Destination:Freedom Newsletter
Destination:Freedom
The Newsletter of the National Corridors Initiative, Inc.
Vol. 3 No. 20, May 20, 2002
Copyright © 2002, NCI, Inc.
James P. RePass, President
Leo King, Editor

A weekly North American rail and transit update



All photos NCI: Leo King

 

Amtrak Reform Council President Gil Carmichael said "so long" to the rail community - at least for now - at NCI's annual meet in Washington, D.C. Most of the office staff has left, he told D:F, and they have enough funds left in the now-Congressionally unfunded agency to work through August.

 


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Gil Carmichael
Labor fires 'shot across bow;'
no policies irks Carmichael

Gunn takes helm at Amtrak; toast becomes issue

By Wes Vernon
Washington Correspondent

A rail labor lobbyist with a high profile in Washington issued what was widely interpreted as "a shot across the bow" to Amtrak's incoming president David Gunn.

The message was (not worded exactly this way), Don't mess with us. If you think passenger trains can be saved without the backing of rail labor, you can forget it. It won't happen. So warned James Brunkenhoefer, Legislative Director of the United Transportation Union (UTU).

Speaking to the annual conference of the National Corridors Initiative (NCI), the labor official said about 40 percent of Congress was in labor's corner, and only a few more votes are needed in either the House or Senate to get legislation that has union support - or, by implication, block legislation that lacks labor's blessing.

Any thought that the crusade to rebuild passenger train service in America will fly without the green light from organized labor conjures up images of "the Tooth Fairy, Easter Bunny, and Santa Claus," as Brunkenhoefer sees it.

The rail labor lobbyist, affectionately known on Capitol Hill as "Broken Rail," is believed to have chosen to make his point at this time precisely because of the fact that David Gunn was about to take the helm at Amtrak. Gunn's relations with labor unions have at times been rocky. In fact, as reported last week by D:F, he had rejected a previous offer to take the Amtrak presidency several years ago, in part because he couldn't "stomach" tangling with 17 unions.

Brunkenhoefer referred to Gunn's imminent takeover as Amtrak CEO, and acknowledged that the new boss was not known as a "loving, go-along kind of guy" where labor relations are concerned.

While one attendee described the "Broken Rail" speech to D:F as "ugly," others saw it as merely an act of laying labor's cards on the table.

The Washington rail labor icon, suffering a bad back and pacing up and down before the audience instead of standing at the podium, then proceeded to demolish what he said are "myths," the first of which is that Amtrak is the only passenger service that doesn't earn a profit.

To buttress his point, he quoted premier investor Warren Buffet - not exactly "a pinko Commie," he reminded the gathering - as having said investors would have been better off if the Wright brothers had been shot before their first flight. Buffet, whose word is law with many on Wall Street, figured that when you add up airline company balance sheets by the same standard as applied to Amtrak, their profits over the years would be a flat zero.

As for Gunn, he showed up Wednesday night (May 15) at the annual Operation Lifesaver party aboard railroad office cars at Union Station, having just completed his first official day on the job.

Despite having arrived at the office "hitting the ground running" at 6:00 a.m., he was smiling through it all, and recalled the mid-nineties event with this writer when he addressed a group of railroaders in suburban Maryland.

The labor issue was the top headliner at the Washington conference May 13 and 14.

The second headliner was the emergence of "toast" as a small but symbolic reflection of Amtrak's band-aid struggle for existence.

"How on earth is taking toast off the trains going to reach the (Amtrak) goal of self-sufficiency?" CSX Vice President Paul Reistrup demanded to know in the Monday session.

"Make a note of the toast problem," interim Amtrak boss Stan Bagley told an assistant at the Monday luncheon.

By Tuesday, National Association of Railroad Passengers (NARP) Executive Director Ross Capon had done some research. It turns out, he told the audience, that by eliminating toast at breakfast in the dining cars, Amtrak does not need a third person in the kitchen, and thus can "control costs."

Last time I rode Amtrak long distance, biscuits were offered in lieu of toast.

Gunn's appointment drew accolades from the vice chairman of Amtrak, the chairman of the Amtrak Reform Council (ARC), and a top freight rail executive.

"Salvation" is how Reistrup described the coming Gunn era. The incoming Amtrak boss has "real rail expertise."

ARC Chairman Gil Carmichael described Gunn as "a rough, no nonsense kind of rail operator" and said he's just the right man for "a new Amtrak."

David Gunn is "as good as they come," said Amtrak Vice Chairman Michael Dukakis. He will ride (the trains) and talk to the customers, "not the muckety-mucks," the former Massachusetts governor added.

