Et tu, Forbes? - Forbes and other business publications attack Amtrak - Column

Railway Age, Dec, 1993 by William C. Vantuono

How sharper than a serpent's tooth it is to have a business press gunning for Amtrak.

First it was the Wall Street Journal, in an article entitled "Empty Seats," that attempted to pinpoint the failures and finacial foibles of rail transit. Now, Forbes Magazine, in a story by James R. Norman entitled "End of the Line" (published in the NOv. 22 edition), takes a similar tact of doom and gloom with Amtral, targeting in general what it loosely depicits as the carrier's drain on the American taxpayer, and specifically, the seeming reluctance of Amtrak Chairman W. Graham Claytor, Jr., to retire and make room for a successor.

There are several misrepresentations in this article. Some of the language, like Forbes' famous "Capitalist Tool" balloons, depends upon hot air to make it work. In other instances, the author has stated the truth, but not the whole truth.

Case in point: The huge losses cited by Norman are a red herring. The purported $731 miilion for FY 1993 may have been taken directly from Amtrak's annual report, but if Norman had checked the facts, he would have found that the components of that figure include depreciation (about 30% of the total, and a non-cash cost), and mandatory payments to Railroad Retirement (a cost that would exist with or without Amtrak). None of these are losses. Amtrak's actual "loss" is equivalent to its 1993 operating subsidy of $351 million.

Norman says that Congress, and memebers of the Clinton Administration, "question whether taxpayers ought to be subsidizing cross-countru trains that are little more than land-based cruise lines, most of whose passengers ride the trains for novelty and pleasure rather than transportation necessity. Do pleasure travelers really deserve public subsidy?"

Land-based cruise lines? Pleasure travelers? Tell that to people who use Amtrak instead of airlines because they reside in places where are service is not readily available, or because they dislike to fly or cannot fly (or drive) for medical reasons.

Do we poll people who drive or fly to find out how many are traveling on business, and how many are traveling on vacation? What difference does it make? And even if they are on vacation, isn't tour travel important to the national economy? The issue here is one of mobility and balance: not why people travel, but providing a choice of modes that best suits their needs--especially in a country as vast as the U.S., which is in search of efficient and environmentally-sound alternatives to congested highways and airports.

Norman didn't spare the Northeast Corridor, Amtrak's heaviest-traveled route, calling it "a huge financial drain." This is not entirely true. Trains that operate on the Corridor are profitable "above the rail," according to Amtrak's Cliff Black, even including a portion of maintenance. Only by assigning fully-allocated costs to the Corridor can it be shown that it is not profitable. Examine the entire picture, and you will find that Amtrak's ownership of the Corridor is used by the federal government as an indirect subsidy to the eight states where commuter service is operated over Corridor rails. Under federal law, Amtrak charges those commuter lines less than it changes the freight railroads for use of the same track.

Let's set the record straight. In the first place, to call Amtrak a "losing" operation implies that it should be turning a profit. Anyone familiar with Amtrak history (or who has bothered to study it) knows that the principal intent of Amtrak, when it was formed under the Rail Passenger Service Act of 1970, was not to turn a profit. Rather, it was to relieve the railroads of money-losing intercity passenger operations--freeing them to concentrate on their freight business--while preserving rail passengers service.

Then there's the subject of equipment. Norman quoted an anonymous Amtrak director who said that Amtrak's equipment is old, "a prescription for disaster." The next sentence cites the tragic Sept. 22 wreck in Alabama as adding substantially to Amtrak's insurance costs. This juxta-position implies that the Amtrak director as potentially disastrous, when in fact he was talking about marketing and maintenance costs--not safety. Anybody who has read past the headlines knows that Amtrak equipment had nothing to do with the Alabama accident.

Norman described Amtrak's equipment as "ancient and under-maintained." While it's true that long-term maintenance has been scaled backed in some areas and some shop personnel have been furlonged due to a leveling-off of passenger revenue, it is misleading to characterize Amtrak's equipment as decrepit. For example, over the next few years, Amtrak will be taking delivery on a fleet of 52 new GE Genesis locomotives as well as the balance of large vendors of modern Superliner and Viewliner railcars, not to mention the 26 high speed trainsets it will be ordering in 1994 for the Northeast Corridor. Amtrak's trains west of Chicago and New Orleans use modern equipment, and within three years, the Auto Train, Capitol Limited, and Citu of New Orleans will be equipped with new Superliner lls.