Transportation For America A blueprint for Amtrak success from T4A Chair John Robert Smith

A blueprint for Amtrak success from T4A Chair John Robert Smith

21 Sep 2022 | Posted by Transportation for America | 10 Comments | amtrak, john robert smith, passenger rail

Amtrak has a workforce crisis on its hands. While the COVID-19 pandemic brought many of these problems to light, it did not create them. Mistakes by Amtrak’s leadership long before COVID-19 led to a slowly diminishing workforce and service impacts, which the pandemic exacerbated. Now, with a historic federal investment in passenger rail, how can Amtrak pivot and get back on the right track? The answer may lie in the company’s recent history.

John Robert Smith is Chair of T4America and policy advisor for Smart Growth America. He served for 16 years as mayor of Meridian, MS, whose Union Station, his signature project, is recognized as one of the best multi-modal transportation centers in the country. He then served on the Amtrak Board of Directors, where he shepherded the company through Congressional defunding, the launch of Acela, and the restoration of 7 day/week national service. At T4A, he now advocates for more equitable and regionally diverse expansion of national passenger rail service.

The history: Amtrak in crisis

In 1995, federal budget cuts slashed Amtrak’s budget to $750 million, a six-year low. Amtrak, facing Congressional pressure to reduce its expenses but wishing to preserve full Northeast Corridor service, suspended service from seven days per week to three days per week along much of the national network.

For John Robert Smith, then mayor of Meridian, Mississippi, that was an unworkable plan. He was overseeing the construction of the South’s first multimodal transportation center, with the city’s Union Station at its center. He knew, having planned for seven day/week rail service through his city, that cutting service to less than half would be an inefficient use of Amtrak’s resources, which would sit idle when not in service, still incurring fixed expenses. He watched Amtrak cut its workforce and service nationwide and feared this would cause long-term losses in ridership and not result in the cost savings Amtrak thought it would.

His fears came to pass. The Government Accountability Office (GAO) found that “during fiscal year 1996, Amtrak’s overall ridership dropped by 1.1 million passengers, or 5 percent, and anticipated reductions in operating costs were not realized on routes with reduced frequency of service.” Testifying before Congress in 2000, Amtrak President George Warrington admitted that “all of those eliminations back in 1995 and 1996 ended up costing the company more in lost revenue than we were able to take out in the way of expenses, given the fixed-cost nature of the operation.”

The change: Better trains, regardless of funding

Recognized by Congress for his successes in building the South’s first multimodal transportation center, Smith was appointed to the Amtrak Board of Directors in 1998. This meant he was thrust into the center of the effort to recover from the disastrous decisions made by Amtrak in 1995. He knew that three day per week service would result in inefficient use of staff and equipment. So he built relationships with both sides of the aisle in Congress, convincing Senate leaders to restore Amtrak’s national seven day per week service to much of the national network. For example, opposition to Amtrak funding had mostly come from Republicans, so Smith spoke with his senator, Trent Lott (R-MS), about the economic benefits of passenger rail for Mississippi, turning Lott into an ally within the party.

But Smith learned from very early on that Amtrak could not rely on steady funding to provide high-quality service. In 2000, Congress defunded Amtrak yet again, this time right before it launched the new high-speed Acela service (to much fanfare). While they did not have the money to boost the service as much as they would like, Amtrak was nonetheless dedicated to running high-quality trains. The Board personally ensured that on-board service on Acela trains would meet customer needs. They persistently marketed Acela as faster than air travel, even issuing a challenge for two reporters to race from the Washington, DC city center to Boston’s city center, one by airplane and one by Acela. The reporter on Acela arrived in Boston first. With airports located far from city centers and delays from air traffic control, weather, and security screenings, air travel was slower than Acela.

When Smith became Chairman of the Amtrak Board in 2002, the company had yet to fully recover from the previous decade’s workforce cuts despite eventually restoring Congressional funding. But Amtrak’s new president, David Gunn, was committed to building a stronger workforce from the ground up. Gunn visited railyards at 4:30 every morning to talk with the crews. He was committed to riding Amtrak to attend meetings so he could witness first hand the problems facing on-board crews. Morale among Amtrak’s labor force was high. Some employees printed t-shirts that read “Proud to Be Working Under the Gunn.”

