Amtrak High-Speed Rail Intercity Rail President

A generational failure: As the U.S. fantasizes, the rest of the world builds a new transport system

Tomorrow, two high-speed rail lines open in France, providing new corridors for trains to slice through the countryside at 200 mph (320 km/h). One is a 302-kilometer link that will connect Paris to Bordeaux in the southwest part of the country. The other is a 182-kilometer line connecting Paris to western France. They’ll provide riders the equivalent of linking Washington, D.C. to Charlotte in just over two hours (versus an eight-hour Amtrak trip today), or Dallas to San Marcos in less than an hour and a half (versus a seven-and-a-half-hour Amtrak trip).

What’s remarkable about the completion of these projects is not so much their scale (though at €7.8 billion and €3.4 billion, respectively, they’re hardly a drop in the bucket), nor the improvements in connectivity they’ll provide (though they’ll slash travel times in western France for millions of riders every year). What’s remarkable about them is, frankly, just how unremarkable they are; for people in most of the world’s wealthy countries, high-speed rail services of this sort have become commonplace.

The U.S., of course, is the world’s notable exception. Over the past thirty years, almost two dozen countries have built up networks of collectively thousands of miles for trains traveling at least 150 mph. Since 1976, for example, France, Germany, Italy, and Spain slowly but steadily built up large networks, under varying political and economic environments (Japan had started opening such lines in 1964; see the bottom of the post for a similar graph including China). Americans upgraded a route between Boston and New York and created 34 miles of track capable of such speeds.

In face of the difficulties inherent in investing in large infrastructure projects that have the potential to transform the travel experience, the U.S. has been unable to advance. Over the course of an entire generation, American society has proven itself incapable of pooling either the sustained motivation or the resources to complete a single major high-speed intercity rail project. Not that the country has committed itself to other forms of transportation, either; an automobile-centric place we may be, but our road network has hardly grown since 1980 in the face of massive population growth, congestion has worsened, and our airports are notoriously awful.

In this failure, high-speed rail encapsulates the American experience in general: A nation now fundamentally unprepared to change, whether in terms of transport, climate change, or healthcare.

My indictment of the U.S. is not founded on a claim that Americans are bereft of “ideas,” or that other countries’ populations are smarter, or wealthier, or more risk-taking than them. It’s just that our society suffers from a malaise resulting from its dysfunctional, irascible political system that is woefully unprepared to commit to anything particularly significant.

In early 2009, the U.S. and China were, in an odd sort of way, in a similar place when it came to transport investment. Propelled into office by a wave of voters who suggested they wanted change, President Obama’s administration released a visionary proposal for high-speed rail that suggested the potential for major new fast train corridors criss-crossing the country. He convinced Congress to pass a stimulus bill with very significant new funds to pay for such lines. He seemed to be promoting a way forward. At the same time, China had just begun developing its rail network; in terms of truly fast trains, it had little more than a short link between Beijing and Tianjin open. But the Chinese government also had big proposals to expand its network into a nationwide system.

What happened in the intervening years suggests the difference between the two countries. In the U.S., President Obama’s initiative was met by Republican governors elected in 2010 who, for reasons that had little to do with sanity, resisted free federal money to fund the completion of intercity rail projects their (Democratic) predecessors had developed. Lines in Florida, Ohio, and Wisconsin were scuttled. Republican members of the House of Representatives fought new appropriations for rail and instead pointed to what have been so far unfulfilled hopes for the private sector’s magic touch to bring fast trains to America.

The federal government, hand-in-hand with willing state governments, invested in dead-end studies of maglev projects. Commentators suggested that high-speed rail was “pointless” in the face of slower self-driving cars, a technology that, by the way, remains to be genuinely proven. Now, we’re being told by the president and the mayor of Chicago that the Hyperloop, another underdeveloped technology, is the transport of the future.

When it comes to intercity transportation, the attention span of the American mind, it seems, is little different than that of a child suffering from ADHD. Perhaps it is no surprise we have elected a president more interested in Twitter than policy.

Meanwhile, the Chinese government, committed to a long-term project, built the world’s largest high-speed rail network. It now carries more than a billion and a half passengers each year. It has reconfigured the nation’s geography such that high-speed rail is the most cost- and time-effective way to get around between most cities.

In the face of significant economic growth and mass migration to its urban centers, the Chinese government constructed a new transportation system. Yes, its roadway network and air travel systems have grown dramatically over the past ten years. But the largest growth in intercity travel has occurred on the high-speed rail network, which accounted for just a third of the passenger numbers of China’s airlines in 2007 but now is carrying almost two times as many riders, and many more than the U.S. air system as a whole.

