If you start doing dedicated, brand-new, right-of-way high-speed–and that’s what that would have to be–you could not do it along the existing system. First, you’ll be in court for 10 years; and then you’ll be under construction for another 10 years.
These are great ideas–and, look, I applaud high-speed; it’d be wonderful to have high-speed. We’re guys who run a nuts-and-bolts railroad who try to do stuff. So, with single-digit billions and single-digit years, I think we can dramatically increase ridership.
So, it’s a matter of infrastructure and funding for a high-speed D.C.-New York train?
It’s everything. First of all, you have to have a dedicated line to accomplish that.
A dedicated rail line?
That’s right. You cannot have commuters on it. Again, we run 750,000 commuters a day on our line. You can’t have any freight trains–we run 50 freight trains a day. You have to have completely different curvatures. You have to have different tunnels. And, again, wonderful, great, they’re vision statements; but, at the end of the day, you have to spend tens and tens of billions of dollars to do that. Then you have to ask yourself, ‘Is that really where you would put that capital?’
We continue to hear about, ‘Gee, how much more could be done?’ Fine. Maybe you can capture the other 40 percent [share of intercity Northeast air-rail commuters]. But I would argue you could capture that if we had new equipment; you could expand our capacity with new equipment; you could, again, drive the connectivity of the stations; you could make much higher-quality stations that basically drive connectivity with local operations. And I have little doubt that you could pick up another 20 points in share.
Amtrak has a very good on-time rate, especially compared to airlines. But what does cause the delays in the Northeast?
First of all, you’re talking about one of the most complicated pieces of railroad in the world. And I want to say that out loud: 1,900 train movements a day in the Northeast corridor; you’ve got minute headways between trains going out of Penn in rush hour. So, all you need is one hiccup; if you have one equipment issue; we do have a complicated operating arrangement with [the Metropolitan Transportation Authority] north of New York City, for example–if we miss a [time] slot there by a couple minutes, we’ll end up being 25 minutes late out of Penn going south.
You’re talking about a very, very precise railroad. Look at our on-time performance between New York and D.C., that’s 90-plus percent right now. In the north, we have had an issue that we’re working through in the next couple of months on slow orders with some tie issues; that’ll be fixed in a couple months and I expect that on-time performance to get better.
Let me give you another example in terms of south-bound in the tunnels. There’s two tunnels [out of Penn], but actually we have so much track and tie work we do there that basically on weekends and nights we run a one-track railroad, a one-tunnel railroad. Every night and every weekend, we are taking one of those tunnels out of service because we’ve got so much tie and track replacement we need to do. So, another issue with connections is to have much more redundancy, parallel operations, being able to move traffic on various tunnels. The lack of a connection to Penn with ARC completely takes that off the table; that would’ve been a benefit if there were a connection as well. And that effectively becomes capacity in a broad sense–it allows you to react to conditions in a broad sense.
Fares went up 5 percent on several routes in July, including in the Northeast. Can you explain how Amtrak sets prices?
Basically, in the Northeast, we would say we stay with the market. We have a management program that is not dissimilar from the airlines–I know that’s a dangerous thing to say in the current era. But if you look at walk-up fares, they’re similar to what you’d charge for the air routes around the Northeast corridor. The quick answer is we believe we’re pricing at market.
But pricing at market–Amtrak has a monopoly on passenger rail?
It doesn’t have a monopoly in terms of transportation. You can take a bus, you can take an airplane, you can drive.
O.K. The latest increase came, though, as gas prices were driving up the costs of driving and flying. Not that Amtrak is gouging people, but there’s the whiff of that–that, suddenly, during this summer, when gas prices were just teetering over $4 a gallon nationally on average, Amtrak’s fares went up again.
Well, our energy costs went up, too. We’re also seeing record inflation on everything–on commodities, on copper, on health care. So, the answer is yes; I’m entirely unembarrassed about that. That is the market.
Are there any more fare increases coming in 2008?
I’m sure. There’s going to be increases from now until eternity every year, unless we have a radical deflationary environment, which I doubt.
Look, let me not be too glib there. That’s a little bit of the micro, what we do day to day, what’s the market answer. The bigger answer is this: One can have, I think, a very realistic national discussion about subsidized travel. In order to do that, though, you need to say, ‘We need a balanced transportation policy,’ where people sit down and plan corridors on tradeoffs with rail, air and highway. That doesn’t really occur today; we’re left with a legacy system. And, in fact, we are basically running Amtrak on the basis of the funding that we’ve gotten over the last 10 years. So, the slightly glib answer is, ‘Talk to your congressman,’ because, in a sense, if we were to operate in a very different financial profile and there were an explicit discussion on what transportation should be subsidized and which should not, you might have a different answer.
We are simply, also, I would say, responding to the realities of our financial situation. Now, that being said, if you go to individual states, when we contract with states, states often control directly the prices of our state offerings. So, the states at times make very specific choices to say, ‘We’ll essentially price below market. We’re going to offer a more clearly subsidized product to the market.’ They make up the difference to us in terms of fees they pay us directly. So there are state routes where you can compare in terms of mileage where you can say, ‘Wow, this one’s less than it would be on the Northeast corridor?’ The answer’s yes and that’s because the state has chosen to create that price structure.
What about doing away with some of the cross-country routes?
That’s an old debate. I think reasonable people can debate that. And let me start on a couple of different directions. One is do we believe that our overall offering and our overall network is exactly what we’d like it to be? Of course not. We’d like to have better stations, newer equipment, better on-time performance. The reality is, and I’ve said this before, if you were to blow away all the long-distance product, you would never get it back.
