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Amtrak

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Amtrak
logo
Reporting marks AMTK, AMTZ
Locale Continental United States, as well as routes to Vancouver, Toronto, and Montreal
Dates of operation 1971–present
Track gauge ft 8½ in (1435 mm) (standard gauge)
Headquarters Washington, D.C.
Image:Amtrak-albany-NY.JPG
Train at Albany, New York station, August 2007.
An electric Amtrak train with two AEM-7 locomotives running through New Jersey on the Northeast Corridor.
An electric Amtrak train with two AEM-7 locomotives running through New Jersey on the Northeast Corridor.

The National Railroad Passenger Corporation, doing business as Amtrak (AAR reporting marks AMTK and AMTZ), is a quasi-governmental corporation that was organized on May 1 1971, to provide intercity passenger train service in the United States. "Amtrak" is a portmanteau of the words "American" and "track".[1]

All of Amtrak's preferred stock is owned by the U.S. federal government. The members of its board of directors are appointed by the president of the United States and are subject to confirmation by the United States Senate. Common stock was issued in 1971 to railroads that contributed capital and equipment; its current holders[2] consider the stock to be worthless but declined a 2002 buy-out offer by Amtrak.[3]

Amtrak employs nearly 19,000 people. It operates passenger service on 21,000 miles (33,800 km) of track primarily owned by other railroads connecting 500 destinations in 46 states.[4] Some routes serve Canada. In fiscal year 2006, Amtrak served 24.3 million passengers, a company record. According to estimates for fiscal year 2007, Amtrak has served over the 25 million passenger mark, a 6% increase from the previous year.[5]

Contents

History

Amtrak's origins are traceable to the sustained decline of private passenger rail services in the United States from about 1920 to 1970. In 1971, in response to the decline, the Congress and the President of the United States created Amtrak. For its entire existence, the company has been subjected to political cross-winds and insufficiencies of capital resources and owned railway. Recent years have been among Amtrak's brightest; the corporation completed a significant rail project in the northeast in the early 2000s while its major competitors — particularly airlines — were affected by bankruptcies and rising fuel costs.

Passenger rail service before Amtrak

Amtrak's old logo from 1971 to 2000, the "inverted arrow." On July 6, 2000 Amtrak unveiled "...a new logo whose shape and suggestion of movement convey the comfort and uniqueness of the rail experience."[6]
Amtrak's old logo from 1971 to 2000, the "inverted arrow." On July 6, 2000 Amtrak unveiled "...a new logo whose shape and suggestion of movement convey the comfort and uniqueness of the rail experience."[6]

From the middle 19th century until approximately 1920, if a person traveled from one city to another in the United States, the trip almost certainly was by rail. By 1910, close to 100% of intercity passenger trips were made by railroad.[7] The rails and the trains were owned and operated by private, for-profit organizations. Approximately 65,000 railroad passenger cars were in operation in 1929.[8]

For a long time after 1920, passenger rail's popularity diminished and there were a series of pullbacks and tentative recoveries. Rail passenger revenues declined dramatically between 1920 and 1934,[7] but in the mid-1930s, railroads reignited the popular imagination with service improvements and introductions of new, diesel-powered streamliners, such as the gleaming silver Pioneer Zephyr and Flying Yankee.[7] Even with the improvements, on a relative basis, ridership continued to erode and by 1940 railroads held a far less dominant 67% share of all passenger-miles in the United States.[7] World War II broke the malaise. During the war, troop movements and restrictions on use of automobile fuel generated a sixfold increase in passenger traffic from the low point of the Depression.[7] After the war, railroads rejuvenated overworked and neglected fleets with a multitude of fast and often luxurious streamliners — epitomized by the Super Chief and California Zephyr — which inspired the last major resurgence in passenger rail travel. In 1948, Santa Fe CEO Fred G. Gurley reported a "complete reversal of our passenger traffic picture", with 1947 revenues exceeding those of 1936 by 220%.[citation needed]

The postwar resurgence was short-lived. In 1946, there remained 45% fewer passenger trains than in 1929,[7] and the pace of decline quickened despite railroad optimism. Passengers disappeared, and so did the trains. Between 1946 and 1964, the annual number of passengers declined from 770 to 298 million.[citation needed] The number of U.S. commuter trains declined by more than 80%, from greater than 2,500 in 1954 to fewer than 500 in 1969.[citation needed] Few trains generated profits; most produced losses. Broad-based passenger rail deficits appeared as early as 1948[7] and by the mid-1950s railroads claimed aggregate annual losses on passenger services of more than $700 million (almost $5 billion in 2005 dollars using CPI).[8][9] By 1965, only 10,000 rail passenger cars were in operation, 85% fewer than in 1929.[8] Passenger service was provided on only 75,000 miles of track, a stark decline.[8] Passenger rail service in the United States showed the signs of underinvestment. Rail facilities suffered from decrepit equipment, cavernous and nearly empty stations in dangerous urban centers, and management that seemed intent on driving away the few remaining customers. The 1960s also saw the end of railway post office revenues, which had helped some of the remaining trains break even despite the dearth of passengers.