Amtrak, whose government support has hardly changed over the past decade, still carries about 1/26th of the daily passengers of the nation’s airlines. Its negligible role in the nation’s intercity transport system—outside of the Boston-to-Washington corridor—remains entrenched, even as other countries have dramatically expanded the railroad’s role in their societies. The problem isn’t that trains aren’t popular to Americans. The problem is that American rail service is terrible, and we’ve done nothing to improve it.

It is true, of course, that the Chinese government is autocratic and that its ability to invest in rail does not face the same bureaucratic or democratic resistance as the U.S. does.

But such concerns didn’t prevent the French, Italian, and Spanish government from completing more than 2,000 kilometers of high-speed rail lines since 2009. Moreover, American claims from early in the Chinese development period that “the Railway Ministry still can’t get anyone to ride its trains” now seem irrelevant given that millions of people ride the system each day. And though it is certainly true that the rail system was, in part, built on corner-cutting, over the six years since 40 people died in the terrible 2011 Wenzhou train crash, more than 160,000 Americans died on their precious roadways.

It turns out that it’s actually not that complicated to conduct transport policy in a manner that adapts to change. You don’t need competitions to gather the input of “geniuses.” You don’t need magical new technologies when we have systems that work today. You don’t need to encourage speculation from the private sector, whose primary interest is in making high returns on their investment, not the public interest. You need a (reasonably) long-term commitment to individual projects, across political lines and among multiple political jurisdictions. You need to amass the public resources to pay for them. And then you need a competent workforce to design, construct, and operate the lines. American society has not shown itself capable of any of those things.

President Trump’s claims over the past year have suggested significant interest in supporting improved infrastructure for the U.S. Democrats were willing to compromise, for better or worse, to make such projects happen. But then the administration revealed its budget, which cut a gaping hole in existing infrastructure programs. And the president has failed to even propose an appointment for the head of the Federal Railroad Administration, among many other positions.

The U.S. lost an entire generation of potential investment in high-speed rail to half-hearted proposals and political back-and-forths over whether to fund better services. There’s no evidence we’re any better off because of it; while other countries have developed new transportation systems that truly improve the ability to get between their cities, we’ve just become further mired in traffic, whether at the airport or on the highway. The current president gives us little reason to believe the coming years offer anything different.

There are, thankfully, still reasons for hope. Florida’s Brightline project, a private initiative that would be difficult to replicate elsewhere because it is being completed by a private company that already owns the right-of-way, nonetheless suggests that it is possible to develop what appears to be a competent, well-run new railroad in the U.S., though it is not truly high-speed rail. And California’s high-speed rail line, though years from completion and under continuous barrage from congressional Republicans, is actually under construction and it retains significant political support. Change could yet be on its way.

Sources for graphs: Wikipedia, U.S. Bureau of Transportation Statistics, World Bank, Amtrak. Photo at top: TGV near Bordeaux, from Flickr user Adrien Sifre (cc).

Amtrak Finance High-Speed Rail Intercity Rail

Revisiting Privatization in Intercity Rail

» Amtrak, as always, is being targeted for privatization by conservatives. But what approach leads to optimized public benefit?

Over the past few weeks, U.S. House Transportation and Infrastructure Committee Chairman John Mica (R-FL) has convened a series of hearings on the failures of Amtrak, America’s independent — but fully federally owned — national rail operator. Mr. Mica has used the meetings to wage an ideological crusade against the railway, arguing that it is too inefficient and expensive to continue receiving subsidies. Republican Presidential nominee Mitt Romney has also advocated selling Amtrak.

Democrats have mostly shot back, arguing that privatizing the agency would result in a significant reduction in services provided and increase ticket costs.

Here is the confusing truth about Amtrak, however: The rail agency, fully government-owned, is in many ways already a privatized operation that receives federal subsidies. The organization does not seem to have the larger public’s interests in mind in setting policies: It has some of the highest fares in the world for services in the Northeast Corridor, it provides no discounts for people of lesser means, and it actively promotes the use of intercity buses for people who want to pay less, in effect strategically reducing its market share. These are not the actions of a government enterprise acting in the public interest; these are the actions of a private corporation attempting to maximize profit.

Amtrak is an agency that, in its existing form, can satisfy neither the left nor the right.

And of course, Amtrak is not making a profit — it operates at a considerable deficit every year. But “privatization” can mean many things — and is a private alternative any better than the current circumstances?

