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Is it the end of the line for Amtrak?

Published Sep. 2, 2005

In the dramatic endings to silent movies, the heroine was tied to the railroad tracks by the villain, with the audience wondering if the hero would arrive in time to save her. In real life these days, it is the oncoming train that is on the brink, waiting for a miraculous rescue.

Amtrak is facing a December deadline, established five years ago, to make enough money to cover its operating expenses.

It was making uncertain progress toward that goal before Sept. 11, but the terrorist attacks wrecked all previous plans. Now more people are riding the trains, especially the profitable ones in the Northeast Corridor, the Washington-New York-Boston stretch that is its most popular, so revenues are up, but expenses are up even more, so losses are reaching record levels.

Facing a loss of funding, Amtrak, which must give 180 days' notice before canceling long-distance trains, said it would do so on March 29, allowing it to shut down many of its operations outside the Northeast Corridor if Congress does not give it new funds for the federal fiscal year beginning Oct. 1. But Amtrak is still taking reservations for those trains and clearly hopes that it will receive the $1.2-billion it is asking for, plus a multiyear commitment for more.

The railroad argues that it is doing well; ridership was up 4.5 percent in January from the same period a year earlier, to 1.76-million, and ticket revenues were up 12.4 percent, to $96.7-million.

A major factor in the increased revenues was the Northeast Corridor, where the new Acela Express carries a premium price.

Meanwhile, airlines' ridership and revenues are down, part of a recession in travel resulting from the weak economy and the aftermath of Sept. 11. In the Northeast Corridor, which accounts for two-thirds of Amtrak's ridership and revenues, business is up sharply, from 212,000 riders in September to 266,000 in December. The reason is new, faster and more comfortable equipment, and travelers' avoiding flying, either for safety reasons or because of security delays.

The improvement is clear in market share. From Washington to New York, Amtrak said it now carries 52 percent of the combined rail-air traffic, up from 42 percent a year and a half ago. From New York to Boston it carries 31 percent, up from 18 percent in mid-1999.

And its long-distance sleeper cars are often sold out, as business travelers on routes like New York to Chicago or Washington to Atlanta snap them up.

But according to Amtrak, the net effect of terrorism has been negative, with expenses for security more than eating up the increased revenue.

Although it has lost money every year since it began in 1971, this year was supposed to be different. Five years ago, in the Amtrak Reform and Accountability Act, Congress set Dec. 2, 2002, as a drop-dead date for Amtrak to break even on its operating costs.

An Amtrak Reform Council was set up under the Act and has now drawn up plans for restructuring the railroad because of its failure to reach "operational self-sufficiency." The council called for peeling off the Northeast Corridor and having a new Amtrak management agency take bids from private operating companies, perhaps state agencies or freight railroads, to run long-distance trains elsewhere in the system, with more financial support from the states. Amtrak itself could bid against private entities.

One result would be to break existing labor contracts. Another would be to eliminate subsidies that some critics say flow among Amtrak's various activities, which include commuter rail services, profitable corridor trains and the long-distance trains. These ideas have drawn opposition from organized labor and rural interests.

Responding to the Reform Council's proposals for a breakup of Amtrak, the National Association of Railroad Passengers, an advocacy group, said in a statement, "The fundamental problem facing passenger rail today is that the federal government spends $13-billion a year on aviation, $33-billion on highways, and only about $570-million on passenger rail."

" "Operational self-sufficiency' is not an appropriate "life or death' target for passenger rail," said the group, which argues that relying on states for more subsidies is not realistic as state budgets slide into the red.

The Amtrak Reform Council, on the other hand, argued that the problem was not lack of support but Amtrak management. "All we're doing with our subsidies is subsidizing excessive costs," said Wendell Cox, one member of the council, at a meeting on Feb. 7 where its report was released.

Amtrak itself says the problem is that it is encouraged by Congress to run unprofitable trains, without commensurate resources. "The status quo has proved itself unsustainable," the railroad said in a report to Congress in February.