[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

A REVIEW OF AMTRAK OPERATIONS, PART III:
EXAMINING 41 YEARS OF TAXPAYER SUBSIDIES

=======================================================================

(112-107)

HEARING

BEFORE THE

COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

SECOND SESSION

__________

SEPTEMBER 20, 2012

__________

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COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

JOHN L. MICA, Florida, Chairman
DON YOUNG, Alaska NICK J. RAHALL II, West Virginia
THOMAS E. PETRI, Wisconsin PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina JERRY F. COSTELLO, Illinois
JOHN J. DUNCAN, Jr., Tennessee ELEANOR HOLMES NORTON, District of
FRANK A. LoBIONDO, New Jersey Columbia
GARY G. MILLER, California JERROLD NADLER, New York
TIMOTHY V. JOHNSON, Illinois CORRINE BROWN, Florida
SAM GRAVES, Missouri BOB FILNER, California
BILL SHUSTER, Pennsylvania EDDIE BERNICE JOHNSON, Texas
SHELLEY MOORE CAPITO, West Virginia ELIJAH E. CUMMINGS, Maryland
JEAN SCHMIDT, Ohio LEONARD L. BOSWELL, Iowa
CANDICE S. MILLER, Michigan TIM HOLDEN, Pennsylvania
DUNCAN HUNTER, California RICK LARSEN, Washington
ANDY HARRIS, Maryland MICHAEL E. CAPUANO, Massachusetts
ERIC A. ``RICK'' CRAWFORD, Arkansas TIMOTHY H. BISHOP, New York
JAIME HERRERA BEUTLER, Washington MICHAEL H. MICHAUD, Maine
RANDY HULTGREN, Illinois RUSS CARNAHAN, Missouri
LOU BARLETTA, Pennsylvania GRACE F. NAPOLITANO, California
CHIP CRAVAACK, Minnesota DANIEL LIPINSKI, Illinois
BLAKE FARENTHOLD, Texas MAZIE K. HIRONO, Hawaii
LARRY BUCSHON, Indiana JASON ALTMIRE, Pennsylvania
BILLY LONG, Missouri TIMOTHY J. WALZ, Minnesota
BOB GIBBS, Ohio HEATH SHULER, North Carolina
PATRICK MEEHAN, Pennsylvania STEVE COHEN, Tennessee
RICHARD L. HANNA, New York LAURA RICHARDSON, California
JEFFREY M. LANDRY, Louisiana ALBIO SIRES, New Jersey
STEVE SOUTHERLAND II, Florida DONNA F. EDWARDS, Maryland
JEFF DENHAM, California
JAMES LANKFORD, Oklahoma
REID J. RIBBLE, Wisconsin
CHARLES J. ``CHUCK'' FLEISCHMANN,
Tennessee
VACANCY
CONTENTS

Page

Summary of Subject Matter........................................ iv

TESTIMONY

Joseph H. Boardman, President and Chief Executive Officer, Amtrak 28
Ted Alves, Inspector General, Amtrak Office of Inspector General 28
Peter J. Pantuso, President and Chief Executive Officer, American
Bus Association................................................ 28
Randal O'Toole, Senior Fellow, Cato Institute.................... 28
Ross B. Capon, President and Chief Executive Officer, National
Association of Railroad Passengers............................. 28

PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Hon. Peter A. DeFazio, of Oregon................................. 51
Hon. Eddie Bernice Johnson, of Texas............................. 54

PREPARED STATEMENTS SUBMITTED BY WITNESSES

Joseph H. Boardman............................................... 56
Ted Alves........................................................ 70
Peter J. Pantuso................................................. 81

``Federal Subsidies for Passenger Transportation, 1960-
2009,'' Robert Damuth, Economist and Principal Consultant,
Nathan Associates Inc., March 2, 2011...................... 88
``Economic Impact of the Motorcoach Tour and Travel
Industry,'' American Bus Association Foundation............ 118
``Motorcoach Census 2011,'' prepared for the American Bus
Association Foundation by John Dunham & Associates, June
18, 2012................................................... 119
Randal O'Toole................................................... 134
Ross B. Capon.................................................... 143

SUBMISSIONS FOR THE RECORD

Slides referenced during the hearing by Hon. John L. Mica, a
Representative in Congress from the State of Florida and
Chairman, Committee on Transportation and Infrastru3, 5, 7, 9, 11, 13
Joseph H. Boardman, President and Chief Executive Officer,
Amtrak:

Responses to questions from Hon. Bill Shuster, a
Representative in Congress from the State of
Pennsylvania........................................... 62
Responses to questions from Hon. Corrine Brown, a
Representative in Congress from the State of Florida... 64
Response to question from Committee on Transportation and
Infrastructure, Minority............................... 69
Ted Alves, Inspector General, Amtrak Office of Inspector General,
responses to questions from Hon. Corrine Brown................. 78
Peter J. Pantuso, President and Chief Executive Officer, American
Bus Association, responses to questions from Hon. Corrine Brown 130
Ross B. Capon, President and Chief Executive Officer, National
Association of Railroad Passengers, responses to questions from
Hon. Corrine Brown............................................. 151

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[GRAPHIC] [TIFF OMITTED] T6148.005

[GRAPHIC] [TIFF OMITTED] T6148.006

A REVIEW OF AMTRAK OPERATIONS,
PART III: EXAMINING 41 YEARS OF
TAXPAYER SUBSIDIES

----------

THURSDAY, SEPTEMBER 20, 2012

House of Representatives,
Committee on Transportation and Infrastructure,
Washington, DC.
The committee met, pursuant to notice, at 9:35 a.m. in Room
2167, Rayburn House Office Building, Hon. John Mica (Chairman
of the committee) presiding.
Mr. Mica. Good morning. I would like to call the Committee
on Transportation and Infrastructure to order. And I welcome
everyone this morning. This morning is the third in a series of
hearings that we are conducting to examine the operations of
Amtrak, our national passenger rail system. And the first
hearing that we conducted, we focused on some of the cost of
food service. And I think the last hearing we talked about some
of the subsidies for intercity passenger rail service, and also
commuter rail service involvement of Amtrak. And today we are
going to look at some of the issues relating to the ticket and
passenger fare subsidization.
The order of business will be, first, opening statements.
And I am going to proceed, as chair of the committee, with my
opening statements. We will turn to Mr. Rahall. We are starting
early this morning, and hopefully we will be joined by Members
from both sides of the aisle who are--I know at least our side
is in a conference this morning. But we do want to make
certain, with a short week--and this is actually our last week
before we return after the general elections--to get these
hearings in, both the one we did last week, this one.
I also announce today that we will be doing a series of
additional hearings on Amtrak during the lame duck session. We
have at least three planned at this point. And as we get the
subjects and the background information in preparation for the
official calling of the hearing, we will notify the Democrat
side of the aisle, so they can also prepare. But we will
continue these through this Congress.
With that, I will recognize myself. Then we will go to Mr.
Rahall, any other Members that are here. And then we have a
panel of witnesses, we will recognize them, and proceed in that
fashion.
So, again, welcome this morning. And let me say that, once
again, the purpose of this series of hearings is to review some
of the financial performance of Amtrak, to look at ways in
which we can limit some of the expenditures and the subsidies,
and provide better customer service. As I said at the opening
of the last two sessions, I consider myself one of the
strongest advocates for passenger rail service in the United
States. But we must do that as cost efficiently and effectively
as possible, always with an eye on the bottom line for the
taxpayers, particularly in light of the country running
trillion-dollar subsidies.
And we do have to look at every operation within each
committee. Our committee is responsible for transportation,
and, specifically, Amtrak, one of those activities. And that
activity has also had a cost subsidization, both in operation
and capital expenses, in excess of $1 billion a year, almost
consistently for many years now.
So, that is the reason we are here. As I said, this is the
third in a series, and we will continue this series. We did
look at the first hearing, again, and we found that about $833
million that Amtrak has lost in providing food and beverage
services, not an insignificant amount over the last decade.
Certainly also raised eyebrows that we found--we are going from
3 years ago, I think, approximately a $79 million subsidy to
$84.5 million last year, also a significant increase in cost in
a time when the country is literally on the verge of financial
bankruptcy.
So, that was our first hearing. Then last week we looked at
Amtrak's inability to compete in the commuter rail market. And
we found that commuter rail agencies saved $107 million over
that, 11.5 percent, by awarding operating contracts to private
operators instead of Amtrak.
And today we will focus again on the needs of the Federal
subsidy and requirements which have totaled some $40 billion
since we began subsidizing that operation 41 years ago, an
average of about $1 billion a year.
Let me start by pointing out that we have looked at a
couple of--the route costs. And there was a report done in
2005, ``Amtrak Management Systematic Problems Require Actions
to Improve Efficiency, Effectiveness, and Accountability,'' and
that highlighted some of the subsidization for passenger rail
service. And then in 1998 there was another study that--and
actually the last study that I found that actually examines
some of the cost of subsidization of the various routes. So,
without objection, we will at least refer to these in today's
hearing proceedings.
What we want to do is look at some of the ticket subsidies
that the taxpayers are incurring. And I have got a couple of
slides up here, and we will point to them.
First of all, we have got a taxpayer paying for one of the
routes, the Southwest Chief. And this shows the Chicago to Los
Angeles route. The ticket has a warning on taxpayers that every
single ticket, on average last year, in fiscal year 2011, was
subsidized by the taxpayers at $49.25. So if we are up to--this
last year was $28 million or $29 million you multiply that out,
you get the subsidy. And that is calculated by taking both the
operational underwriting by the taxpayer, and also capital
expenses.
[Slide.]

[GRAPHIC] [TIFF OMITTED] T6148.007

Mr. Mica. We have a 5-year average we have calculated of
the average subsidy per ticket is about $51. It's actually
$50.97. That average, unfortunately, is staying fairly high,
hovering around that. That is, again, for every single ticket
on Amtrak. The average subsidy--Amtrak's average subsidy over
that period was $1.4 billion per year, and that is a
significant amount of money.
[Slide.]

[GRAPHIC] [TIFF OMITTED] T6148.008

Mr. Mica. Over the last 5 years, Amtrak does not include in
that figure $1.3 billion, which in 2009 was given to--provided
Amtrak as stimulus dollars that went to Amtrak. If you add in
that average and amortize it over a 3-year period, then the
ticket subsidy rises to $67.84 per ticket, a extremely high
subsidy when you look at cost of subsidies.
[Slide.]

[GRAPHIC] [TIFF OMITTED] T6148.009

Mr. Mica. Now, we do know, and it has also been recited by
members of the committee, that almost all forms of
transportation are underwritten by a subsidy. However, the
latest information that we have got here from a report that was
done several years ago--2008 data--this shows that the average
subsidy per ticket in aviation was $4.28, mass transit $.95,
intercity commercial bus at a $.10 per passenger ticket
subsidy, and Amtrak, the average subsidy at that time was
$46.33. Again, off the chart in the amount of subsidization by
the taxpayers. Amtrak has, by far, the highest per-trip
subsidy, about 11 times that of aviation and 463 times that of
intercity bus services.
[Slide.]

[GRAPHIC] [TIFF OMITTED] T6148.010

Mr. Mica. Furthermore, our aviation and highway subsidies
are offset by user fees, while Amtrak subsidies come from the
General Fund. As we know, with the General Fund right now, more
than $.40 of every dollar that is spent out of the General Fund
in the most recent past has been borrowed money. So we are
actually using a large portion of deficit money to finance some
of these subsidies for Amtrak.
In fact, too, it is important to note for the record that
Amtrak has no service in four States--Hawaii, Alaska, Wyoming,
and South Dakota--so the taxpayers in those States are paying
towards Amtrak subsidization of these money-losing activities,
and getting no service.
Last week Mr. Boardman argued at the hearing that capital
support does not amount to a subsidy. Unfortunately, I
disagree, and I think anyone in business would disagree.
Someone has to absorb the expense. Amtrak subsidies, whether it
is for capital or operation are not manna from heaven, they are
actually dollars out of the Federal treasury, and all the
taxpayers are paying for them. And if they are out of the
general treasury, then we are right now borrowing about $.40 on
a dollar.
Even if you applied this theory, much of Amtrak's
operations do not make financial sense. For example, let's put
up here that--the 10 worst money-losing routes on the system.
[Slide.]

[GRAPHIC] [TIFF OMITTED] T6148.011

Mr. Mica. The worst offender, by far, is Sunset Limited.
That is Los Angeles to New Orleans. Every ticket on that route
is--was subsidized in 2011, $375.
Do we have the--on the Sunset Limited, do I have the
information on the--just want to--again, I want to use this as
an example.
We just checked--and you all can Google it, if anyone can
Google it, go to Travelocity, KAYAK, or whatever your favorite
site is, and you can get a ticket on a flight from New Orleans
to LAX--we checked last night--for $170. That is a 4-hour
flight. You can also hire a driver and a sedan to pick you up
at the New Orleans airport for $58, and hire another Town Car,
a sedan, to take you home, or to a downtown location for $95.
The total cost--that is with chauffeur-driven car or sedan--
plus an airfare, the airfare on site, was $323. The total
travel time is 7 hours. It takes, what, 2 full days to get from
New Orleans to Los Angeles, and the Federal subsidy for this
train ride is $375. To me, that is absolutely outrageous
underwriting by the taxpayers. And again, if we put people in
limos door to door, flew them out there, we would save about
$50 per ticket, with the current subsidy. So that is just one
example of some of the loss.
Let's also compare some of the--Amtrak's biggest money
losers to private-operated intercity bus service. Let's--and we
took, for example, from Chicago to Indianapolis. There is a
head-to-head competition between Amtrak, the Hoosier--the
Amtrak's Hoosier State costs $23. It takes 5 hours, has one
departure per day. That doesn't include, of course, the $40-
some ticket subsidy. Megabus, on the other hand, takes--costs
$22, takes 3 hours and 15 minutes, and has seven departures a
day. So the Government is not only subsidizing a, again, a
money-losing route. Passengers are inconvenienced by almost 2
hours, and they have one choice in Amtrak a day and a total of
seven departures a day by their competition, Megabus. Amtrak is
a Government-subsidized, taxpayer-subsidized operation.
Megabus, on the other hand, is a private sector operation that
actually makes a profit and pays taxes.
[Slide.]