Over the past month, Stephen Smith has published articles on the failure of Britain’s rail privatization, the success of Japan’s effort, and the potential for privatization of Amtrak services. The overall conclusion from the articles seems to be that there may be benefits from the movement of rail services out of the public sector, but that without vertical integration — in other words, single-company control of both tracks and services — difficulties are likely to ensue, as in the case of the U.K. Smith points to the structure of Japanese National Railways (JNR), in which six private companies control services in different parts of the country.*

Smith suggests that with privatization, Amtrak could radically improve its efficiency. The biggest problems with the rail agency, he argues, are related to low worker productivity. Despite Amtrak’s privately motivated interests that I pointed out above, much of its labor rules remain affected by politics and can be altered by Congressional action. Are we willing to accept reducing the influence of democratic actors in agency decision-making? It would mean restructuring labor agreements — reducing the income and health benefits that unions have fought for decades to acquire — and firing huge numbers of workers (a third in the case of JNR’s privatization).

If privatization slashes the number of workers needed to do the same job, rail in the U.S. could indeed become profitable, since most of Amtrak’s costs are labor related. For the transportation public, that could produce cheaper ticket prices and fewer subsidies. But it means, fundamentally, that we are bringing private companies in to do the dirty work that the government is politically incapable of doing.

Assuming that some privatization is accepted as “needed” to improve American rail service, in what form should it be implemented?

In general, there are four rough frameworks for such privatization:

  1. Publicly owned tracks with competition for services. This is being implemented in mainland European countries under E.U. regulations; public sector track owners (such as RFF in France) allow operators — both public and private — to run competing services on the same lines.** This allows riders to choose operators on journeys with the same origins and destinations, just as can be done for airline journeys.
  2. Publicly owned tracks with competition for contracts. This is the network organization in the United Kingdom; public Network Rail owns the tracks but then leases the rights to operating rail corridors to private companies. In general, contracts last around seven years and give each operator close to monopoly rights over each corridor.***
  3. Privately owned tracks with competition for contracts. This was the system previously operated in the U.K.; the privately controlled Railtrack owned all tracks in the country between 1994 and 2002. The tracks were moved into the control of a public operator, as described in the second alternative.
  4. Privately owned tracks with one private operator. This is how intercity rail operations are managed in Japan.

Smith and other critics have argued that separating track ownership from rail operations — that’s what happens in alternatives 1-3 described above — result in inefficiencies and potential competing motivations. The U.K.’s attempt to privatize both tracks and operations (alternative 3) produced a number of failures, reducing the safety of the services provided. These difficulties led to the nationalization of the track ownership (a switch to alternative 2), but the contractual relationships between the track owner and the rail operators continue to be a cause for concern. In both cases, the U.K. government has subsidized capital upgrades and in some cases it has subsidies operations.

The problems have expanded over time. Operators have failed to follow through on their commitments. In some instances they have promised too much. In the case of services on the East Coast Main Line, operator National Express East Coast gave up its contract following higher costs and lower revenues than expected; the result was that the government took over operations directly through publicly owned (but supposedly temporary) Directly Operated Railways. National Express’ promises to the government for fees it would pay over the years were abandoned.

The government announced that FirstGroup (owner of Greyhound and BoltBus) would in December take over operating services from Virgin on the West Coast Main Line, Britain’s most popular, and profitable, railway line. But Virgin, which was hoping to renew its contract, warned that the deal was a “recipe for bankruptcy” because of FirstGroup’s inflated estimates of future ridership, which were used to determine how much FirstGroup would pay National Rail over the next few years to use the tracks. Last week, the government admitted it had made a serious mistake, revoked FirstGroup’s winning bid, and refunded all four bidders for their work upwards of £5 million. This was an unnecessary loss of taxpayer funds and will force the contract to be re-bid in the next few months.

These circumstances are revealing of the problems with separating ownership of tracks and operations. Track owners want to maximize the amount of money they can charge companies to run their services there, and so in places with profitable operations, they will accept the highest — and potentially riskiest — bids. Meanwhile, operators have an incentive to maximize profits — either in terms of inflating estimates of future performance in order to win a bid (in the case of the current U.K. system) or skimping on services or maintenance — in order to pay the operation charges to the track owners.

It is hard to see how mainland Europe’s approach, the first alternative, would be much better. The track owners are setting standard prices for track use by each individual train, which will likely encourage intense competition on the heaviest-traveled routes but a lack of interest in operating services on lines with less passenger travel. This will reduce revenues per train on the popular corridors, making any kind of cross-subsidies currently instituted by national operators less likely and probably requiring increasing government aid for the continuation of services to less popular areas.

