Testimony of Jim Mathews | September 9th, 2020
September 9, 2020
President & CEO Jim Mathews Testifies Before the United States House of Representatives House Transportation & Infrastructure Subcommittee on Railroads, Pipelines, and Hazardous Materials
Good morning, and thank you Chairman Lipinski, Ranking Member Crawford, and all of the members of this Committee for holding this hearing to focus attention on nation’s intercity rail network at this critical juncture. I firmly believe what the Congress decides to do about rail and transit between now and September 30 will have important and lasting impact for hundreds of Amtrak-served communities and millions of Americans.
My name is Jim Mathews, and I am President and Chief Executive Officer of the Rail Passengers Association, the oldest and largest national organization giving a voice to more than 40 million rail passengers in the U.S. Our mission is to improve and expand conventional intercity and regional passenger train services, support higher speed rail initiatives, increase connectivity among all forms of transportation and ensure safety for our country's trains and passengers. I am honored to have the opportunity to testify before you today on behalf of our 28,000 members from all across the U.S. I am also conscious of the duty I have to share their growing sense of alarm over the diminishment of an essential service upon which their communities rely.
Today, I will talk about the challenges this once-in-a-generation pandemic poses for America’s rail passengers, and the consequences governmental inaction poses to the cities, towns, and rural communities connected by our intercity rail network. I understand well that Amtrak faces real and difficult choices, and that without financial aid there are far greater risks to the network than thrice weekly (3x) service for long-distance routes—we could lose entire corridors, permanently.
Our Association was thrilled by the level of investment in passenger trains laid out by this committee in the Moving Forward Act. This bold, forward-thinking infrastructure bill would not only get our rail system through the current pandemic, it would put millions of Americans back to work building a truly world class transportation network.
We were also glad to see House appropriators respond to the vision outlined in H.R. 2 by including $10 billion in grants for Amtrak in the FY 2021 transportation budget passed out of the House in July.
We wholeheartedly endorse this level of investment as the right course for America’s passengers and the U.S. economy, and we continue to believe that this is the best way forward for our passenger-rail system.
We understand, however, that Amtrak can maintain existing service levels at significantly lower levels of investment. We’re heartened to hear that Amtrak is working with Congress to establish a no-harm supplemental budget request. Our Association continues to believe that maintaining daily service across the National Network and preventing massive furloughs and layoffs of Amtrak workers should be the floor, not the ceiling. As Amtrak Chief Operating Officer Stephen Gardner noted in a March 22nd article in the Washington Post, “Eventually this will pass, but none of the bridges or [train] cars or any of the things we have that are old and need to be replaced will get younger as a result of this crisis.” We wholeheartedly agree and continue to support the bold vision of this Committee and of your appropriations colleagues to make the investments we need so that rail service can help restore the U.S. economy.
When I testified before this committee less than a year ago, I was able to speak about the unique moment of strength passenger rail in the U.S. found itself in, enjoying record ridership and record levels of federal funding. Now, however, COVID-19 has devastated the travel sector. Americans are foregoing travel of all types in an attempt to keep themselves, their families, and their fellow citizens safe. The result has been that, during "the COVID Period" (i.e., March – July 2020), Amtrak revenues are down 83 percent compared with the same period in 2019. This unprecedented decline in demand for passenger transportation has forced U.S. rail and transit operators to navigate extraordinary difficulties to keep these systems afloat.
Our Association understands all of these factors. And we recognize the difficult decisions and tradeoffs Amtrak’s leadership has had to make and will continue to make. Theirs is not an easy task.
However, even with these exogenous shocks to demand, the fact remains: Amtrak is an essential service for tens of millions of Americans and hundreds of communities. We were quite pleased with Amtrak President & CEO William Flynn’s May 25th statement to Congress that the railroad understands “how important Amtrak service is to the nation and, particularly, small communities across the nation where we play a unique role in connecting these communities to the rest of America.” However, reducing service on the 12 of the 15 long-distance routes—a vital transportation link to the 40 percent of the nation’s small and rural communities that it serves—to only three days per week speaks much louder than words. Whatever the reasons, reducing frequencies across the National Network will drop a $2 billion-dollar bomb on “Flyover Country.”
Defining an Essential Service
It’s worth taking time to be explicit about what we mean when we say Amtrak is an “essential service” to the communities it connects. For many, it’s easier to understand why a service like the Northeast Corridor (NEC) is necessary; without the 2,200 daily trains and 260 million annual trips the NEC carries, the regions this corridor links would grind to a halt. How can a single daily train to a small town also be accurately described as “essential” to the people it serves?
