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Travelers Shift to Rail as Cost of Fuel Rises

Patrick Andrade for The New York Times
Amtrak ridership has increased to record levels, and some of the popular long-distance routes are sold out in advance.

By MATTHEW L. WALD
Published: June 21, 2008

WASHINGTON — Record prices for gasoline and jet fuel should be good news for Amtrak, as travelers look for alternatives to cut the cost of driving and flying.

And they are good news, up to a point.

Amtrak set records in May, both for the number of passengers it carried and for ticket revenues — all the more remarkable because May is not usually a strong travel month.

But the railroad, and its suppliers, have shrunk so much, largely because of financial constraints, that they would have difficulty growing quickly to meet the demand.

Many of the long-distance trains are already sold out for some days this summer. Want to take Amtrak’s daily Crescent train from New York to New Orleans? It is sold out on July 5, 6, 7 and 8. Seattle to Vancouver, British Columbia, on July 5? The train is sold out, but Amtrak will sell you a bus ticket.

“We’re starting to bump up against our own capacity constraints,” said R. Clifford Black, a spokesman for Amtrak.

The problem is that rail has shriveled. The number of “passenger miles” traveled on intercity rail has dropped by about two-thirds since 1960, and the companies that build rail cars and locomotives have also shrunk, making it hard to expand.

In 1970, the year that Congress voted to create Amtrak by consolidating the passenger operations of freight railroads, the airlines were about 17 times larger than the railroads, measured by passenger miles traveled; now they are more than 100 times larger. Highway travel was then about 330 times larger; now it is more than 900 times larger.

Today Amtrak has 632 usable rail cars, and dozens more are worn out or damaged but could be reconditioned and put into service at a cost of several hundred thousand dollars each.

And it needs to buy new rail cars soon. Its Amfleet cars, the ones recognizable to riders as the old Metroliners, are more than 30 years old. And the Acela trains, which have been operating about eight years, have about a million miles on them.

Writing specifications for bids, picking a vendor and waiting for delivery takes years, even if the money is in hand.

Amtrak is an alternative to airlines along the Boston-New York-Washington corridor, and on some routes out of Chicago and a few in California. But most of its other routes are so slow that people take those trains because they have no alternative to reach places like Burlington, N.C., or Burlington, Iowa. Or they go for the train ride itself.

The railroad carried about 25 million passengers last year and may hit 27 million this year. (That is all intercity traffic; commuter rail, connecting suburbs and cities, is also growing, but that is not Amtrak’s market.) By contrast, the airlines carry about 680 million domestic passengers a year. If Amtrak were an airline, in terms of passenger boardings it would rank approximately eighth, behind Continental and US Airways and ahead of AirTran and JetBlue.

H. Glenn Scammel, a former head of staff of the rail subcommittee of the House Transportation and Infrastructure Committee, said the railroad should give up on some of its cross-country trains and redeploy the equipment on relatively short intercity trips, where it could provide enough frequency to attract new business. (Providing one train a day in each direction will not draw many new business travelers.)

But the railroad’s labor contracts provide stiff penalties for dropping routes, and dropping states from its itinerary would hurt its political support, especially in the Senate, where thinly populated states are overrepresented relative to their population.

Scarcity is not all bad for the railroad, though. It has raised ticket prices, so that it recorded ticket revenues of $153.4 million in May, up 15.6 percent from $132.7 million in May 2006. That jump is higher than the ridership increase of 12.3 percent, to 2.58 million, from 2.30 million.

Most of the money came from airline-style “yield management,” using a computer to look ahead, see how many seats are filled, and raising or lowering the price on the remainder. Mr. Black said that while the railroad is not set up to make money, “we’re intended to maximize revenues.”

Profits are unlikely. The Government Accountability Office found last November that Amtrak had received more than $30 billion in federal aid since its creation in 1971, but was still in “poor financial condition,” with extensive deferred maintenance.

When Amtrak began operating 37 years ago, the plan was for it to eventually break even. In 1997, Congress passed a law threatening dire consequences if it did not reach self-sufficiency by 2002.

But by 2002 the mood had changed, and the appropriations have continued, financing losses of over $1 billion a year.

The G.A.O. analysis noted the continued operation of cross-country trains with low ridership and high costs. “The current structure does not appear to effectively target federal funds where they may provide the greatest level of public benefits, such as reduced traffic congestion and pollution,” it said.

Oil costs hurt Amtrak, too. Fuel is projected to reach 11 percent of Amtrak’s budget this year, up from 6 percent in 2004. The railroad is not radically more energy-efficient than other means of travel. Amtrak can move a passenger a mile with 17.4 percent less fuel than a passenger car can, and about 32.9 percent less than an airline can, according to the Oak Ridge National Laboratory.

It does save oil, however, since much of the fuel Amtrak uses is in the form of electricity, made from coal, natural gas and nuclear power.

Despite its popularity with passengers, the biggest determinant of the railroad’s health is still the federal government, and in Washington, views diverge sharply.

Last year Senator Frank Lautenberg, Democrat of New Jersey, and others won overwhelming Senate approval for a bill that would offer the states 80 cents for every 20 cents they spend on new intercity passenger rail service, the same as the match offered for highway projects.

The House passed a bill with the same provision by a veto-proof margin earlier this month. The bill will soon go to a conference committee, but the White House is threatening to veto it because it wants the passenger rail system to be turned over to private operators.

Some members of Congress think the private sector should play a bigger role, and that that congestion and fuel prices should push the country to trains, but not necessarily to Amtrak.

The House version of the Amtrak reauthorization bill has a provision that invites private companies to build a rail link between New York and Washington that would make the trip in less than two hours.

The Florida Representative John Mica, a senior Republican member of the House Transportation and Infrastructure committee who wrote the provision, said, “We have no passenger high speed rail service in this country. To really change that, you’re going to have to bring in the private sector to develop, finance and operate the system.” Both versions of the bill authorize bigger subsidies, but Congress is often more generous in authorization bills than in actual appropriations.

Amtrak’s fortunes also hinge on who wins the White House; Senator John McCain of Arizona, the presumptive Republican nominee, was a staunch opponent of subsidies to Amtrak when he was chairman of the Senate Commerce Committee. Barack Obama, the probable Democratic nominee, was a co-sponsor of the Senate version of the bill to provide an 80/20 financing match.


http://www.nytimes.com/2008/06/21/business/21amtrak.html