Thus the explanation for Stephen Smith’s call for privatizing in the mode of Japan’s railway; by integrating track ownership and passenger services, conflicting incentives can can be negotiated, rather than fought out. Ed Glaeser, the Harvard economist, wrote Sunday that potentially profitable lines in the densest sections of the U.S. — including the Northeast Corridor and parts of California — should “follow Conrail into unsubsidized privatization.” This implies, like in Japan, giving one company rights over both tracks and the trains that run on them.

The problem with this approach is clear: It is a recipe for monopoly control of a railroad by a private enterprise. Conservatives berate Amtrak and other government-owned enterprises for being “Soviet“-like (in the words of John Mica), but private monopoly control of rail services is worse — and market conservatives should agree on that fact. After all, monopolized services can inflate prices, provide poor service, and in general be unresponsive to customer concerns. Unlike Amtrak, which must respond to political demands in our democracy, private monopolies must respond only to their profit-seeking shareholders, who clearly have different demands than the public as a whole.

Some might argue that rail services in the U.S., even if controlled by one company, cannot constitute a “monopoly” since they are competing with air and road services, which are owned and operated by other entities. Yet if it is in the public interest to encourage fast, relatively inexpensive services on intercity rail lines (that is what we want, right?), we are effectively arguing on behalf of massively increasing rail share on specific intercity travel markets — and significant government subsidies dedicated to investments in new tracks would back this approach. Once we have done that, we do not want people to move back to cars or airplanes, and we will have made those alternatives quite unappealing — thus benefiting the monopoly. Japanese rail operators do not have to compete with air or auto travel for most of their services because of the extraordinary advantages of rail along their routes, allowing them to act as transportation monopolies.

The presumptive development of vertically integrated private enterprises for the provision of new rail services in Florida between Miami and Orlando and in the Southwest between Victorville and Las Vegas has led to excited speculation that there is a potential for future American private investment in intercity rail. These investments would produce rail monopolies, but their overall market shares — at least at first — would make them small enough to avoid the prospect of developing into transportation monopolies. So they offer considerable benefits and likely should be supported by the public sector if possible — especially since neither Florida nor Nevada seem likely to be promoting state-sponsored public intercity rail projects in the short term.

Yet as a national approach the vertical integration of railroads into privately controlled monopolies is problematic policy that could encourage higher ticket prices and little concern for the overall public interest. There is an argument to be made that effective regulation of such services, much as is done with private energy utilities in most of the country, could limit the profits and destructive effects of such monopolies. But utility regulation has hardly prevented price gouging among energy companies. Can we trust that private railroads in the U.S. would work as well as those in Japan?

Moreover, private companies will only be interested in operating lines that are profitable. The reason Amtrak continues to serve places like Montana and Kansas is not that the agency has fooled itself into thinking that these can be profitable routes, but rather that its political support from the federal government has been premised upon the continued operation of trains to places that do not “deserve” it. But there are few transportation options available for these areas, and there is a political concern for continuing operations there. Would it make more sense to continue having Amtrak operate those routes, and, as usual, privatize the profits and socialize the losses? Or should such routes be contracted out to the lowest bidder, knowing that such contracts may fall apart, as they have in the U.K.?

If there are significant reasons to be concerned about private monopolies on rail services and there is a consensus that separate control of infrastructure and operations causes more problems than desired, what, then, is the option? Amtrak’s role as a public enterprise with seemingly very little interest in the public itself does not set a particularly helpful precedent. But if a monopoly over all rail services in a specific area is the only reasonable option, is the public sector the more appropriate place to turn than profit-motivated private groups? There are no easy answers.

* The “private” nature of these companies is worth questioning. Of six railway companies, three (Hokkaido, Shikoku, and Kyushu) are fully owned by the government entity Japan Railway Construction, Transport and Technology Agency. In other words, they are public enterprises, like… Amtrak.

** It should be noted that in some countries, like Germany and Spain, the historic nationalized rail company (DB and Renfe, respectively) has a separate division that controls the tracks, on which competing operators can buy running rights.

*** One of the odd consequences of Britain’s privatization schemes (which extend beyond rail and into energy and other services) is a significant expansion of government-owned corporations from other countries entering the U.K. marketCertain bus services in London are provided by Paris Métro operator RATP; certain intercity rail lines are operated by Germany national railroad DB’s subsidiary Arriva. Meanwhile, the U.K. itself has no such state-owned enterprises that have the capability of competing for services in other countries.

Amtrak Congress Finance Northeast Corridor

Are Private Operations on the Northeast Corridor the Means to an End, or Just an End?