Year to year, Amtrak’s ridership does not have a strong impact on its revenue. (Source: 2017 CRS report)

Due to the lapses in funding, Smith and Gunn often had to confront the possibility of bankruptcy. During the worst of their fiscal crisis, in the summer of 2002, they worked with the Bush Administration to secure an emergency $100 million loan to keep the company afloat. The loan conditions were hard, but the money kept Amtrak running and was critical to the rebuilding effort.

Despite stagnant federal support, high morale among workers translated to high-quality service. By 2007, Amtrak’s ridership reached a 15-year high. Despite some pressure to invest only in the “profitable” Northeast Corridor, Smith and the rest of the Board knew better. They had ridden the trains with their long-distance customers, who they knew would be loyal to Amtrak if Amtrak took care of them. Their success, on top of the honest relationships with Congressional staff built by Amtrak’s director of Government Affairs Joe McHugh, created trust in the halls of Congress. Smith, Gunn, and McHugh were able to convince senators like Lott, Frank Lautenburg (D-NJ), and Kay Bailey Hutchison (R-TX), who had little else in common, to serve as Congressional champions for Amtrak service through each others’ states. Smith, Gunn, and McHugh also developed relationships with Senate Appropriations leaders Robert Byrd (D-WV) and Thad Cochran (R-MS) to ensure stable federal funding for years to come.

Throughout his tenure on the Amtrak Board of Directors, John Robert Smith believed in long distance service and its ability to support the rest of the organization. Smith’s trust in the loyalty of long distance customers was later vindicated during the COVID-19 pandemic, when Amtrak was kept afloat largely by its long-distance customers outside the Northeast Corridor. As ridership continued to be depressed on the Northeast Corridor and state supported lines in April 2020, ticket revenues from long-distance trains rebounded much quicker, jumping 71 percent, from $6.8 million to $11.6 million.

Today: History repeats itself

The progress made by Amtrak leaders like Smith and Gunn is threatened by an Amtrak leadership that is repeating the mistakes the company made in the 1990s by once again furloughing much of its workforce and defunding its long-distance network.

*Graphic detailing long distance service, from Amtrak’s FY 2021 Company Profile, showing the positive effect long distance service has on the company’s revenue.*

When the COVID-19 pandemic reached the United States in 2020, Amtrak leadership decided to furlough 11 percent of its workforce, with another 20 percent reduction in 2021. These reductions mostly affected the company’s loyal long distance customers despite overwhelming evidence that these types of actions do not reduce long-term expenses and can indeed make service recovery much more difficult. Now crews are demoralized, evidenced by Amtrak’s struggle to attract furloughed employees back to their jobs. Remaining staff are overworked, threatening safety and customer care.

The Infrastructure Investment and Jobs Act authorized a record $2.2 billion in annual funding for the national network, twice that of the Northeast Corridor. But as Amtrak proved in the late 1990s and early 2000s, funding does not guarantee high-quality service. And Amtrak is going in the wrong direction. Facing a drop in revenue due to the coronavirus Omicron variant in early 2022, Amtrak once again slashed long-distance service, hurting its most loyal customers. Many long distance routes have yet to recover.

John Robert Smith’s simple message for today’s Amtrak leadership

“Ride the trains unannounced and individually. See the same service your customer does. Ride lines other than the Northeast Corridor, and more than once. Leaders like myself and David Gunn knew what the company’s workforce and riders needed to thrive because we used the service we were providing nationwide. We moved our monthly board meetings out of Washington two or three times per year and traveled there on our trains.
Talk to the crews. Ask what they need. Ask them what it’s like to work an entire train alone. Talk to coach passengers who are not allowed to purchase meals from the diner if they don’t carry cash or if delays cause passengers to board after food service has ended. Many of them, especially along lower-income, more rural sections of the national network, do not own a credit card. Eat the food on the trains, which is often unhealthy and undesirable.
Focus on long-distance service. We’re seeing an increase in remote work, so business and commuter passengers might not come back to riding Amtrak. But long-distance passengers have proven their desire for more frequent trips.”

As Amtrak has proven in the past, success with long-distance customers can translate into success in Congress. Amtrak developed champions like Trent Lott and Frank Lautenburg in the past, and can develop champions like Roger Wicker and Maria Cantwell today. If Amtrak engages with its passengers and provides regionally diverse service, it can make passenger rail an issue of national consensus with allies across the aisle.