One of the things I strongly believe is we are on a path, and if you look at, by the way, the ridership on the long-distance products, they’re up–let’s see–in July, they were up 12 percent year over year. So we’re seeing dramatic growth in long-distance, which, in many cases, runs along what we would call the corridors of the future. You look at the Sunset West–you’ve got Phoenix to L.A. In your and my lifetime, there is going to be a serious high-speed or near-high-speed product offering between Phoenix and L.A.; it has to happen. And one of my arguments would be if you take all of Amtrak’s long-distance product away, you’ll eliminate the remaining vendor base; you’ll eliminate facilities; you’ll eliminate the workforce. It will be that much harder to get it back.
So, I would argue that we’re on a path here to really create a serious national network; and, look, five to 10 years from now, I would argue that we would probably have a much more robust 100- to 500-mile corridors and some center slivers of long-distance connections because the networks still matter.
Very quickly: Are there plans to increase the frequency of service between Penn Station and Albany?
We are looking at an express service there. We can get back to you on those details, but that’s clearly an important corridor for us. I know that one of the things we would want to do is look at additional service there.
Are you talking about Acela-like trains?
No. But there are stretches there where we can run 100 miles an hour.
Does Amtrak have a favorite in the presidential election? I’m only asking because Senator McCain has made comments in the past about Amtrak.
Even if we did, we wouldn’t answer that question. We have to be very apolitical. But let me give you the real answer. The real answer is, if you look historically, there’s very little correlation with the party of the occupant of the White House relative to Amtrak’s fortunes. In fact, some of it has been counterintuitive. What I would say is what we’re hoping for–and there’s nothing on the horizon here–is just a thoughtful–and I’m not saying we don’t today; we have a very thoughtful Secretary of the [Department of Transportation]–but Amtrak’s fortunes often are closely linked with the interests of whoever runs the Department of Transportation.
So, no, A, we wouldn’t answer that. And, B, I would say if you look at it historically, there’s very little effect on Amtrak relative to who occupies the White House.
Do you think that will be the case going forward, especially if the price of gas keeps going up?
Let me put it this way: We’re in a different world today from a transportation point of view. We’re seeing dramatic growth; we’re seeing dramatic needs; we’re seeing the airlines pull back in capacity. The country tends to react in these large issues in crisis; and, I think, yeah, we are in a transportation crisis. Will something happen overnight right now? Probably not.
But I would also argue there are, in a sense, major issues that are converging. One is clearly energy. The other’s the infrastructure crisis. The other is a very different environmental consciousness than 10 years ago. And that’s really coming together in terms of a core, blended issue. We cannot peel away the energy question from transportation because that’s where our oil is spent. You cannot peel away a real question of federal infrastructure spending because we’ve got so many problems with highway spending; and, in my view, we have so dramatically underspent on passenger rail that we have to belly up to the bar here and really look at a much higher rate of infrastructure spent relative to GDP.
In general, we have to have a balanced national transportation policy, where we truly make tradeoffs between air, rail and highway.
Can that happen?
Absolutely it can happen.
We can come full-circle here on capacity for the Northeast corridor: We’ve got a very thoughtful group from all the states between Maine and Virginia talking about a master plan for the Northeast corridor. Well, when you look at the very difficult air traffic congestion in New York, rail has to be an answer. If you look at the airports, a lot of the departures from the airports are flights that are 400 miles or less. The sweet spot for rail in the future is kind of 100- to 400-mile corridors. And again, I think, the market share we own between D.C. and New York is really emblematic of what we could do across the nation if we get serious about that: Chicago-Detroit; Detroit-Minneapolis; Chicago-St. Louis; St. Louis-[Dallas-Fort Worth]; Phoenix-L.A.; L.A.-Vegas would be a huge one; corridors within Florida; extending the Northeast corridor south to Richmond and then Richmond to Charlotte.
And another piece here is there is a bit of a social cultural movement back to the city centers; and that’s congruent with what rail does.
Besides geography, why were Western Europe and Japan able to develop high-speed rail?
Well, one of the things that we always say is that something came before TVG [the high-speed French train] as well. The fact is you had a more densely populated area; you had a history of passenger rail because freight worked very well on barge and on highway in those fairly limited geographies. …
We, from the get-go, with sort of the miracle of both the American geography and political system, we’re trying to move goods from Iowa to New York City–so our rail system in the last 30 to 40 years has been the envy of the world from a freight point of view. And so it’s just a different history.
And now if you overlay that, frankly, with our legal systems today–when the French government wants to build an arrow-straight line from Paris to Brussels, they can do it. We’d be in court for god knows how long with lawsuits from every community. So, there’s a number of different issues at play here.
But, again, I think we can go about building a big system on existing right-a-ways in partnerships with the freight railroads for single-digit billions; and that can move a lot of people at 100- to 110-mile-per-hour speeds.
And, again, I want to get back to ARC and Moynihan: The main point is we’re just in a very different world today. And I think that this dialogue would’ve sounded very different five years ago because a lot of these things could be dealt with locally–plenty of capacity, no big regional issues. All of a sudden, we’re out of capacity; there’s less airline capacity; and, wow, you get ripple effects that can ripple all the way from New Rochelle to Pennsylvania in terms of how our rail system works.
But, if circumstances have changed so much, is there just some sort of dissonance between Amtrak and the commuter rails. Is everybody on board with the same vision?
Not necessarily. But I would say it’s become harder. … You could get by with handshakes; the rail operating guys could get together and say, ‘Well, the suits kind of made this deal but we’ll make this work.’ Today, things are so tight that you have to have specific legal agreements about specific time slots; and that creates a lot of tension and friction with any kind of commuter or regional deal you try to make.
It’s much harder to do it. It’s just a much tighter world with a lot less slack. And I don’t think that it’s necessarily that people, in the end, disagree or are enemies or don’t agree that, ‘Wow, we have to figure this whole thing out.’ It’s just a lot harder to do.
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