Rail- Mica: Report highlights Amtrak’s failure to compete. Progressive Railroading

Posted: September 13, 2012 in Uncategorized

September 12, 2012

A new committee report shows that Amtrak continually fails to compete successfully at operating commuter-rail service effectively in the private sector, wasting hundreds of millions of tax dollars in the process, House Transportation and Infrastructure Committee Chairman John Mica (R-Fla.) said in a statement issued yesterday following a congressional committee hearing on Amtrak.

Mica released the report, titled “Amtrak Commuter Rail Service: the High Cost of Amtrak’s Operations,” as his committee held the hearing to highlight the cost savings realized by commuter-rail agencies through competitive contracting for operations.

At the hearing, Mica, a longtime critic of Amtrak who has called for privatizing the railroad”s food and beverage service as well as the Northeast Corridor, reiterated many of his concerns.

“Amtrak is a highly subsidized, Soviet-style rail system, but despite every ticket being underwritten nearly $50 by the taxpayers, Amtrak is an absolute failure in competing with the cost-effectiveness and level of service provided by the private sector,” he said. “We already know that Amtrak’s losses in food and beverage service are a staggering $833 million over the last decade. Now we know that Amtrak wastes the taxpayers’ money bidding on commuter-rail contracts that it cannot win, and that hundreds of millions of dollars in savings can be realized if the private sector is given a chance to compete with Amtrak in commuter rail and passenger rail service.”

However, Amtrak’s defenders also provided testimony at yesterday’s hearing. Edward Wytkind, president of the Transportation Trades Department of the AFL-CIO (TTD), questioned the purpose of the hearing.

“TTD and a number of our rail affiliates have been called to this committee room time and time again to debate the so-called merits of privatizing Amtrak’s Northeast Corridor, outsourcing food and beverage services to companies ill-equipped to take on such responsibilities, or to simply close down routes that don’t make a profit,” Wytkind said in a prepared statement. “We have reminded [committee] members that no passenger operation in the world can operate without government subsidy and passenger-rail service must be part of our inter-connected multi-modal transportation system.”

In a statement, Amtrak President and Chief Executive Officer Joseph Boardman noted that the contract commuter business has costs and benefits.

“It can generate net revenue, which allows us to reduce our dependence on federal operating support. Because we do not use federal funds to cross-subsidize these agencies, our bids can be more expensive than those from private companies that may underbid to enter the market or to build a market for other services such as capital replacement,” he said. “Whatever the cause, profit margins have decreased significantly in recent years.”

And while Amtrak in the past two years has lost two contracts to operate commuter-rail services — Virginia Railway Express and Caltrain — the railroad will remain in the commuter-rail business, Boardman said.

“We will continue to work with agencies that are a good fit for both Amtrak and the agency,” he said. “This is an exciting field right now, and there is plenty of competition and many opportunities for both carriers and agencies. Amtrak will continue to look at the opportunities on a case-by-case basis, and we will be guided by the need to provide our partners with the support they’re looking for and our need to generate revenues that can be used to reduce Amtrak’s dependence on federal operating support.”



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