Copyright 2000 The New York Times Company
The New
York Times
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November 15, 2000, Wednesday, Late Edition -
Final
SECTION: Section A; Page 18; Column 5; National
Desk
LENGTH: 894 words
HEADLINE: Amtrak Is Putting Its Hope On a Successful
Acela Express
BYLINE: By MATTHEW L. WALD
DATELINE: WASHINGTON, Nov. 14
BODY:
The sleek Acela Express that Amtrak will roll
out on Thursday is supposed to move more than just well-heeled passengers
between Washington and Boston; it is supposed to carry the railroad a long way
toward self-sufficiency, which Congress has insisted it reach by 2002.
The railroad, created in 1971 when Congress fused the failing
passenger operations of several freight lines,
has enjoyed a small boom recently, with record passenger levels and ticket
revenues. It has begun carrying mail and express packages, and makes money by
running commuter railroads and doing maintenance for other railroads. But its
expenses are rising almost as fast as revenues, and its operating losses have
not changed much, ranging from $500 million in 1989 to $579 million in 1999,
auditors at the Transportation Department said.
The auditors estimated
operating losses of $521 million in the fiscal year that ended on Sept. 30.
Amtrak counts the money differently and said its loss for the most recent fiscal
year was $471 million, but acknowledges that it must do better.
The
railroad has tried recently to spend money to make money, by increasing service
instead of cutting it, and by investing in new services and technologies. But
the General Accounting Office, the auditing agency of Congress, reported in May
that in 1995, Amtrak earned 65 cents for every dollar it spent on operations;
last year, that rose to 67 cents.
The Acela Express, with a top speed of
150 miles an hour, will cut the New York-to-Washington trip to 2 hours and 45
minutes, from 3 hours on the Metroliner.
After a V.I.P. trip on
Thursday, it will begin carrying paying passengers in December, more than a year
after originally intended. It is "one of several critical building blocks that
will enable us to achieve self-sufficiency," said George Warrington, the
railroad president.
"The concept and market attractiveness of high-speed
train operations in densely populated corridors," Mr. Warrington said, "is the
model that could and should be transported across this nation."
One of
the few profitable parts of Amtrak's operation has been the Northeast Corridor,
from here to Boston, which carried 12.9 million people last year.
In
three years, with 20 new Acela trains, it is supposed to carry 15.9 million, or
about 8,200 more passengers a day, making the train competitive with the plane
between Boston and New York, and raising the market share for Amtrak between New
York and Washington.
Amtrak would not say just how many air passengers
it hopes to attract, and the airlines profess to be unworried. If the railroad
wins the 8,200 additional passengers per day, many of them will be traveling
between intermediate destinations, like Philadelphia to Stamford, Conn., and the
airlines point out that the planes will still be faster.
Delta Air Ways
and US Airways last year carried just under five million people on the
Boston-New York, Washington-New York, and Washington-Boston routes.
Travel between Boston and New York is up sharply on all-electric Acela
Regional trains, which make the trip faster because of a $1.6 billion track
improvement project, largely done for the Acela Express.
The question
for Amtrak is, will the added patronage be enough. Amtrak is projecting $300
million in additional revenue by 2003, and $120 million in additional costs.
That would close the gap, but the bottom line is becoming more
worrisome. The railroad was supposed to be self-supporting after its first two
years, but subsidies have now reached $23 billion.
Congress, frustrated,
said in 1997 that Amtrak would have to reach "operational" self-sufficiency by
December 2002. (The federal government would continue to provide money for
capital investments, and also promised some money for unanticipated pension
expenses, because of a quirk related to Amtrak's creation.)
The
Transportation Department's inspector general estimated in September that in
2003, Amtrak's losses would total $351 million more than the federal government
would give it, and said that its plan to have revenues equal operating expenses
relied on $747 million in "undefined management actions."
"Without major
corrective action, Amtrak will not achieve operating self-sufficiency," the
auditors said.
Amtrak officials say they have improved productivity in
several areas, including maintenance of tracks and telephone reservations, and
that more savings are possible. Some cost controls must still be identified,
said Arlene Friner, the chief financial officer, but "it's less than a percent
of our annual budget."
Raising fares is a poor option; the railroad
raised fares stiffly in 1995 and 1996 and lost riders.
Meanwhile the
railroad's capital outlook is "grave," the Transportation Department said. A
bill to provide Amtrak with money for high-speed rail expansion has 171 sponsors
in the House but has not gone to the floor. If it does not come up in the
lame-duck session, Congress could still appropriate money next year. But Amtrak
backers point out that one of their strongest supporters is Senator William Roth
Jr., Republican of Delaware and chairman of the Senate Finance Committee, and he
was not re-elected.
There is also a chance that Congress will not
actually unplug Amtrak if it does not reach self-sufficiency, but clearly the
Acela and the whole railroad must do well. http://www.nytimes.com
LOAD-DATE: November 15, 2000 
