Understanding the Cost Drivers of Passenger Rail

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0 Tuesday, May 21, 2013 @ 01:00 |

Transcript of Hearing

Summary of Subject Matter

Opening Statements

Chairman Jeff Denham (R-CA)

Subcommittee on Railroads, Pipelines and Hazardous Materials

Hearing on Understanding the Cost Drivers of Passenger Rail

May 21, 2013

Opening Statement

(Remarks as Prepared)

This hearing is another step towards the Committee’s bipartisan efforts to complete a Rail Reauthorization bill this year. 

One of the key goals of the current Passenger Rail Investment and Improvement Act (PRIIA) was to seek cost efficiencies and savings in Amtrak’s operations.  Since the enactment of PRIIA in 2008, Amtrak has achieved notable improvements in its financial condition. 

On the Northeast Corridor, Amtrak earns a substantial “above the rail” operating profit and with the introduction of the Acela, Amtrak has captured 75 percent of the Washington to New York rail-air market.  Amtrak has also seen significant ridership increases on its State-Supported routes, which connect metropolitan areas less than 750 miles apart.  In many ways, these are the routes where rail makes sense – connecting densely populated areas where rail trip times are competitive with air and automobile options.

PRIIA included an important change to this part of Amtrak’s business by requiring the States to contribute more to maintain services.  We look forward to hearing how that process is going with our witnesses today.

The one area that PRIIA, and indeed multiple rail bills, have not seen success is improving the financial performance of the long distance routes.  Year after year these routes lose money.  In 2012, they lost a combined $600 million.  We simply cannot afford to continue these levels of subsidized losses year after year.

PRIIA requires Amtrak to develop and post on its website performance improvement plans for its long distance passenger routes and implement those plans for its worst performing routes.  This all was supposed to be done by 2012.  However, as we all know, Long Distance has been losing more and more since PRIIA became law.

To illustrate, since PRIIA became law the NEC has increased its profits by 143% and State Supported Routes have reduced their losses by 24%, while Long Distance Routes have increased losses by 11%.  It is clear that FRA and Amtrak did not follow PRIIA’s intent to reduce long distance costs, so it is up to us on this committee to find better solutions.

Finally, Amtrak’s labor force is by far the largest component of the company’s overall cost, and Amtrak is currently negotiating collective bargaining agreements through 2015.  It is important for this committee to understand how Amtrak management and personnel decisions affect the full cost of rail service and if any efficiencies can be found to reduce the overall cost for providing passenger rail service across the country.

We are open to all suggestions, and look forward to hearing from our witnesses today. 

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Mr. Joseph H. Boardman, President and CEO, Amtrak | Written Testimony

Mr. Robert Puentes, Senior Fellow, Brookings Institution | Written Testimony

Mr. David Kutrosky, Managing Director, Capital Corridor | Written Testimony

Mr. Ross Capon, President and CEO, National Association of Railroad Passengers | Written Testimony

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