After more than 30 years of funding battles and harsh criticism, Amtrak is more than just surviving - it's thriving

By Angela Cotey, Associate Editor

When Amtrak was formed in 1970, some thought it was the federal government’s way of phasing out intercity passenger-rail service. A growing number of freight railroads were abandoning unprofitable passenger services. Handing that service over to the government would ensure the public still had intercity passenger trains, and as interest continued to wane, the service would fall by the wayside.

Nearly four decades later, Amtrak is not only still operating, but experiencing some of its best years ever. Getting there hasn’t been easy. Amtrak has had to piece together service acquired from a collection of freight railroads, ward off calls for self-sufficiency and rebuild the Northeast Corridor while continually fighting for funding. Today, the national intercity passenger railroad is carrying a record number of passengers — and many believe it can play an essential role in meeting the country’s growing transportation needs.

Clearly, the railroad’s biggest accomplishment is survival, says former Federal Railroad Administrator Gil Carmichael, who previously served on Amtrak’s board and was chairman of the Amtrak Reform Council.

“Amtrak has survived through different [U.S.] presidents, through the cheap fuel era, through a time when it was easy to buy and finance a car, through the 1980s when the rail industry was downsizing and thought it was going out of business,” he says. “And Amtrak has not only survived, but it’s about to start a whole new era of passenger-rail service in this country.”

Amtrak’s start can be traced to the Rail Passenger Service Act, which was signed by President Richard Nixon in 1970. The legislation enabled most railroads that operated intercity passenger service to join the national system, and many took advantage. When Amtrak launched service on May 1, 1971, the number of intercity passenger trains dropped from about 450 to 250, says Amtrak spokesperson Cliff Black, who’s served the railroad for 27 years.

“Most private railways couldn’t get out of the passenger train business fast enough because it was draining their finances, but they had to go through a long process with the ICC to abandon service,” he says. “This was an opportunity to rid themselves of passenger trains overnight with virtually no consequences.”

Along with the national passenger operation, Amtrak inherited a mismatched fleet (railroads that joined the national system had to pay a fee, and many did it with in-kind equipment donations), debilitated stations and a slew of critics who thought the railroad should be a profitable company.

“How can you sweep together a bunch of unprofitable enterprises and make them profitable by consolidating them? It just wasn’t a practical proposal,” says Black, who describes Amtrak’s early years as “turbulent.” “But when it wasn’t [profitable], Amtrak was considered a failure.”

But if there was any doubt whether there should be a national passenger railroad, it was quelched in 1973, when the Organization of Arab Petroleum Exporting Countries stopped shipping oil to the United States.

“It created havoc in the U.S.; gasoline was very scarce. People were flocking to the trains,” says Black. “It eventually blew over, but it was a significant enough shock to transportation officials and the traveling public that Amtrak seemed to take on a new importance.”

A track of its own

Amtrak’s value grew even more in 1976, when Congress passed the Railroad Revitalization and Regulatory Reform Act. The legislation’s primary intent was to create Conrail, but it also gave Amtrak ownership of the Northeast Corridor (NEC) between Washington, D.C., New York City and Boston. Amtrak also received capital dollars to rehabilitate the electrified corridor.

Work began in 1978, and it didn’t take Amtrak long to realize that infrastructure needs were greater than anticipated. To cut costs, the railroad dropped plans to electrify the portion from New Haven, Conn., to Boston, according to the Southeast High Speed Rail Corridor (SEHSR) report “The Northeast: Twenty Years of High Speed Rail.”

Meanwhile, Amtrak still was under pressure from the government to be a self-sufficient operation. And it almost was under the leadership of Graham Claytor, the former Southern Railway president who led Amtrak from 1982 to 1993. Claytor controlled expenses and raised revenue through increased ticket sales, says Carmichael.

“No passenger railroad in the world makes money, but Graham Claytor came close,” he says.

During Claytor’s tenure, Amtrak also continued to plug away at NEC repairs. By 1991, Metroliner trains were operating between New York and D.C. at 125 mph, but trains between New York and Boston were only running 49 mph on average. So, Amtrak launched the Northeast Corridor High Speed Rail program to bring the New York-to-Boston segment up to the same performance levels as the New York-to-Washington section, according to the SEHSR report.

The New Haven-to-Boston electrification was completed in late 1999 and a year later, Amtrak launched the Acela Express between Boston and Washington, D.C. — the country’s first and, to date, only high-speed rail service.

Despite the NEC improvements and faster service, Amtrak still was fighting to prove it was a necessary transportation provider.

In 1997, Congress passed the Amtrak Reform and Accountability Act, which mandated the railroad achieve operational self-sufficiency within five years. The act also created the Amtrak Reform Council, an 11-member committee charged with making self-sufficiency recommendations to Amtrak. If the council found that Amtrak couldn’t become self sufficient by Dec. 2, 2002, the committee would have to submit to Congress a plan for a restructured national passenger-rail system; Amtrak officials would have to submit a plan for the railroad’s liquidation.

Under George Warrington, who held the top Amtrak post from 1998 to 2002, the railroad worked to reach the self-sufficiency goal by expanding service in hopes of generating more revenue. Instead, rising operating costs exacerbated Amtrak’s financial woes.

In the early 2000s, Amtrak’s expenses continued to grow faster than revenue and debt exploded from $1.7 billion in 1997 to $4.6 billion in 2001. That year, the Amtrak Reform Council announced the railroad would not be self sufficient by the December 2002 deadline.

In March 2002, former transit exec David Gunn came out of retirement to take on Amtrak. During his three-and-a-half-year tenure, Gunn streamlined management, cut hundreds of jobs and trimmed expenses.

He also implemented a five-year strategic plan to repair infrastructure and rolling stock, and convinced Congress to appropriate record funding levels for the railroad. Under his leadership, ridership reached record levels of more than 24 million passengers.

Posting progress

Today, Amtrak continues to post progress and register record ridership under the leadership of Alex Kummant, who joined the railroad in September 2006. He continues to push for state-of-good repair improvements, and ways to grow ridership and revenue.

In early 2008, Amtrak inked labor pacts with nine unions representing about 16,000 workers that had been working without a contract for eight years.

With the labor agreements settled and a steady — albeit lower-than-requested — funding stream coming in, Amtrak now can focus on the future. Next on the agenda: purchasing new rolling stock (“We need modern equipment with a modular design to make maintenance efforts more cost effective,” says Kummant), adding or expanding service throughout the country (“By 2020, we could grow ridership by 50 to 100 percent”), and working with state DOTs and regional planners to help improve mobility (“300- to 500-mile corridors make a lot of sense”).

Ultimately, Amtrak’s success hinges on whether it obtains necessary funding to carry out its vision.

“We need a modal balance and capital has to flow into rail for both freight and passenger services,” says Kummant. “We have to make federal and state funding for rail very real, and that will allow progress to be made.”