» Without a commitment of more federal funds for improvement, an initiative to transfer rights to private entities to operate trains along the Northeast Corridor would not accomplish much.

In order to take advantage of the roadways effectively, bus drivers — not to mention car drivers — do not need to take possession of said roads. Indeed, they need only to be in possession of a vehicle that can navigate along the streets and be able to pay for fuel, part of whose cost returns to cover many of the expenses required to build and maintain the roads. Many different vehicles, owned by many different people or organizations, can share the roads, usually without problems. Sometimes, there are accidents, which can be mostly avoided through proper design of the roadways, and there is sometimes congestion, which can be relieved through road fees. Fundamentally, the system works: There are vehicle owners, usually private individuals, and there are infrastructure owners, usually the public sector, and they get along fine.

All of this, I know, is obvious. But when it comes to rail transportation, this formula has been avoided, especially in the U.S. The owner of railroad tracks usually is also the operator of trains along them. When other operators want to move their own trains in, conflicts typically erupt. The frequent disagreements about acceptable service levels between national rail operator Amtrak and freight railroads on tracks that the latter owns (and which it isn’t very happy to share) are indicative of this problem. But these disagreements are not irreconcilable. Indeed, an infrastructure owner that is able to arbitrate between competing operators could be more effective in producing efficient service for everyone than might be an owner-operator, which discriminates against other operators.

In this context, yesterday’s revealing of House Transportation and Infrastructure Committee Chairman John Mica’s (R-FL) plan for the Northeast Corridor raises a number of interesting questions. Convinced of the value of private sector competition and promoting a pull-out of the federal government from every public service imaginable, Mr. Mica has submitted a proposal that attempts to re-imagine the Northeast Corridor, Amtrak’s flagship route and the nation’s most-traveled intercity rail line, as a place where, fundamentally, the rules of the road — but not the railroad — could apply.

The bill (draft text) would force Amtrak to abandon its control of (much of) the Northeast Corridor between Washington and Boston, handing it over to the Department of Transportation, which in turn would lease it to an “Executive Committee.” Amtrak would have to give up all of its assets and it would loose federal funding. The Committee, in charge of infrastructure and setting pricing policies, would then engage a public-private partnership (PPP) with a private group, which would commit to upgrading the line and then operating trains to offer two-hour trips between New York and Washington and 2h30 between New York and Boston — within ten years, twenty years more quickly than Amtrak has said it would be able to make roughly the same improvements.

Mr. Mica also claims that this could be done at a cheaper price than Amtrak’s $117 billion proposal.

Outside of the Northeast, states would have to offer their rail corridors to competitive bidding; current subsidies to Amtrak would simply be redistributed to the winners of those operations bids.

Despite the wide-ranging proposed effects of the bill as summarized, the manner in which any of this would be implemented remains incredibly unclear. How would intercity rail operators interact with the freight and commuter railroads that also use the tracks, in the Northeast and elsewhere? If a PPP were implemented, how much would the government agree to commit to pay for improvements?

Unfortunately, the bill would not provide a realistic way to promote true operational competition. Nor does it would it offer a promise of actual federal support to fund an upgrade of the corridor, which seems unlikely to be sponsored by private entities alone. Most problematic would be the transfer of authority over the line’s management to the currently non-existant Executive Committee, whose ability to make decisions about rail properties has yet to be tested, let alone proven.

Fortunately, the proposal is unlikely to make it through the Senate, where Democrats and other Republican supporters of Amtrak are likely to prevent the bill from passing even if it makes it through the House. The American intercity rail system and the governance bodies that oversee it at the federal and state levels are too underdeveloped to be able to guarantee that this semi-privatization wouldn’t be a disaster.

But Mr. Mica’s bill does articulate a number of policy changes that could play an important role in shoring up passenger service in the Northeast. The status quo, in which Amtrak operates relatively infrequent and slow passenger trains within the nation’s most important megaregion, certainly is not ideal. If managed appropriately, the separation of track ownership and line operations could allow for a situation in which multiple operators offer competing services along the same routes, just as Megabus and Bolt Bus compete for the most customers on I-95.

In mainland Europe, E.U. regulations have mandated that national rail companies like France’s SNCF or Germany’s DB allow other operators (in many cases, SNCF and DB affiliates) to run trains between similar destinations. Though I am not convinced that this will produce universally positive results, it will at least likely result in lower fares for customers on the most heavily trafficked rail corridors. And focusing on the most-used lines is clearly Mr. Mica’s goal; according to the bill, the second-highest stated priority for potential investors are “activities that benefit the greatest number of passengers” (just after safety). Amtrak’s current policies do not exactly fit that bill since they are designed to push lower-income individuals (like myself) onto slower and less comfortable intercity buses.