Causes of decline of passenger rail

Image:Amtrak snack car.jpg
Snack car in an Amtrak train

Literature suggests that the causes of the decline of passenger rail were complex. The industry was hobbled by government regulation and labor inflexibility, which undermined passenger rail just as the industry faced an explosion of competition from flexible and subsidized automobile and airplane transportation.[10][11] These for-profit railroads were structured to sell access to elaborate, efficient roads at a profit; they lost in the competition for passengers to parallel, publicly-funded, non-profit turnpikes, air strips, and highways in the sky.

In March of 2008, with gas prices are hitting an all time high[12] with expectations that it may go higher, Amtrak has begun selling more seats as consumers look for alternative sources of transportation.[13]

Government regulation and labor issues

The first interruption in passenger rail's vibrancy coincided with government intervention. From approximately 1910 to 1921, the Federal government introduced a populist rate-setting scheme, followed by nationalization of the rail industry for World War I. Ample railroad profits were erased, growth of the rail system was reversed, and railroads massively underinvested in passenger rail facilities during this time.[11] Meanwhile, labor costs advanced, and with them passenger fares, which discouraged passenger traffic just as automobiles gained a foothold.[11]

The primary regulatory authority affecting rail interest from early twentieth century was the Interstate Commerce Commission (ICC). The ICC played a leading role in rate-setting and intervened in other ways detrimental to passenger rail. In 1947, the ICC ruled that passenger trains could not exceed 79 mph (127 km/h) without in-cab signaling systems; the systems were criticized as being unnecessary and prohibitively expensive; after the regulation, plans to develop intercity high-speed rail services were shelved.[citation needed] In 1958, the ICC was granted authority to allow or reject modifications and eliminations of passenger routes (train-offs).[14] Many routes required beneficial pruning, but the ICC delayed action by an average of eight months and when it did authorize modifications, the ICC insisted that unsuccessful routes be merged with profitable ones. Thus, fast, popular rail service was transformed into slow, unpopular service.[10] The ICC was even more critical of corporate mergers. Many combinations, which railroads sought to compete, were delayed for years and even decades, such as the merger of the New York Central Railroad and Pennsylvania Railroad, into what eventually became Penn Central, and the Delaware, Lackawanna and Western Railroad and Erie Railroad into the Erie Lackawanna Railroad. By the time the ICC approved the mergers in the 1960s, disinvestments by the federal government, years of deteriorating equipment and station facilities and the flight of passengers to the air and car had taken their toll and the mergers were unsuccessful.

At the same time, railroads carried a substantial tax burden. A World War II-era excise tax of 15% on passenger rail travel survived until 1962.[15] Local governments, far from providing needed support to passenger rail, viewed rail infrastructure as a ready source for property tax revenues. In one extreme example, in 1959 the Great Northern Railroad, which owned about a third of one percent (.34%) of the land in Lincoln County, Montana, was assessed more than 91% of all school taxes in the county.[10]

Railroads also were saddled with antiquated work rules and an inflexible relationship with labor unions. Work policies did not adapt to technological change.[10] Average train speeds doubled from 1919 to 1959, but unions resisted efforts to modify their existing 100 to 150 mile work days. As a result, railroaders' work days were roughly cut in half, from 5 to 7½ hours in 1919, down to 2½ to 3¾ hours in 1959. Labor rules also perpetuated positions that had been obviated by technology. Between 1947 and 1957, passenger railroad financial efficiency dropped by 42% per mile.

Subsidized competition

While passenger rail faced internal and governmental pressures, new challenges appeared that undermined the dominance of passenger rail: highways and commercial aviation. The passenger rail industry wilted as government backed these potent upstarts with billions of dollars in construction.

Beginning roughly in the WWI era, cars became more attainable to most Americans. This newfound freedom and individualization of transit became the norm for most Americans due to the increased convenience. Government actively began to respond with funds from its treasury and later with fuel tax funds to build a non-profit network of roads not subject to property taxation[16] that rivaled and then surpassed the for-profit network that the railroads had built in previous generations with corporate capital and government land grants. All told between 1921 and 1955 governmental entities, using taxpayer money and in response to taxpayer demand, financed more than $93 billion worth of pavement, construction, and maintenance.[10]

In the 1950s, a second and more formidable threat appeared: affordable commercial aviation. Government at many levels supported aviation. Governmental entities built sprawling urban and suburban airports, and funded construction of highways to provide access to the airports.

