Commentary: How to Get Amtrak on the Right Track

By Nicole St. Pierre

Amtrak is turning 30 this year, but the passenger rail service has little reason to pop open the bubbly. The carrier was supposed to be making a profit by now, yet it continues to spill red ink at an alarming rate. The latest problems: embarrassing failures on its new high-speed Acela line, as well as rampant, system-wide delays. Indeed, things started to look desperate in June when Amtrak mortgaged one of its most prized assets, New York's Penn Station, to raise $300 million to cover operating costs. Now, even one of rail's biggest supporters, Transportation Secretary Norman Y. Mineta, is losing faith: "There's no question Amtrak is facing some very, very serious financial problems," he says.

It's time for a radical fix that recognizes reality: split Amtrak in two. First, Congress should spin off a non-profit, government-owned corporation to maintain its rails, stations, and other infrastructure. Then lawmakers should create a private corporation focused solely on running the rail system profitably.

Such a move could help improve Amtrak's muddled management and clarify how to properly fund the rail system. As is, the quasi-public carrier is expected to perform like a private corporation, but it is beholden to Congress. So its executives are pulled in two directions--trying to make sure the trains run on time while hitting Congress up for funds for capital improvements.

Neither job is getting done effectively. "It's ludicrous," says Gilbert E. Carmichael, chairman of the Amtrak Reform Council, a body set up by Congress in 1997. "Management spends half of its time lobbying Congress for more money when it should be worried about running profitable routes." ARC has endorsed a proposal to split up the carrier.

The need for reform is dire. U.S. highways and airports are jammed--and anything but energy-efficient. Many states, along with the Transportation Dept., say a good intercity rail system would help. The DOT has proposed high-speed rail links along 11 corridors in 33 states. And after years of delay, a bill to give Amtrak $12 billion in bonding authority to kick-start high-speed development is suddenly barreling through Congress.

CATCH-22. The renewed interest is welcome. But Amtrak must move quickly to reverse a long history of disappointments. One glaring example is the souped-up Acela Express. More than ten years in the making, the high-speed line was supposed to zoom passengers from Washington to Boston at up to 150 miles per hour. But antiquated tracks along some stretches slow the train to highway speeds. That provides ammunition to critics such as Senator John McCain (R-Ariz.), who calls Amtrak the "great train robber."

Critics complain that Uncle Sam has pumped $23 billion into Amtrak since 1971. And yet, rail is relatively undercapitalized. In 2000, Congress allotted $33 billion for road work and $13 billion for civil aviation. Passenger rail got just $521 million. (Luckily auto makers and airlines don't have to maintain roads or airports.) Amtrak's underfunding begets a Catch-22: It can't maintain infrastructure or make long-term plans without a reliable stream of capital. And as maintenance and service deteriorate, Congress is loath to fund capital improvements for fear of throwing good money after bad.

While Congress gripes about Amtrak, individual lawmakers have aggressively sought to maintain service to their hometowns, even when it's unprofitable. Such hypocrisy tacitly confirms the importance of keeping the system going. Splitting operations from infrastructure would give Congress a continuing hand in Amtrak's success, while freeing the operator to make sensible decisions on routes and other matters.

Amtrak is committed to finding a new way forward. "I know we can rewrite the book on Amtrak," says its chief executive and president, George D. Warrington. But Congress will have to start writing the first chapter before anyone can dream of such a happy ending.

St. Pierre covers transportation issues from Washington.

    Before it's here, it's on the Bloomberg Terminal.