Despite the current Amtrak crisis, complete with the "'" symbolism, Dukakis was upbeat.

"Ridership is growing, growing, growing," he said.

He held out high hopes for a reasonable compromise on Capitol Hill between the House (Young-Quinn) bill, which provides nearly $2 billion for Amtrak and the Senate (Hollings) counterpart, which would allocate over $4 billion.

Paul Reistrup

Paul Reistrup questions toast, praises Gunn.

If that compromise comes to fruition, it is likely to be in the next Congress, in the opinion of former FRA deputy administrator Don Itzkoff. His more modest projection for 2002 was a compromise between the Bush administration's "place-holder" $521 million for Fiscal Year 2003 and former Amtrak President George Warrington's request for $1.2 billion.

Since Warrington had said the $1.2 billion was "rock bottom" just to keep Amtrak going at its present schedule, D:F asked Itzkoff if he was predicting the demise of some of the long distance trains.

Not necessarily, he replied, adding that Gunn would probably find a way to keep the entire system afloat.

All of which gets us back to D:F's speculation that Congress might typically tell Amtrak top keep running the trains while not providing the money required to do so.

Actually, both Dukakis and Itzkoff could be right. Dukakis was referring to the ultimate long-term legislation authorizing a structure for Amtrak. Itzkoff, on the other hand, was speaking of this year's appropriations bill. Authorization sets out goals and theory. Appropriations is where "the rubber hits the road," the moment of truth. This is a distinction ruefully noted by Reistrup, a former Amtrak president who recalled authorizations raising hopes, only to be shot down by appropriations. Two different committees in both the House and the Senate handle the processes.

"There is nothing fat and happy about Amtrak these days," Dukakis told the conference. He cited Amtrak's failure to reach Congressionally mandated operational self-sufficiency goals, but attributed the failure to late delivery of the Acela high-speed equipment, lack of consistent investment, and the recession.

But he cited the fact that the frequently sold-out Acela Express had boosted Amtrak's portion of the New York-Washington air-rail schedule to 58 percent, prompting air shuttle companies to run ads criticizing Amtrak, "something they've never done before."

The 1988 Democrat presidential nominee noted that 89 cars and locomotives were sitting at the Beech Grove repair facility in Indiana, unrepaired because of a shortage of funds. Interim Amtrak boss Bagley speculated that if one more derailment put Amtrak equipment out of action, he might have to move to eliminate some trains on the timetable. Already diners and sleepers have been taken off a few trains because of the equipment shortage.

Reistrup said CSX had moved from "neutrally negative" to "neutrally positive" when it comes to accepting government money so as to help in partnering with passenger entities to upgrade trackage and other infrastructure, with the understanding that freight would benefit as much as passenger operations.

"We don't want to give up control of our own property," agreed Edward Hamberger, President of the Association of American Railroads, the Washington voice of the Class I companies.

Freight traffic is expected to double by 2020, Hamberger noted, adding that government assistance may be justified. More double-tracking will "probably" be needed.

Carmichael said the freight lines would benefit from the government assistance for infrastructure improvement.

The freight lines are "too slow," he said, "and need to operate on faster schedules to attract more customers."

Gil Carmichael and Jim RePass (sitting)

NCI CEO Jim RePass listens intently as ARC's Gil Carmichael criticizes the lack of Bush Administration rail plans or policies. "The Executive Branch never has taken an interest in Amtrakä DOT has failed to exert leadershipä I do not believe that this Administration can afford to stand aside from the debate about the future of rail passenger service. The Administration should weigh in this year with strong recommendations."

Tom Donlan, editorial page editor of Barron's Magazine, rejected the group's basic premise, i.e. Amtrak's right to exist outside the private sector. He proposed putting all Amtrak property on the block and let anyone who thinks he can make a profit on it submit a bid.

The notion that rail passenger service is "a public good" is a shield for what it really is, in Donlan's view.

"It was and is political theft," he argued, a reference to its use of private freight railroad property at below-market rates.

After all, he noted, the original New York City IRT subway was built with private money. That, of course, is a matter of record. It is also a matter of record that as soon as it became clear to August Belmont, the entrepreneur who built the IRT, that it would be a financial black hole for him, he could not get out of it quickly enough.

NCI President Jim RePass told the group Donlan was invited to speak in order to stir intellectual debate. That goal appeared successful, judging by the questions and answers. In answer to a question from Trains magazine writer Bob Johnston, Donlan said it would not bother him at all if Washington's Metro rail subway system were paved over and replaced by buses, presumably privately operated. Johnston proclaimed that as "preposterous."

The Barron's editorialist himself acknowledged that for him to appear before a group of passenger train boosters was "a little like a reporter traveling to Johannesburg to write for Ebony."