[GRAPHIC] [TIFF OMITTED] T6148.012

Mr. Mica. Furthermore, again, the ticket does not account
for the $118 Federal subsidy for this service. So the real
price of the ticket is $141.10, $23 paid by the passenger and
$118 paid by, again, the taxpayers by the--in this case,
general treasury. And 40 percent of that is right now being
borrowed in deficit.
The bottom line is in many instances Amtrak costs more,
takes longer, and has fewer options.
So, those are some of the points that we wanted to make in
updating the information from 1998 and from 2005. And my goal
here, of course, is, first of all, to eliminate any of the
wasteful spending we can. I read recently an article that I
thought told it all. And this is Progressive Railroading. It
said, ``At Long Last, a Longer View.'' Heavily quoted by Mr.
Boardman, the chairman. Also heavily quoted by Joe McHugh and
the vice president of operations, DJ Stadtler. And they all
said--and let me quote them--they said, ``Whether taking small
steps to minimize waste or larger steps to reduce Amtrak's
required subsidies, all employees will need to get past the
business-as-usual mindset, and general new ideas.''
So, that is what this hearing is about. This, again, is a
very strong advocate of passenger rail service and public
transit. We have got to find the best ways we can do this,
eliminating waste, inefficiency, routes that don't make sense,
looking at cost-effective alternatives. And I think if we do
that, we can first dramatically expand passenger service. I
think we can actually increase the employment in Amtrak and
those involved in this important industry, because instead of
contracting--I see we have got many people who are workers with
Amtrak.
The history of Amtrak to date is when I came to Congress
there were 29,000 employees. Today--Mr. Boardman can correct
me--I think it is somewhere around 19,000, and also
diminishing. If that is the future that you want to look
forward to, I think it is a very dim future. I think we have a
potential, instead, to dramatically increase routes,
operations, and join public-private partnerships, secure
investments to broaden routes and enhance infrastructure, and
also provide customer service in ways that we haven't even
begun to approach.
So, I agree with the statement of the Amtrak executives
that we cannot conduct business as usual, and that we have got
to change our mindset, and that we have got to generate new
ideas. And I look forward to working in a positive manner to
accomplish just that.
In a minute we will hear from our witnesses. And now I
would like to turn to our distinguished ranking member from the
great State of West Virginia, Mr. Rahall. Recognize him.
Mr. Rahall. Thank you, Mr. Chairman. And I appreciate your
recognizing the many Amtrak workers that are in attendance this
morning. They work all up and down the Northeast Corridor. We
want to thank them for their labors and for their interest in
this issue, and certainly for what they do for our traveling
public.
You know, we are here yet again talking about Amtrak this
morning. The railroad subcommittee has not had a single hearing
since July 2011. Yet this is the third full committee hearing
on Amtrak in 7 weeks. And I understand you have more to come.
While our committee is convened this morning we could be
focused on other legislative issues, and Mr. Boardman could be
running a railroad. Gee, what a novel idea. Instead of
traipsing up here every week for what amounts to the same exact
hearing: Amtrak-bashing.
I am wondering if in the next rail title, Mr. Chairman, if
the Republicans are willing to establish a new line just to
shuttle Mr. Boardman back and forth between his Amtrak offices
and the committee room.
Today's hearing is titled, ``Examining 41 Years of Taxpayer
Subsidies,'' as if there is something wrong with subsidizing
transportation. This committee supports big investments in
transportation and infrastructure on a bipartisan basis. From
highways to transit and aviation to rail. Amtrak should be no
different. Investment means jobs. And it means jobs. And it
means jobs. And improved transportation infrastructure.
But we know why we are really here. The Republicans want to
outsource Amtrak's routes to the lowest bidder, a policy that
they enshrined into their own party's platform last month, and
borrowed from Mr. Mica's legislation earlier this Congress. The
Republicans then want to give those winning bidders Amtrak's
operating subsidy. That makes no sense.
I have said this before today, and I will say it again.
Lowest bidder is code for low wages and little to no benefits.
And here is a perfect example. In 2008, Congress passed the
bipartisan Passenger Rail Investment and Improvement Act,
PRIIA, which required Amtrak to develop performance improvement
plans for the five worst-performing long-distance routes.
One of those five, identified by Amtrak--now I am not
quoting from a 1998 study, Mr. Chairman--but one of those five
is the Cardinal, which serves 53,515 passengers in my home
State of West Virginia, more than half the passengers on the
entire route. Mr. Mica has proposed outsourcing this route to
the lowest bidder in his draft competition for Intercity
Passenger Rail in America Act of 2011. Without the input of the
host freight railroad, which is CSX Transportation. The
Cardinal supports good-paying-wage jobs in West Virginia, and
it invests over $3 million annually in wages back into our
economy, not to mention the orders that Amtrak has made in the
State, which exceed $2 million annually.
And I want to take this time to congratulate Mr. Boardman
and Amtrak on its performance improvement plan for the
Cardinal. It increases service on the route from 3 days a week
to daily service, which eliminates some inefficiencies on that
particular route. More service means more jobs for West
Virginia and for our Nation at a time when jobs should be our
main focus.
These types of proposals to improve service on our Amtrak
lines support job creation in our communities, and they promote
economic development, and this is what our committee should be
examining, not looking at ways to dismantle our passenger rail
service, or play the role of chief in the dining car.
And I might add the Cardinal is going to continue to
improve as we have coming to southern West Virginia along the
route's service by the Cardinal the Boy Scouts of America's
National Jamboree next year and their Worldwide Jamboree in 5
years. Truly a game-changer for our economy in southern West
Virginia. And it would not be possible if it were not for the
service provided by Amtrak and other modes of transportation.
But where are we instead? We are here again today
confronting the Republicans' tortured logic when it comes to
jobs and investment in our transportation network. The
Republicans claim they want to create jobs. And I heard the
chairman say that was his hope at the end of his comments just
now. But then they also claim they want to reduce Amtrak's
operating subsidy. In order to do that, you have to increase
revenue. Except the Republicans want to eliminate routes and
service, which are the only means that Amtrak has to generate
revenue.
So, when you have to reduce operating--then you have to
reduce operating expenses. And a quick look at Amtrak's
operating expenses shows us that its two biggest expenses are
fuel and labor.
Now, unless the Republicans are willing to go after big
oil, which I kind of doubt it, then labor is the target. Now,
they will tell you that they are for creating jobs. We all are
for creating jobs. But what they are not telling you is that
they are for creating low-paying-wage jobs, not maintaining
good-paying union jobs.
And contrary to what you will hear today, Amtrak has
actually requested and received less Federal operating
assistance since enactment of PRIIA. The railroad, to its
credit, chose to absorb increased operating costs and focused
on growing its capital program. So it decreased its operating
grant request and increased its capital grant request for
fiscal year 2012 and 2013.
Unfortunately, the railroad ended up with across-the-board
cuts to both its operating and capital programs. These cuts
have, of course, yielded predictable results: decreased Federal
funding has allowed for little more than maintaining the
current status of the infrastructure in rolling stock. There
are no available funds for addressing deferred maintenance,
investing in improvements that would grow the business, or
replace aged rolling stock.
In the rail title of H.R. 7, committee Republicans took
this perplexing logic one step further and proposed permanently
reducing Amtrak's operating grants. We offered, on our side, a
sensible amendment to increase funding for capital, which would
have helped Amtrak upgrade tracks, bridges, and other
infrastructure, pursue efforts to expand Acela Express
capacity, advance initial planning work for the Gateway program
to provide additional capacity into Manhattan for intercity,
commuter, and high-speed rail services, and continue the
development of a Next Generation reservation system. That sound
investment would have supported and created thousands of jobs
and led to better service. Republicans rejected our proposal.
What we ought to be holding a hearing on today is how to
mess up a railroad. We have a hearing, we put the squeeze on
Amtrak even more, force them to beg for adequate Federal
funding on an annual basis, and then turn around and criticize
them for the way they run a railroad in the same breath. Give
me a break. Give me a break.
Other nations, which are investing billions in passenger
rail system must be--have to be--laughing at us. Had we
invested like we did 41 years ago, we would not have the
problems Amtrak suffers from today. There wouldn't even be a
need for a state of good repair program. There wouldn't be a
need for today's hearings, and Mr. Boardman could be out
running the railroad, like he should be doing.
Thank you, Mr. Chairman.
Mr. Mica. Thank you. Pleased to yield 5 minutes to the
gentlelady from Ohio, Mrs. Schmidt. And I would ask her if I
could have 30 seconds, just to lead.
Let me just respond, because I think the record should be
clear that my position has always been that we would guarantee
the wages and benefit for all Amtrak employees, and that none
would be cast aside in any negotiations.
And furthermore, when Amtrak employees had to take on
Amtrak and the Federal Government to secure their benefit and
wages some years ago, I stepped up to the plate to support them
when others did not.
And furthermore, for the record, the subsidization of the
Cardinal route that was referred to here is $160 per ticket,
and the loss is $17.8 million a year.
And finally, that we can do a better job. Even Romania,
Bulgaria, Russia, and other countries are now looking at
privatization and actually have implemented it and increasing
routes, customer service. So the United States is slipping
further behind as we protect the status quo, which is not
acceptable.
Thank you, and I yield back.
Mrs. Schmidt. Thank you. And, first off, I want to thank
you, Chairman Mica, for bringing all of these hearings before
us. As you well know, about a year ago I brought to the
attention of this committee the cost of food service and how we
were losing millions of dollars each year, the fact that a hot
dog that cost Amtrak to produce is $6.10 and yet we sell to a
passenger for $4.50 shows that we have a problem.
I do support mass transit, mass transit in all forms. I
think it is vital to our economic and national security in our
country. But I also realize that we are over $16 trillion in
debt, and that debt climbs a couple hundred billion dollars
each and every day. And so we have to be smarter about the way
we are spending the taxpayer dollars. Because if we are not, we
are going over a financial fiscal cliff that will not be good
for any of us, including the public service employees that
provide services such as mass transit.
And so, I think it is imperative that all forms of mass
transit take a good, hard look at the way they do business. And
they have to say to themselves, ``Can we do more with less? How
can we economize our delivery without compromising passenger
comfort and availability?'' When you look at lines such as the
Chicago to Indianapolis line, where you offer one route a day,
and it costs more than if you were to take a bus, obviously
passengers are going to take the bus. It is more convenient, it
is less costly.
So, perhaps we have to look at a different paradigm for our
rail transportation service. This isn't about us versus you.
This is about asking all of us to collectively work together so
that Amtrak can be a viable form of mass transit in the future.
But I am going to be leaving here at the end of December.
And I can tell all of you this. If you don't get smart about
this, the train is going to stop, regardless of who owns the
gavel, because there is just not going to be enough money at
the Federal level to provide the services that the folks in
this country deserve and need.
I yield back.
Mr. Mica. Thank you. Mr. DeFazio?
Mr. DeFazio. Thank you. I have to, given the so-called
staff report on the Republican side, respond to a couple of
things. It is a little bit disingenuous at best. They come up
with this phenomenal number of $51 per passenger on Amtrak. But
they ignore the bulk of the passengers that are actually
carried by Amtrak, which I find curious. They apparently used
only the long-distance routes, and divided that by the
appropriation to come up with $51. If you take all of the
passengers carried by Amtrak, you actually come up with a
number that is $5.62. That is one-tenth this inflammatory
number that has been put out there.
And then there is the further allegation that this is the
only form of transportation that the Federal Government
subsidizes. Well, that is blatantly not true, and certainly the
other side of the aisle knows that. Just in the last 4 years,
we have appropriated $53.3 billion into the Highway Trust Fund
of General Fund money. Because we haven't changed the user fee,
the gas tax, since 1993, and it is inadequate to meet the needs
of a crumbling system. So, $53 billion in 4 years, and the
total number for Amtrak over 40 years is $41 billion.
And then, aviation. We talked as though aviation gets no
General Fund money. Actually, over the last 4 years, aviation
has gotten $19.8 billion of General Fund money. So both surface
transportation and aviation have received what would be these
horrible subsidies that we are talking about that are going to
Amtrak. And the money going to Amtrak is a tiny fraction of the
monies that have gone to these other modes. And those other
modes are also supported by user fees, which are essentially
taxes on the American people.
So, you know, let's be a little bit fair here in our
criticisms. And let's have an honest debate about the future of
rail transportation, passenger rail transportation, in America.
Are we going to become--yes, I hear a lot about American
exceptionalism, American exceptionalism. Well, I guess, you
know, we are going to be really exceptional. I mean for years
we have been exceptional. It is the only industrial democracy
on earth that can't figure out a way to provide health
