[M II A II R II K]

Amtrak Shifts Strategy From Begging for Money to Thinking Big


Jul 31, 2012

By Jeff Plungis

Read More: http://www.bloomberg.com/news/2012-0...nking-big.html

.....

Amtrak, which got a $1.4 billion federal subsidy this year and needs congressional reauthorization to continue operations past September 2013, has decided it’s better to be ambitious than to continually beg for enough money to keep trains rolling.

- For detractors like the Heritage Foundation’s Emily Goff, Amtrak’s proposal, building on a structure that requires government subsidies, amounts to throwing good money after bad. “I don’t think it’s realistic to expect taxpayers to be willing to keep funding these programs, when Amtrak serves such a small sliver of the traveling public,” Goff said. A better solution would open up Amtrak routes to competitive bidding to lower costs, Goff said.

- The Northeast Corridor is the only place Amtrak gets enough revenue to cover its operating costs. In its plan to upgrade the corridor, Amtrak said ridership may grow to 43.5 million people annually with ticket revenue of $4.86 billion by 2040 -- roughly four times last year’s ridership and about five times the ticket sales of $983.5 million. “The plan is completely unrealistic and Amtrak wasted its money developing it,” said Randal O’Toole, a researcher with the Cato Institute, which advocates for free markets and limited government. “There is no way that Amtrak can get the private sector to fund more than a trivial amount.”

- House Transportation and Infrastructure Committee Chairman John Mica has called for greater private-sector investment in passenger rail projects and private competition for rail service, to the point he briefly proposed a bill last year to remove Amtrak from managing the Northeast Corridor. The Florida Republican, who has described Amtrak’s operations as “Soviet style,” has scheduled an Aug. 2 hearing on its losses running food and beverage services. Funding for the railroad has varied. The House passed an appropriations bill for fiscal 2013 with $1.8 billion, which is more than this year’s $1.4 billion and less than the $2.5 billion sought in Obama’s budget. Only about a third of Amtrak’s U.S. support goes for operations; this year, it got $466 million for operations and $952 million for capital and debt service.

- If Amtrak were an airline, it would be able to charge its passengers a separate fee to finance construction projects. That’s not built into U.S. rail law, said Ross Capon, president and chief executive officer of the National Association of Railroad Passengers. Amtrak may already be charging what the market will bear for tickets, he said. Amtrak’s ambitious proposals may be a smart way to attract investors, said Robert Puentes, an expert in infrastructure financing at the Brookings Institution, a Washington-based research organization. Sovereign wealth funds are increasingly looking for ways to invest in U.S. transportation projects, he said, citing a $2 billion infusion from China into a California project. “There’s going to be a big conversation about Amtrak next year,” Puentes said. “ There’s an aspirational piece to this. They need to think about the future, about what passenger rail is going to look like in this country.”

.....