Amtrak to Spin Off Corridor
Friday, October 14, 2005
Amtrak's board of directors has voted to split the train's Northeast Corridor service into a separate subsidiary, a move that railroad officials said would isolate the cost of maintaining the railroad's busiest line.
The subsidiary would manage service between Washington, New York and Boston. It would be owned and controlled by Amtrak but have its own president and management who would report to Amtrak's board.
David M. Laney, chairman of Amtrak's board of directors, said the railroad hoped to have the subsidiary in place by January. Although Amtrak is partly funded by Congress, Laney said it is unlikely that the proposal would require congressional approval.
The Northeast Corridor routes carried more than half of the railroad's 25 million passengers in fiscal year 2004, generating more than $600 million in ticket revenue.
But Laney said the routes have been one of Amtrak's most costly operations. Of the railroad's $550 million operating budget, $280 million went to service Amtrak's debt while much of remainder went to Northeast Corridor maintenance and operations, he said.
Amtrak owns the track, bridges, tunnels and signals along the 456-mile line, which is shared with many commuter and freight railroads. Most of the other thousands of miles of track that Amtrak trains run on are owned and maintained by others, primarily freight railroads.
Separating the Northeast Corridor from the rest of Amtrak's national operations, including long-distance train lines and other regional services, would make it easier for Amtrak to ask states for financial help in maintaining the line's infrastructure, Laney said.
"It's very important that the bills [the states] get are based on credible numbers," Laney said.
The board's Sept. 22 vote was never publicly announced. It was reported Wednesday in a newsletter of the United Rail Passenger Alliance, a Jacksonville, Fla.-based group that favors expanding intercity passenger rail service and has been critical of Amtrak's management.
The Bush administration has favored ending Amtrak subsidies and turning passenger rail into regional services operated by the states with federal grants. Amtrak supporters worried that separating the Northeast Corridor marked the first step in breaking up the railroad.
"If they wanted to break the railroad up, they have to do this," said Ross B. Capon, executive director of the National Association of Railroad Passengers, a group that advocates greater Amtrak funding. "They've laid the groundwork for the administration to push for a breakup."
Capon said the board's move appeared suspicious, particularly because it was never made public.
In its 34-year history, Amtrak has never turned a profit, and it has accumulated more than $3.5 billion in long-term debt. The Bush administration's budget for fiscal year 2006 did not include any funding for Amtrak, which received $1.2 billion in federal subsidies last year.
The railroad has remained popular with members of Congress. The House voted in June to keep Amtrak's subsidy at $1.17 billion.
"This administration has been intent on crippling Amtrak since George Bush was sworn into office," said Sen. Jon S. Corzine (D-N.J.) in a statement. "This latest gimmick by President Bush -- to claim fiscal discipline by lowering the numbers and shifting the cost burdens to states and communities -- is ill-fated, ill-conceived and just plain wrong."
J. Bruce Richardson, president of the United Rail Passenger Alliance, applauded Amtrak's board's decision and said the move should lead to greater financial support for Amtrak's national rail system.
"Amtrak was spending too much money and time on the Northeast and was grossly neglecting other areas as a result," Richardson said. He said the group hoped that separating the Northeast Corridor from the rest of Amtrak's operations would allow the railroad to boost service in other parts of the country.
"This is exactly the right move to make," said Tom Till, a senior fellow at Discovery Institute in Seattle who in 1999 led the Amtrak Reform Council, a group created by Congress to study the railroad's problems. "The kind of funding needed to make the corridor work is different from the funding needed to make the train operations work."