insurance to all of its citizens.
We are becoming exceptional in that we may be the first
industrialized democracy in the world to end up without a
postal service, because that has been ignored on the other side
of the aisle. And now we want to become yet exceptional again
and be the only major developed nation that doesn't have a
national rail transportation network for passengers.
At a time when our population is aging, and air travel is
becoming more and more and more miserable, I think the numbers
we are seeing in terms of growth isn't just going to be in
commuters, isn't just going to be in people avoiding the high
cost of operating their automobile. It is going to be in people
who are leisure travelers who are retired and have a little bit
more time and don't want to go through the TSA experience and
get clammed in a Spam can, you know, in very uncomfortable
circumstances.
So, I see, if we provide the proper equipment, if we
provide the proper investment, a great future for a national
passenger rail system. And, you know, we can agree or disagree
over this. But let's be fair about the numbers we use. Thank
you, Mr. Chairman.
Mr. Mica. Thank the gentleman. Mr. Barletta, gentleman from
Pennsylvania.
Mr. Barletta. Thank you, Mr. Chairman. I just want to say
that, you know, I am a freshman. This is only my second year
here. And prior to coming to Washington, I had started my own
business, along with my wife. And it was one of the greatest
experiences that I have had. And it taught me a lot. It taught
me that you don't only say your prayers in the morning and at
night, you say them on the way to the post office, in hopes
that there is a check there so that you can make payroll at the
end of the week. And I also learned that every year I was
responsible for the bottom line, and whether or not not only my
job existed, but the jobs of everyone else existed.
I then went on to be mayor of my home town, which was
another great experience, for 11 years. I took over a city that
was bankrupt. And I made it pretty clear where I was coming
from. It was never about taking away people's jobs. I would
tell the employees there that the best way to save your job is
for our organization to run more efficiently, that you needed
to depend on management and the business model, so that this
company can run efficiently. And that is how you save your own
jobs. It is not by taxpayers throwing more money and continuing
to use a business model that is clearly not working.
I don't think there is one person in this room or up here
that, if this was their private business, would continue to
operate at a loss. Just in food and beverage. If you owned the
food and beverage sales on Amtrak, do you believe for 30 years
you would lose money?
Now, we can't just have an open checkbook. We all
understand that. We need to run more efficiently. And there is
things that Amtrak does well. And we should improve on it. And
there is things that you don't do well, and it must be fixed.
We can't depend on the taxpayers to continue to throw money at
it.
Now, my district was hurt by a flood, a terrible flood.
People lost everything. They lost all their possessions, and I
watched senior citizens cry, I watched a young man cry on a
porch. And for 1 year, for 1 year, I worked to try to find $15
million so that we could help the people back home. And you
know, in the short time that I am here, if we just stop the
loss in the food and beverage sales on the train, that was $16
million.
So, I am not here to threaten or scare. I am here to say
that I came to Washington on a message from the American
people. They want their tax dollars spent wisely. So, you know,
I am going to hang with you here, but I am going to say that I
am probably not going to be so patient next year if this
business model continues, because it is just--it is not
working. The areas that work well, let's improve, and you do.
There are areas that I am sure Amtrak does better than anyone
else. But there are also areas that we have to admit must be
improved. Thank you.
Mr. Mica. Thank you. Let me recognize Edie Bernice Johnson,
the gentlelady from Texas.
Ms. Johnson of Texas. Thank you very much, Mr. Chairman.
You know, I feel that this committee's time and resources have
been spent disproportionately on Amtrak hearings, and the
intent has been less to effect positive policy changes than to
act as a platform to expound partisan talking points.
As a nationwide rail network, Amtrak serves more than 500
destinations with an average ridership of 75,000 per day.
During fiscal year 2011, Amtrak transported more than 30
million passengers, the largest annual total in Amtrak's
history. Amtrak has reduced its Federal operating subsidies by
50 percent since fiscal year 2004, allowing the rail service to
cover some 85 percent of its operating expenses on its own. And
these numbers are something to be highlighted during this
hearing.
My colleagues to the right are very critical of the Federal
funds Amtrak receives. And I think this approach is short-
sighted and wrong-headed. When we compare the investments that
other countries devote to their passenger rail systems, the
United States is woefully behind. As a nation, we have
prioritized investment in service transportation, transit,
ports, and passenger rail. This should not be any different.
In addition, every member of this committee knows that we
must pursue a multimodal approach to accommodate increased
population and address congested urban areas. According to the
Federal Railroad Administration, by 2050 the United States will
add some 100 million residents--this country is simply a magnet
for attracting people--placing an unparalleled strain on the
U.S. transportation networks. And rail offers the greatest
opportunity for sustainable growth supporting these citizens.
We are at a point now where we simply cannot build our way
out of these problems. And passenger rail does not only provide
accessibility to both rural and urban areas, it takes cars off
the roads and reduces emissions.
Mr. Chairman, we have a very few days left. As a matter of
fact, 2 days before we recess for over a month. And we should
be using this time to pursue more pressing matters like the
reauthorization of the Water Resources Development Act, which
committee is meeting as we speak, as a rail title that should
have been introduced in MAP-21. And I regret that we continue
to work on a problem where we really don't have much of a
problem, in lieu of working on problems where we have massive
problems.
Thank you, Mr. Chairman. I yield back.
Mr. Mica. I thank the gentlelady. The gentlelady from
California, Mrs. Napolitano.
Mrs. Napolitano. Thank you, Mr. Chairman. And I will make
my remarks rather brief.
Thank Ranking Member Brown. She has been on this issue for
many years. And I have been very much a strong supporter with
her of Amtrak. It is vital to California. We have three of the
five top busiest corridors, the Pacific Surfliner, the Capital
Corridor, and the San Joaquin Corridors. The Sunset Limited
travels right through my district, and it is plagued by delays
because of the issue of the Colton Crossing, which is a rail
crossing that UP has in that area.
We need to be able to support Amtrak. If we do not have--
especially in California--assistance in mass transit, we
already are plagued by many traffic delays, by accidents, by
road rage, by pollution of the air of the exhaust of the
vehicles, by all those. And while everybody tells--especially
my bus operators--that they can handle this, they get stuck in
traffic, just like everybody else. Amtrak does not. Neither
does any other rail passenger.
We need to be able to help. No public transit is
unsubsidized. All of it is subsidized. And for me to say that
our European counterparts have a better system, they do. But
guess who owns the land? The government does. Here we do not
own any land. The Government does not have the ability to tell
any of the rail lines or any of the Amtrak lines that this is
something that we need to expand or put out to bid.
It is important for both urban and rural. How do we get
people who don't have the bus lines to be able to carry people
back and forth into the cities where they can go to work? Or to
medical appointments, or for school, for education? That is
vital. And we need to continue to support it.
Certainly we need to look at cost cutting, in terms of
being able to have better systems, whether it is in the--as it
was pointed out--in the beverage section, or in other areas.
But that is minimal. People rely on rail. We need to continue
doing that. And also, for safety purposes, ensure that those
lines are safe, that the rails are safe, that the crossings are
safe.
So, many of those things that--I would like to continue to
look at and see how we are able to support it. And while our
bus lines are wonderful--I have supported those in my area, and
especially getting UC&G buses--but they do run on highways that
are subsidized and funded by the Federal Government. So there
is money going into--to help them. The bus lines do not take
care of the pavement.
So, I would love to hear more about this. I will maybe
introduce some questions for the record, Mr. Mica. And I thank
you for this time, and look forward to working with my
colleagues.
Mr. Mica. Thank the gentlelady. The gentleman from Florida,
Mr. Southerland, you are recognized.
Mr. Southerland. Thank you, Mr. Chairman. And I would like
to commend you on holding this hearing. And I would like to
thank the representatives that are representing Amtrak here
before us today.
As a new Member of Congress and having a district where
Sunset rail runs through my district--or used to run through my
district; it stops west of us now--I am often visited by
counties and city officials throughout my district, asking that
Amtrak be restored to my district. It is very difficult for me,
in having those discussions with them, when learning that the
subsidy per passenger is $375 per ticket. $375 per ticket.
I often ask those who do the fly-ins--and they come to my
office, and they come to ask me about restoring that. And I
always ask them, well, what time is their meeting with Amtrak
officials. And many times they say, ``Well, we don't have a
meeting at Amtrak.''
And I'm saying, ``Well, let me get this straight. You are
coming to me, asking me to restore or to support restoring, a
part of the rail that subsidizes, per ticket, $375. You are
asking me that. But yet you do not have a meeting with Amtrak,
urging them that we got to find a better, more equitable way to
run our operation.'' That just seems like common sense to me.
And when I learn that the money that is lost through just
food and beverage, I am blown away by--because I came to
Congress as a small business owner, having never served in an
elected position in my life, not locally, not State, not
Federal. I came from small business straight to Congress. And I
am telling you that our family business, if we operated it this
way, we would have been gone a long, long, long time ago. We
would not have made it to the third generation.
And so, I am glad you're here. And, Mr. Chairman, I am
thrilled that we are asking some very difficult questions. We
all want rail. But I got to say this. We talk about the measure
of the importance of our investment to rail, and we talk often
times about what other countries spend. Well, let me say this.
Many of those countries are not countries any of us want to go
live. It is nice to visit, but you all know we want to come
back right here to the United States.
It is not what we invest as the only question we must look
at. It is what we receive back as a result of that investment.
Is it effective? Does it create value for the taxpayer? I want
you to be successful, because I think we need rail. That is a
no-brainer. And I am looking at some of the things that you are
doing in this study. You are asking the right questions, but at
the same time we need to be courageous when we learn the
answers that we may learn by asking those difficult questions.
What is going to be done to immediately implement the
reforms necessary for us to restore Sunset? This isn't hard.
And most Americans don't struggle with this. If we are
subsidizing tickets by $375, I mean, really. How do we get to a
point to where the American taxpayer is not taken to the
cleaners here.
I am thrilled that we are having these discussions. Not for
standing up and screaming and yelling. No, no, no, no. To get
down to the core. Let's peel this onion from eight different
sides, find out what the issues are, solve those issues, so we
can have a rail system that is the leader of the world.
Mr. Chairman, thank you for having the courage to have
this. And also, I want to thank those that are in attendance
today. And I yield back.
Mr. Mica. Thank the gentleman. Do other Members seek
recognition? Well, I'm going to go to Ms. Edwards. She was here
first, and we will come back to you. The gentlelady from
Maryland is recognized.
Ms. Edwards. Thank you, Mr. Chairman. And I want to first
acknowledge I know here with us today are so many of the good
workers of Amtrak. I am not just sitting here in Congress, I am
a passenger and a customer. And I am proud of the service that
the Amtrak workforce provides us.
It is disturbing that in the course, at least of this
Congress, while we have a need to try to figure out how we make
the kinds of investments in our Nation's infrastructure that
are going to keep us competitive, that will make sure that we
strengthen corridors like the one that I live in, in the
Northeast Corridor, which is so important to the economy along
the entire northeast stretch, that instead we have spent so
many hours in this committee figuring out ways not to fund our
Nation's infrastructure, whether we are talking about our roads
and our bridges, our mass transit, our rail infrastructure. And
that is unfortunate, because it means that time has been lost,
that we are not creating jobs and that we are not engaged in
the work that is important to this Nation to make sure that we
stay competitive in the 21st century. And that is a real loss.
It is a loss for the American public, it is a loss for American
workers, it is a loss for people who want to work.
We know that Amtrak has been engaged in a number of capital
projects to modernize the system, and to repair existing
infrastructure along the Northeast Corridor. I am looking
forward to hearing from the panel today about what the real
effect would be of ending or decreasing Government support for
Amtrak, and the impact that that will have on the funding of
these projects and rail traffic along the Corridor, in addition
to other areas like safety and consumer satisfaction.
The United States spends .8 percent of our GDP on rail
infrastructure, which--and I do think it is important for us to
look at those international comparisons. It is far less than
the percentage of the GDP that is spent in China and India.
China spends about 11.7 percent more as a percentage of their
GDP, and India 3.9 percent. The effect of these--this kind of
financial contribution and the lack of it in the United States
has a tremendous ability--a tremendous effect on our ability to
be economically competitive, not just today but for generations
