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