Johnston's dialogue with Donlan is but a sample of the brisk challenge the Barron's editorialist faced. Time constraints prevented all the questioners from challenging him.

Had the Q&A period been extended, Donlan would have been invited to lead the charge against the "political theft" that he criticizes.

From 1942 to 1962, rail passengers paid a ticket tax, much of which was sunk into building highways and air travel systems. Allowing for inflation and interest charges, the sum total of this "political theft" came to about $40 billion. Surely Mr. Donlan would demand that rail passenger service receive those dollars back so as to recoup the losses customers suffered in "political theft." No?


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Catenary repair in the yard

NCI: Leo King

Tom Till says infrastructure maintenance is labor-intensive, from the track to the catenary as well as signals and switches and bridges and buildings. He would create a corporation separate from the operational side of the ledger.
Till shoots hard from the hip;
a no-nonsense railroader
By Leo King
Editor

ARC's answer to Amtrak's dilemmas, in Tom Till's view, is to dissolve the present Amtrak makeup and create at least two bureaucracies where one now only one exists.

His background is in law and government. He is a former deputy FRA administrator (1982-1985), and holds degrees in law and political science from Georgetown Univ. He is also a U.S. Air Force Academy graduate. In short, a bright guy.

Till was, before he joined that Amtrak Reform Council in 1999, manager of transport policy planning and investment projects in the former Soviet Union for the World Bank, and for the European Bank for Reconstruction and Development, in London. It was only natural for his eyebrows to rise a little higher than most of the rest of us when he learned Amtrak had mortgaged Penn Station for $300 million in private financing.

"Last year, when Amtrak carried out its summer surprise - secured borrowing against Penn Station, New York to cover those three months of operating expenses. We all know about the furor that that caused. The actual structure of the deal has some important lessons for all of us.

Perhaps the most important thing about that financing agreement is that the creditors insisted that the two concourses, whose revenue streams were securing the financing, be placed in a separate corporation."

The corporation has three directors - the secretary of transportation, Credit Lyonnais of France through its U.S. agent, Wells Fargo, and Amtrak. The USDOT holds some $4 billion in liens against Amtrak in the Northeast Corridor, he said.

Till told the gathering, "The creditors wanted a corporate structure where the revenue streams would be absolutely transparent and would be protected by financial covenants, but would also be protected by a strong corporate veil."

He said the structure would insulate the revenue streams against any creditors' claims that might be filed against Amtrak's overall assets, and certainly the revenue streams would be more secure in that corporate environment than they would be if they were left in the same pot with all of Amtrak's other assets."

His point, though, went beyond an economic history lesson.

"So, we're dealing with a separation of transparency ensuing financial security and the representation of parties and interest on the board, that were vile and necessary conditions" for the financing.

"If that is so," he continued, "then why are these same considerations and the corollary conditions most appropriate for what is almost certainly the single most valuable transportation asset in the Northeastern United States?"

He said the asset "has deteriorated to an alarming extent over the past several years" as the Inspector General's office has demonstrated.

The ARC's position, Till said, is that there "is no good answer to the question that defends the status quo. We've got to change with how we deal with this infrastructure, or the whole thing is going to go down the tubes."

He outlined what the corporate structure would look like under the ARC reorganization plan. The title would be a governmental organization, and, he said, "Amtrak could create a corporation right now, if it wanted to, as a subsidiary, and name the board with representatives from the states."

He added, "That would give it all those characteristics of transparency, the insulation of revenue streams, and all the other things that are so essential to getting this thing to start to run like a business."

The core business, he explained, would provide "as economically and as effectively as possible track capacity for the operation and support of intercity passenger, mail and express service, of commuter services, of freight services, and capacity to repair and maintain" as well as "capital improvements of the corridor infrastructure."

That unit could not be a revenue-generating outfit. Its sole business would be to generate operational capacity. In short, fix and build track and signals so more trains can run.

He said a transition period would last one or two years.

"Forget normalizing maintenance. Amtrak hasn't even been able to get the amount of maintenance into the plant to cover operational reliability needs."

Regarding trains, he said, "You've got to design a near- to mid-term capital plan, and one that is going to be prioritized for ability to increase capacity and train speeds."

Till underscored that the first rule of any capital intensive organization - particularly an infrastructure corporation like this would be - "is to maintain your existing assets, and that rule has been violated repeatedly over the history of Amtrak's ownership of this corridor. It has got to stop."

He added that when railroads, or any corporate entity, stops maintaining its existing assets, things start to fall apart, and "that where Amtrak is right now."

Till sees it this way - it would also put people to work.

