Board requests 1.82 billion for FY 2006

[Guest_Amtrak_flyer]

http://news.yahoo.com/news?tmpl=story&u=/n...ort_amtrak_dc_1

 

[AlanB]

Here's Amtrak's Press Release on this:

April 21, 2005  Amtrak Announces Strategic Reform Initiatives, Requests $1.8 Billion for FY 2006

Railroad pursuing legislation to improve service & competition  

WASHINGTON - Amtrak Chairman David Laney and President and CEO David L. Gunn today announced a series of bold and comprehensive strategic reform initiatives the railroad is undertaking as corporate actions and pursuing in legislation to revitalize U.S. passenger rail service. Additionally, the railroad will seek $1.82 billion in federal funding to support critical FY '06 capital investment programs and to support national operations.

The initiatives seek to transform the funding and development of passenger rail service, and introduce competition, efficiency and cost-savings. "These are dynamic measures to strengthen passenger rail service at a time when our nation needs it most," said Laney. Together, they advance four fundamental objectives:

Development of passenger rail corridors utilizing a federal/state matching approach common to all other modes (generally 80/20). States, not Amtrak, would lead the development of the corridors, a number of which have already been federally designated, and Amtrak may, among others, competitively bid to provide the service.

Return of the Northeast Corridor infrastructure to a state-of-good-repair and operational reliability, with phased-in financial responsibility for capital and operating costs assumed on a proportionate basis by all users, including Amtrak, freight and commuter railroads.

Establishment of phased-in financial performance thresholds for Amtrak's existing 15 long-distance trains and any future similar proposed service. Amtrak is initiating a series of actions to improve the financial performance of these trains. Services falling below the thresholds could be continued through support by states or other authorities, reconfigured or eliminated.

Creation of markets for competition, private commercial participation and industrial reforms in various rail functions. This includes competition among operators, including Amtrak, for new corridor routes.

"Business as Usual Cannot Continue"

"Despite the record number of passengers being served by the railroad today, Amtrak cannot continue business as usual, nor can the snail pace of passenger rail development continue to lag behind the growing need in high-demand regions of the country," said Laney. "These initiatives will both continue fundamental reform at Amtrak and help spur a rational and much-needed growth of the passenger rail network. It is Amtrak's belief that the leadership of such development is the role of states and the federal government - not Amtrak. Instead, Amtrak must in the long run transform itself to a competitive provider of passenger rail services, with the recognition that in the near term it will remain the steward of the national passenger rail system as it is today."

Amtrak Reforms

In 2002, Amtrak eliminated its unwieldy business-unit structure and began a series of other reforms: reduction of management layers, zero-based budgeting, strict GAAP accounting and other cost controls, including the reduction and elimination of several routes. Amtrak also returned its focus to the railroad's core business of passenger service and asset rebuilding. More than 5,000 positions were eliminated and the growth in operating costs was brought under control.

Building on these efforts, Amtrak will for FY '06 align financial accounting, planning and management accountability along five business lines to facilitate future decision-making. The five business lines are: Amtrak-owned infrastructure management (principally the Northeast Corridor (NEC)); NEC operations; state corridor operations; national long-distance operations and ancillary businesses. These lines are not a return to the business unit structure and do not separate NEC operations and capital project management. Amtrak has reviewed various proposals to separate the management of NEC operations and infrastructure, but concluded that complexities and risks of separation outweigh the benefits, and therefore that such a separation is not advisable at this time.

With an ultimate goal of a vibrant passenger rail system with multiple service options and a competitive supply industry, Amtrak will undertake a wide range of reforms, including the clarification of individual business activity costs, increased outsourcing, and the initial facilitation of competition for selected routes and functions.

Public Sector and Legislative Reforms

While internal reforms at Amtrak will help provide a foundation for a competitive and efficient national passenger rail system, strong federal and state leadership is essential if passenger rail is to meet the demand for service. Among the legislative changes called for to accomplish the reform objectives are:

Establishment of a federal/state capital match program for passenger rail development, comparable to other modes of transportation. This long-proven federal transportation funding mechanism through which the U.S. Department of Transportation annually provides more than $40 billion for highway and transit projects.

Designation of a federal agency to oversee the transition to a competitive passenger rail environment, including the distribution of federal funding, selected assets and rights of access.

Revisions allowing the transition to a method by which all users of the NEC fund their proportionate share of its costs.

Ultimately, extension of Amtrak access rights on freight railroads to qualified competitors for state-managed services.

Targeted revisions to allow labor agreements to terminate at the conclusion of the term of their agreement.

