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May 2011

Rail News: Amtrak

Amtrak: keeping an eye on the long-range forecast for U.S. intercity passenger rail

— by Angela Cotey, Associate Editor

It's been four decades since Amtrak began operating a national intercity passenger-rail system, taking on a slew of unprofitable passenger services from about 200 freight railroads after the 1970 passage of the Rail Passenger Service Act. And for four decades, the railroad has had a less-than-stable upbringing.

Amtrak's history is marred by under funding, calls for self-sufficiency and privatization, proposals to eliminate the railroad altogether and a revolving CEO door that's made it tough for Amtrak workers to adapt to new corporate strategies and corresponding cultures before others are introduced.

Through it all, Amtrak leaders and the railroad's employees have worked to adapt to changing business environments. Regardless of political agendas and noise from naysayers, Amtrak executives have pushed ahead with programs to create a relevant national passenger-rail network. Over the years, Amtrak has revitalized the Northeast Corridor (NEC), continued operations with often scarce funding, launched high-speed rail service and worked with state DOTs to make slow but steady improvements on various corridors.

Today, the Amtrak leadership team is taking steps to ensure it remains a relevant transportation option for the next 40 years and beyond. The railroad is seeking to improve service by replacing its fleet, add capacity on the Acela Express high-speed service and carry out a long-range vision for 220 mph rail service in the NEC. Amtrak also is working to develop better relationships with states and transit agencies, particularly with competition for passenger-rail operating contracts becoming more fierce. Amtrak executives are building stronger bonds with labor unions and the rank-and-file, too, by involving them in the strategic planning process and listening to their suggestions.

The ultimate goal? For Amtrak to be "the first intercity mobility choice for connections to and from the nation's key metropolitan areas," says President and Chief Executive Officer Joseph Boardman.

The Long Road Ahead

Getting there won't be easy. For starters, Amtrak will need more federal funding support — lots of it. And at least for the near term, it's not looking promising. Today's volatile political and economic climates make the prospects seem dim for substantial funding increases for any program, rail included. Meanwhile, Amtrak still has its share of critics, including some key congressmen who believe the railroad should privatize operations.

But if the changing political climate has Amtrak execs rattled, they're not letting on. During late March interviews, both Boardman and Vice President of High Speed Rail Al Engel were even-keeled about the impact that a Congress bent on program cuts could have on the railroad's finances.

And for good reason. Amtrak is used to dealing with political mood swings and criticism. The railroad also has gotten some financial stability from the Passenger Rail Investment and Improvement Act of 2008 (PRIIA), which authorizes Amtrak through FY2013. The legislation was a morale booster for railroad employees, too, who had grown all-too-accustomed to year-to-year funding struggles. And in many ways, the future prospects for passenger rail — amid concerns about congestion, the environment and fuel prices — have never looked better.

If there's a lesson to be learned from Amtrak's rocky history, it's this: Keeping an eye on the long-range forecast, rather than the clouds that linger above, is key to maintaining a successful rail operation. With that in mind, Amtrak execs plan to continue working toward their goal of becoming the intercity transportation mode of choice by focusing on mobility and connectivity, safety, customer service and, as Boardman puts it, "organizational excellence." Although they're bound to encounter some storms along the way, Amtrak officials believe they'll be able to create a stronger intercity passenger-rail system that will play a key role in what still looks to be a bright future for rail transit.

Meet Part of the New Fleet

Those plans hinge in part on providing more reliable service. In February 2010, Amtrak unveiled a long-range fleet plan that calls for replacing Amtrak's rail cars and locomotives through 2040. The railroad since has ordered 130 single-level cars for long-distance trains from CAF USA in July 2010. The $298.1 million order includes 55 baggage, 25 baggage/dormitory, 25 sleeping and 25 diner cars, which are scheduled to be delivered beginning in October 2012.

In October 2010, Amtrak inked a $466 million deal with Siemens to supply 70 electric locomotives capable of reaching speeds up to 125 mph. The units will replace all the existing conventional electric locomotives operating on the NEC. Siemens will begin delivering the locomotives in FY2013.

