Saturday, July 22, 2006

Amtrak - off track

The Philadelphia Inquirer ran a recent 2-part series on Amtrak (part 1 is here). Among the gems from former Amtrak head David Gunn (who used to head SEPTA here in Philadelphia, plus Metro down in DC):
Throughout his conflict with the administration, Gunn said senior transportation officials repeatedly suggested that Amtrak could revitalize itself by filing for Chapter 11 bankruptcy protection - like a bankrupt airline, it could void its labor contracts.

"Oh, I think they felt... somehow, out of the wreckage, would come a new company," Gunn said.

But he said that bankruptcy for Amtrak could have caused a service shutdown - in a way it never would for an airline - because of the nature of the passenger rail business, which is mostly unprofitable and lacks competition....

It has never turned a profit, and requires billions of dollars in government subsidies.

And that is the problem, Gunn said. Because no other company has Amtrak's experience running a national passenger rail service, Gunn said it was highly improbable that any other rail line could have stepped in had Amtrak gone out of business. The airline industry offers no comparison, he said, because its losses are smaller and another airline is always available to take over the business of companies that fail.

When he tried to explain this to Transportation Secretary Norman Mineta, Gunn said he got little response.

"It was like talking to a mannequin," Gunn said of a meeting with Mineta on June 13 last year, the only business meeting he had with Mineta during his 31/2-year term as Amtrak president. "He never showed any intellectual engagement in terms of dealing with the problem."

When British Rail was dissolved in the 1980s, expectations were that private industry could surely do a better job than a government-run enterprise. Results have been almost uniformly bad - train crashes, trains almost always running behind schedule, lack of coordination between the numerous private rail systems, and continued decay of infrastructure.

Would US companies do any better? Probably not. The only profit center is the Northeast Corridor (which is not immune to power failures). Amtrak loses money on scenic but costly long-distance routes elsewhere in the country - what company would buy into those routes just to lose money?


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