Rail Passenger Service Act

In the late 1960s, the end of passenger rail in the United States seemed near. First had come the requests for termination of services; now came the bankruptcy filings. The legendary Pullman Company became insolvent 1969, followed by the dominant railroad in the Northeastern United States, the Penn Central, in 1970. It now seemed that passenger rail's financial problems might bring down the railroad industry as a whole. Few in government wanted to be held responsible for the extinction of the passenger train, but another solution was necessary.

In 1970, Congress passed and, in a surprise, President Richard Nixon signed into law, the Rail Passenger Service Act. Proponents of the bill, led by the National Association of Railroad Passengers (NARP), sought government funding to assure the continuation of passenger trains. They received the National Railroad Passenger Corporation (NRPC), a hybrid public-private entity that would receive taxpayer funding and assume operation of intercity passenger trains. The original working brand name for NRPC was Railpax, but shortly before the company started operating it was changed to Amtrak. There were several key provisions:

  • Any railroad operating intercity passenger service could contract with the NRPC, thereby joining the national system.
  • Participating railroads bought into the NRPC using a formula based on their recent intercity passenger losses. The purchase price could be satisfied either by cash or rolling stock; in exchange, the railroads received NRPC common stock.
  • Any participating railroad was freed of the obligation to operate intercity passenger service after May 1 1971, except for those services chosen by the Department of Transportation as part of a "basic system" of service and paid for by NRPC using its federal funds.
  • Railroads that chose not to join the NRPC system were required to continue operating their existing passenger service until 1975 and thenceforth had to pursue the customary Interstate Commerce Commission (ICC) approval process for any discontinuance or alteration to the service.

Nearly everyone involved expected the experiment to be short-lived. The Nixon administration and many Washington insiders viewed the NRPC as a politically expedient way for the President and Congress to give passenger trains the one "last hurrah" demanded by the public. They expected Amtrak to quietly disappear as public interest waned.[17] Proponents also hoped that government intervention would be brief, but their view was that Amtrak would soon support itself. Neither view has yet proved correct. Popular support has allowed Amtrak to continue in operation longer than critics imagined while financial results have made infeasible a return to private operation.

Early days

Amtrak began operations May 1, 1971. The corporation was molded from the passenger rail operations of 20 out of 26 major railroads in operation at the time. The railroads made contributions of rolling stock, equipment, and capital. In return, they received approval to discontinue their own passenger services, and at least some acquired common stock in Amtrak. Notably, Amtrak received no railroad track or right-of-way at its inception. Railroads that shed passenger operations were expected to host Amtrak trains on their tracks, for a fee.

Image:Amtrak No 928.jpg
Amtrak #928, a former PRR GG1, speeds through North Elizabeth, New Jersey in December 1975.

There was a period of adjustment. All of Amtrak's routes were continuations of prior service, although Amtrak immediately pruned about half of the existing passenger rail network. Out of the 364 trains that were operated previously, Amtrak only continued 182. On the trains that were continued, to the extent possible, schedules were retained with only minor changes from the Official Guide of the Railways. Former names largely were continued.

Several major corridors initially became freight-only, including New York Central Railroad's Water Level Route across New York and Ohio and Grand Trunk Western Railroad's Chicago to Detroit service, although service soon returned to the Water Level Route with introduction of the Lake Shore. Reduced passenger train schedules created headaches. A 19-hour layover became necessary for eastbound travel on the James Whitcomb Riley between Chicago and Newport News.

Amtrak also inherited problems dealing with station facilities, most notably stations with deferred maintenance, and redundant facilities resulting from competing companies that served the same areas. On the day it started, Amtrak was given the huge responsibility of rerouting passenger trains from the then seven existing train terminals in Chicago (LaSalle, Dearborn, Grand Central, Randolph, Chicago Northwestern Terminal, Central, and Union) into just one, Union Station. In New York Amtrak had to pay to maintain Penn Station and Grand Central Terminal due to lack of track connections to bring trains from upstate New York into Penn Station, a problem that was not rectified until the building of the Empire Connection in 1991. In many cases Amtrak had to abandon service into the huge old Union Stations such as ones in Cincinnati, Saint Paul, Buffalo, Detroit, Kansas City, and Saint Louis and route trains into smaller Amtrak-built facilities down the line (although Amtrak has pushed to start reusing some of the old stations, most recently Cincinnati Union Terminal, and Kansas City Union Station).