In addition, Amtrak is "very close" to ordering 40 Acela passenger coaches, says Boardman. The new cars would enable the railroad to expand Acela train lengths from six cars to eight, providing 40 percent more capacity on Amtrak's high-speed service, which often reaches capacity during peak periods.

"We would add even more if it weren't for the limitation we have on the platforms at the stops on the Northeast Corridor," Boardman says.

Amtrak's $2.22 billion FY2012 budget proposal includes funds to purchase the vehicles.

Next-gen Plan for NEC

But adding a couple cars to each of its high-speed trainsets — which only average speeds of about 60 mph in some areas because of curves or aging infrastructure — won't be enough to handle increasing transportation demand in the Northeast. In late September, Amtrak unveiled a $117 billion, 25-year plan to create a next-generation high-speed rail service between Boston, New York City and Washington, D.C., with trains reaching speeds up to 220 mph.

Amtrak currently is defining project packages and plans to begin a programmatic Environmental Impact Statement later this year through the Federal Railroad Administration (FRA), which is developing a request for proposals for the work, says Engel, who joined Amtrak in September 2010 to fill a new position overseeing the railroad's high-speed rail efforts.

While the FRA conducts the programmatic review, Amtrak plans to advance projects designed to upgrade existing NEC infrastructure. The top priority: the Gateway project, which calls for building two new tunnels under the Hudson River from New Jersey into Manhattan's Penn Station.

The Gateway project is similar to New Jersey Transit's Access to the Region's Core (ARC) project, which was terminated last fall by Gov. Chris Christie. The $8.7 billion ARC project also called for building twin tunnels into Manhattan and a new station beneath 34th Street. But the Gateway project is not a more expensive version of ARC, as some people have claimed.

"Critics have mistakenly said we're replacing a $9 billion project with a $13.5 billion project, but the $13.5 billion includes other improvements," says Engel.

For one, Amtrak's version calls for replacing the 100-year-old Portal Bridge over the Hackensack River with a higher structure, so it doesn't have to be raised when marine traffic passes under it. That portion of the project alone will cost about $750 million, says Engel. Amtrak also is proposing to reconfigure tracks to provide access to a new Moynihan Station, and add two tracks between Newark and New York City that can handle higher-speed trains.

In addition, Amtrak would expand Penn Station, and trains traveling through the new tunnels would surface at the facility. The ARC project had called for trains to terminate at a new station below 34th Street.

"You want to reach Penn Station, which is a major complex," says Engel.

Amtrak now is working to determine how much of the ARC project work NJ Transit did prior to the project's cancellation can be reused for the Gateway project. The railroad hopes the environmental work completed on the New Jersey side still will be applicable.

An 'Official' Recognition

Amtrak officials also are hoping the project gets a boost with some federal dollars. In March, U.S. Transportation Secretary Ray LaHood named the NEC as the 11th federally designated high-speed rail corridor, enabling Amtrak to compete for federal funds under the High-Speed Intercity Passenger Rail program.

On April 4, the railroad submitted an application seeking a portion of funds being redirected from Florida to cover elements of the Gateway project, including $720 million to replace the Portal Bridge, $188 million to conduct preliminary engineering and environmental analysis for two new tunnels under the Hudson River into Manhattan, and $50 million to conduct preliminary engineering and environmental analysis for the Penn Station expansion.

Amtrak's asking for federal dollars to begin work on other elements of the next-gen NEC high-speed system, as well. The railroad requested $450 million for a project designed to support capacity increases, improve travel times and increase speeds up to 160 mph between Philadelphia and New York City by upgrading electrical power, signal systems and overhead catenary wires in New Jersey and Pennsylvania. And, Amtrak is seeking $15 million to conduct environmental work and preliminary engineering to examine replacement options for the more than century-old Pelham Bay Bridge over the Hutchinson River in the Bronx. The structure is located on the Hell Gate Line that connects New York and New England.