in the future.
And as I look around the room at the former chairs of this
committee, and I think about past Congresses, generations long
before I came here made a decision about the importance of a
Federal commitment to investing in our infrastructure because
we realize that it is that Federal commitment, that national
responsibility, that links this Nation and provides for our
competitiveness, invests in our workforce. And I think that
this committee is shirking our responsibility when it comes to
future generations by not investing in the infrastructure in
the way that we need.
I look forward to hearing, as well, from the panel. And I
regret that I won't be able to stay because of other
commitments, but will certainly look to the record as to the
projections that will--of the trends that will continue over
the next--course of the next several years for Amtrak to be
able to meet 100 percent of its operating requirements from
revenues, excluding income that is derived from real estate.
These are really important questions.
But I have to tell you, as a taxpayer, as a passenger, as a
customer, I am OK with putting a little bit extra in to make
sure that we have an infrastructure that is competitive. I am
OK with putting a little extra in so that we have a workforce
that is paid a decent wage so that they continue to show up
every day and are able to take care of their families. I am OK
with investing in corridors around this country that are not as
competitive as the Northeast Corridor is, even though I don't
live there. Those are collective responsibilities, and it is
time for this Congress to honor those. Thank you. And I yield.
Mr. Mica. Thank the gentlelady. Pleased to yield now to the
chair of the rail subcommittee, distinguished Member from
Pennsylvania, Mr. Shuster.
Mr. Shuster. Thank you, Mr. Chairman. And I think there are
more people in here from the Ninth Congressional District than
I have ever seen before. So I want to welcome all the railroad
workers and retirees that--hopefully they are wearing that PA-9
proudly. So glad to have you here today.
And once again, to explore and examine ways for us to
improve Amtrak. I think I have made it pretty clear over the
past 2 years or so that--what my views are on passenger rail in
this country. And I believe that we need passenger rail in this
country. But I also believe strongly that we've got to find
ways to reform it.
Now, my guess is that most of you guys out there--guys and
gals that are from the Ninth District--are either working or
retired railroad workers. And my guess is probably most of you
work in the freight rail industry. And from the looks of some
of the gray hair out there, most of you were around in the
1980s, when we reformed freight rail in this country. We saved
freight rail. And, in fact, freight rail in this country is the
envy of the world. We--our Federal Government does not have to
put money into those freight rail operations. They do it
themselves. They put massive investment back in there.
And so, the lesson we can learn--I am not sitting here
saying that we can turn passenger rail and make it as
profitable as the freight rails are, but I certainly think we
can do better. I believe that we can do better. We got to put
some reforms in place, because we need a strong passenger rail
in this country. And again, if we do those reforms, we do those
tough things--and it is going to take labor, management, and
Congress, all of us sitting down and figuring out a way to move
forward so that we have a strong passenger rail system in this
country.
When you look at the reforms that have occurred in Europe,
there are some lines over in Europe that have doubled and
tripled. We see in Pennsylvania the Keystone Corridor. With
investment and with reforms, we can have the same kind of
success, I believe, that the Keystone Corridor from Harrisburg
from Philadelphia--and what does that mean? That means more
ridership. And if there is more ridership and there is more
trains, that means more trains to be fixed. That means there is
more passengers have to be taken care of. That means, I
believe, more jobs. And over the last 15 to 20 years, Amtrak
has gone from 29,000 workers to 19,000 workers. And if we keep
doing the same things, I think it is going to become--there are
going to be less and less.
So, the time for us to look at it is now. And it should be
driven by the fact that the population of the United States of
America is going to go from--we just--it took us 65 years to go
from 200 million people to 300 million people, and we crossed
that line in 2005, I believe. It is going to take us from
2005--already 2012--about another 25 years we are going to go
from 300 million to 400 million people. And everybody is not
moving to Florida and Arizona. When you look at the Northeast
Corridor and the populated corridors around the country, the
population gets more dense, which--and we can't--look at I-95
through the Corridor; you can't add more lanes there. You got
to figure out ways to transport people.
And the Northeast Corridor, as the chairman and I have
worked on, is trying to take a new approach to how do we do
that. Bring the private sector in. And so many times my
colleagues on the other side of the aisle make the argument
that, you know, ``Look what Europe has done.'' I mean look what
Europe has done. Look what they are doing today. They are
adding competition to passenger rail. In fact, by 2014, the
entire passenger rail system in Europe and the European Union,
there is going to be competition on the lines. And so, what
they believe is going to happen is better customer service,
prices will be competitive, and that is going to drive more
people to use the rail lines.
So, I think that reform is a good thing. And I hope, as we
move forward, we can all sit down--it is not going to be easy,
because when you have something that doesn't work very well,
and you have to correct it, sometimes you have to have the
castor oil. The medicine sometimes is a little bit bitter. But
in the end of the day, it makes the patient better. And I think
that is where we are, and that is what we have to do.
And, as I said, the passenger rail is something we need to
grow in this country. But we need to grow with a new way of
looking at it with these reforms. Some of these reforms, all of
these reforms that we are talking about I think do that. I know
Mr. Boardman has taken some steps at Amtrak and some positive
things, but I don't think it is enough. I think we have to go
further, and I think we have to, again, make sure if we are
going to use taxpayer dollars--which we probably always will
have a portion of taxpayer dollars--we got to make sure we are
good stewards of the taxpayers' money, making sure we are doing
the right thing.
So, again, I want to welcome our witnesses here today, and
also the folks from the Ninth Congressional District. And
again, Mr. Chairman, thanks for having this hearing.
Mr. Mica. I thank the gentleman. Others seek recognition?
Mr. Cohen, you are recognized, the gentleman from Tennessee.
Mr. Cohen. Thank you, Mr. Chairman. I appreciate the
opportunity to address Amtrak and the issues that we have
before us. I am a big fan of Amtrak's. I am a big fan of
passenger rail service. Partly, I think it has to do with my
age. One of my first memories was traveling on the City of New
Orleans and the Panama Limited to Chicago. And it was a great
memory, traveling with my parents to Chicago. And I have done
it since then many times.
I also travel frequently to New York from Washington, and
vice versa, and get great service, and appreciate that service.
And the other thing is, beside just the memories of the
nice service that I had in the past, and the opportunities I
have today in the Northeast Corridor, is the fact that Memphis
is a transportation center. And we have a hub airport which has
been decreased in its opportunities to serve our community
since the merger of Delta and Northwest. As a result of that,
airfares are higher in Memphis than almost any other city in
the country. Mid-cities' hubs have been decreased and fares
have gone up. And the public is very concerned about the
expense. Many drive to Little Rock to get on Southwest Airlines
and/or Nashville to do the same.
I believe in the future, as we have seen airlines
consolidate, that we are going to see prices continue to go up
and make it more and more difficult for the middle class that
continues to be squeezed and eliminated in American society as
a valued part of our country, that people will not be able to
afford air traffic, and they are going to need rail traffic
more and more in the future. And while it takes a lot more
time, it is economically convenient and necessary to have
competition to air.
There are a lot of people in my community can't afford air
travel, and they take the train to New Orleans, or they take
the train to Chicago. We would like to have train service out
of Memphis to go to Nashville and to Little Rock. And in the
long range plans, there is a study on traffic from Memphis to
Little Rock to connect with Texas. I think the future in
America is going to be more rail, not less rail.
And rail keeps--particularly in the Northeast Corridor,
where it is profitable--keeps energy costs in line because we
are not having to have all those cars on the road that are
buying their gasoline from Middle Eastern or Venezuelan--or
wherever--sources, which is one of the great problems we have
as a future of oil, the expense of oil, the expense of a
defense industry that is set up to protect those oil routes.
And the more we can do to get away from reliance on gasoline,
the better off we are.
So, when you look at Amtrak simply on its cost, you have to
factor in--or you should factor in--how much we are not having
to put in to defense costs defending the Strait of Hormuz,
because we don't need gasoline to move those trains. And if we
didn't have those trains, and everybody was driving from New
York to Washington, or Memphis to New Orleans, or wherever,
there would be more and more concerns about the Strait of
Hormuz and other areas where we have troops to protect those
routes to get that oil from the Middle East, and more and more
lives lost over wars which have been fought over oil.
So I like Amtrak. I think it has a great future in our
country. We don't do as much as the European countries and the
Chinese do to keep it afloat and to put government monies into
it. It is an efficient, clean energy that otherwise would have
people in the roads. You couldn't get from New York to
Washington if the trains didn't run. The highways would be that
clogged. And it would hurt commerce, but it would also
contribute more to pollution, more to global warming, and more
to defense costs to protect those oil routes. Amtrak is the key
to our future, and competition with the airline industry as
well.
So, I thank you. I don't question the fact that there
aren't possibly ways to save money. And I saw where Amtrak
agreed with the food and beverage, to look into ways to make it
more cost efficient. Sure, there can be more cost efficiencies.
But it--when it is subsidized, it still does a public good, and
that is why we do it, because it is important that we have a
good rail system in our country and in the future we are going
to depend on it more and more.
So, I thank you for what you provide, the service you
provide. I certainly look forward to continuing--I hope one day
I can go from Memphis to Nashville or Memphis to Little Rock.
And I think that a lot of people in this country would really
benefit taking a train trip across the country with their
children. Talk about family values. You get close when you
learn about America on the rails, and you get to share that
time with your children.
I thank the chairman for the time. I thank Amtrak for the
service. And I--in the proverbial congressional spirit of being
out of time, yield back the balance of my time.
Mr. Mica. Thank the gentleman from Tennessee. Others seek
recognition? Mr. Altmire, you OK? OK.
I think all the Members have been heard, and thank them for
their input. We will now turn to our witnesses. And I will
announce once again that we will be doing at least three more
hearings during the session after the election. It is called a
lame duck session. I invite everyone to participate. We will
probably end on a hearing regarding the Northeast Corridor.
When I became chairman during the beginning of this
Congress, the very first hearing I held was a field hearing in
New York City, at Grand Central Station, about the Northeast
Corridor. And that was--that will be almost 2 years past. Very
last hearing we will be doing during this Congress will also be
on rail. So I am very committed to dramatically reforming
passenger rail service, increasing dramatically the
opportunities for employment, making certain that the--those
who work in the industry get even better wages and treatment,
and more stable management. And finally, that we do expand
passenger rail service with a national network in the United
States of America, and that we actually have high-speed rail in
the United States in my lifetime. And that may not be that much
longer.
So, with that, let me recognize our witnesses. Mr.
Boardman, who is the president of Amtrak. Welcome back, and I
thank you. You are actually the inspiration for these hearings,
Mr. Boardman. You said that, in this Progressive Railroading
article, ``We want to run this company more as a business and
less as a Government entity.'' And that is part of my
inspiration for these continuing series of hearings that we
will continue to do. And they are all based on the contents of
what you and your associates, Mr. McHugh and your vice
president of operations and others who are quoted in this
article.
So then we have got also the distinguished inspector
general of the Amtrak office, Ted Alves. And then we have the
president and CEO of American Bus Association, Mr. Peter
Pantuso. And we are pleased to welcome Mr. Randal O'Toole, a
senior fellow from the Cato Institute. And then back, returning
for another witness performance is Mr. Ross Capon, who is the
president and chief executive officer of the National
Association of Railroad Passengers, and strong advocate for
railroad passengers.
Welcome to all of our witnesses today. If you have long
statements that you would like to be made part of the record,
you can do that. We would like you to try to summarize. Then we
can have our discussion.
Also, in fairness, since this is a Majority report being
presented today, I will also ask unanimous consent that we
leave the record open for 30 days for the Minority, the
Democrat side, to present their views on the report.
[No response.]
Mr. Mica. And without objection, so ordered. So everyone
will have an opportunity for input, both the witnesses, the
other Members that are here, and others who wish to comment,
and the Democrat side of the aisle, to contribute to the
report.
So, with that, and without further ado--and you can tell
there is a great deal of interest, Members have come and gone,
but everyone has strong opinions on this--we are pleased to
welcome the long-suffering, hard-working, ever-devoted-to-
Amtrak president, Mr. Boardman. Welcome, sir. And you are
recognized.