Federal Funding for Fiscal Year 2006

As Amtrak will undertake the internal reforms addressed earlier and pursue public sector and legislative reforms, little reduction in the need for federal support will be realized in FY '06. In fact, funding for operations, critical assets such as the Northeast Corridor and other needs are essential to the success of the reform initiatives Amtrak has outlined

Consequently, Amtrak is seeking federal funding in FY '06 of $1.82 billion. This request includes $787 million for capital infrastructure projects, $560 million to support train operations, $278 million for service on existing debt, $175 million in working capital and $20 million for transition costs associated with the reforms previously outlined.

Current federal Amtrak funding (FY '05) is $1.2 billion. However, Amtrak cautioned that an appropriation at this level would be insufficient in FY '06 to sustain operations and the backlog of capital projects the railroad is working to erase. Amtrak's Board and management want to emphasize that Amtrak cannot continue to operate at the current funding level of $1.2 billion in FY06.

Amtrak Hearing Scheduled for April 21

Today, April 21, 2005 Amtrak Chairman Laney along with President and CEO David Gunn are testifying at an Amtrak oversight hearing before the Senate Subcommittee on Surface Transportation and Merchant Marine.

The full press release can be found here.

 

[lepearso]

Well, what does everybody think? At first glance, this all looks ok to me.

 

[engine999]

Well, what does everybody think? At first glance, this all looks ok to me.

I agree, but i hope amtrak ends up with that much.

 

[National Limited]

I wonder what exactly the "financial performance thresholds" are. Does this mean the LD trains must not loose money or does it mean they can loose a certian amount?

 

[Trogdor]

I wonder what exactly the "financial performance thresholds" are. Does this mean the LD trains must not loose money or does it mean they can loose a certian amount?

From what I read earlier, the administration's proposal was to have cost recovery threshholds that would reduce federal operating subsidies on all services...eventually to 0.

I have not read Amtrak's version to see if it matches that which the administration has proposed.

 

[lepearso]

I wonder what exactly the "financial performance thresholds" are.  Does this mean the LD trains must not loose money or does it mean they can loose a certian amount?

From what I read earlier, the administration's proposal was to have cost recovery threshholds that would reduce federal operating subsidies on all services...eventually to 0.

I have not read Amtrak's version to see if it matches that which the administration has proposed.

I too don't know if Amtrak's idea matches that of the Adminstration, but from what I can tell it looks like a reasonable approach.

Amtrak has proposed a process for improving long-distance services with a goal of seeing greater financial returns and cost trimming to a point that each of the 15 routes meets a minimum level. (What that level is I guess is to be determined.)

In any event, if a certain train is still falling short of its operating goal, the money managers at Amtrak put together a "gap" figure. Congress can decide to fill that gap with their own appropriation or the respective states can decide to fill that gap. Or, all parties can decide to eliminate or restructure that route.

At first, this idea may cause us some worry. But I think that it has some real logic to it. It demands that all involved groups work together to improve the route service and explore dynamic ideas to keep costs down - such as contracting with other businesses to provide ticketing and passenger services in rural locations. Amtrak's vision, as revealed in this document, is that the long-distance routes will not only surive, but will serve an even greater purpose that is more in line with the needs and desires of the traveling public.

Fundamentally, it comes down to this. Amtrak has a long-term purpose, a long-term strategy, and a long-term responsibility. At the same time, the states, the federal government, the freight railroads, private entities, and others are all called to the table for meaningful discussion on things that matter, like on-time performance, congestion relief, asset allocation, service improvements, and so on.

I encourage everybody to download this entire document from the Amtrak website and see what you think.

 

[rile42]

I have a worry about this. At face, it seems somewhat in line with what was expected to keep Amtrak running trains. However, how will it jive with the cost of repairing all the Acela's brake problems?

 

[AlanB]

However, how will it jive with the cost of repairing all the Acela's brake problems?

The loss of revenue is the only problem for Amtrak with the current Acela problem. All costs for the replacement parts and the needed work to install them will fall on Bombardier's shoulders not Amtrak.

 

[AmtrakFan]

I think $1.82 Billion is pretty good.

 

[AlanB]

I think $1.82 Billion is pretty good.

Well that's what Amtrak is asking for. So far no one has promised them that they are going to get 1.82 B.

 

[Midland Valley]

I don't like anything about these thresholds. They are unfair. It is asking Amtrak to work under stipulations no other form of public transportation has to endure. Can the congress just nullify that part of the reform? If they can give 80 billion to Afganistan and Iraq without batting an eye, why can't they just give 1.8-2 billion per year to Amtrak for common sense transportation?