Amtrak is all for advancing high-speed rail projects outside the NEC, too. The railroad has worked with other states to submit applications for federal high-speed dollars, and has submitted an expression of interest to the California High Speed Rail Authority, noting that it wants to help the agency develop and implement its system. In addition, Amtrak was part of a consortium preparing to bid to design, build, operate, maintain and finance Florida's Tampa-Orlando high-speed system until Gov. Rick Scott rejected federal funds for the project, effectively cancelling it.

"I think we have a very major role to play leading the effort. We are the only operator of a high-speed rail system in the country," says Engel. "States would be wise to consider the assets we bring to a project — the technical, operations and marketing aspect. We have a state-of-the-art reservation system, we know how to operate effectively with 13 different labor unions and we have freight relationships. We want to be a leader."

Opposing Views

But not everyone wants them to be. Throughout its history, Amtrak has had scores of critics who have called on the railroad to institute reforms such as increasing transparency and eliminating long-distance routes. At one point, the Bush Administration even proposed zeroing out funding for the railroad. Amtrak criticism continues today, and seemingly becomes louder the more volatile the political climate.

At least one key congressman has had Amtrak on his radar for years, and continues to call for privatizing the railroad's operations. Now that Amtrak is trying to get involved in the high-speed rail business — beyond what it provides with the Acela — Rep. John Mica (R-Fla.) has been even more aggressive with his criticism.

"They shouldn't be providing any commuter service; that should be provided by the private sector," says Mica, who serves as chairman of the House Transportation & Infrastructure Committee. "Amtrak should give up the Northeast Corridor and let someone else do the construction, development, financing and operating. In fact, all the routes should be operated by a private operator."

Boardman has a different view.

"Amtrak is private. Amtrak does not need operating assistance on the Northeast Corridor. It needs the capital to be invested that was promised from the time that Amtrak took over the Northeast Corridor in 1976," he says.

When Amtrak assumed control of the NEC, the U.S. Department of Transportation required that the agency have control of core construction — a fact that seems to have gotten lost during the past 40 years, says Boardman.

"This is Amtrak-owned infrastructure, and with the support that should have and could have been provided, there wouldn't be any question here about how things should be going forward," he says. "Amtrak can get investments and make things better on a regular and incremental basis, and I think we're proving we can do that."

Mica isn't so sure. Amtrak has "a history of poor performance and poor management," and is hanging onto Northeast Corridor operations because "it's the only thing that masks their incredible losses," he says.

Funding and Financing the NEC

Amtrak does recover 169 percent of its operating and maintenance costs for the Acela, says Engel. The railroad expects the next-generation high-speed system to be a money-maker, as well. The Gateway project will open up about two dozen new train slots for Amtrak and NJ Transit. And operating 220 mph trains along the corridor will reduce travel times to about 90 minutes between Boston and New York City, and New York City and Washington, D.C.

"It will attract a tremendous volume of passengers away from autos and airlines," says Engel, adding that Amtrak already has captured 69 percent of air-rail traffic on the NEC corridor south of New York, and 52 percent north of New York. "The projected surplus after O&M and capital renewal is $928 million per year, which can be used to amortize some debt for the $117 billion price tag for Boston to Washington, D.C."

Still, Amtrak will require large grants from the federal government and states along the NEC in order to complete its long-term NEC vision. Getting those grants will be next to impossible, says Mica, calling the next-generation high-speed system a "pipe dream."

"Congress will never give them that kind of money," he says.

Instead, the House T&I Committee plans to put out a rule during the next month or so that calls for developing a demonstration project to bring in a private operator to handle the development and financing of a next-gen high-speed rail system on the Northeast Corridor. Amtrak would retain ownership of the NEC "in name," Mica says, adding that he believes there always will be a need for the intercity passenger-rail company to ensure the national system continues to operate and is interconnected, as well as manage vendors and contractors.

"If Amtrak would work with us, I think we could probably hire more employees, people could make good wages and they could start improving service if they would allow privatization of some of these routes," says Mica.