"These steps will have an immediate effect which is to start putting the brotherhoods back to work. Corporate structure, which has not had the money to buy the materials to have these people get out on the track and make it right," would now be able to do so.

The next step would be to "size its management staff to the task. They are going to do this while they are doing everything else. They are going to start looking at a zero-based management structure."

Details of how many extra people they have in Philadelphia on engineering staffs such as civil engineers and others who deal with the designs of these things "is absolutely amazing," Till said.

"We've heard numbers as high as 700, maybe only 400. Why do you need 400 civil engineers to put in $71 million worth of maintenance each year? That's a bigger staff than any of the class I railroads have, with the possible exception of the Burlington Northern-Santa Fe, which has an enormous territory to cover."

Till was also critical of what he termed as "outdated accounting and management information systems."

He said they could first look to U.S. freight railroads, "which have gone a long way in their accounting for fixed plant and track infrastructure since deregulation in 1980 [Staggers Act]."

He suggested they could also look to Europeans railroads for off-the-shelf systems as well. In 1991, he said, Europeans railroads, including nationalized lines, were required to separate their accounting of infrastructure and operations "so the governments would know what they were getting for the amount of money they were investing in the track."

He asked, "Does that sound familiar?"

Thomas Till graduated from the Air Force Academy but was unable to fly, so he went into government and railroading instead after his military commitment.

The idea of changing top management earned him a round of some applause. He and ARC chairman Gil Carmichael seem to be nearly alone in the woods, so to speak. Even Carmichael, in an informal, amicable conversation I had with him and Till in The Atrium, a restaurant inside the Washington Marriott where the conference took place, noted virtually all railroad operating people thought it was not a good idea to break up Amtrak into a separate operating entity and another to take care of the infrastructure. The plans are based on the interstate highway and airport models. Both argued, what's wrong with that? Why not fund passenger rail the same way?

I blurted out I thought it was a terrible idea.

I pointed out the railroads had been doing it this way for a long time, before there were any paved roads and certainly airports; that it was one of the oldest industries in the U.S., from about 1832 onward, and railroads therefore have historically built and repaired their own rights-of-way.

I didn't convince them, nor did they convince me, but it was a friendly conversation.


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No cars left, Bagley says
Amtrak's vice president of operations, Stan Bagley - who was the acting CEO until David Gunn took over on Wednesday - told NCI's 70 attendees that he had had a recent conversation with Gunn. Bagley will be staying on. Other heads are expected to roll.

Bagley enjoys a good reputation within the Amtrak and railroad community in general. He is now breaking in his seventh corporate president at the passenger carrier, and will be staying on as ops chief, for an outfit that moves an average of 265 daily trains nationwide. He is also Amtrak's police commissioner, and carries a badge on his belt.

While working from "the spare board," as Amtrak's acting CEO, Bagley, 62, who has been railroading for 28 years, said it his intent to rehire laid-off workers to bring service levels back to what they were before the layoffs of two months ago, particularly at stations.

He was "pinch-hitting" for new Amtrak board chairman John Robert Smith, who had been asked by his state (Mississippi) delegation to head an urgent trade mission to Korea this week and had to bow out at the last minute. It was the first NCI national conference he has ever missed, spanning 14 years, said NCI's CEO Jim RePass. Smith is also NCI chairman as well as mayor of Meridian, Miss.

Bagley warned his rapt listeners, including national reporters, "I'm one derailment away from having to cut service."

He said he "pulled every rabbit out of the bag" to keep the carrier at full service after the April 18 crash of its northbound Auto Train in Crescent City, Fla., where four people died and 150 were injured. The NTSB is still looking into that wreck, which saw 14 Superliner cars go on the ground. Some landed on their sides.

Meanwhile, Amtrak's No. 97, the Silver Meteor, went on the ground near Yemassee, S.C. on May 14 after colliding with a logging truck. Ten cars derailed, but all remained upright. No one died, but several people were injured. All the cars were single-level coach and baggage cars.

Stan Bagley

Amtrak operations chief says if there is another catastrophe, he will probably have to cut some trains.

Bagley said nearly 90 cars were stored dead in Beech Grove, Ind., at Amtrak's major car repair shop. He was forced to take equipment from other trains - a Superliner here, a coach there.

"I've got 89 wrecked cars and locomotives that I can't fix because of money. As long as I've been doing this, I've never seen such a backlog."

Amtrak has warned that it will have to make cuts, beginning with its 18 long-distance routes, if it receives less than $1.2 billion.

On the positive side of the ledger, he said the Acela Expresses and Metroliners (which the railroad had intended to scrap) are consistently selling out.

"We now have what is known in the business as 'tweeners,' that run on the half-hour.