Yet the Mica proposal would not produce true competition in rail operations. It would encourage competition in rail operations contracts. Rather than invest in the infrastructure and then open up the rights to use tracks, the PPP structure as proposed would be a build-operate-maintain system in which one private group would invest in improvements and then have control over operations, which it would perform itself. Mr. Mica has repeatedly referred to Amtrak as a “Soviet-Style” system because it has a monopoly over its services, but it is hard to see how a PPP extended over a long contract would be any different, except that it would charge even higher prices to make up for the initial cost of capital improvements and — even worse — it would be literally banned from cross-subsidizing other services with the profits, according to the proposed bill. Is this in the public interest?

The biggest question of all, though, is whether Mr. Mica is in complete denial about the extent of either the private sector’s ingenuity or their collective willingness to invest in public infrastructure. While it may sound nice, asserting that corporations can rebuild the Northeast Corridor in 10 years at a far lower cost to the taxpayers than Amtrak has proposed could is a stretch. And even a $50 billion upgrade would be larger than any single private investment in infrastructure ever in the U.S. What evidence does Mr. Mica have that a plan like this could move forward?

Image above: Inside New Haven’s station along the Northeast Corridor, from Flickr user Andrew Ciscel (cc)

Amtrak Congress Finance

Discussing Privatization of the Northeast Corridor, but for What Aims?

» House Republicans suggest putting Amtrak’s primary line up for bids, but faith in the private sector is not enough to promote this change.

House Representative John Mica, a conservative Republican from central Florida and the Chairman of the Committee on Transportation and Infrastructure, has been berating Amtrak for years, so his announcement last week that he would promote the privatization of the Northeast Corridor comes as no surprise.

With Democrats still in control of the Senate and a Republican Party history of bringing up the issue and then promptly giving up in the 1980s and 90s — even when the GOP has controlled the Presidency or both houses of the Congress — any such plan is unlikely to move forward. Yet the question of the privatization of intercity railway operations in the United States will play a role in future debates, especially if the federal government continues to invest in new and improved rail networks. This may be the opening salvo in a years-long argument.

Before stepping into that, though, we need an honest discussion about the goals of the railway system and that of the transportation network in general. Is it there to generate profit for a small number of private corporations, or to ensure alternative mobility options to the largest possible percentage of the population? Should its operations be ultimately determined by surface-level profitability, or by public and political consensus?

Mr. Mica’s recent denunciations of the national railroad have come across as downright dogmatic: So convinced of the failures of Amtrak, he has been referring to it as a “Soviet-style” railroad. The committee released a chart showing little growth in Amtrak ridership along the corridor over the past thirty years to back up this notion.* Thus the committee chair’s privatization argument, founded in the broader modern conservative logic that claims — whatever the evidence suggests — that anything that the public sector does, the private sector can do better. For Mr. Mica, who is an adamant supporter of high-speed rail between Boston and Washington, this means that Amtrak’s current ownership of the Northeast Corridor is a stumbling block in the way of progress.

Instead of Amtrak’s 30-year, $117 billion proposal to build a new true high-speed link along the East Coast, Mr. Mica would produce the same benefitsin half the time and at significantly less cost,” thanks to private sector participation, which would be involved in building, designing, and operating the new system. His committee has yet to release any information showing how this could work.**

Avoiding the complicated issue of construction and focusing on operations alone, the committee compared Amtrak’s performance with that of Virgin Trains, which has since 1997 held the contract to operate the United Kingdom’s West Coast Main Line, connecting London with Birmingham, Manchester, and other cities. Mr. Mica made the claim that Virgin had been operationally profitable and been able to pay the government usage fees, compared to Amtrak, which he noted was subsidized. The U.K., which began the privatization of its railroads in the early 1990s, is the model the Florida congressman seems to be interested in imitating: The general idea, like in Great Britain, is to pull the Northeast Corridor itself out of the hands of Amtrak and hand it over to a new track-owning entity under the auspices of the Department of Transportation (the fate of the track section not owned by Amtrak in New York and Connecticut is unclear). Then private operators, potentially including Amtrak, would be able to bid out for operations rights.

This was an odd comparison to make, not only because Amtrak is operationally profitable in the Northeast Corridor, but also because Virgin’s history of operating trains in the U.K. has not been scot-free. Though ridership has increased more than expected, on-time performance of Virgin trains have never reached levels above 90%. Instead of paying £1 billion to the government as originally planned in the contract, the company actually received what were effectively £590 million in operating subsidies between 2002 and 2006, according to the National Audit Office (much of which was due to the government’s own poor contract writing).