Amtrak officials don't think that's the answer. In a written testimony submitted in March to the House T&I Committee's Subcommittee on Railroads, Pipelines and Hazardous Materials, Amtrak Vice President of Policy and Development Stephen Gardner said private-sector participation "is not the silver bullet that ensures success."

"Increased private-sector involvement is not a substitute for adequate, consistent and assured federal funding," he said. "Federal funding for intercity passenger-rail service is the only way to attract — and maintain — private-sector participation and financing."

Amtrak isn't opposed to involving the private sector in some areas, though. The railroad plans to soon request bids from the private sector to develop a comprehensive business planning and financing study for the next-generation high-speed rail project to determine how much private investment Amtrak could generate, as well as other business opportunities associated with high-speed rail, such as station and real estate development. Amtrak officials hope to have results by the end of the year.

Making the Amtrak Case

In the meantime, Amtrak execs will continue to push Congress for additional capital funds. Many members of Congress will be less than receptive, Boardman believes.

"On a very high level, the prospects for funding for rail transportation, with the growth we're seeing for rail transportation in general, are very good," he says. "Whether there are prospects for funding for anything in the near future now keeps weighing on everybody's mind."

In March, Congress approved a continuing resolution for the FY11 federal budget that reduced Amtrak's capital and debt service grants by $78 million compared with FY2010. The continuing resolution also zeroed out funding for the High Speed Intercity Passenger Rail program, which Amtrak has been benefitting from, as the majority of the money allocated through the program has gone to states to upgrade existing intercity passenger-rail service.

Boardman, who served as Federal Railroad Administrator under the George W. Bush administration, has been working hard to get the Amtrak funding message across to new members of Congress who might not understand the ins and outs of the railroad.

"I've been visiting as many people as I can on the Hill to tell them our story," says Boardman, adding that he understands the Republican perspective on rail. "I was a Republican. I was part of the Bush administration. They were going after rail to reduce costs."

But from a Republican perspective, it's important to note that Amtrak covers 76 percent of its operating costs through farebox revenue, something "no other railroad in the United States does," says Boardman. In addition, Amtrak's operating subsidy is used for its 15 long-distance routes, and that subsidy — $434 million in FY2010 — is lower now than it's been in years, he says.

"And where do we operate? Through red states. It's the isolated, rural areas that no longer have aviation services or bus services, and Amtrak is the only lifeline to transportation they have," he says. "Whether you're a Republican or Democrat, you have to understand that this is the United States and Amtrak is a critical element."

In the end, Boardman & Co. can only do so much to sway the opinions of political leaders. They'll continue to push ahead with long-range plans while hoping funding for those plans falls into place. Engel, for one, believes it will.

"I took this job knowing the leadership would most likely change in Congress and I still had enough confidence that wisdom would prevail," says Engel, who has more than 40 years of experience in the rail industry, including a recent stint as VP and high-speed rail director for AECOM. "It's tough to get there and painful to watch the process, but in the end, usually America has come through with the right decisions."

Amtrak's long-term plans to improve and expand service on the NEC, and help other states launch higher-speed rail service will help ensure Amtrak continues to evolve right along with the changing passenger-rail landscape. But it's equally important for the railroad to focus on day-to-day issues, such as relationships with employees, states and transit agencies.

"We're continuing to concentrate on our organizational excellence, making sure that we are capable of competing," says Boardman. "Part of that is having a clear direction and part of that is changing the culture of Amtrak."

Culture Cultivation

And part of changing the culture — a big part, actually — begins with making workers "feel valued," says Boardman. The railroad has more than 17,000 union-represented employees.

"We went eight years here without a contract, and that affected our relationships with the rank and file," he says. "Now, almost 60 percent are under contract for five years and the relationship is one of inclusion."

Transport Workers Union (TWU) Railroad Division Director Gary Maslanka would agree. His union represents about 1,400 Amtrak carmen and onboard service workers, and since Boardman joined Amtrak in late 2008, Maslanka has noticed a "pretty significant, positive change," he says.

