On the record with Amtrak Chairman Anthony Coscia

By Angela Cotey, senior associate editor

Progressive Railroading recently checked in with Amtrak Chairman Anthony Coscia to hear his thoughts on Amtrak’s “operate-like-a-business” mantra, as we reported in our August cover story. During the discussion, Coscia also provided his thoughts on the evolution of Amtrak and intercity passenger rail in general, as well as why he believes Amtrak is poised for financial improvement and ridership growth. His lightly edited responses follow.


How has Amtrak evolved during the four years you have served on the board?

I feel very fortunate because I think — and this is true of myself and a fairly significant number of board members — we came to Amtrak at a time when there is substantial opportunity in the marketplace. The exciting thing about passenger rail today is that Amtrak is a company in the business of selling a service that is in great demand. In Amtrak’s history, there have been times when a great deal of effort has been necessary to convince people that passenger rail is important and plays a vital role in the nation’s transportation system. My predecessors have had to convince people of that proposition because they’ve needed support — sometimes on a monthly basis — to sustain themselves. Everybody gets that now. And in fact, I think the public even got there before Amtrak did, in the sense that we believe that demand outstrips our capacity.

When you think about all the effort that went into operating passenger rail the past three or four decades, we will now see the benefit of that system being kept in place at a national level. So now our job is to take that opportunity and develop that system in a way that creates passenger-rail alternatives for a large cross section of the American public, and I think we can do it in a way that is wrapped around a sustainable business from a financial standpoint. It’s important for us to find a financial structure we know can last and represents a very efficient use of financial resources, and advances the kind of service we provide to customers.


What prompted Amtrak to implement a new strategic plan and place more of a business focus on the organization?

When I got here in 2010, [Amtrak President and Chief Executive Officer] Joe Boardman had done a phenomenal amount of work and incredible job dealing with a lot of the fundamental issues in the company that needed attention. He focused on providing a very strong culture of safety, getting people thinking about the day-in, day-out attentiveness to operating details in the company, and a lot of that was turning around a culture that had been allowed to grow within the company for a long time. We felt as though this was the perfect time for us to introduce the kind of financial reforms within the company that would make it a much stronger operating business in terms of financial performance and, as a result, put us in a better position to take care of customers.

We took at look at our business and said, "What business is Amtrak in?" Amtrak is the intercity passenger-rail business — it connects cities. So Amtrak’s real value is that it provides a service that supports a national transportation system and can connect cities, whether it’s New York and Washington, or Washington and Philadelphia, New York and D.C., Chicago and Milwaukee, or cities on the West Coast or in the Southwest. And that’s becoming increasingly important, with the patterns that people have adopted, the reemergence of cities across the country, the fact that a younger group of travelers are more interested in mass transit alternatives, the fact that the aviation system — particularly for trips less than 500 miles — has become a less-efficient mode to travel. So we’ve gotten very attentive to how do we create city pairs, how do we charge prices that we think people will be willing to pay, how do we come up with the right way to price the service.

We’re not done by any stretch of the imagination, but the results so far are incredibly compelling, when you consider the fact that in 2010 — which is when we started this conversation — our operating subsidy was $565 million and in 2014 it was $340 million. My hope and expectation is that in FY2015, that number will be even lower. That’s a significant shift in operating results. If this were a business, this would be a company that is viewed as one that has found its stride and is operating in a way that represents a significant improvement, and we have seen improvement across the board.


Generally speaking, how do you think Amtrak is being viewed on Capitol Hill these days?

The best way for us to convince those in Congress who have some skepticism about Amtrak is to do our job well. So if we properly use the resources we’re given every year, if we run the business more efficiently, if we reduce our operating subsidy, if we ever get lucky enough to get the capital investment we need and spend it in a way that produces strong results, I think we’ll turn around even those who have the strongest negative views about Amtrak. I feel it’s very important for us not to focus on trying to convince people that Amtrak needs their help because our situation is dire, but rather convince them that we deserve their help because we are running a good company and it’s an investment that is very much in the public’s interest.

If this were the private sector … investors are attracted to companies that are well run and use their money well. Not to those companies that say, “Gee, we can’t figure out how to run our business, can you give us money?” Amtrak has to think of itself as a business, and a business that is convincing stakeholders and investors that it’s doing a good job.

I’m hopeful as we continue to show operating improvement, do a really good job of connecting city pairs, give customers a positive experience and continue to improve our financial results, Congress will say this is a good investment. We hope to get to a point where we need virtually no operating subsidy because we want Congress to consider more capital investment in the system. We’re using assets that in some cases are over 100 years old. Our argument to Congress is that we’re going to work incredibly hard to convince you that when you give us money, we will spend it well and won’t waste it. We know we have work to do to get better, but I think over the last several years, we have made incredible progress in that regard.


How is Amtrak’s current strategic plan different from strategic plans from the past? And why do you think the changes being made right now will stick?

It’s always easier to sell a product when there are people out there who want the product. In many ways, what the American public wants has changed; the typical teenage kid doesn’t run to the DMV on his or her birthday. There are a lot of young riders, business travelers, leisure travelers, riders of all different ages and income brackets, and it’s up to us to find products we can sell to them and provide it on an affordable and sustainable basis. The biggest change is the operating environment. So now, we’ve organized the company in a way that we can tell how much money we’re making, how much money we’re losing, how we look at the way we allocate resources. All these things had not been attended to as carefully in the past.


What are Amtrak’s major initiatives heading into FY2015?

No. 1 on the list is improve operating performance. We want to see stronger on time performance, we want to see more of our routes generate more positive income. We also begun to look very closely at the various stations we own or operate or are a part of, and how we can created transit oriented development opportunities around them. Amtrak is a major owner of real estate interests in places like New York City, Chicago, Philadelphia, Boston and D.C. We’ve begun TOD efforts to look at how to integrate what we do around stations with how we upgrade them, provide better amenities and make some money that Amtrak could then use to invest in the railroad itself.

And finally, we hope to make progress on the development of substantial investment in the Northeast Corridor, including the fact that we’re going to the market and producing a new replacement for Acela. In the 2017-2018 timeframe, we’ll be able to provide significant expanded capacity and improve service on the NEC. We’re hoping that in 2015, we can make significant progress on advancing the Gateway program that will alleviate the single biggest bottleneck in the rail infrastructure by building capacity under the Hudson River into New York City.