 

[lepearso]

You're right...it is unfair. But there is still a positive angle. The threshold gives Amtrak a mandate to improve service and to build meaningful relationships with the respective states and communities, something which is missing in many areas. The threshold will also draw attention to routes that need some type of restructuring so that they better serve their market and their purpose. In fact, their purpose is more clearly defined in this proposal as a starting point for corridor development, a lifeline for rural communities, and a connection between different corridors.

Keep in mind one other possibility. The new standard for operating long-distance trains (and Amtrak in general) may create a whole new standard for other areas of government. If Amtrak can successfully adapt to this new operating standard, citizens and government will have reason to look at other programs and require them to adapt to something very similar. Imagine...just imagine...a day when highway programs and air traffic programs have to go through a very careful screening and evaluation to make certain they are serving their intended purpose at a reasonable cost and with meaningful input from different sources.

I know that I sound unusually optimistic about this, but at this present moment I am relieved and encouraged that we may finally be getting somewhere. Perhaps, just perhaps, Amtrak is moving into an whole new realm. Maybe, just maybe, at this time next year we will all be debating the development and improvement of Amtrak services to meet higher standards as opposed to all this exhausting anguish over whether or not Amtrak will even exist!

 

[Save Our Trains Michigan]

I don't like it one bit.if you don't work for the RR you don't know half of what realy goes on and how much money it takes to keep the RR's going and passenger equipment is real expensive to keep up.If amtrak were to ever go under the whole RR systom would be screwd up from our retirment to our jobs on the freight side.

 

[Amtrak OBS Employee]

I don't like it one bit.if you don't work for the RR you don't know half of what realy goes on and how much money it takes to keep the RR's going and passenger equipment is real expensive to keep up.If amtrak were to ever go under the whole RR systom would be screwd up from our retirment to our jobs on the freight side.

I right along with this! All I can say is the buzz around work is "reform is on the horizon!" And as far as I am concerned, this is the writing on the wall! Change is coming, and I for one feel it is not gonna be for the better! I hope I am wrong! OBS...

 

[lepearso]

Change is coming and there's no need to panic. According to this proposal, Amtrak's needs will be funded so that the company can continue stabilizing its day-to-day operations and focus on internal reforms. Any and all of the so-called "reforms" will happen on a gradual basis. At the end of the day, Amtrak remains intact, functional, and purpose driven.

Amtrak employees may lose sleep over the impact that restructing will have on the workforce, but the document makes it clear that most of the restructuring has already happened and has been in the works since 2002.

All of us may lose sleep over the idea that other entities may bid on certain route services. Again, there's no need to panic. Part of Amtrak's accounting revisions will truly demonstrate how much it cost to run a train. If there's another entity out there that wants to bear that enormous burden, more power to 'em. Amtrak, however, is going to have a headstart and a real advantage.

Perhaps the best angle in all of this is that the "reforms" call on the states to ante up and get involved. This too is supposed to happen on a gradual and predictable basis. There won't be, according to this proposal, any extortion tactics. Instead, there will be a process for getting the states more involved in the services they receive. Yes, some states are going to buckle, but that's where we passengers and rail advocates get to step in and force them back to reality. Because we are a grassroots force, we can have greater impact at the state and local level.

Let me close this by saying that Amtrak is here to stay. If Congress goes along with this proposal, Amtrak will stabilize and fulfill a better understood purpose.

 

[AmtrakWPK]

I can also very clearly see how route segments around the country that MIGHT be profitable would end up being taken over by private enterprise. Amtrak would then be left with the most money-losing segments, and under the new guidelines would have to close them down, and poof!, there goes Amtrak AND the national pax rail system down the crapper, which is W's goal.

 

[haolerider]

My observations regarding "change/reform", is that those that should fear the change are exactly those that should be gone from the system. Adapting to change is one of the biggest challenges in business and those that can do it survive.........those that fight it are generally left in the dust.

Having read the Reform Initiatives document fully, it would appear that there will be "accountability" issues for all departments in the company....from the Call Center staff taking the reservations to the OBS dealing face to face with the passenger. It is not too much to ask to do your very best to keep the passengers Amtrak has and also do your best to provide an atmosphere that will keep them coming back and generate incremental ridership.

Every employee needs to be a strong part of the solution and not a part of the problem..........

 

[lepearso]

I can also very clearly see how route segments around the country that MIGHT be profitable would end up being taken over by private enterprise. Amtrak would then be left with the most money-losing segments, and under the new guidelines would have to close them down, and poof!, there goes Amtrak AND the national pax rail system down the crapper, which is W's goal.

Don't rush to that conclusion just yet!

