Amtrak asks Congress for more money, plans long-distance cuts, workforce reductions

Letter to Congress says $1.475 billion needed to maintain 'minimum service;' memo tells employees staffing could be cut by 20%
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With a reduced seven-car consist, the eastbound California Zephyr approaches Chicago’s Union Staion on April 2, 2020. Amtrak says it plans to reduce frequencies to “less than daily” operation on most long-distance routes beginning Oct. 1.
Bob Johnston

WASHINGTON — In a Memorial Day letter to Congress, Amtrak management has asked for $1.475 billion in “supplemental funding” it says is necessary to operate at “minimum service levels across the rail network” and continue capital projects.

Even with this funding — which is addition to $2.04 billion in its budget request for fiscal 2021, submitted before the COVID-19 pandemic decimated ridership and revenue — it says most long-distance routes will be reduced to less than daily service.

The company has subsequently told employees it expects to reduce its workforce by as much as 20%. In a Tuesday message to employees, Amtrak President and CEO William Flynn said the cuts are “to ensure we have a sustainable Amtrak that can continue to make critical investments in our core and long-term growth strategies, while also keeping safety a top priority.”

Flynn said he recognizes that “this activity will cause stress in the organization,” and that management will seek to “minimize the negative impact to our people” by first offering incentives for voluntary separations and retirements before resorting to layoffs.

The message emphasizes that the exact nature of staff or operating reductions is still being formulated, but estimates that patronage for the fiscal year beginning Oct. 1, 2020, will rise to only 50% of 2019 levels.

There have been ridership gains though May and more frequencies are returning in June. But with all Acela Express and most Northeast Regional departures cancelled, April 2020 ridership and revenue was down 98% compared with April 2019. Declines were 95% on state-supported regional trains, and about 85% for the 15 lon- distance trains. Some overnighters are maintaining round trips on the portions of their routes where states have discontinued service.   

The letter to Congress lists the cancellations to date and the anticipated 50% figure in asking for the additional $1.475 billion, which it says will also provide funding “in lieu of state and commuter payments that will be difficult for our partners to provide.”

Data accompanying the letter anticipates steady growth through October but then a big dip until February, using 2019 ridership and revenue patterns as a guide, with the assumption that passenger behavior will change. The full letter is available here.

Even with the supplemental funding request, Amtrak says it will shift to less-than-daily long-distance service and significantly reduced Northeast Corridor frequencies to match capacity more closely to demand,” saying it would expect to restore frequencies in both areas “as demand returns to pre-COVID levels … subject to adequate funding.”  

Management estimates it will save $500 million in what it characterizes as “self-help cost reduction activities” from frequency and capacity elimination ($150 million) and workforce cuts ($350 million).

A Trenton, N.J.-bound NJ Transit train stops for passengers at Princeton, Jct., N.J., in April 2019. Amtrak seeks to have the federal government fund NJ Transit's capital charge for fiscal 2021, an estimated $117.15 million.
Bob Johnston

An appendix labels all long-distance trains except Auto Train “at risk” without the supplemental appropriation. With the additional funds, the only specific changes the document spells out are consolidation of the Palmetto, Silver Star, and Silver Meteor. A possible blueprint for this is occurring through June 2, when — because of CSX trackwork — the Meteor runs Monday through Thursday and the Palmetto Friday through Sunday via Charleston, S.C., and the Star operates on its route through Raleigh, N.C., and Columbia, S.C. only on the weekends. This preserves daily service between the Northeast and Florida, but creates uncertainty and inconvenience for intermediate-stop patrons.

The company’s worst performing long-distance routes are two triweekly trains, the New Orleans-Los Angeles Sunset Limited and the New York-Washington-Chicago Cardinal. They produce just three days of revenue to seven days of route costs — themselves the product of the company’s opaque fully-allocated accounting. In contrast, most Northeast Corridor expenses are capitalized and don’t flow to each train departure as they do for long-distance and state-supported trains.  

Cutting frequencies to three or four days per week was suggested to then-incoming Amtrak President Tom Downs in 1994, when Amtrak’s budget was sharply reduced by the Clinton Administration. Consulting firm Mercer Management Consultants projected that some of the ridership lost on days a train didn’t operate would “claw back” to the days when there was still service. That didn’t happen, while route costs remained high. The service reductions were soon reversed, once “product lines” were established that were responsible for each train’s revenue and expenses.

Still unknown is how much service states will restore on the corridors they sponsor, given already-stretched state finances. As of now, most service reductions are in place on only through Sept. 30, with pre-pandemic schedules shown beginning Oct.1.

Amtrak projects it will charge states $495 million in operating and capital costs for fiscal 2021, and with expenses capped at 80% of the fiscal 2019 amount, management wants $260 million from Congress to make up the company’s shortfall.

It also seeks to have the federal government pick up $229 million in commuter payments from the 10 operators that utilize portions of Amtrak’s Northeast Corridor, and to give the states flexibility to use Highway Trust Fund money for capital projects.

Trains News Wire will report and analyze details as they become available.

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