None of these goals are easy to achieve. They will require diligent time and effort. But they will pay off. At a time when Amtrak has unprecedented funding and national attention, the moment is too great to pass up.

10 Comments

Joseph Freedman
2 years ago

Thank you for this article, as disturbing as it was. I was not aware of the furloughs imposed by Amtrak’s management, but I can appreciate that once you furlough people, they may go to other jobs or retire. I have traveled almost all of Amtrak’s long distance routes over the years, though not during the pandemic, and wish to see them properly staffed. If you watch Congressional hearings, you quickly find that both Republican & Democratic lawmakers want to see good Amtrak service. I do have a trip planned on the Cardinal in November, my first long distance trip since 2019.
T. L.
2 years ago

We are faithful long distance customers. Amtrak is better than airplanes for us. Flying is stressful. We see areas of the country we would not see from the roads. Amreak should consider 7 Eleven fresh food:

https://www.7-eleven.com/products/fresh-chilled

Or even subway. These items will keep just fine in the frig.
Linda Carroll
2 years ago

Thank you for this perceptive article. I have traveled on Amtrak long-distance trains for decades and much prefer them to other means of transportation. I was delighted when kitchen-cooked meals returned to the Empire Builder but very disappointed that the Capitol Limited and other long-distance East Coast trains are still on highly-limited, microwaved food.
Andrew Selden
2 years ago

This story contains two serious errors, one of omission and one a material misstatement.
ALL the inter-regional routes have recovered fully from the epidemic, but they are being sabotaged and suffocated by Amtrak management: (i) trains are not carrying the full consist of cars that they did before the epidemic, creating false declines in usage simply because there are no seats and sleeper rooms available to sell; (ii) management still refuses coach passengers access to dining cars, forcing them to endure junk food from the snack bars for two or three day trips; (iii) prices are artificially inflated; and (iv) several trains have had their lounge cars removed, downgrading passengers travel experience.
The critical omission is the simple fact that the inter-regional trains strongly out-perform all the shorter corridor trains, including the Northeast Corridor. The once a day (or less) inter-regional trains carry as many intercity passengers as do the dozens of daily NEC trains (most NEC customers are classified as commuters, not intercity); they produce 50% more annual revenue passenger miles than do all the NEC trains; they have greater load factors than any corridor trains; they have market shares along their routes that are 3 to 5 times greater than the market share of Amtrak’s NEC trains; and they do all that on less than 1/4th the annual subsidy cost that the NEC incurs.
Evan Stair
2 years ago

Amtrak leadership would beg to differ with the Honorable John Robert Smith’s characterization of long-distance sector. Amtrak’s own balance sheet reflects heavy losses for the same. In contrast, contemporary Amtrak balance sheets reflect above-the-rail profits for a few Northeast Corridor routes.

Questions abound:

1. Why would Amtrak or any member of Congress seek to continue long-distance operations with such financial results?
2. Why would Amtrak attempt to deceive through accounting tools created by the USDOT?
3. What kind of fiscal miracle transformed the money-hemorrhaging, 457-mile, Penn Central Northeast Corridor (NEC) into an Amtrak profit center?
4. Why does the NEC still receive federal appropriations if it is profitable?
5. Why was the NEC divested to Amtrak in advance of the Conrail takeover if the corridor was potentially profitable?
6. Did government finally succeed with an enterprise… something northeast railroad capitalists could not achieve?
7. Why wasn’t the NEC divested from Amtrak once profitability was achieved?
8. Why isn’t the fiscal genius who turned the NEC into a profit center running the federal government?

All of the above is a sarcastic perspective, but it is what current Amtrak leadership wants its funding partners in the White House, Congress, state legislatures, and moreover the general public to swallow. This is the Big Lie that began seeping into colloquial conversations around 1976.

A larger question is why would Amtrak seek to deceive? Maybe those federal representatives and officials who lurk in the shadows pulling Amtrak’s puppet strings could answer. Let’s look at Amtrak’s current leadership. Let’s ponder a plethora of potential provincial puppet-masters who placed Amtrak leaders in their present positions.

