Before the Subcommittee on Railroads

Committee on Transportation and Infrastructure

United States House of Representatives







Supplemental Testimony of

Wendell Cox,

Council member





Supplemental Testimony of

Wendell Cox,

Member, Amtrak Reform Council


Before the

House Transportation & Infrastructure Committee,

Subcommittee on Railroads

25 February 2002



Mr. Chairman, and members of the Subcommittee:


Thank you for the opportunity to submit supplemental testimony. This testimony includes additional information on the following issues:


  • Potential Amtrak Anti-Competitive Behavior Involving Predatory Pricing.
  • Information Showing that Buses, Cars and Some Airplanes are More Fuel Efficient than Amtrak.
  • Chicago O-Hare International Airport Analysis Showing that there is Little Potential for Diverting Short Distance Air Traffic to Rail


I have also attached various figures to illustrate points made in my previous testimony.


Amtrak Could Become the Least Fuel Efficient Intercity Transport Mode: It is often suggested that intercity rail is the most fuel efficient form of intercity transport. This is simply not true (Figure 5).


  • According to the Congressional Research Service, intercity buses consume 64 percent less  fuel per passenger mile as Amtrak (Amtrak and Energy Conservation: Background and Selected Public Policy Issues, January 19, 1999).


  • According to the same Congressional Research Service report, automobiles are one percent more fuel efficient per passenger mile than Amtrak for journeys of more than 75 miles. Generally improving automobile fuel efficiency performance is likely to widen the advantage over intercity passenger rail.


  • While the airline industry remains less fuel efficient than Amtrak, some of the newer planes are more fuel efficient. For example, the Boeing 717 and Boeing 737-800, at normal load factors are at least 10 percent more fuel efficient than Amtrak per passenger mile (Calculated from Air Transport Association and Bureau of Transportation Statistics data).


Airline fuel efficiency has been improving rapidly. As more newer and more fuel efficient become a larger percentage of fleets, it is possible that airlines will become more fuel efficient than intercity rail. This would leave passenger rail as the least efficient intercity mode of passenger transport.


Potential Anti-Competitive Behavior on the Part of Amtrak: Amtrak may be involved in anti-competitive behavior involving predatory pricing with respect to bidding on commuter rail contracts. In November, Amtrak was awarded a contract to operate the San Francisco “Caltrain” commuter rail service. Amtrak was the incumbent operator and bid against two private sector train operators.


A provisional analysis (Table) suggests that the newly awarded Caltrain contract would reimburse Amtrak at an annual inflation adjusted and service level adjusted rate 13.2 percent ($5.4 million) less than the 2001 reimbursement. This would reduce Amtrak revenues by nearly $25 million over the five year contract period. Depending upon the details of Amtrak’s strategic plan with respect to this contract, there might be an even larger net negative impact. There is no indication that Amtrak has obtained improved labor productivity, labor concessions or “give-backs” that would justify such a cost reduction.


Provisional Analysis

Amtrak Caltrain Contract Rates


 2001-2006 CONTRACT


 Sources and Notes


 Total Basic Service & Mobilization (Operations & Maintenance)


 10-24-2001 Summary of Request for Proposals


Annual Payment (4.64 year contract term)


Line 1 divided by 4.64










Budgeted Annual Payment: FY 2001: 100% Service Level


 June 30, 2001 Statement of Revenue and Expense










 New Annual Payment


From Line 2


 Reduction to Account for Higher Level of Service


Line 4 discounted to account for 2.1 percent annual service increase from 2001.


Reduction to Account for Inflation: Average Year


 Line 5 discounted to account for inflation at 2.5 percent annually






New Contract Rate Compared to 2001 (Average over 5 years)


 Line 15 minus Line 6


 Percentage Change








 Estimated Reduction from 2001 Rate


Line 7 times 4.64



Further, such a unit cost reduction could be reflective of a federal taxpayer subsidy by Amtrak to this local commuter rail service. Such a tactic would make self-sufficiency even more difficult to achieve, besides representing anti-competitive behavior employing predatory pricing. It is simply inappropriate for a government corporation to use tax resources to compete against taxpaying corporations.


The Limited Potential for Air Substitution: Intercity rail is often suggested as a substitute for short distance air travel. But there is little air travel that is short distance enough for proposed “high-speed” rail systems to compete favorably. The proposed systems generally average 75 miles per hour. If it is assumed that passenger rail can compete with airlines for trips of up to three hours, this means that the effective rail market is 225 miles. But, for example, less than two percent of the air traffic to and from Chicago’s O’Hare International Airport is in markets of 225 miles or less. And, that traffic is distributed among 21 markets. The strongest route, Chicago to Indianapolis has approximately 800 daily passengers --- an amount that could be comfortably accommodated by an hourly non-stop intercity bus service.


Figures: The following figures are enclosed to supplement my previous testimony.


  • Figure 1 shows that passenger rail has a nearly imperceivable market share, even in the shorter distance market that some believe represent opportunities for competing with airline service.
  • Figure 2 shows that most of the current intercity travel market is not susceptible to being transferred to passenger rail. Today’s air travel volumes per capita are well above even the artificially inflated rail travel rates of World War II. Airlines have created the bulk of the present market, not taken it away from passenger rail.
  • Figure 3 shows that federal subsidies simply pay for Amtrak’s excessive unit costs. Amtrak passengers already pay higher fares per passenger mile than total airline and intercity bus costs (which include the attributable costs of related infrastructure, such as airports, air traffic control and highways). The point of this figure is to demonstrate that if Amtrak’s unit costs were competitive, there would be no need for capital and operating subsidies.
  • Figure 4 shows the relative productivity trends of Amtrak, airlines and intercity buses. Amtrak’s cost per passenger mile has risen over the last 25 years, while costs have declined among airlines and intercity buses








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