"Management at many companies say, 'Our most valued asset begins with the employees,' and they use it pretty loosely, but in this situation, there's been a true demonstration," he says. "Since Mr. Boardman's been here, he's been walking the talk. His actions show that he is indeed interested and engaged, and working with the employees in a collaborative way."

That collaboration has been most evident in the shops, where TWU workers have pushed to improve processes, says Maslanka. For example, TWU proposed to Amtrak managers that the railroad implement Six Sigma quality control processes at the Beech Grove, Ind., shop.

"[Boardman] has been very receptive to that. He indicated to his mechanical staff that this is a priority," says Maslanka. "There's now a process engineer on board at Beech Grove, as well as some others that are helping us facilitate things, getting organized and really taking control of the business."

In addition, union leaders have had opportunities to participate in Amtrak's strategic planning process for various business units, as well as corporate asset development discussions. Nurturing a culture that values a labor/management partnership is simply good business sense, says Maslanka.

"Part of the process here is to find ways to be competitive and leverage the assets Amtrak has," he says. "The better we do things, the more we can take advantage of opportunities and the more competitive we'll be."

These days, Amtrak needs to have that competitive edge. Under the PRIIA act, states now can choose operators other than Amtrak to operate intercity passenger-rail services.

"We've tried to change the way we behave as a company and we're beginning to get fruit from that," says Boardman.

George Weber, chief of the Illinois Department of Transportation's Bureau of Railroads, says he can tell.

"We've noticed a difference in the performance of the train crews and service attendants," he says, adding that he believes the PRIIA legislation helped boost morale at the intercity passenger railroad by providing a sense of stability. "There's a long history at Amtrak of not knowing whether you'll have a job or not the next year ... and I think that has an effect on the overall performance and the employees."

But employees' attitudes and Amtrak service won't change overnight, Weber says.

"I think you're seeing some indications that this is a work in progress," he says. "It likely will take some time to change the thinking and culture there, but we're seeing some important strides being made."

Amtrak is working to remain competitive with transit agencies, as well. The railroad has been working to secure more operating contracts, something that's becoming increasingly difficult now that new rail operators have entered the U.S. market. In March 2010, Amtrak landed its latest transit operating contract: a four-year deal to operate commuter-rail service for southern California's Metrolink. The contract includes options for two three-year extensions.

An Easy Decision

For Metrolink, the decision to go with Amtrak was an easy one, although not necessarily because Amtrak submitted the most competitive bid. The agency previously contracted Veolia Transportation, which employed the engineer who caused the 2008 Metrolink crash in Chatsworth, Calif., that caused 25 fatalities and 138 injuries.

Metrolink wasn't going to renew its contract with Veolia, and Amtrak was the only other party that was interested, says Metrolink Chairman Richard Katz. Amtrak previously operated Metrolink trains between 1992 and 2005.

But winning the contract by default doesn't mean Amtrak hasn't had to make some concessions to accommodate Metrolink's requests. Agency execs, which have said they're working to make Metrolink the safest railroad in North America, have required that Amtrak comply with some new standards, such as inward-facing cameras in locomotive cabs, and a requirement that agency personnel conduct their own equipment tests and inspections in addition to Amtrak's.

"We wrote it into the contract that there will be a lot of testing and inspection rights that Metrolink would retain to ensure rules compliance and safety on the railroad," says Katz. "[Amtrak] understood, and that was something they were open to."

Amtrak began operating Metrolink service in June 2010, and while there have been some "growing pains with headquarters," the Amtrak engineers and conductors have been "very professional and we've been very happy with them," says Katz.

Whether the strides Amtrak is making to improve service quality and plan for the future matter to the new Congress, and whether legislators are willing to help the railroad out with some additional funding, remains to be seen. For now, Amtrak will continue to do what it's grown accustomed to for the past 40 years: push ahead with its top priorities, whatever the weather. Boardman thinks they're doing a pretty good job.

"Things get better every day, although we keep finding things that need to get done," he says. "But we're getting there. We're making progress."


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