‘Not Unlike the Postal Service’: Advocates Want Amtrak to Prioritize Service Over Profit

WASHINGTON — For Amtrak, the coronavirus pandemic has not only slashed ridership and any chances of breaking even, it has also forced its leaders to face an existential choice: act like a for-profit airline or a government-subsidized entity.

Since March, ridership on the national rail agency has fallen by 95 percent and projected revenue for 2021 has declined by 50 percent. In response, Congress has bailed out the rail network with $1 billion in emergency funds.

But Amtrak’s leadership says it needs more money. Otherwise, it will have to cut costs by decreasing its work force by 20 percent and curtailing service on long-distance routes that serve areas where Amtrak is often the only mode of public transportation. The rail agency receives federal funds but is independently run.

“Operating trains with very few passengers on them at all, during a time of constraint — capital constraint, cash constraint and uncertainty around funding — doesn’t make a lot of sense,” William J. Flynn, Amtrak’s chief executive, said in an interview.

Rail advocates have pushed back, noting that as of July ridership on long-distance routes across the country is faring better than it is on those that were more popular before the virus hit — including shorter routes like those in the Northeast Corridor.

Long-distance ridership is down 62 percent compared with the same period last year, while ridership on those relatively shorter routes through more urban areas is down more than 80 percent, according to an analysis by industry experts.

Advocates also argue that if Amtrak drastically cuts service to long-distance routes, it will become a less reliable mode of transportation and cause the rail network to lose passengers permanently. Rail experts are urging agency leaders to focus less on profitability and more on the network’s mission.

“Not unlike the Postal Service, Amtrak is a service,” said Jim Mathews, the president and chief executive of the Rail Passengers Association, an advocacy group. “The objective is not profit; the objective is to serve all the communities.”

Amtrak leaders have pushed back on the notion that they plan to permanently cut service on long-distance routes in the name of profitability. They say reductions would be temporary and only in response to drastic drops in ridership because of the pandemic.

“There isn’t a focus on profitability. There’s a focus on proper stewardship of resources,” said Anthony R. Coscia, the chairman of Amtrak’s board of directors. “There’s no realistic way that we can lose 85 percent of our passengers and just continue doing everything the same way we were doing it.”

Since Congress created Amtrak in 1970, the idea of profitability has loomed large among lawmakers who have gone back and forth with the question through legislation.

In Amtrak’s founding law, Congress designated the network as a “for profit” organization. In 1978, lawmakers watered down the requirement, according to rail advocates, and directed the agency to operate as if it was expected to turn a profit but would not be penalized if it lost money. By 2008, lawmakers refined the requirement further and encouraged the agency to adopt a plan that “minimizes the need for federal operating subsidies.”

Lawmakers on Capitol Hill have continued to weigh in on the question. The House passed a $1.5 trillion infrastructure reform package in July that included language that would allow Amtrak to focus less on profits and more on providing rail service across the country. The package sits stalled in the Republican-led Senate.

“I know that you feel you have a mandate to break even,” said Representative Peter A. DeFazio, Democrat of Oregon and the lead sponsor of the infrastructure package. “I intend to change that.”

In recent years, Amtrak’s board has leaned on leaders from the airline industry to help prioritize profitability on the rail network.

In 2017, Amtrak’s board hired Richard Anderson, a former chief executive of Delta Air Lines, to take the reins of the agency and make it profitable and more reliable. His three-year contract expired in April. He was replaced by Mr. Flynn, a former chief executive of Atlas Air Worldwide Holdings, a cargo and passenger aircraft leasing company.

Mr. Anderson took his task from the board seriously. He embarked on a mission to trim the work force and improve shorter-haul, more trafficked routes in corridors like the Northeast, while scaling back support for longer-haul and less popular routes that run across parts of America’s Southern, mountain and Western regions.

“We should be looking at breaking up some of those long-distance trains,” Mr. Anderson said last year at a Senate hearing, “and figuring out how we serve the American consumer to provide high-quality service in short-haul markets.”

In 2018, he decided to close an Amtrak reservation call center in California and told 500 employees they could keep their jobs if they relocated to Philadelphia in 60 days. Around 100 took the offer, according to union officials.

The same year, Mr. Anderson tried to significantly cut long-distance service along a 2,200-mile route that stretches from Chicago to Los Angeles and replace the portion from Kansas to New Mexico with bus service. Amtrak abandoned its plans after receiving fierce blowback from members of Congress.

Mr. Flynn has yet to testify before Congress about his vision for the rail agency, but he is prepared to cut Amtrak’s operating costs by $500 million in its 2021 fiscal year, which starts in October, if Congress does not provide additional emergency funding.

His plans were met with intense skepticism from lawmakers on Capitol Hill, with 16 senators writing letters to the agency sounding the alarm at Mr. Flynn’s proposed cuts to the work force and long-distance service.

“These cuts would not only dramatically reduce the utility of the nation’s passenger rail network, but would also ignore congressional intent to expedite economic recovery following the pandemic,” a bipartisan coalition of seven senators, led by Steve Daines, Republican of Montana, said in one letter.

Mr. Flynn has noted that service reductions to Amtrak’s long-distance routes would remain in effect for the winter. Recently, his leadership released a white paper outlining the three requirements needed to restart daily service on long-distance networks, including a provision that requires every region served by a long-distance train route to see virus hospitalization rates stabilize by February.

Rail experts have noted concern about that measurement, saying it could significantly delay the return of regular service. They say Amtrak is a safe option for travel during the pandemic, noting its efforts to increase the frequency at which air is replaced in rail cars to once every five minutes, along with its efforts to enforce social distancing and mask wearing in ways that are more strict than airlines.

But the tension between rail advocates and the agency’s leaders around the central issue of Amtrak’s desire for profitability is likely to remain beyond the pandemic.

Mr. Flynn and his top officers have reinforced that they want to focus on expanding the rail network in areas where there are highly dense clusters of population and passengers looking for an alternative to airplanes for trips under 400 miles. Their goal is to replicate the success of the highly trafficked Northeast Corridor route that serves riders between Boston and Washington.

Amtrak’s chief operating officer, Stephen Gardner, notes that long-distance service accounts for only 4.5 million riders out of the network’s 33 million total, and cannot be the prime focus for the agency.

“It’s a small part of our business,” he said. “We need to be where the people are.”

source.

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