Before the Subcommittee on Railroads
Committee on Transportation and Infrastructure
United States House of Representatives
Supplemental Testimony of
AMTRAK REFORM COUNCIL
TO BE SUBMITTED FOR THE RECORD
Supplemental Testimony of
Member, Amtrak Reform Council
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:
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).
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.
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
Figures: The following figures are enclosed to supplement my previous testimony.