And then there’s the fact that the U.K. government paid for most of the costs of the £9 billion upgrade to the West Coast Main Line that was completed in 2008. Can we compare Amtrak effectively to this history? The U.S. government certainly did not commit to a $15 billion upgrade of the Northeast Corridor over the past 15 years — in fact, the Northeast Corridor Master Plan, the last serious effort to improve the system, lasted between 1977 and 1998 and distributed only $6 billion to the line.

This is not to say that Virgin is a particularly bad example. Its peer companies have a history of dropping their contracts in order to avoid paying the government for the use of the railroad tracks. During the recession, several private companies simply determined that they could not handle the agreements they had signed just a few years before, putting several lines into public hands (which now are making a profit). But these failures do not “prove” anything: There is no evidence that a public sector entity would have done the same job more effectively. A well-functioning government service provider would have passed any profits or shareholder dividends back to the user or the government, arguably the better outcome — but how can we be sure that it would be well-functioning?

The irony for Mr. Mica is that Amtrak, especially in the Northeast, has been acting much like a private, profit-motivated company would. The company has prioritized profitability in its operations over expanded ridership: The growth of intercity buses between the region’s largest cities has been met with little decrease in rail prices, and that’s because Amtrak knows it can fill its trains even at higher fares. The continued operational profitability of the corridor in the face of this competition is indicative of this fact.

Why, then, bring up the issue? Because the value of the nation’s rail system is established by the policymakers determining how to distribute grants or to whom to award service contracts, whether they be to public or private entities. Alon Levy wrote pointedly last week that the major handicap to improved performance in the Northeast is not Amtrak but rather the Federal Railroad Administration, which determines the regulations that govern the operations of the railways. Public or private, these rules would have to be followed.

If Mr. Mica’s ambition is to improve rail services, a reasonable path must evaluate the risks and benefits associated with different models of transport operations. This might mean transferring control of the infrastructure to an independent entity, or altering regulations, or even promoting some competitive bidding for the rights to operate in certain rail corridors.

But a goal of moving yet another service out of public hands and into private ones mostly for the sake of denouncing government as a concept is one that cannot be accepted. The surface-level comparison Mr. Mica made between Amtrak and Virgin Trains is indicative of the lack of serious thought that has been devoted to this conversation thus far. We need to evaluate and determine the national vision for our transportation system, and then move on from there.

* There was no mention of the fact that Amtrak’s capacity problems are mostly structural, stemming from track conflicts with commuter railroads and an inability to buy new railcars until recently. Update, 31 May: Ross Capon of the National Association of Railroad Passengers notes that the decline in ridership cited by the committee was not accurate; the initial figures included New York to Philadelphia Clockers (turned over to New Jersey Transit in 2005) and trains between Philadelphia and Harrisburg, neither of which were included in the 2010 numbers. Comparing the same train service, Amtrak ridership on the Corridor increased from 7.7 million in 1981 to 10.4 million in 2010.

** Amtrak has recently announced that it will pursue partnerships with private investors on future improvements for the Corridor.

Image above: Amtrak Acela train, from Flickr user Angelo Leung (cc)


Making Sense of Amtrak’s Vision for the Northeast

» Delving into the national railway’s plans for growth.

Let it be known: Amtrak’s focus is on the Northeast Corridor. While Congress may require it to provide long-distance, cross-country services, the public company owns most of the rail corridor between Boston and Washington and it intends to exploit it fully… If it gathers sufficient resources to do so.

That, at least, was the message projected by Amtrak President and CEO Joseph Boardman, who spoke on his company’s future vision in Cambridge last week. And it is in line with the mission the organization has been slowly constructing since the Obama Administration entered office: Not only to upgrade the existing line, as the company has been doing since it was founded in 1971, but also to build a new parallel corridor such as the $117 billion project the agency sketched out last year, which would allow travel times of about three hours between Boston and Washington, compared to six hours today. Such an investment has been being discussed for decades, but for the first time, Amtrak appears to be taking the cause seriously.

With political consensus circling around the idea that something must be done to improve travel in the Northeast, Amtrak could have a winning proposition in its hands.