TESTIMONY OF JOSEPH H. BOARDMAN, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, AMTRAK; TED ALVES, INSPECTOR GENERAL, AMTRAK OFFICE OF
INSPECTOR GENERAL; PETER J. PANTUSO, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, AMERICAN BUS ASSOCIATION; RANDAL O'TOOLE,
SENIOR FELLOW, CATO INSTITUTE; ROSS B. CAPON, PRESIDENT AND
CHIEF EXECUTIVE OFFICER, NATIONAL ASSOCIATION OF RAILROAD
PASSENGERS

Mr. Boardman. Thank you, Mr. Chairman. And now I know I am
to blame, as well. I thought it was Rocky, since it was, you
know--this would be Rocky III, there is IV, there is V, there
is VI here. But I understand. Thank you for having me here
today.
Last year, Amtrak actually--and I got my own prop today; I
saw your ticket up on the wall, and I thought, gee, you know, I
got a ticket, too, a ticket to ride--and last year Amtrak
recovered 79 percent of its operating costs from fare box
revenues. That is really better than any other passenger
railroad in the United States. When you include the real estate
and contract commuter revenues, Amtrak covers 85 percent of its
operating costs.
Federal taxpayers pay just 15 percent of every dollar that
Amtrak spends on its operations. And our Federal operating
grant in fiscal year 2012 was $466 million. That works out to
$1.48 per American. Less than a small cup of coffee at the
Starbucks over in Washington Union Station. And the longest
line at Union Station these days isn't for Starbucks, but
rather to board our trains.
Amtrak ridership has grown more than 44 percent since 2000.
That is a major reason for our inflation-adjusted operating
need, which is half of what it was in 2004. We set annual
ridership records in 8 of the last 9 years, and monthly records
in 11 of the last 12 months. And we will do both again in 2
weeks. We halved our debt over the last 10 years from nearly $4
billion to $1.6 billion. On-time performance has improved on
all of our business lines, increasing to over 88 percent on the
Northeast Corridor during the first 11 months of fiscal year
2012, despite all the track work and bridge replacements that
we are doing to bring the Corridor to a state of good repair.
We have achieved these accomplishments, even though
passenger rail is only a tiny portion of the Federal budget. In
the past 4 years, the Federal Government has appropriated $53.3
billion from the General Fund of the treasury to bail out the
Highway Trust Fund. That is 30 percent more than the total
Federal expenditure on Amtrak since 1971. Revenue generated
from highway users accounted for only 45 or 46 percent of total
funding available for highways in 2010. The rest came from
taxpayers.
Amtrak has significantly improved financial performance,
while meeting the statutory obligation to operate a national
rail passenger transportation system. None of our 15 long-
distance train routes covers its operating costs. But long-
distance trains are heavily utilized. Their ridership grew over
18 percent from fiscal year 2007 to 2011, and they accounted
for 43 percent of our passenger miles in fiscal year 2011. They
provide the only intercity passenger rail service on half of
our system.
Most importantly, our long-distance trains are increasingly
the only public transportation option for many who ride them.
The Chinatown and other curbside buses are now prevalent
between Washington and New York, providing service that is
cheaper than our trains, but it is much slower and subject to
traffic delays. Our ridership between Washington and New York
has continued to grow since curbside buses entered the market,
and even grew more as the buses entered Union Station. But you
won't see a curbside bus, or increasingly, any bus in the small
and mid-sized communities served by our long-distance trains.
And we think that needs to change. And I talked a little bit to
Peter about that before the hearing, where we can work better
together in that area.
While intercity bus service is increasing in a few major
city markets, it has declined precipitously elsewhere. Bus
operators and airlines are cutting service to smaller cities
and rural communities because services lose money. According to
the BTS, the number of Americans who no longer have access to
intercity bus or air service, and are served only by Amtrak,
tripled in just 5 years.
We also hear a lot about privatization of passenger rail
services in other countries. In a number of countries,
including the United States, many commuter and local rail
services are operated for profit by multinational companies
that receive government subsidies. Only two major countries,
Japan and Great Britain, have privatized intercity passenger
rail to any significant extent.
Japan privatized its services after the government-funded
construction of the country's major high-speed rail lines. It
also provided a huge one-time infusion of funding to subsidize
future losses from unprofitable services, and continues to fund
construction of new high-speed rail lines.
In Great Britain, privatization actually increased public
funding needs. Government expenditure on passenger rail rose
from less than $3 billion in 1993/1994, the year privatization
began in Britain, to over $7.4 billion in 2010/2011. The share
of the railway system's costs, operating and capital, paid by
the British public rose from 40 percent to 50 percent. No
country has succeeded in constructing initial high-speed rail
systems primarily or exclusively with private funding. Great
Britain and Taiwan had to take over, at huge public expense,
the private entities created to develop their initial high-
speed rail lines.
Finally, I want to emphasize that Amtrak is not satisfied
with our recent accomplishments. Rather, we aim to do much
better. We have begun implementing our strategic plan by
expanding our Safe-2-Safer initiative, restructuring our
operating departments by business line to improve our bottom
line and enhance customer focus. We are adopting strategic
management techniques used by the Nation's largest and most
successful companies. We have ordered 70 new electric
locomotives for the Northeast Corridor and 130 long-distance
single-level cars to replace equipment that is more than 50
years old, some more than 60 years old.
We have successfully rolled out our nationwide eTicketing
program, replacing 19th-century railway processes with
innovative mobile technology that won an award from CIO
magazine. We now offer WiFi on most of our trains. Federal
expenditure on Amtrak during the last 41 years pales next to
what virtually every one of our European and Asian competitors
has spent on passenger rail. But Amtrak has provided a high
return on limited Federal investment we have received. Our aim
is to continue to do that in the years ahead. Thank you.
Mr. Shuster. [presiding.] Thank you, Mr. Boardman.
Mr. Alves, you may proceed.
Mr. Alves. Good morning, Chairman Mica, Ranking Member
Rahall, subcommittee Chairman Shuster, and members of the
committee. Thank you for the opportunity to discuss how
improvements in the efficiency and effectiveness of Amtrak's
operations can lead to financial benefits and reduce Amtrak's
reliance on Federal subsidies. I will address three issues
today: first, Amtrak's initiatives to improves its operations;
second, opportunities we have identified where Amtrak can build
on those initiatives; and third, work we are doing to identify
additional improvement opportunities.
Today Amtrak is very focused on improving its operations.
It has issued a strategic plan with specific goals, metrics,
and strategies to guide improvement efforts. It is also taking
action to hold people accountable for results, integrate
operating departments within geographic regions, realign along
new business lines, and develop a system to focus resources on
achieving strategic goals. We support these initiatives, but
note that, to be successful, Amtrak will need to sustain them
over the long term, and implement them effectively.
Our recent work shows that successfully implementing these
initiatives has the potential to yield significant operational
improvements. For example:
--We recently reported that multiple employees
defrauded Amtrak by being paid for hours not worked,
and committed other serious abuses. We also noted a
pervasive lack of supervision by responsible union and
management officials. Losses from this one case could
be over $100,000. Amtrak acted quickly and aggressively
to discipline the involved employees.
--Significant opportunities also exist to improve
management controls over food and beverage operations.
We conservatively estimated that $4 million to $7
million of onboard food and beverage sales could be at
risk of theft because of inadequate management
controls. In responding to our recommendations, Amtrak
has established a loss prevention unit and a chief
customer service position, which will have
accountability for improving the program.
--Lastly, over the years we have identified more than
$83 million in overpayments to host railroads. These
errors went undetected because Amtrak did not have
adequate management controls for its invoice review
process. Over the last 2 years, Amtrak has established
an invoice review process that should help to avoid
future overpayments.
An underlying cause of each of these deficiencies is a
breakdown in management controls. A sound system of controls,
including well-defined and applied policies and processes, is
critical to efficient and effective business operations.
In that regard, earlier this year we reported that Amtrak
does not have an enterprisewide framework to manage risk.
Central to such a framework is a strong management control
system. We recommended that Amtrak ultimately implement a risk
management framework for the entire company, but focus
initially on its strategic goal to improve financial
performance. The company is in the process of considering how
it would implement such a system.
Turning to our future work plans, key issues we plan to
address include:
--Reviewing how Amtrak manages its capital investment
projects. Effective management of capital projects is
critical, given that Amtrak spent almost $1.7 billion
on capital investments in 2011,
--Completing a series of forensic audits in the
acquisition and procurement area. This work is designed
to identify opportunities to reduce losses to causes
such as duplicate payments, and
--Reviewing the adequacy of contract management for two
multiyear procurements valued at over $800 million.
In closing, we believe the keys to improving Amtrak's
operations and reducing reliance on Federal support are
sustaining and fully implementing its ongoing strategic
initiatives, and continuing to develop and implement new
initiatives, including a risk management framework.
Mr. Chairman, this concludes my statement, and I will be
happy to respond to any questions that you or other Members may
have.
Mr. Mica. [presiding.] I thank the inspector general. And
we will get back to you and Mr. Boardman and others. We will go
through all the panelists first.
Let me recognize Mr. Peter Pantuso, president and CEO of
the American Bus Association. Welcome, and you are recognized.
Mr. Pantuso. Thank you, Chairman Mica and members of the
committee. Thank you very much for allowing us to testify this
morning.
All segments of the private bus industry provided nearly
700 million passenger trips in 2010. It is a number comparable
to domestic airlines and many times more than those provided by
Amtrak. And ABA's 800 members provided approximately 60 percent
of those trips. Our industry offers quality, efficient, safe,
and cost-effective transportation.
According to a paper presented in 2011 at the
Transportation Research Board, curbside and intercity bus
travel has more than doubled in the Northeast Corridor in the
last couple of years. Growth across America has been
remarkable. Greyhound's annual passenger volume is now over 20
million passengers, and Megabus, a relative newcomer to the
industry, moves 8 million passengers a year. These two carriers
alone provide nearly as many passengers as Amtrak does in their
record year.
In addition, the bus industry creates a huge economic
benefit of $112 billion. That includes 1 million jobs
throughout the transportation, travel, and tourism industries.
Private buses are also the most fuel-efficient and carbon-
efficient mode of mass transportation. These services are
provided by an industry made up mostly of small business men
and women that receive virtually no or little subsidy.
The cost efficiency of bus travel is well documented. A
round-trip ticket from DC to New York, for example, by bus,
will cost somewhere between $36 and $58, or if you are lucky,
you can do it for as little as $2, when the current Amtrak
schedule prices the same round-trip fare between $98 and $300.
And there is really only a modest difference in time between
the regular train service and bus service.
The American public is hungry for more transportation
options, as evidenced in a study released just last week by the
Natural Resources Defense Council. The NRDC found that three
out of four Americans are frustrated with their lack of
transportation options. A major barrier to offering real
transportation choice is a combination of an uneven playing
field and modal stovepipe funding.
The private bus industry's advantages in cost,
efficiencies, and flexibility argue for complete inclusion of
intercity bus transportation and the intercity transportation
system. If it is Congress' decision that there should be some
areas where transportation needs to be subsidized, we propose a
different paradigm. A subsidy should be limited. Transportation
service must move to a point of operational efficiency,
including all current and future costs.
One example that works very well is Boston Express. They
provide bus service between Manchester, New Hampshire, and
Boston South Station. Twenty-seven trips take place a day,
round trips, and Boston Express has carried over 2 million
passengers in only 4 years, while achieving a 94-percent fare
box recovery. New Hampshire had a choice of bus or rail. They
chose intercity bus.
Where population density does not warrant massive capital
investment required for rail operations, buses should be
considered as the primary intercity option. States should be
given funding flexibility to determine how best to serve the
needs of their traveling public. This is not unlike what we
have proposed in the essential air service: Give communities
the option to provide the most cost-effective and most frequent
service in a given corridor. Once the corridor has been fully
developed, then consider other options, whether they are more
costly or not.
Transportation facilities should be multimodal. Now, it is
not that Amtrak doesn't serve a vital part of the Nation's
transportation system, but there also should be room for other
modes.
As I mentioned earlier, intercity bus provided nearly 700
million passenger trips, serving more communities with more
schedules, costing less money, using little or no subsidies,
and, in some cases, more amenities than our national intercity
rail or airlines. Imagine what this industry could do if the
barriers to competition were removed, or if States were given
more flexibility in using their transportation dollars.
In closing, Mr. Chairman, let me also suggest that, while
it may appear that ABA and Amtrak are on different pages, we
very much serve the same customer. We very much have the same
goal of getting people out of cars. The automobile is the
competition for the bus and the train. They are not in
competition with one another. And, as Mr. Boardman pointed out
earlier, we actually work quite well together in many
corridors. And he also reminded me that he is one of our
largest bus customers, spending more than $20 million a year in
bus services.
I thank you and the committee for your time, and I am
certainly happy to answer questions.
Mr. Mica. Thank you, and we will defer. Let's hear from Mr.
Randal O'Toole, senior fellow with the Cato Institute.
Welcome, sir, and you are recognized.
Mr. O'Toole. Thank you, Mr. Chairman and members of the
committee, for inviting me to speak today. I have been in love
with passenger trains ever since I was 5 years old and rode my
first passenger train, which was the Great Northern Western
Star, from Grand Forks, North Dakota, to Portland, Oregon. I
have literally been obsessed with passenger trains ever since.
But I don't happen to think that other people should have to
subsidize my particular preferences or hobbies.
When Amtrak was created by Congress in 1970, I was young
and naive enough to believe that a national rail transportation
system could be operated efficiently, and could provide
attractive service. Unfortunately, Amtrak has proven me wrong.
At that time, in 1970, rail fares averaged about two-thirds per
passenger mile as much as air fares. And so rail was the lower
cost option. Since then, Amtrak has made rail into the high-
cost option in almost any corridor and almost any route. Today,
Amtrak rail fares are more than twice as much as airfares per
passenger mile. Amtrak has--rail fares have increased since
then, in terms of inflation-adjusted money, whereas airline
fares have declined.