To understand, you have to look at the dearth of transportation options faced by rural and small-town Americans. Over 62 million people live in so-called “Flyover Country,” a quarter of whom are veterans, another quarter are senior citizens over the age 65. Intercity rail plays an outsized role in these communities, with almost one-fifth of Amtrak’s passengers traveling to or from a rural station with no access to air service.
Think of what this implies for just a single use-case. Long-distance trains, frequently used by senior citizens and passengers with mobility impairments, provide access to healthcare facilities that would otherwise be too expensive or difficult to reach. In an August letter to the U.S. Senate advocating for daily service, the Station Host Association of California, an independent volunteer organization operated in cooperation with Amtrak, shared its frontline experiences helping passengers navigate our rail system:
“Particularly during the COVID-19 pandemic, long distance trains provide accessible bedrooms ensuring privacy and cleanliness for any passengers who may need to travel within or out of state, and for whom the more public setting of an airplane creates a health risk. The private rooms on the overnight trains provide an additional level of safety to travel during a pandemic while minimizing exposure to the virus. However, if the tri-weekly service intervals do not match the passengers’ needs, then the entire benefit is moot.”
So while travel demand is down broadly, coronavirus has actually made these passenger rail services more necessary for certain segments of the population.
These are just a few of the many reasons Amtrak’s long-distance routes have proved to be the most resilient business line in the face of the pandemic. Amtrak’s own ridership numbers back this up. Since the crisis began through the end of July, NEC revenues are down 90 percent from the same period last year, compared with a 64 percent decline for the National Network. Ridership has also flatlined across the NEC, down 88 percent. By contrast, ridership on the long-distance routes is down only 68 percent during the COVID Period.
Perhaps one of the more significant statistics is that during the COVID Period, Amtrak’s National Network of long-distance intercity passenger routes has contributed 45 percent of Amtrak's revenues, compared with 21 percent a year ago. Moreover, the so-called "money-losing long-distance routes" have contributed the largest single share of revenues in every month since March.
Make no mistake: these trains are essential to the communities they serve. Congress didn’t let the Federal Highway Administration close highways four days out of seven when gas tax revenues flatlined, and it shouldn’t stand by and allow Amtrak to introduce 3x service to hundreds of communities across the U.S.
Airlines Eliminating Service to Amtrak-Served Cities
These cuts will fall especially hard on a subset of Amtrak communities that will see a simultaneous reduction in rail service and air service on October 1st. Several major airlines announced last month that they will drop service to dozens of cities upon the expiration of the CARES Act. Rail Passengers looked at service reduction announcements released by 11 air carriers and found that of 67 cities seeing air services cut, 31 would also see cuts to passenger rail service (see: Appendix B).
Airlines have been walking away from mid-sized markets for decades, and it is clear that this trend will only accelerate in the wake of COVID-19 as passengers shy away from a mode of travel they fear is unsafe. An August survey of consumer sentiment conducted by Boston Consulting Group found that 60 percent of U.S. consumers worry about being infected from flying, and 70 percent of respondents expect travel spending will not return to normal for more than a year. This will further erode the business model for midsized airports, leaving more and more Americans disconnected from job opportunities, educational institutions, and critical health services.
Rail Passengers firmly believes that running daily trains could put Amtrak in a position to expand its market share in this environment. Amtrak offers a unique product: a socially distant way to move around the country. Our government should be increasing access to rail service, not diminishing it.
Quantifying the Economic Benefits of Daily Service
I’ve said it to this committee before, and I’ll say it to anyone who’ll listen—it’s not a question of if trains make money, it’s about who trains make money for. Rail corridors generate value by acting as economic engines in the communities they serve—through jobs, retail, mobility, tourism and real-estate development. The “profit” goes not to Amtrak, but to the communities served, often to the tune of billions of dollars.
We decided it’s not enough to say it, we’ve got to put our money where our mouth is. That’s why I invested our association’s resources in 2018 to co-develop a rigorous economic model with the University of Southern Mississippi’s Trent Lott Center. We’ve used that model to quantify the economic return on passenger rail corridors in a way that hasn’t been done previously.
This time, we’ve modeled a preliminary, high-level analysis of the economic consequences of Amtrak’s decision to cut its daily intercity passenger services back to only three runs per week. Unfortunately, even the most conservative assessment is dire: to save $213 million, Amtrak's nine months of daily service cuts could drop at least a $2.3 billion bomb on Flyover Country, a figure that could rise above $3 billion if the cuts remain in place for the full year.