The national equation has changed what is considered feasible. Less than three years ago, Amtrak President Alex Kummant dimmed the hopes of high-speed rail enthusiasts, suggesting that any advance in the Northeast would be slowed by “20 years in court on eminent-domain proceedings,” not to mention serious difficulties getting the required funds from Congress. Thanks mostly to President Obama’s ability to get $10.5 billion out to states to begin work on intercity rail investments over the past two years, however, that skepticism no longer seems applicable to the rail company. Sounding a different note, Mr. Boardman, who has been heading Amtrak since 2008, argued persuasively for new infrastructure spending.

Amtrak sees a massive investment in the Northeast Corridor as a necessary one, both from an economic perspective and in terms of physical infrastructure. Noting the Northeast’s role as the nation’s most productive region, Mr. Boardman argued that its health depends on the transportation systems that connect it. “We’ve lived off investments that were made two centuries ago,” he said. “And we haven’t made the investments that we need to make for the future.” Amtrak, as the provider of intercity rail and the owner of most of the line, can serve an essential role.

Mr. Boardman noted Amtrak’s record ridership (28.7 million passengers last year) and pointed out that the corridor is reaching its physical limits. As Amtrak’s air/rail mode share has increased — from 37% between Washington and New York and 20% between Boston and New York in 2000 to 69% and 53% respectively today — the rail company has simply not been able to expand its carrying capacity. This explains why Amtrak fares in the Northeast Corridor are so much higher than those on competitor intercity buses: There is too much demand and not enough supply. Part of the problem is due to the fact that trains are simply not long enough, a difficulty that Amtrak hopes to resolve partially with the addition of new cars to each Acela Express train. Mr. Boardman said that purchase would pay for itself over six years thanks to the Acela service’s operating profits.

But the more long-term problem is that Amtrak cannot bring more trains into New York City because of a lack of space on the tracks and at Penn Station. This fact explains why the company jumped at the chance to propose a new tunnel under the Hudson River almost as soon as New Jersey cancelled the ARC project. And in the longer term, the company’s projections suggest that the entire corridor will reach its carrying capacity in thirty years — which is exactly when it has said it wants to open the full extent of its new high-speed corridor.

Amtrak may have found the right cause at the right time. The Obama Administration’s high-speed rail investment program has benefited some states like California, but its expansion into a $53 billion spending regime, as the White House recently suggested to the Congress, is compromised by the fact that fast trains have become — like it or not — a partisan issue.

Yet some Republicans in the House do seem to be interested in funding a project in the Northeast Corridor. At last week’s hearing on privatization of passenger railway provision, House Transportation and Infrastructure Committee Chairman John Mica (R-FL) repeated his complaint that federal funds were not focused enough on the Boston-Washington line, a place that he deems appropriate for federal investment.

Can Amtrak leverage bipartisan support to get its project done, not in the 30 years it has described but instead in ten to twelve, as Mr. Mica has said he wants? Mr. Mica refers to Amtrak as a “Soviet-style” system because he thinks that it as a government monopoly it is inefficient; this implies that Republicans like him will hesitate to offer the national rail company any direct assistance such as in the creation of a new line. Yet Mr. Boardman (himself a Republican) comes across as extremely competent, and it is clear that with its increasing ridership and newly proclaimed interest in radically improving travel in the Northeast, Amtrak is a responsible entity.

If the company can make a convincing argument that it is the right organization to perform radical repair on the Northeast’s main spine and to construct a brand-new corridor through its biggest cities, it could find support among politicians left and right. It would be very difficult to get away with calling a train line between New York and Washington a “train to nowhere,” to repeat the way too many members of the Tea Party have dismissed other infrastructure projects. It is hard to imagine a big investment regime in fast trains that ignores other parts of the country. People in the Midwest and California will want similar funds if Amtrak gets them for the Northeast. But the sheer density of the area and its vital importance to the national economy may mean that it deserves something different.

But even the $117 billion investment program wouldn’t be enough to solve Amtrak’s long-term issues. With infrastructure that is in many places more than one hundred years old, the existing Northeast Corridor must also be improved, and Mr. Boardman suggested that achieving a state of good repair would cost an additional $52 billion. Finally, the agency head noted another problem: “Every Amtrak President since the late 1990s has either been forced out or fired… Amtrak is unable to ever say no to anyone anywhere, because of the political football that it is.”

Does the mere fact that Amtrak is owned by the public make it impossible for it to adequately respond to the public’s demands? Perhaps. But Amtrak’s management has successfully improved the service over the past several years, and with Mr. Boardman in charge, it continues on the right course. The Amtrak of three years ago would have never had the gall to introduce serious plans for a brand-new Northeast Corridor. Today’s Amtrak is a different beast.

Image above: An Amtrak Acela Express train, from Flickr user John H. Gray (cc)