And so, Amtrak is not competitive in lots and lots of
different routes. It is not hard to look up online routes such
as Portland to Oakland, Oakland to New York, Chicago to
Detroit, Chicago to Minneapolis, where air fares are lower than
Amtrak fares. And, of course, the airlines operate more
frequently and faster. Buses, too, are far more efficient than
Amtrak. The fares are far lower than Amtrak. And there is
numerous routes across the country where buses are more
frequent and faster than Amtrak, as well as being less costly.
It is not just the fares, though. We also have to count the
subsidies. And people like to say that all forms of
transportation are subsidized. But the subsidies are hardly
equal. According to the Bureau of Transportation statistics,
subsidies to the airlines, which are mostly at the Federal
level, average about $.02 a passenger mile. Subsidies to
highways, which are mostly at the local level, average about
$.01 a passenger mile. By comparison, subsidies to Amtrak
average between $.25 and $.30 a passenger mile, and have done
so consistently, in terms of inflation-adjusted dollars, since
1975.
So, we have Amtrak fares averaging $.30 a passenger mile,
compared to about $.13 for airlines, Amtrak subsidies averaging
$.30 a passenger mile, compared to about $.02 for airlines,
$.02 or $.03 for airlines. The total result is that Amtrak
costs four times as much as airlines, eight times as much as
buses, and roughly four times as much as driving. This means
that Amtrak is completely uncompetitive, compared to other
systems.
Now, Amtrak will tell you that most of those subsidies go
for capital improvements, and shouldn't be counted against a
year-to-year operating revenues. But that is not true. In fact,
much, if not most, of what Amtrak calls capital improvements is
not a capital improvement. It is maintenance. Replacing a 50-
year-old train car, replacing a worn out locomotive, replacing
a dilapidated bridge or other infrastructure is maintenance. It
is just as much maintenance as replacing the spark plugs on
your car or replacing the furnace filters on your home. It is
not a capital improvement. There are some capital improvements
in Amtrak's budget. But much, if not most, of what they call
capital improvements is maintenance.
Now, with the high cost of Amtrak, it is no surprise that
Amtrak is essentially an insignificant player in the national
travel market. While people say they want to keep Amtrak going,
they hardly ever use it. Nationally, Americans, before the
recession began, traveled almost 20,000 miles per year per
capita. About 2,000 miles of that was by air, about 15,000
miles of that was by automobile. About 19 miles was by Amtrak,
one-tenth of 1 percent. The average American rode Amtrak 19
miles.
Now, since then, Amtrak has increased its ridership, and
per capita ridership has gone all the way from 19 miles to 21
miles. That is still less than it was in 1990, when it was 24
miles. But that 21 miles, or even 24 miles, just does not sound
significant compared to the 1,850 miles the average American
flies, or the 14,000 miles that the average American travels by
car today.
Because Amtrak carries so few people, the savings in
energy, the savings on air pollution, and the savings on other
things that Amtrak provides are totally insignificant. And, in
fact, they are diminishing. Airlines and driving is becoming
energy efficient far faster than Amtrak. By 2030, Amtrak will
be the brown form of travel. It will be the form of travel that
consumes the most energy per passenger mile, and emits the most
pollution per passenger mile.
Now, what should be done about Amtrak? Does Amtrak have the
problems it has because it is--passenger trains are an obsolete
form of travel? Or does it have these problems because
Government is an inefficient manager of any mode of
transportation? I think the answer is some of each.
And I don't think the answer to the problem is going to be
to contract out or otherwise try to reform Amtrak. Contracting
out can save money. The city of Denver--the State of Colorado
requires that Denver's regional transit district contracts out
half of all of its bus service, and operates only half of it
with in-house. The half that is contracted out to private
operators, private operators pay comparable wages to the
regional transit district. Some of them are even unionized. And
yet they charge taxpayers only 55 percent as much per bus
vehicle mile as the regional transit district spends on its own
buses. So that saves money. And yet, contracting out still
leaves Amtrak's major problem, which is that routes will be
determined politically, and not based on demand or economics.
I think the real solution, ultimately, is going to be
privatization. And if we privatize we might lose a few trains.
We are probably going to lose the Sunset Limited. It is just
not an efficient train. But there are other places where
private operators will come in and make a big change. When
Canada ended service between Calgary and Vancouver, a private
operator came in. It has been operating profitably ever since.
They now have four different routes, and they have begun
operating service down to Seattle, Washington.
I think if we had private operations, we would start seeing
private operators--cruise trains, if you want, in the West,
business trains in major corridors in the east--continue to
operate passenger trains without subsidies. And I think this
should be done in the context of a broader effort to end
Federal, State, and local subsidies to all forms of
transportation.
Thank you very much.
Mr. Mica. Thank you. Very interesting testimony.
And we will turn now to Mr. Capon, who is the president and
chief executive officer of the National Association of Railroad
Passengers.
Welcome, and you are recognized.
Mr. Capon. Thank you very much, Mr. Chairman. We have
strongly supported--and I would ask that my full statement----
Mr. Mica. Without objection, all--any statements,
additional information or data, will be made part of the record
from all of our witnesses. Proceed.
Mr. Capon. Thank you. We have strongly supported the
Federal Government's investment in Amtrak. We think the
investment has been worthwhile and brought important benefits
to the Nation, including both to passengers and others. We
think it looks smarter today than it did 20 years ago, and will
probably look smarter still 20 years hence.
Amtrak fares are not ``completely uncompetitive.'' The
ridership keeps rising, which is one indication that the public
wants it. Part of the reason the ridership is going up is
gasoline prices are also going up. And part of the reason is
that young people are more interested in being connected than
they are in driving, compared with 10 years ago. And the senior
population is growing, which increases the need for all forms
of alternatives to driving.
As has previously been suggested in the opposite context,
Amtrak has not been giving away the store; the fares have been
rising. But you can get a very misleading impression by looking
at national statistics, systemwide statistics, on Amtrak
because the fares are very competitive in most markets. The
Acela fares, as you know, are very high because the market
there is dominated by business travelers who are willing to pay
a lot in congested markets. And so, the result is that Amtrak
is really a series of systems. And giving a single average fare
for nationwide Amtrak is very misleading.
I have a long list in my testimony of benefits that Amtrak
provides, both for the riders and for others, including bus
companies, as Mr. Pantuso noted. Amtrak and the bus companies
work very well on many fronts. Just on July 31st, the Oak Ridge
National Laboratory report, ``Transportation Energy Data
Book,'' came out showing actual energy consumption by mode.
This shows that in the most recent year they have covered,
which is 2010, Amtrak improved relative to trucks, automobiles,
and aviation. Amtrak is 41 percent more energy efficient than
personal trucks, 34 percent more efficient than automobiles, 17
percent more efficient than domestic commercial aviation. They
don't have the data for intercity buses, so they don't include
it. But I would emphasize that those numbers are not
theoretical ideas about what could happen if the train was
full; those numbers are based on actual energy consumed and
actual passengers traveled.
There has been a lot of criticism about the long-distance
trains that is evidently based on the theory that most of the
people are riding from one end of the route to the other. On
page three of my written statement I show that, for example, on
the Southwest Chief 35 percent of trips are over 1,000 miles,
34 percent of trips are 501 to 999 miles and only 8 percent of
the passengers are riding all the way from Chicago to Los
Angeles. I think there is a similar pattern on the Sunset
Limited. It is not about New Orleans to Los Angeles. But I did
look at the fare yesterday. And the coach fare on the Sunset
Limited is actually somewhat lower than Greyhound.
I think that I will agree with Mr. O'Toole on one point,
and that is that subsidy per--or the cost per passenger mile is
a more accurate measure than cost per passenger. To a large
extent, when we rank Amtrak routes by loss per passenger, we
are simply really ranking them by the length of route. The
Southwest Chief, which you had cited critically, actually in
terms of a subsidy per passenger mile, is slightly lower than
the average--it is one of the stronger routes.
I need to talk about food service. Mr. Crosbie, in 2005,
before this subcommittee testified--he was the Amtrak vice
president of operations--that the primary purpose of onboard
food service is to enhance ticket sales and ridership, not
serve as a profit center. In 1981, when Congress passed the
break-even mandate, committee reports urged Amtrak to attribute
up to 10 percent of ticket revenues to food service for
purposes of determining compliance with that provision. And I
believe Amtrak has calculated that they are breaking even, even
if just 5 percent of ticket revenues are attributed to food
service. The point being that if there is no food service, a
lot of the revenue--a lot of the ticket revenue--is going to
disappear, because people won't ride the train.
We feel that a lot of the investment in Amtrak is
investment and not a subsidy. I won't repeat--I think Mr.
DeFazio made the point about the number of riders that Amtrak
handles when you take into account the infrastructure that
Amtrak owns.
We believe that the mode-specific trust fund itself
constitutes a huge subsidy, because it directs investment into
modes based on their current dominance, rather than on their
usefulness in solving problems our children and grandchildren
will face. In most other countries, fuel taxes are higher and
go into the General Fund. In most other countries, the tracks
are owned by the government, which is free to assign them to
private operators. In this country, most of the tracks that
Amtrak uses are owned by private railroads that are not
interested, in most cases, in having other companies--whose
stability they are not sure of--use their tracks.
I think Amtrak should be given credit for a couple of
innovations that certainly improve the bottom line. One is the
fact that when the Web was developed, they were very early--I
think Amtrak was selling tickets on the Web before most
airlines. And Amtrak has, in spite of the intense complexity of
its system, because of the number of intermediate stops that
trains make, it now has eTicketing on a nationwide basis. I
have actually had to use Amtrak in the past couple of months on
a couple of trips, and eTickets are much more efficient for the
passenger, because you no longer have to figure out where can I
get to the station to buy the ticket, or where is there a Quik-
Trak machine. You just make the purchase online, and Amtrak
immediately sends you an eTicket, which makes travel much
easier.
I think I will leave it at that. Thank you very much for
your attention. And I know you will read every word of my
written statement.
Mr. Mica. Well, thank you. And thank you for appearing
again before the committee, and all of our witnesses, for their
contributions today.
And we will start questioning, and I will take the first
round. Again, Mr. Boardman, I said I was inspired by some of
your comments, particularly the one that said, ``We want to run
this company more as a business and less as a Government
entity,'' and I know that has been your goal from the beginning
of your tenure.
And let me just say, too, I think you understand, Mr.
Boardman, that I am fairly conservative, from a fiscal
standpoint. I am a strong supporter, as you know, of passenger
rail. I think we should be having four times as much service
and twice as much employment, and more routes, et cetera, but
they have to make sense.
You are aware that there is a--you know, there was a wave
last time of how many Members that came that were pretty
conservative. And you know after this election--you all do know
that there is another wave coming. And that wave is going to
also be met here by a tsunami which is called the fiscal
financial cliff of the United States of America, where $16
trillion--now, I can't solve the problems for the whole
Government. I will have a very narrow scope of responsibility
within the jurisdiction of this committee.
So, my goal is to see how we can expand service for
passenger rail, how we can do it with less subsidization. I
think that is your goal, too, is it not? I think you cited
that. Is that your goal, Mr. Boardman?
Mr. Boardman. [Nodding.]
Mr. Mica. Yes. OK. So that--I think we have a similar
purpose and goal, as strong advocates in passenger rail.
Mr. Capon, you spoke of the benefits as far as energy and
efficiency. And certainly rail--I will be glad to give the
statistics that--I have been trying to put a commuter rail line
in since December of 1992 in central Florida, and fighting
sometimes Neanderthal thinking that people don't understand,
even who are fiscal conservatives, that rail can be very, very
cost effective, energy efficient, as far as emissions, for the
atmosphere. And also, it has a difference between bus and other
modes, because the buses are still stuck in traffic. I mean,
again, it is a great option. But we do have to look at
efficiencies and how we can bring costs down.
My point is, too, that if you think I am tough on Amtrak,
there is another group coming in January. And you ain't seen
nothing yet as far as, again, the steps they are going to have
to take to get the country's finances in order. And every
agency and activity financed by the Government is going to face
similar scrutiny.
So, my intent, from the first hearing, was to dramatically
increase the timeframe that we have for putting in high-speed
rail, put it in the Northeast Corridor, where we own that line,
as--Mr. Boardman, isn't that the only corridor that we own that
is conducive to high-speed rail? Is that correct?
Mr. Boardman. [Nodding.]
Mr. Mica. Just answer----
Mr. Boardman. Oh. Yes.
Mr. Mica. ``Yes,'' OK. And we should have 10 times the
service, 10 times the passengers, and the whole country
benefits by that, folks. So, if you want to come out and try to
keep the status quo and keep things going as they are, I think
you are undoing yourself and what you propose to support.
So, that is the purpose of the hearing. And Mr. Boardman is
doing his best to bring in efficiencies. We bring in the
inspector general. We task him at looking at where there is
waste and inefficiency in this agency. And we have inspector
generals for almost every other activity. He has pointed out
today that we have a lack of management.
Mr. Alves, did you not say that the primary shortcoming
with some of these losses is lack of management?
Mr. Alves. The underlying problem----
Mr. Mica. Management controls.
Mr. Alves. Management controls, yes, the underlying----
Mr. Mica. Right, OK.
Mr. Alves. Go ahead.
Mr. Mica. Yes. And Mr. Boardman--and actually, I recommend
this Progressive Railroading article to folks, because others
are quoted in here--and how he is trying to restructure the
activities so there--it can be run more like a business and get
responsive--positive response from each of the activities.
Capital investments. Now, that concerns me, and I am going
to ask the staff to do some further investigation. And if you
would, work with our staff because--did you say $1.7 billion in
capital investments?
Mr. Alves. Yes. And that includes money from all sources.
Mr. Mica. Stimulus?
Mr. Alves. Yes.
Mr. Mica. And what is also cited. And you see that as--the
oversight and accountability for that as an issue?
Mr. Alves. Yes. That is such a large amount of money, we
want to make sure that there are----
Mr. Mica. That it is properly--and you cited there were
duplicate payments?
Mr. Alves. This is one of the things that we are going to
look for in this forensic analysis.
Mr. Mica. OK. All right. Well--and I also direct our staff
to work with you and look at the same thing. We have
congressional staff and I have investigative staff. We
corroborate and we try not to interfere or duplicate, but we
also want to get the facts where there are losses, and get the
information to Mr. Boardman, so he can make the management