This is tied directly to passenger-rail’s role as an economic engine in the communities it serves. The existence of Amtrak buoys the economies of hundreds of towns and cities all across America. Degrading that service means withdrawing those benefits from millions of Americans, even those who don’t necessarily ride the trains themselves, because in many cases lives and livelihoods depend on the routes’ operation.
We examined six National Network services -- the City of New Orleans, the Empire Builder, the combined Silver services, the Southwest Chief, the Texas Eagle and the Crescent. Together, these six intercity passenger rail routes serve 30 states plus the District of Columbia, and Rail Passengers estimates that they produce $2.4 billion every year in economic benefit. In fact, Amtrak’s existing group of daily long-distance trains (excluding the Auto Train) collectively produce some $4.7 billion in economic benefits which are widely distributed throughout America’s heartland.
These benefits take many forms, which our model attempts to capture. Whether traveling for vacation, personal reasons or business, visitors spend money at their destinations, paying for hotels or other lodging, patronizing restaurants, shopping or buying local items. By doing this they support the hotel workers, the restaurant waiters and cooks, retail and entertainment outlets, and they generate sales tax revenues for the communities they visit. The local workers also contribute to the local tax base, further spreading the economic benefit. Meanwhile, because those visitors have left their cars behind, they're not imposing wear and tear on highways and roads, and they're avoiding the risk and cost of injuries or even death from car crashes.
Cutting service reduces these benefits. Rail Passengers’ model estimates that Amtrak’s plans would slash the $2.4 billion produced by the six services we examined down to just a little more than $800 million – a more than $1 billion hit on just those routes alone during the proposed nine-month period of reduced service, or $1.5 billion on an annualized basis. Systemwide on an annualized basis, America’s Amtrak-served communities could absorb a $3.1 billion body-blow. This after already reeling from the effects of a deep economic recession.
Some of the poorer states will be among those hit hardest. In the case of the Silver services, Amtrak decided to degrade service months ahead of the October 1st plan outlined for the rest of the system, leaving some of the South's poorest communities to absorb an even harsher punishment than the rest of the country. Combining the Silver Star and Silver Meteor into a single route and then cutting back daily service means many Star-served stations have already seen a 50% reduction in service – communities like Southern Pines and Hamlet, N.C., or Camden, Columbia and Denmark in South Carolina. Those stations account for 13% of the Star's ridership. The Census Bureau reports that more than two-thirds of Southern Pines' population is non-white, and some 14% of the town's residents are estimated to live below the poverty line. So, too, Denmark, SC, is majority non-white, and 15% of residents are below the poverty line.
But make no mistake. The damage is not confined to a handful of towns or just one region of the country. Amtrak’s National Network touches nearly every corner of our country, and the economic pain will be felt in 30 states and the District of Columbia. Communities in eight states served by the popular Empire Builder route from Illinois to Washington State (with a portion of the train split to Oregon) will absorb a $391 million annualized economic loss. The seven states traversed by the Texas Eagle will lose $318 million, and states from New York to Florida and in-between will feel the hit twice, from losses of service on the Crescent ($153 million) and the Silver services ($251 million).
The problem will be exacerbated by missed connections. The devilishly tricky math of ensuring that one set of trains that only runs three days a week can connect reasonably to another set of trains also running three days a week guarantees that many thousands of journeys simply won’t be taken. This is because a passenger planning on a connection would have to work backwards from her planned arrival date while taking into account not only that her original train is running only three out of seven days, but that so, too, is her connecting train. And in many instances, those trains will not mesh.
Some $39 million of connecting revenue flows through Amtrak’s Chicago Union Station alone, and the 3x schedule disrupts all of these connection patterns.
The California Zephyr and the Texas Eagle are particularly hurt. For example, travelers taking the Eagle to Chicago hoping to connect for a further eastbound trip on the Capitol Limited or the Lake Shore Limited can only make a same-day connection on Mondays and Saturdays. Going westbound it’s even worse – with the exception of a single connection from the Cardinal on Tuesdays, not a single Amtrak long-distance train will offer a same-day connection in Chicago to the westbound Eagle. All passengers will have to assume a hotel stay in Chicago, perhaps even a multi-day stay. That will be enough to lead most passengers to forego the trip. Eagle connections from other routes accounted for nearly 12% of connecting travel through Chicago in Fiscal 2019, and this plan would largely eliminate those connections. On Tuesdays, Wednesdays, Thursdays, Fridays and Sundays, westbound passengers hoping to connect to the California Zephyr would be out of luck. The Cardinal will only have a same-day Zephyr connection on one day each week, Saturdays, and passengers from the Capitol, Lake Shore and City of New Orleans will only get a same-day connection on Saturdays and Mondays.
