashington.Thetrainsonthislinemaynotbe

asfleetasthebulletsofEuropeandJapan,buttheyrunfre-

quentlyandprettymuchontime.Amtrakcanmakesureof

thatbecauseit ownsalmostalltheNortheastCorridortrack

andcontrolsmuchofthedispatchingonit,whichhelps

explainwhythecorridorhad 12 millionriderslastyearand

anoperatingprofitof$524million.

Thenthere’stherestofAmtrak’s21,400-milenetwork.

DoyouwanttocatchAmtrakinCleveland?There’sno

trainleavingtherebefore1:54a.m.orafter5:50a.m.Bring

somethingtoread,becauseoutsidetheNortheastCorridor,

Amtrak’slong-distancetrainsoperatedaccordingtosched-

uleonly43%ofthetimelastyear.

ThebiggestreasonisthatAmtrakownshardlyanyof

thesetracks.Forthemostpart,theybelongtofreightrail-

roads,whosepredecessorspersuadedCongresstoform

Amtrakin 1971 totakeovertheirfailingpassengeroper-

ations.Inreturnforwhatwasessentiallya bailout,the

freightsagreedtogiveAmtrakpreferenceontheirtracks.

Themeaningofpreferenceis technicalandsomewhatdis-

puted,butinessencefreighttrainsaresupposedtopull

ontoa sidingsotrainsliketheCrescentcangetby.Inprac-

tice,thefreights,whichcontrolthedispatchingontheir

rails,oftenkeepAmtraktrainsidlingwhiletheirownslower-

movingtrainspass.

TheFederalRailroadAdministrationandAmtrakwant

tosortthisout byestablishingperformance standards

designedtoensurethatthetrainsareontimemorefre-

quently.Thefreightshaveresisted.IanJefferies,presidentof

theAssociationofAmericanRailroads,thefreightindustry’s

chieftradeorganization,recentlytoldCongressthatthepri-

vaterailroadscarryfarmorecargothentheydidin1971,and

thatit’sunreasonabletoexpectthemtopullovereverytime

anAmtraktraincomesalong.(Paradoxically,Amtrakis also

anassociationmember.)ForAmtrak,thatintransigence—

orwhatit callsfloutingofthelaw—hasbeendevastating.

Ridershiponits 15 long-distanceroutesdeclinedlastyear

by4%,to4.5milliontrips.The$543millionoperatingloss

eclipsedtheNortheastCorridor’sprofits.

Fordecades,Congresslargelysidesteppedthequestion

ofhowtoimproveAmtrak,preferringtosquabbleabout

whetherAmtrakshouldevenexist.Butthesedays,Amtrak

enjoysstrongbipartisansupport.TheTrumpadministration

hasproposedsignificantlydefundingAmtrak,butCongress

hasdefiedtheWhiteHouse.Thisyearit lavishedAmtrakwith

almost$2billioninannualsubsidies.

Amtrak’sboardofdirectorsalsobrokewithtradition.In

2017,ratherthanrecruitingfromthepublic-transitsphere,it

hireda chiefexecutiveofficerfromtheprivatesector:Richard

Anderson,who’dbecomeCEOofDeltaAirLinesInc.after

it emergedfrombankruptcyandrestoredit toprofitability.

Workingwithouta salaryoranannualbonus—heprob-

ablydoesn’tneedthemoney,havingleftDeltawith$72mil-

lion in company stock—Anderson is determined to move

Amtrak toward self-sustainability. He’s vigorously cutting

costs and vows it will break even on an operating basis

next year. That, he says, will enable Amtrak to spend its

annual congressional subsidies to buy new trains and fix

up its tracks and stations. Anderson will need all the money

he can get. The Northeast Corridor has been underfunded

for decades and needs an estimated $41 billion to keep its

bridges and tunnels, some of which were built more than a

century ago, from collapsing.

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