On the other hand, merged operations also presented efficiencies such as the combination of three West Coast trains into the Coast Starlight, running from San Diego to Seattle. The Northeast Corridor received an Inland Route via Springfield, Massachusetts, thanks to support from New York, Connecticut and Massachusetts. The North Coast Hiawatha was implemented as a second Pacific Northwest route. The Milwaukee to St. Louis Abraham Lincoln and Prairie State routes also commenced. The first all-new Amtrak route, not counting the Coast Starlight, was the Montrealer/Washingtonian. That route was inaugurated September 29 1972, along Boston and Maine Railroad and Canadian National Railway track that had last seen passenger service in 1966.

Amtrak soon had the opportunity to acquire railway. Following the bankruptcy declaration of several northeastern railroads in the early 1970s, including the Penn Central which owned and operated the Northeast Corridor, Congress passed the Railroad Revitalization and Regulatory Reform Act of 1976. A large part of the act was directed to the creation of a Conrail, but in addition the law enabled transfer to Amtrak of the vital Northeast Corridor railway from Boston, Massachusetts to Washington, DC. That trackage became Amtrak's crown jewel. In subsequent years, various short route segments not needed for freight operations were transferred to Amtrak. Nevertheless, in general, Amtrak remained dependent on freight railroads for access to most of its routes.

Amtrak fell far short of achieving financial independence in its first decade, but it did find modest success rebuilding ridership. Outside factors discouraged competing modes of transportation, such as fuel shortages which increased costs of automobile and airline travel, and airline strikes which disrupted airline operations. Intensive investments in Amtrak's track, equipment and information resources also made Amtrak more relevant to America's transportation needs.[18] Amtrak's ridership increased from 16.6 million in 1972 to 21 million in 1981.[19]

Leaders and political influences

Unlike many large businesses, subsequent to its formation Amtrak has had only one active investor: the United States government. Like most investors, the Federal government has demanded a degree of accountability. Determination of congressional funding and selection of Amtrak's leadership have been infused with political considerations. As discussed below, funding levels and capital support have varied over time.

Some members of Amtrak's board and executive leadership have had little or no experience with railroads. Conversely, Amtrak also has benefited from the interest of highly motivated and politically-oriented public servants. For example, in 1982, former U.S. Secretary of the Navy and retired Southern Railway head W. Graham Claytor, Jr., brought his naval and railroad experience to the job. Claytor had served briefly as an acting U.S. Secretary of Transportation in the cabinet of President Jimmy Carter in 1979, and came out of retirement to lead Amtrak after the disastrous financial results during the Carter administration (1977-1981). He was recruited and strongly supported by John H. Riley, an attorney who was the highly skilled head of the Federal Railroad Administration (FRA) under the Reagan Administration from 1983-1989. Secretary of Transportation Elizabeth Dole also tacitly supported Amtrak. Claytor seemed to enjoy a good relationship with the Congress and was perceived to have done a good job, albeit through extensive use of short-term debt.[20]

In the 1990s, Claytor was succeeded at Amtrak's helm by a succession of career public servants. First, Thomas Downs, who had overseen the Union Station project in Washington, DC, which experienced substantial delays and cost overruns, assumed the leadership. In January, 1998, after Amtrak weathered a serious cash shortfall, George Warrington succeeded Downs. Warrington previously led Amtrak's Northeast Corridor Business Unit.

Then in April, 2002, David L. Gunn was selected as president. Gunn had a strong reputation as a straightforward and experienced manager. He was not one to shy away from conflict with others. Years earlier (between 1991 and 1994), Gunn's refusal to "do politics" put him at odds with the Washington Metropolitan Area Transit Authority board of directors, which included representatives from the District of Columbia and suburban jurisdictions in Maryland and Virginia. Gunn was an accomplished public servant and railroad person and his successes before Amtrak earned him a great deal of credibility, despite a sometimes-rough relationship with politicians and labor unions.

Gunn was polite but direct in response to congressional criticism of Amtrak, and his tenure was punctuated by successes in reducing layers of management overhead in Amtrak and streamlining operations. Amtrak's Board of Directors removed Gunn on November 9 2005; he was succeeded by David Hughes, Amtrak's Chief Engineer. [21] Given Gunn's solid performance, many Amtrak supporters feared that Gunn's departure was Amtrak's death knell, although those fears have not been realized. On August 29 2006, Alexander Kummant was named as Gunn's permanent replacement effective September 12 2006.

The list of Presidents of Amtrak includes:

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