Amtrak headed toward failure, says inspector general

Ongoing problems at Amtrak could lead to a major crisis unless Congress intervenes, according to a report by the Transportation Department's inspector general released Monday.

The IG, Kenneth Mead, said Amtrak has not invested in much-needed capital investments, including repair for old bridges and tunnels. "Deferral brings Amtrak closer to a major point of failure on the system, but no one knows where or when such a failure will occur," Mead reported.

Amtrak officials said the agency needs more funding from Congress in order to maintain its systems. The agency asked for $1.8 billion for fiscal 2005; Congress approved $1.2 billion.

The assessment comes on the heels of a report from Mead last week that the entire Transportation Department faces serious management challenges, many of which stem from underfunding.

Amtrak has a long history of struggling to provide quality service while sustaining operating losses from unprofitable operations. According to Monday's report, Amtrak had a $1.3 billion operating loss in 2003 and expected a similar one in fiscal 2004.

In a letter to Mead, Amtrak president and chief executive David Gunn said more funding is needed in order to make the necessary capital investments. He agreed that Amtrak was on the brink of a major failure and said one problem is that the organization depends on annual appropriations from Congress, complicating efforts to plan long-term maintenance projects.

While Mead did not specify the kind of "major point of failure" that could be imminent, Amtrak spokesman Cliff Black said it did not concern safety. But trains have to operate increasingly slowly where tracks or bridges have deteriorated, he noted, and trains that are powered by electricity-such as the ones that travel the Northeast Corridor-might have to temporarily shut down if power systems fail.

When trains are forced to move slowly, Black said, "you lose your competitiveness as a mode of transportation…that creates a downward spiral of losses." He also pointed out that Amtrak carried more than 25 million passengers in fiscal 2004, a new record that surpassed the previous year's total by 1 million passengers.

Despite the overall increase, certain routes have experienced declining ticket sales, partly because riders are frustrated with long delays. In the first nine months of fiscal 2004, only 71.8 percent of Amtrak trains were on time, compared to 74.1 percent in fiscal 2003. Even the Acela Express, a fast train that charges premium prices and travels between Washington and Boston, arrived on time only 74.7 percent of the time, compared to its goal of 94 percent. The IG's report states that the delays are "unacceptable for Amtrak's premier service."

Revenues for the Acela Express and Metroliner services declined 8.6 percent from fiscal 2002 to 2003, and revenue from trains traveling the Northeast Corridor fell 4.3 percent-from $780 million in fiscal 2002 to $746 million in fiscal 2003.

Still, Black said, Amtrak carries more passengers from Washington to New York than all of the airlines combined. He also noted that Gunn has embarked on a cost-cutting effort since he took over two and half years ago, reducing the size of Amtrak's workforce to 19,900 from 25,000.

The IG's report recommends further cuts in payroll costs, noting that labor costs are Amtrak's largest operating expense. It also suggests that certain routes may need to be cut, although both DOT and Amtrak declined to specify which ones might be eliminated.

Black said Amtrak has a plan for continuing some capital investment, although at current funding levels some projects will have to be deferred. Asking Amtrak to maintain railroad tracks, Black added, is like asking Greyhound Lines to maintain the interstate highways.

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