First of all, private enterprise will have to place its bid on these routes, and there's no guarantee whatsoever that their bid is going to be better than Amtrak's. As you can see from this document, Amtrak is getting better on cost controls and revenue management. If all this progress continues, Amtrak will be in a position to put in an excellent bid and probably win in most cases. Never assume that just because Amtrak has a unionized labor force that it will have a cost disadvantage. For that matter, do not assume that just because a "competitor" might have a non-union labor force that it is going to have a cost advantage. There are countless other factors to consider, and Amtrak can and will move into a competitive position.

As far as the money-losing routes, there's no mandate that these routes have to be killed off in an instant. The proposal calls on Amtrak to determine a "gap" for each of these trains, and let Congress, the states, or private enterprise determine how to fill that gap so that the route can continue operating. Lead time is built into this plan so that these money-losing routes aren't simply dumped on somebody else and aren't simply shut down at a moment's notice.

We may have reason to believe that W wants the national rail passenger system to wither and die, but that will not happen, ever! Public support for the rail system, even within his own party (myself included), is strong and likely to get stronger.

 

[AlanB]

First of all, private enterprise will have to place its bid on these routes, and there's no guarantee whatsoever that their bid is going to be better than Amtrak's.  As you can see from this document, Amtrak is getting better on cost controls and revenue management.  If all this progress continues, Amtrak will be in a position to put in an excellent bid and probably win in most cases.  Never assume that just because Amtrak has a unionized labor force that it will have a cost disadvantage.  For that matter, do not assume that just because a "competitor" might have a non-union labor force that it is going to have a cost advantage.  There are countless other factors to consider, and Amtrak can and will move into a competitive position.

Actually part of the proposal makes it clear that Congress must make all passenger rail operators subject to the same labor laws. This means that all operators will have to use union labor and keeps Amtrak on an even keel with them.

As far as the money-losing routes, there's no mandate that these routes have to be killed off in an instant.  The proposal calls on Amtrak to determine a "gap" for each of these trains, and let Congress, the states, or private enterprise determine how to fill that gap so that the route can continue operating.  Lead time is built into this plan so that these money-losing routes aren't simply dumped on somebody else and aren't simply shut down at a moment's notice.

The key here is going to be those performance metrics. They should have been included with this plan, not scheduled for release later this year. This is the key to revealing the true intentions of this plan.

If the metrics are those proposed by the Bush plan, then they are unacceptable. If however they correspond to what's hinted at, that losses must be minimized and not necessarily eliminated, then this protects most of the National system.

As much as I'd hate to see the Sunset Limited disappear, there is no doubt that this train is a huge money looser for Amtrak right now. The problem as I see it relates largely to the very poor OTP and the 3 days a week schedule. The one problem that I do see with the plan as outlined, is that it doesn't IMHO give Amtrak enough time to improve a money loosing route like the Sunset. It will take Amtrak too long to get new cars or enough refurbished cars to run this train 7 days a week, in an effort to turn this train around.

A few of the other big losers might be able to turn things around in the time allotted, again assuming that the metrics are reasonable.

 

[AmtrakWPK]

What we really need is to turn Bill Gates into a railfan. Then he could just buy Amtrak a whole new complete set of equipment and double track the entire country and we'd be all set! :lol:

And then the loco computers would all go BSOD (message on screen would be: GAME OVER) waiting for a new version of the operating system and we'd be stuck again. Oh, well.... :blink:

 

[lepearso]

As much as I'd hate to see the Sunset Limited disappear, there is no doubt that this train is a huge money looser for Amtrak right now. The problem as I see it relates largely to the very poor OTP and the 3 days a week schedule. The one problem that I do see with the plan as outlined, is that it doesn't IMHO give Amtrak enough time to improve a money loosing route like the Sunset. It will take Amtrak too long to get new cars or enough refurbished cars to run this train 7 days a week, in an effort to turn this train around.

I don't think we would see the Sunset disappear altogether as part of this plan, but you could certainly count on some major changes. The plan implies that certain routes may have to be restructured and/or rerouted in order to meet the threshold. The Sunset would expectedly see some major changes which could be very positive. A reroute through Dallas? Seperation of the easter and western sections? A reroute through Phoenix? These are just some possibilities.

 

[frank]

One thing I know for sure.....I can't afford to ride any of Amtrak's competition here in North America as it stands right now. Orient Express and others are strictly for wealthy retirees or CEOs. Why would I think that would change?

One other thing I know for sure.....if Haliburton was watched (or reported to the American people) as closely as Amtrak, there would be an outcry heard 'round the nation. They probably line their pockets with enough extra cash to not only save Amtrak, but to buy all new train sets for all of the routes. But of course, they do have several good buddies at the top in Cheney and Bush.