controls that should be instituted, if we have a $1.7 billion
capital program and we have problems there.
The other thing that concerned me is you had mentioned also
continued losses in--I guess there is some cash practices,
either for tickets or for food service. And we still have a
cash system. This was brought up at another hearing. And, Mr.
Boardman, how far are we now from going to a cashless system
for food service or other areas where we have seen losses that
we might be able to avoid?
Mr. Boardman. Mr. Chairman, from 3 weeks ago we haven't
moved.
Mr. Mica. OK. So that is still the same.
Mr. Boardman. It would be--we do have the point of sale
service that we are expanding. And I believe it will be
probably done in the next fiscal year, where that helps us a
lot.
But there are other things that really have to happen. And
I think that the IG has recommended, and I have agreed to, a
pilot program where we could see what the issues would be to
implement that more widely.
Mr. Mica. Well, again, I think, coming from a business
standpoint, I am sure there are vendors out there, if a tender
was put out, that could change the system out relatively
quickly with a modern, state-of-the-art billing, without cash,
and cut our losses. Just a suggestion. Just another area that--
in which I think we can improve our operations and our losses.
The Sunset Limited, Mr. Boardman, it is the--by all
accounts--Mr. O'Toole, and I think everyone had confirmed that
the underwriting and subsidy for the Sunset Limited is the
highest. Anyone disagree with that?
Mr. Boardman. Yes.
Mr. Mica. You do? There is a route that is more subsidized?
Mr. Boardman. Yes.
Mr. Mica. What is it?
Mr. Boardman. It is the Chief.
Mr. Mica. The Chief is worse? The Chief, we get 177, Los
Angeles to Chicago. Money being at loss we have is 375. Again--
but they both are losing money in a significant amount per----
Mr. Boardman. All the routes lose money, significant money,
in the way that it is calculated.
Mr. Mica. And I was quite interested, Mr. O'Toole. You said
that in Canada they had changed out some of those routes and
actually now--did you say they were profitable, some of the
routes that were, say, less traveled but also had potential for
rail crews or--I forget exactly how you phrased it.
Mr. O'Toole. Well, it was a cruise train. I was actually on
the very last run of a Canadian train from--a Government-
subsidized Canadian train from Calgary to Vancouver. And that
was in 1990. And immediately after the government ended that
train, a company sprang up called the Rocky Mountaineer, and
they operate cruise trains from Vancouver to Calgary going
through Banff. And since then they have expanded. They go to
Whistler, they go to Jasper, and they now have trains coming
from Seattle, as well as Vancouver. They operate on private
tracks, Canadian Pacific and Burlington Northern Santa Fe
tracks, and as well as Canadian National. And they apparently
have good relations with the railroads and offer three classes
of service. It is a little expensive, but it gives people great
opportunities to go sightseeing and to enjoy trains at a very
high-quality level.
Mr. Mica. OK. Mr. Boardman, is--would there be any
possibility of looking at some of these routes--and I know we
have--in PRIIA and others--of possibly tendering them out to
see, and maybe looking at a change in the route schedule, as
long as we protected the employees' benefits, salaries, things
of that sort, if an operator would come in and look at
performing them with a lower subsidy or, God forbid, you know,
breaking even or turning a profit? Any thought to that, Mr.
Boardman?
Mr. Boardman. Yes, I have got a couple different thoughts,
Mr. Chairman. One is--and I think Mr. O'Toole identified it--is
the Rocky Mountaineer that he was talking about. Their new
Seattle service will actually be operated by Amtrak.
[Laughter.]
Mr. Boardman. But the real network need that we are dealing
with has to make sure that everything works together and
connects together. And I know you know that.
Mr. Mica. Yes.
Mr. Boardman. But every one of our trains and the character
of the trains is changing constantly. For example, the Empire
Builder today, one of the fastest-growing areas is Williston,
North Dakota, because of the energy boom that has occurred up
there. And we have had to change the way we really operate
that. We also have to improve the security on that. Part of
what no other mode really has a responsibility for that Amtrak
has is to maintain a police and security force. And that is 500
folks at Amtrak to do something like that.
So, a lot of times, when you really look at what the cost
is, and what the subsidies are, it really is an apples-oranges
comparison, much more difficult to start pulling it apart,
piece by piece.
Mr. Mica. Well, you mentioned security. And on the airlines
we have a $2.50 passenger charge for security. You can do three
segments, maximum of $5. Would you think the user should pay
the security cost, which--would that help you with your bottom
line?
Mr. Boardman. Well, I think they do pay--part of what we
really looked at here on the operating--covering 79 percent of
our operating costs really is the passengers are paying a very
large amount. And with that, with some of the folks that----
Mr. Mica. Well, again, my point was on the money-losing
routes that stand out, that have fairly significant--I mean $37
million for Sunset Limited, Southwest Chief--I see where you
are getting your figure. Actually, in net operating loss,
Sunset Chief is the big enchilada. It is $63 million of loss on
that route. But there are many more passengers, 354,000 as
opposed to 99,000. So I see what you are saying.
Mr. Boardman. That train operates 7 days a week, as opposed
to 3.
Mr. Mica. Yes, exactly. But----
Mr. Boardman. OK.
Mr. Mica. But is there any thought to, again, looking at a
different model or operator?
Mr. Boardman. Well, the Congress has regularly told us to--
--
Mr. Mica. Right.
Mr. Boardman [continuing]. Look at these kinds of things.
And they have been looked at. And we still have the obligation
of running the trains.
Mr. Mica. But there is no--have there been active
solicitations for----
Mr. Boardman. No solicitations, no.
Mr. Mica. And you wouldn't consider that, even----
Mr. Boardman. I mean we use----
Mr. Mica. Even with----
Mr. Boardman. We use private contractors----
Mr. Mica. Even with protections that I outlined?
Mr. Boardman. We use private contractors for services, but
not to operate the trains, no.
Mr. Mica. There is a constant diatribe I hear from the
other side, ``Oh, Mica wants to lower wages and all of that.''
And I have never said that. I have always said whatever we did,
if we brought in a private contractor in the Northeast Corridor
to enhance that service, that they would have to guarantee--
actually, I think by most of the contracts they are guaranteed
anyway. Even if we eliminate the route we have provisions for
guarantees that have been written in.
The--just see here. One of the things that I have been
working on--and actually, I am very proud of this, coming at
the end of this congressional session--is next Tuesday morning
at 10:00 they are going to dedicate--or at least a formal
opening--of Union Station. And what we have done there is I
insisted that we have buses, we have intercity transportation,
we have rail and Metro all connect together. They said it
couldn't be done, and we are actually doing it. And I would
thank Assistant Secretary Porcari, who helped when everyone
said it couldn't be done. We are doing it.
Because people will not use mass transit or transit in the
United States if it does not connect. So whether it is in
Miami, where we are doing a--where we have done a $1.7 billion
intermodal center that connects rail, tri-rail, commuter rail,
Metrorail, bus, all forms, rental cars, in a $1.7 billion
state-of-the-art facility, or Union Station, we need to make
certain that we connect. And whether it is a big city in New
York, Washington, or Miami--and I have had the privilege of
representing St. Augustine, Florida, the oldest community in
the United States--we have actually, in our small, intermodal
center, we have--we brought the different modes all together.
Because you cannot have national passenger service without
intermodal connections. Isn't that correct?
And did you say you have 700 million passengers that you
carry?
Mr. Pantuso. That is correct, Mr. Chairman. The bus
industry moves about 700 million passengers annually. And I do
want to thank----
Mr. Mica. You guys make a profit?
Mr. Pantuso. Absolutely, they make a profit.
Mr. Mica. That is unheard of. We want to make sure--Steph,
write that down. This witness has said--because I want to write
it down for Ms. Brown. She always gives me a hard time that we
can't move people and make a profit, but we--and I think we
have got a couple of public systems that actually turn a
profit.
But you were about to compliment me, and I don't want to
interrupt you.
[Laughter.]
Mr. Pantuso. Mr. Chairman, I do want to thank you and, as
you pointed out, Secretary LaHood and Secretary Porcari,
certainly Congresswoman Norton, for the efforts that you made
in getting the bus into Union Station. It is a marvelous
intermodal facility. But for decades you have had to drag your
bags blocks to go down to the Greyhound or, when it existed, to
the Trailways terminal. And we certainly thank you for making
the change to Union Station happen. We think it is a benefit--
it is not only a benefit to the motorcoach industry, it is a
benefit to the train. It is also a benefit, most importantly,
to the passengers, who----
Mr. Mica. Yes, you are the largest surface carrier in the
United States of passengers. And to not have them connect in,
or have this all work together--working on that in central
Florida. I have got a meeting with the Secretary in a week or
two about a connection into an intermodal center in our
commuter rail with bus service. So--and I hope we make that a
requirement in the future of all of our projects that have
Federal funds.
Mr. DeFazio, did you have questions?
Mr. DeFazio. Yes. Thank you, Mr. Chairman. If we go back to
the proposal in H.R. 7, which would mandate outsourcing the
long-distance routes to the lowest bidder, but then would
transfer the operating grants to the lowest bidder, I am
puzzled as to how the taxpayers come out ahead on that one. So
I--can anyone help me with that?
Mr. Boardman. Mr. DeFazio, I don't think they come out
ahead.
Mr. DeFazio. OK.
Mr. Boardman. I think they actually come out behind,
because it will be more expensive to actually coordinate these
routes.
Mr. DeFazio. Right. And then, isn't there a provision in
the contract--now, Mr. Mica said that he proposes that they
would--any Amtrak employees who worked on that route would get
full pay and benefits and go there. But where then does the
lowest bidder--how do they operate more--less expensively, if
they have to pay--if they are going to carry the same pay and
benefits as Amtrak?
Mr. Boardman. I don't think they do. And the bigger
problem, really, is going to be the freight railroads, and what
they say about having anybody additionally operate on that
line, or even if they can.
Mr. DeFazio. Right, because you can't just sign over your
rights to operate on those routes.
Mr. Boardman. That is correct.
Mr. DeFazio. So that would--the new private operator would
have to renegotiate with the big rail carriers who, as I know,
are not really----
Mr. Boardman. We even have----
Mr. DeFazio [continuing]. Enthusiastic about----
Mr. Boardman. We have to do that, as well.
Mr. DeFazio. Yes. So, then I guess I am puzzled as to where
the savings comes. And I guess I don't see there are savings.
Then, secondly, to Mr. O'Toole, the real solution is to end
subsidies for all modes of travel, let people decide which they
prefer, based on their own personal preferences and budgets.
So, you are actually advocating that we not have a Federal
Aviation Authority and we don't control the airspace of the
United States of America, and coordinate safety in traffic? Or
are you just proposing that that would somehow be done by
somebody, not by the Government, and the money would come from
somewhere?
Mr. O'Toole. There are numerous countries around the world
that have privatized their----
Mr. DeFazio. Yes. I am very familiar with that--if I could
interrupt--I have been on aviation 26 years, and it has been
disastrous. They have had to go back in and subsidize the
private companies that took over in Britain, in Canada, and
everywhere else. There is no successful model of operating a
system of any great size more efficiently and contracting it
out. Hasn't worked.
So, we have the largest, most complex, safest system in the
world, and you are saying we are going to contract it out, we
are going to save money, and we will not contribute any Federal
money to it, and the airlines and the passengers will pay for
the whole thing? Is that the proposal?
Mr. O'Toole. I don't see anything wrong with expecting
passengers to pay for their trips. Most of the benefits of
transportation----
Mr. DeFazio. There are no benefits to the greater economy
of the United States of America to have a network of aviation
in this country. There is nothing beyond the people that get on
the planes or the freight--there is no benefit to it, so it
should be paid for solely by the freight airlines and by the
private airlines who would then pass on all the cost to their
customers.
Mr. O'Toole. Most of the benefits of travel goes to people
who are doing the traveling or the shipping. And so they should
be the ones to pay the cost. Yes, there are some side benefits,
but----
Mr. DeFazio. So the Federal Government would no longer
control the airspace of the United States.
Mr. O'Toole. That is right.
Mr. DeFazio. Boy, that is wild. That is totally wild.
[Laughter.]
Mr. DeFazio. OK. So, let me ask, then--you know, as I
pointed out, there is a subsidy there. And then we have the
subsidy--we have a national--you must be a devolutionist,
probably, right? No, I am serious.
There is a theory, a well-developed theory out there in
the, you know, the Libertarian right-wing think tanks of
devolution. It is being advocated by Grover Norquist and
others. The Federal Government should not be involved in
coordinating our national transportation system on the surface.
It should be devolved to the States. Grover hasn't decided
whether or not they could get the Federal money, or whether
they just have to pay for it themselves. I have been traveling
around with a poster of the Kansas Turnpike 1956, when it ended
in a farmer's field in Oklahoma, because they couldn't deliver
on their proposed section until we had a national program.
So, we are going to--are we going to pass back the duties
for developing any sort of a national transportation system to
the States and territories?
Mr. O'Toole. Oklahoma completed its side of that highway
just a little after Kansas did. I know that is a famous old
story.
The truth is that local and State highway departments have
been very good at cooperating and making sure that their roads
connected up ever since we started building roads----
Mr. DeFazio. Let's use an example. The Port of Los Angles.
The Port of Los Angeles should get no Federal assistance, and
it should, even though the freight coming into the Port of Los
Angeles doesn't end up in Los Angeles, for the most part, but
gets dispersed throughout the United States, they should carry
all the burden of getting the freight out of Los Angeles for
the rest of the country.
Mr. O'Toole. Why not? The rest of the country ends up
paying for that freight, and they end up paying for that
shipping.
Mr. DeFazio. All right.
Mr. O'Toole. Our home State of Oregon was the first State
to pass a gas tax in order to pay for roads. And since then,
most of the cost of roads have been paid for by users.
Now, I agree there are subsidies. I think we should get rid
of those subsidies. But the idea that some modes are subsidized
so therefore they should all be subsidized, we need to somehow
compensate subsidies, we end up with competing subsidies, we
end up with political allocation of resources----
Mr. DeFazio. Can you name a country that has gone down this
route, withdrawing all Federal support, all national support
for their transportation infrastructure in the air, on rail,
and on the ground? Can you name one? Because as far as I can
see, all our competitor nations are spending a hell of a lot
more money than we are on these modes, and they are beating us,
and ours is falling apart, and theirs is getting better. But
you are recommending something else.
Mr. O'Toole. If you are looking at Europe, you find all
over the place countries are building roads throughout Europe
using public-private partnership.
Mr. DeFazio. Right.
Mr. O'Toole. Countries grant a franchise, and then the
private companies put up all the money to build the road, and
they pay for it out of tolls, and the----
Mr. DeFazio. I am familiar with the----
Mr. O'Toole [continuing]. Users pay all of the costs.
Mr. DeFazio. I am familiar with isolated instances where
that is done. But they are still putting more money into and