"For the first time in history, Amtrak enjoys a majority market share between the nation's seat of government and the world's financial center in New York. For the fourth quarter (fiscal 2001) we were 53 percent, now we're at 58 percent. That's pretty good."

He said the Pacific Northwest - the Cascades service - continues to show "stellar ridership growth, 30 percent over the last two years."

He also cited the Heartland Flyer exceeding ridership expectations.

"Overall," he said, "Amtrak has seen a 19 percent ridership and a 30 percent revenue growth over the last five years. We carried twenty-two-and-a-half million passengers last year."

Bagley observed, "It's unfortunate, I believe, that despite rail passengers continued growth and popularity, Amtrak finds itself at the crossroads of a critical junction. We witnessed a transportation crisis of the first degree on September 11. Amtrak was grounded for three days nationwide. Nothing could have demonstrated more vividly our reliance - perhaps over-reliance - on the aviation leg of our nation's transportation system."

"This under-investment in rail has gone on for decades. The [USDOT's] Inspector General [Kenneth mead] says Amtrak has not received even the minimum capital necessary for the last five years to maintain a reliable system. That's true. I know - I'm responsible every day to maintain that system. I will assure you the system is safe, but it's not at what I would call a state of good repair; certainly not to my standards of the railroad business."

Next week: Reports from the regions and states, and other speakers' notes. - Ed.


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Higher Acela fares begin
A system-wide Amtrak fare hike began last Wednesday affecting Acela Express and Metroliner passengers.

The company told travel agents " service has been extremely popular, resulting in many sold-out departures. To ensure that Amtrak can accommodate as many guests as possible, a new peak/off-peak fare structure" was introduced.

The change is expected "to garner additional revenue for Amtrak, it will also benefit those guests whose travel plans are flexible. Thus we will maximize the number of guests we can carry on these premium services."


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Meetings...

May 21-24

High-Speed Ground Transportation Assn.
International Conference and Expo

Wyndham Resort Hotel
Orland Fla.
Contact HSGTA via e-mail at infor@hsgt.org.;
Phone 202 789 8107; Fax 202 789 8109.


June 2-4

Transportation Marketing and Communications Assn.
Sixth annual conference

Omni Tucson National Golf Resort
Contact Sarah Shamla via e-mail at
tmcaservices@earthlink.net;
Phone 952 442 5638, Ext. 202;
or fax at 952 442 3941.


June 9-13

APTA Commuter Rail and Transit conference

Renaissance Harborplace and Hyatt Regency, Baltimore.
Contact David Phelps via e-mail at dphelps@apta.com
or via APTA's web site at http://www.apta.com;
Phone 202 496 4885.


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The way we were...
Union Pacific Post Card

NCI: Leo King Collection

When the Union Pacific ran passenger trains, one of their premier named trains was the City of Los Angeles. This photo is from a three-and-a-half-inch by five-and-a-half-inch "pictorial post card" published by the UP's PR department in the 1950s. The logos on the engine (what kind of engine was it?) were Union Pacific and Chicago & North Western, both of which merged several decades later. The number on the side of the engine states, "LA-1." Try as we might, we cannot make out the signpost along the right-of-way to the right. Under a magnifying glass, we can see the printer's dots, and what appears to be "River," but there's no way to tell, for sure, nor for that matter where the scene is at all. The caption on the reverse states, "This swift, superbly appointed extra fare train, providing the finest to be had in luxurious travel comfort, carries both Pullmans and reserved seat coaches between Chicago and Los Angeles."
End Notes...

We try to be accurate in the stories we write, but even seasoned pros err occasionally. If you read something you know to be amiss, or if you have a question about a topic, we'd like to hear from you. Please e-mail the crew at leoking@nationalcorridors.org. Please include your name, and the community and state from which you write.

Destination: Freedom is partially funded by the Surdna Foundation, and other contributors.

Journalists and others who wish to receive high quality NCI-originated images that appear in Destination: Freedom may do so at a nominal fee of $10.00 per image. "True color" .jpg images average 1.7MB each, and are 300 dots-per-inch for print publishers.

In an effort to expand the on-line experience at the National Corridors Initiative web site, we have added a page featuring links to other rail travel sites. We hope to provide links to those cities or states that are working on rail transportation initiatives - state DOTs, legislators, governor's offices, and transportation professionals - as well as some links for travelers, enthusiasts, and hobbyists.

If you have a favorite rail link, please send the uniform resource locator address (URL) to the webmaster in care of this web site. An e-mail link appears at the bottom of the NCI web site pages to get in touch with D. M. Kirkpatrick, NCI's webmaster in Boston.


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