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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.

Cutting worker-related costs won’t be easy, though. Smith must deal with 14 different unions and 26 bargaining units. “There’s a lot of low-hanging fruit,” he says. “[But with the unions], you have considerable limitations on what you can do.”

Like executives at other highly unionized companies — particularly airlines — Amtrak managers have zeroed in on trimming generous benefit packages. One example: Amtrak management recently floated a plan to reduce the carrier’s $200 million annual pension obligation by switching new employees to Social Security rather than the current plan administered by the Railroad Retirement Board.

The concept has not been received warmly by union officials. Transportation Communications International Union president Robert Scardelletti labeled Amtrak’s proposal “an outright assault” on employees’ pensions. And as Ross Capon, executive director of the National Association of Railroad Passengers, points out, the pension plan is pretty much a “third-rail issue” for the 200,000 unionized railroad workers in the United States. Says Capon: “I think the [various railroad] unions would rather see Amtrak shut down than set a damaging precedent.”

Planes, Trains, and Government Grants

The list of those wanting to see Amtrak shut down — or at least radically altered — is getting longer each year. To critics, Amtrak represents all that’s wrong with big government: waste, institutionalized indifference, lack of accountability. Moreover, bashers argue that rail travel is a technology past its prime. “Trains are not practical,” argues Utt. “In the time that one airplane goes back and forth 10 times [from Chicago to Seattle], trains have their capital tied up for 19 hours.”

The on-time performance on many of Amtrak’s overland lines hasn’t helped matters. Overall, Amtrak’s 13 long-distance lines (excluding the Northeast Corridor) recorded a 43.5 percent on-time rate for the first nine months of the railroad’s 2005 fiscal year. Trains on six of those routes arrived on schedule less than one in three times — a dismal performance that only adds fuel to the “liquidate Amtrak” sentiment.

Then again, Amtrak’s poor performance (both in meeting schedules and budgets) is not entirely of its own making, says Smith. Of the 22,000 miles of rails the carrier traverses, he notes, only 730 are owned by Amtrak. In many cases, its trains travel on single-track freight routes. Even on the Northeast Corridor, Amtrak must accommodate cargo carriers and commuter lines. Says Utt: “There’s not a shred of give in the system.”

And while critics howl about the $30 billion or so Amtrak has received in federal subsidies since 1971, that largesse pales in comparison with what airlines received during the same period. Observers estimate that, from 1971 to 2004, federal and state grants for the construction of airports, improvements to the national grid system, and other items topped $2 trillion. The sector received nearly $15 billion in federal assistance after 9/11 — and still, airline after airline files for Chapter 11 protection.

In fact, it’s not entirely clear if any form of inter-city transportation makes money, once you subtract federal and state subsidies. Smith notes that the federal government spends billions on research and development for military aircraft. Developed at great cost to taxpayers, the innovations in those planes eventually make their way into commercial aircraft. Adds Smith: “Nobody’s helping us design trains.”


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