assessing much higher gas taxes than we are. They are obviously
subsidizing their government with gas taxes, in addition to
transportation.
So anyway, thank you, Mr. Chairman. It is an extraordinary
view of the future that I hope doesn't come to pass.
Mrs. Schmidt. [presiding.] I don't think anyone here wants
to eliminate Amtrak or eliminate Government help with Amtrak.
I think what--the purpose of this--these hearings are to
get Amtrak to understand that we do not have an unending pot of
gold here to help you remain operational. And so, together, we
have to look at ways to make Amtrak more efficient and use less
tax dollars in the process.
Now, Mr. Boardman, I know that I have probably gone on too
long about the food service aspect and how we can possibly
streamline the ways, and so I am not going to ask the question.
But I remember a few weeks ago your reluctance to make it a
cashless transaction, even when it was suggested that cashless
transaction would save dollars. So, we can't have the kind of
reluctance that I feel is coming from some folks out there to
change the paradigm. What we have to do is find a way to change
the paradigm so that Amtrak continues to run, so that when my
grandchildren need to get on a rail and go somewhere, that that
rail is there.
So, I want to ask you this, sir. This is a new question.
Over the last 41 years, Amtrak has been in existence and has
needed nearly $40 billion in taxpayer subsidies to remain
afloat. Now, I don't care about the other groups. I am talking
about Amtrak. This year, you received $1.4 billion in
subsidies. Now, let's fast forward that to 2022. How much money
do you think Amtrak is going to need? What is their financial
situation going to be in 10 years if you needed $1.4 billion in
subsidies this year? That is the question.
Mr. Boardman. I don't know, Mrs. Schmidt. I think we could,
you know, investigate something like that, and look at it. But
it depends on what Congress really wants from us, in terms of
high-speed rail, and some of the other services.
Mrs. Schmidt. Let me go back to that, sir. Before I came
here, I started my life as a township trustee. And we looked at
5-year windows and 10-year windows for our modest pot of gold
that we had of the taxpayer dollars. What could we do to
provide police and fire? How could we also provide amenities?
What could we do with the surface issues that we had, receiving
very few Federal and State dollars? What was our 5-year
projection and our 10-year projection? When I got to the State,
I was on the financial committee that actually looked at
budgets. And we again looked at a 5-year and a 10-year
projection.
So, I think my suggestion to you, sir--and I will go to
another question--is that perhaps maybe when you look at your
financial situation, you don't do what many people in
Government do and only look at a 2-year window. Look at that 5-
year window and that 10-year window and say to yourself, ``How
can I become profitable? How can I use less tax dollars? What
do I need to do, and what does the Government need to do to
help me get to that end?''
And I think if you do that, the fiscal cliff that we will
face--and we are going to face it in the next 12 to 24 months--
you can't continue to monetize our debt and not see the fiscal
cliff before us. And that means that all people are going to
suffer in some fashion. And it also means the new people that
are going to come and replace people like me are going to be
perhaps a little more radical in their approach to what
Government should be doing for its citizens. And so, I am
cautioning you that, in order for you to continue to provide
needed service for our country, that you have to look at ways
of doing it better.
So my second question to you is can you produce--maybe not
for this session, but for the next session--a 5-year and a 10-
year window, so that you can really look at ways to prioritize
and economize, and allow yourself to do what George Voinovich,
when he was Governor of Ohio, commonly said, ``Do more with
less''?
Mr. Boardman. Perhaps I misunderstood your first question.
We do have capital plans and we have operating plans for the
future. The difficulty has been, of course, that Congress only
gives us an appropriation 1 year at a time. So, a lot of times,
especially with our capital funding, we have to keep moving
back, and don't--we can't move forward in the way that we
believe that we should, because the dollars aren't there
necessary for us to make that happen.
Mrs. Schmidt. Well, I am going to go to my next question.
But when I was a township trustee, we had a 2-year window to
look at at the State, and we had a 1-year window to look at at
the county level. And yet we did 5- and 10-year projections,
based on that.
Mr. Boardman. Yes, ma'am, we do that.
Mrs. Schmidt. My second question to you is since 2008
taxpayer subsidy per ticket has increased more than $3. Do you
believe this is a management failure in getting costs under
control, or is there something else driving that cost?
Mr. Boardman. We actually--and I think we disagree on
this--we actually have reduced the amount of operating requests
that we have made, not increased. When you look and you add the
capital into the equation, then yes, that increases. But there
has been major capital improvements with bridge replacements
and other capital services that increase that cost because of
the way it has been calculated.
Mrs. Schmidt. Well, then I think we have got a point of
disagreement. But I want to go to another question, sir.
The inspector general has reported inadequate internal
controls stemming from weak or poor management and oversight in
such areas as food and beverage service, overpayments on--of
on-time performance incentives, overtime use, and mechanical
maintenance. How will the reorganization efforts currently
underway improve internal controls and management oversight of
the areas identified by the inspector general?
Mr. Boardman. Several different ways. One of the things
that came out today in our October Ink magazine, which I think
is particularly--and I don't know if Congress gets this
magazine--there is a program called CSPMI, which stands for
Customer Service Performance Metrics Integrator. And what is
happening is we are changing the way we manage. And this is
right down to the bottom level of customer service and customer
focus.
I think Ted is right, and he has been very solid in trying
to provide the kinds of guidance that Amtrak would need for
improving management for the future. And internal controls and
risk management have a very important element in what we need
to get done. But it needs to start right at the bottom and all
the way to the top, and not just always at the top.
And part of the difficulty at Amtrak has been the very
rapid turnover of managers and initiatives to make these
improvements that need to get done. And they need to be done by
the men and women that really do the work, because they are
ready and they are able and they do a damn good job. We need
them to have the tools necessary to make this happen.
Mrs. Schmidt. OK. I could argue or try to figure out
different ways to help you get to where you need to go, but I
have one final question. And I am looking at the 10 worst-
performing routes. And the Hoosier State Indianapolis, that is
not that far from my house. It is a 2-hour drive. Chicago is a
5-hour drive. And I have learned in my lifetime that--I used to
fly to Chicago. I now drive; it is easier. I have always driven
to Indianapolis because it is just easier for me to get to from
point A to point B.
But you only had 37,000 passengers in 2011 from Chicago to
Indianapolis. Now, I understand that you always have a loss
leader in any business model. But you apparently have 10 loss
leaders. This is the one that has the fewest ridership. If you
stop that route, how much money would you save, and how much of
disruption of service overall would occur for Amtrak?
Mr. Boardman. I don't have the numbers in front of me,
Congresswoman, but I can tell you that there is another purpose
for that particular route itself. We call it the hospital
train. And while you could make a joke, I suppose, out of that,
it really is the fact that equipment that needs to be worked on
at our major Beech Grove facility is attached to that, that
train, every night. Every morning, the ones that are finished
go back to Chicago, which is our hub. So it provides us the
ability to move our equipment back and forth. And while we were
doing that, we decided we would try to give service to
passengers, as well.
Mrs. Schmidt. Follow up, and then I will turn it--am I the
only one here? Oh, I will turn it to Mr. Harris. Is there
another way to get that equipment without using a rail service
that is so costly? Or would it benefit to just have the
equipment and the engines, so that you wouldn't have to have
the food service and all the other people there?
Mr. Boardman. There isn't any food service on that train at
all. And we could put them on flatbeds, I guess, and take them
down. And I am making a joke there. There is no way we would do
that. We would need to use that route to get our equipment to
and from Beech Grove while we had the major maintenance
facility there.
Mrs. Schmidt. OK. Mr. Harris?
Dr. Harris. Thank you very much. I only have a couple of
questions.
Mr. Boardman, if you could separate out the Northeast
Corridor, what percent does the fare box pay of the cost on the
Northeast Corridor?
Mr. Boardman. All of it.
Dr. Harris. So is it even, in fact, more than 100 percent?
I mean----
Mr. Boardman. Yes----
Dr. Harris [continuing]. Subsidized----
Mr. Boardman. We subsidize Congress with that one. I call
it subsidizing Congress.
Dr. Harris. Right.
Mr. Boardman. And that is that we don't receive the amount
that we need from Congress for operating assistance for the
rest of the system. Part of that money comes from the Northeast
Corridor.
Dr. Harris. And what is the occupancy rate or the--how many
percent of your seats are filled on the Northeast Corridor?
Mr. Boardman. Actually today, which is Thursday, everything
on Acela will be filled from about noon until about 6:00.
Dr. Harris. But over time. I mean because when--I know I
get on airplanes now, it seems no matter what day I fly, they
are mostly filled. So I know there are some days that are peak
days. But when you average over time, what is the average?
Mr. Boardman. I will get back to you with that. I don't
have the average. But it is pretty high.
Dr. Harris. On the Northeast Corridor.
Mr. O'Toole. It is about 65 for the Acela, and----
Mr. Boardman. I would rather get back to you, sir.
Dr. Harris. Sure. That is fine. If you could get me that
answer, I would appreciate that.
And the--has--what has Amtrak done in order to increase
that utilization? I mean have they done--and I think, last time
I traveled to New York and looked at the fares, you do some
fare adjustments. I mean like the airlines do----
Mr. Boardman. Yes, we do.
Dr. Harris [continuing]. You raise and lower fares as you
approach----
Mr. Boardman. Yes.
Dr. Harris [continuing]. And you don't fill seats and all.
OK.
Mr. Boardman. We call it revenue manage.
Dr. Harris. Revenue manage. OK. That is great.
Now, Mr. Pantuso, let me say in your testimony--or I should
say Mr. Boardman's testimony, he says that, you know, you won't
see any bus in some of the small and mid-sized communities that
our long-distance trains serve. How do you address that issue
of if--you know, we say that Amtrak has to make money on
everything, that in fact, small communities would lose service?
Mr. Pantuso. Well, there is a couple of answers to that.
First of all, we are serving more than 3,000 communities across
the country, as compared to about 400, I think, or 500
communities that Amtrak serves. So we are already serving a lot
more communities than any other mode of transportation.
Secondly, there has been some pull-out in some communities.
I think Greyhound, a number of years ago, began pulling back
the route system to be more of a point-to-point service. They
still serve many, many, many thousands of communities around
the country. But there certainly are places that have lost
service because it wasn't profitable or it wasn't affordable.
There was obviously no subsidy to continue running those buses.
Companies that I represent run their businesses as business
people. So if they can't afford it, if they are losing money,
they pull out of communities.
But the other thing we have seen in a lot of rural
communities is a better partnership between the intercity bus
service and local transit providers, where in some cases the
intercity provider might be running a route system. For
example, maybe the coaches are going down I-35 out in the
Midwest, and they are connecting with a transit system that
might be 20 miles away, bringing customers to and from that
main trunk system. So, there is a lot of partnerships, but we
still serve more than any other mode of transportation.
Dr. Harris. And you--and I imagine that, you know, part of
the reason a bus company might choose to discontinue service in
one of these locations is that it is competing with trains.
Mr. Pantuso. In some cases, that might be the case. I would
guess, for the most part, throughout the Midwest that probably
isn't the case.
Dr. Harris. So both are serving the communities, both buses
and trains?
Mr. Pantuso. In some cases.
Dr. Harris. In some cases. Now, in your testimony, you
said, you know, page five, you know, ``Imagine what we could do
if the barriers to competition were removed.'' What barriers
are you talking about? What are the barriers to competition?
Mr. Pantuso. The transportation system in the United
States, unfortunately--and I don't have to tell you, you are on
the transportation committee--but it is built in a stovepipe
environment. You know, rail has funding, air has funding. Roads
have funding. There is very little cooperation, in some cases,
among the modes. Airplanes or airports sometimes exclude bus
systems from even coming in to the airport, because they don't
want to give up their parking revenue.
In other cases we have seen from different modes predatory
pricing that, even though you have gotten good bus service in a
system, you might see rail or another mode come in and try to
knock that out. That doesn't make any sense. The systems ought
to be working together for the passengers' benefit.
Dr. Harris. So specific barriers you would say are the--are
what?
Mr. Pantuso. Well, certainly one is funding. One is access
to broader funding. I think in MAP-21 some of that is being
corrected by allowing the bus to interact more with public
facilities, and having more access to some of the public
dollars so that, again, the dollars can be spent where they
make sense, not just on a mode because that is where the
funding has been.
Dr. Harris. OK. Yes--no, thank you very much for that.
Mr. O'Toole, you have anything to add to that?
Mr. O'Toole. Well, I think there is a feeling that somehow
the Federal Government can pass out the money efficiently and
accurately where it is needed, and I don't share that belief.
Mr. DeFazio was expressing incredulity that I thought that we
shouldn't subsidize the Port of Los Angeles. And yet his own
district has the Port of Coos Bay, which competes directly with
the Port of Los Angeles and doesn't get to take advantage of
the same subsidies, although he would like to send subsidies to
the Port of Coos Bay.
I would like to end all subsidies, and let the chips fall
where they may. If shipping wants to go through the Port of Los
Angeles, if people want to take a train, if people want to take
a bus or fly, let them do it, but let them pay their full cost,
and not have the expectation that I can live in Wolf Point,
Montana, and have the Government subsidize mass transportation
for me.
Dr. Harris. So in my district, which has rural areas, I
mean, what would you--should there be any program to
incentivize availability of transportation?
Mr. O'Toole. I live in a rural area. I live in a community
of 140 people. And it is a very rural area. I don't even get
cell service where I live. And I don't think the Government
should subsidize my cell service. We certainly don't have bus
service, and I don't think the Government should subsidize my
bus service. When I decided to move there, I knew I wouldn't
have access to those things. If I need access to those things,
I will move to a place where I need to have access.
We are a mobile society. The average American moves 10
times or more in their lifetimes. So if people need that at
some point in their lives, they can move to a community that
has that. I don't think that everybody in the United States is
entitled to Government support of their internet, their cell
service, their transportation, and everything else, regardless
of where they live and what the cost is in that location.
Dr. Harris. Thank you very much. And thank you, Madam
Chairman.
Mrs. Schmidt. Thank you--is the mic on? This concludes the
hearing. Any Member that wishes to have any remarks has up to--
how many days--30 days for the remarks.
I want to thank the panel for your patience with all of us,
and look forward to seeing you in the future.
[Whereupon, at 12:02 p.m., the committee was adjourned.]