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Is This Any Way to Run a Railroad?

You think you've got problems? Amtrak's got an overpaid workforce. Its trains and tracks are falling apart. Worse, the carrier's balance sheet is a flat-out mess.

With the White House’s plan, however, that tab would be picked up. The trade-off: states would be free to choose carriers other than Amtrak to run routes. But unlike former Amtrak executives, Smith doesn’t seem overly spooked by the specter of competition. “If the states have this money to spend, I think they’ll still come to us,” he predicts.

Nice Work If You Can Get It

In fact, the carrier’s new CFO appears quite willing to apply a dose of reality to the monopoly mind-set rampant at Amtrak. “Both David Gunn and I are going to tell it like it is,” vows Smith.

Amtrak, for instance, has announced plans to benchmark the financial performance of its 13 long-distance lines, with the aim of improving or shedding underperformers. “What we’re trying to do,” explains Smith, “is to create, in the most objective way possible, a ranking system, and then hold it up for all to see.”

And if that system tells a particularly ugly tale? “If Congress decides ‘here’s the ratty-ass little route, it’s not meeting the criteria, and there’s nothing we can do to make it better,’” answers Smith, “we’ll shut it down.”

Some of Amtrak’s long-distance lines need to be shut down. While none turns a profit, a few are prohibitively expensive to run. Last year, per-passenger loss on the Orlando-to-Los Angeles Sunset Limited, for example, worked out to $466 — not including depreciation. Says Joseph Vranich, former Amtrak Reform Council member and author of End of the Line: “It would be cheaper just to buy those passengers airplane tickets.”

The operating cost of the Sunset Limited highlights a reality of rail service: shorter routes do better than cross-country ones. In Amtrak’s case, 3 percent of the carrier’s 22,000-mile rail network (primarily the Northeast Corridor) accounts for 66 percent of ridership. Insists Vranich: “There’s not a company in the world that wouldn’t reconfigure that system.”

Probably not. But even if Amtrak can reconfigure its system — no easy task, given congressional self-interest — Smith faces an even bigger hurdle. Despite a decades-long reduction in staffing, the wages, salaries, and benefits for Amtrak’s 20,000 employees ate up all of the carrier’s fare-box revenues last year — and made up about half of its total costs. By comparison, worker-related expenses account for 37 percent of costs in the U.S. airline sector. Says the FRA’s Yachmetz: “You can’t do anything significant at Amtrak unless you address labor costs.”

Worker representatives dispute the assertion. Frank Wilner, a spokesman for the United Transportation Union, says that a decade ago its members agreed to concessions that have resulted in a 40 percent increase in worker efficiency. “Conductors used to get paid by the mile,” he notes. “Now they’re paid by the hour.”

Whatever the scale, Amtrak employees appear to be doing just fine. Based on the carrier’s most recent figures, the average worker at the railroad receives $70,000 in annual compensation. Moreover, certain work rules — some call them featherbedding — pump up the number of employees required to perform specific tasks. The rules do take a toll. According to Ronald Utt, the Herbert and Joyce Morgan Senior Research Fellow at The Heritage Foundation, Amtrak moves 105 passengers per employee; Canada’s VIA railroad moves about 130 per worker.

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