The current Amtrak board of directors is led by a two-term board member, acting chairman, and Biden Administration nominee. This individual is a northeast developer, northeast law partner, and northeast financier.

Amtrak’s present CEO arrived in 2009 following a career as a former northeast congressional staffer. Earlier, he was employed in the northeast freight carrier business as a railroad worker and manager.

Amtrak’s president arrived on the scene in 2019 from Aeroméxico, and earlier a plethora of other airlines. He was assigned as Amtrak’s chief long-distance administrator upon arrival. Why wasn’t this an internal promotion – someone with Amtrak operating experience?

Even the Biden Administration seems confident that provincialism will lack any significant political consequences. Only one of the administration’s board nominees resides outside of the northeast. As of yet, the administration has not nominated any Republican board candidates in accordance with the law. They must be difficult to find in the northeast.

In conclusion, Amtrak’s current service meltdown is going unnoticed. Whether the meltdown has been caused by executive incompetence, provincial malfeasance or a percentage of both is immaterial. The damage done since 2016 is not easily repaired. How many more months, or even weeks can Amtrak survive without intervention from underrepresented congressional districts west of Washington D.C.?
Bill Hutchison
2 years ago

Message to Amtrak: If you want support from the hinterlands, you need to perform. Current long distance “service” is plagued by an equipment shortage of YOUR making. We expect better and if we don’t get it, we might start calling for our elected representatives and senators to look at other solutions. Wake up.
G B Norman
2 years ago

I’m sorry to report here my long-held conclusion that the LD trains no longer provide much, if anything, in the way of meaningful transportation to the traveling public.

Presently, Amtrak does not have sufficient serviceable equipment or staff to operate their full system. The only way out I see is to drastically reduce, or entirely eliminate, the LD system and redirect all efforts to what counts – the Corridors.

I think it is time to accept that the only market in which Amtrak has a meaningful role is in the Northeast. However, localities such as within California, have chosen to sponsor, and fund from local sources, passenger service with “mixed” success.

Being the only organization with the institutional expertise to operate an intercity passenger train, Amtrak has a requirement to remain a National concern. While some here may disagree, if Amtrak operates, or is available to operate, local intercity services nationally, I hold the mandate under RPSA70 to be national in scope is being fulfilled.

Finally, to conclude on the minor point regarding cash acceptance within this material, to my knowledge, airlines no longer accept cash for anything on the ground or inflight. There are means for the “unbanked” to obtain “Gift Cards” good anywhere major credit cards are accepted, and as such, I see no need for any transportation concern to accept such. On this point, “cashless” is coming to hotels. For an upcoming stay I will make, it is clearly noted at the hotel’s site that cash is not accepted anywhere within. Regarding tips, those ostensibly are a transaction between you and the employee.
Thomas Beaumont
2 years ago

Mistakes by Amtrak management made prior to Covid disruptions certainly foreshadow current operating problems. However, they are hardly foreign to any US company. Why? To survive in our hyper “capitalist” economy, revenue in the short run always trumps a service model, no matter the long term consequences.
francis Manzo
2 years ago

Best to put Amtrak on an “Asset Lite” model.

Since employee hiring and retention will always be a problem going forward due to demographics and work ethic, fewer employees will be the new normal. Perhaps better to convert all long-distance trains to Santa Fe’s El Capitan model (or UP”s Challenger) – coach only long-distance service. Less new equipment types would be needed, and all could be standardized for systemwide use. There is nothing in the law that says Amtrak has to provide sleeping car or dining car services.

Second best to privatize equipment maintenance and shops. Beach Grove may be better in another entity’s hands who will commit to passenger car equipment construction and repair. Shift work and responsibility others that want to do those services for profit. Catering is outsourced already to ARAmark.

If the northeast corridor is so profitable, perhaps another for-profit entity will purchase it and the proceeds used to purchase equipment for both long-distance and corridor services.

If maintenance on the northeast corridor infrastructure is expensive, better to transfer ownership and responsibility to a State Compact-USDOT entity. Then Amtrak management could concentrate its’ efforts on providing good quality passenger services for what rail lines it operates on.

Forget about operating on the nostalgia of the past passenger rail model, the future is going to be completely different.
Rick
2 years ago

So many comments by some who have no apparent expertise in the subject matter.