A WORKING GROUP of 13 set up by Bud Shuster, Chairman of the House of Representatives Transportation & Infrastructure Committee, reported on June 23 that ’Amtrak is now awash in red ink, buffeted by conflicting missions and ballooning debt, and virtually starved of capital in both political and financial terms.’ If nothing changes - and the chances are something will - the corporation which has run US inter-city passenger trains since 1971 could be bankrupt within 12 months.
Kirk Rostron, Manager of Corporate Communications, points out that Amtrak has been receiving less government funding for investment than the railways of Bolivia. It must therefore borrow from banks to buy rolling stock, and last year’s order for high speed Northeast Corridor trains will quickly inflate this debt from $1bn to $2bn. On top of this, with its operating subsidy slashed by 50% in the last two years, Amtrak has had to take out ever-larger short term loans at the end of each fiscal year until the next batch of even smaller federal grant cheques starts coming through. The result is that interest and loan repayments are set to exceed the 1998 subsidy, leaving nothing to support operations. While Amtrak was committed to operating without subsidy from 2002, and already covers 80% of costs from revenue, this can only happen if $750m a year of capital funding is available - a 0·5cent/gallon tax on petrol has been proposed.
The Working Group suggests splitting Amtrak into two. ’Amrail’ would own or procure from freight railways the infrastructure required by passenger trains, and be responsible for investment to achieve improvements. The other company would operate trains without subsidy from 2002, and would be open to competition from new entrants in bidding for the right to provide service - Virgin Group is among those keeping a watching brief. But as Amrail would require the same $750m a year as Amtrak, it is hard to see what is to be gained by inserting a third party between train operator and infrastructure manager on most of the network. Other key issues are the need to eliminate legal impediments which prevent market-based decisions by Amtrak, and new arrangements for access to freight tracks which address liability issues such as those preventing New York State from expanding Empire Corridor services to Buffalo.
Two members of the group dissented from the report, accusing the other 11 of ’unwarranted pessimism about Amtrak’s prospects.’ Jim Florio, former governor of New Jersey, and academic Carl Van Horn claimed the plan was based on British privatisation which ’thus far has cost nearly $1bn a year more in public funding.’ They said the structure put forward would not remove inter-city passenger trains from the annual battle for infrastructure funds. o
