“It is clear that Amtrak faces daunting challenges in Fiscal Year 2021, which will require us to take action to protect our rail network, our critical capital assets, and the livelihoods of our employees,” Flynn said in the letter dated Monday.
“While we work towards a full recovery one day, our current projections tell us that we expect to see ridership drop by approximately 50%, down to just over 16 million riders in FY 2021,” Flynn said in the letter.
Amtrak’s funding request for $1.475 billion for the fiscal year that begins in October is in addition to its request for a grant of just over $2 billion. The passenger railroad receives about $2 billion in federal subsidies annually to cover operations in its national and Northeast networks.
Last month, the federal government released more than $1 billion in relief money to Amtrak to keep the railroad running and its front-line workers on the job during the pandemic. The funding, part of a $2 trillion federal bailout package, was an important boost for the carrier, which saw cancellations spike and had to make severe service cuts in recent weeks amid an unprecedented drop in passenger traffic.
Federal officials said the bailout money would help offset the loss in ticket revenue, which pays for operations, including employee salaries, and would ensure service continues during the crisis.
Ridership began to plummet in early March, decreasing 95 percent systemwide. The disruptions set the railroad back after a year of growth on its number of routes and derailed projections that 2020 would yield positive earnings for the first time in the company’s 50-year history.
“Amtrak — like all other modes — has now seen a dramatic decline in demand for service. Today, many of our routes are struggling to reach ten percent of the ridership levels we had only months ago,” Flynn said in the letter.
Amtrak said it is projecting a 50 percent reduction in systemwide revenue in fiscal 2021, saying demand remains about 5 percent of normal. Recent company surveys show about half of people are reluctant to ride a train in the next six months, and more than a third say it would be more than a year before they would do so. The predictions of a second wave of coronavirus infections in the fall would further complicate a recovery, Amtrak said.
“Furthermore, when demand returns, we anticipate that changed behaviors, such as increased telework and reduced discretionary income, will likely impact ridership, along with capacity limits that may be needed to achieve social distancing on our trains,” Flynn said.
Amtrak has reduced or suspended service on many of the routes across its network, implemented pay reductions and voluntary furloughs, and suspended the 401(k) match for employees through the end of the year. The company said it is planning to take extra steps to cut about $500 million in operating costs in fiscal 2021, including $150 million from reduced frequencies and capacity, and $350 million from workforce adjustments.
Even after cost-reduction efforts, Amtrak said, it needs the additional $1.475 billion. Without it, the company said, it “will be unable to maintain the minimum services levels” and address long-standing capital needs.
President Trump in February asked Congress to slash federal aid for Amtrak, including its network in the Northeast Corridor, which stretches from Washington to Boston, by more than half.
Trump’s proposed 2021 budget, delivered to Congress in February, would reduce funding to the Northeast to $325 million from $700 million. Funding for Amtrak’s long-distance trains would decrease to $611 million from $1.3 billion under the plan, which intends to phase out aid for long-distance service.