If this seems complicated in written testimony, think of how complicated it will be for the average passenger trying to work out the best departure day to take a journey connecting to another train. The utility of a schedule like this to the traveling public quickly approaches zero for all but the most leisurely of trips. And as we know, despite a popular narrative, pure leisure trips are not the majority of trips on Amtrak.
The drastically reduced utility of a nationwide network of trains operating only three days a week on schedules that make connections difficult or impossible helps to explain why ridership will plummet even more than many observers would expect, driving catastrophic economic losses to the communities served. The estimated loss of as much as $3.1 billion to the U.S. economy dwarfs the $150 million in savings from 3x service Amtrak has identified.
(Rail Passengers would like to acknowledge our volunteer members and our partners at Transportation 4 America, who participated in the preliminary research we needed for this rapid-response study and helped to gather and collate the state-level tourism data we needed for our modeling exercise.)
A Better Route Forward
Even if we are to analyze 3x service proposal narrowly, we still can’t support it as an operating plan based on its merits. The U.S. has been down this path before, and it didn’t work.
In the mid-1990s, Mercer Consulting advised Amtrak leaders to eliminate several long-distance routes, shorten others, and take 11 routes down from daily to three and four times per week. In Fiscal Year 1995, the first year of diminished operations, Amtrak’s network saw a decrease of 13 percent in total route miles and saved $54 million. However, the General Accounting Office (the government watchdog now known as the Government Accountability Office) reported to Congress that the very next year Amtrak lost 1.1 million riders—a 5 percent drop in ridership—and never saw the savings they had projected for the 11 routes with less-than-daily service. A functioning passenger transportation service requires reliable and frequent connections. And there is nothing to suggest that the buying and traveling habits of today’s riders are much different from those in 1994.
One of our members, former BNSF Railroad train dispatcher Mark Meyers, performed an analysis of 3x on the present-day network. He found that three-times weekly service—a 57 percent cut in overall service—only cuts the number of on-board crew starts by 38 percent and engineer-crew starts by 36 percent, while producing large compensable layovers for some of the affected crews. Equipment use is only cut 40 percent. Staffing at stations would be cut only minimally because even 3x weekly trains arrive over the course of more than five days, which would require a second station staff position to continue to be filled. Lost revenue and missed connections will drive lower ridership and revenue while crew layovers will grow.
Amtrak has acknowledged this fact in the construction of its 3x schedule, with railroad management explaining that the decision to run the Star/Meteor on successive days “was made to allow for more efficient use of operating crews while assuring availability of crew resources for all journey segments… While from a marketing standpoint alternating days may have had some utility for some customers, our overall demand patterns by day of week do not differ materially and do not justify the operational risk."
We’ve already seen the negative effect this has on ridership. While the long-distance average was down 62 percent in July over the same period last year, Silver Star bookings—already subject to 3x service, losing four days of intra-Florida service—were off 72 percent in that same period. In light of Amtrak’s metrics for returning service, this is a statistically significant reduction.
We understand that Amtrak leadership sincerely believes that this is the only choice available to the railroad. But the facts we’ve just outlined demonstrate that this choice is bad public policy for the country. Amtrak will throw away a little more than half the daily frequencies but will lose two-thirds of the ridership and save only 38 percent of the crew costs, squeezing out at most $150 million of savings while hurting the taxpayers in 30 states to the tune of as much as $3 billion.
Rail Passengers instead proposes an alternative: continue to run daily long-distance trains with shorter equipment consists for the duration of the pandemic. This has been the compromise in place since the crisis began in March, and it has served Amtrak well so far. As we’ve noted above, operating every day with shorter consists the 12 daily intercity passenger trains Amtrak plans to cut back have contributed the largest single share of Amtrak’s revenues in every month this year since the pandemic began. Slashing daily frequencies to three times per week would only ensure that the long-distance trains would sink to levels similar to those being seen in Amtrak’s other business lines. By contrast, running shorter consists but maintaining daily frequencies would preserve connections and jobs and allow Amtrak’s National Network ridership to return to previous levels organically, all while still lowering some operating costs.
Amtrak is a taxpayer-supported public service. Its object is not profit, but to serve the Nation. It cannot fulfill its mandate by cutting service for half the country during one of the most severe economic crises our nation has experienced and during a pandemic that has made air travel a perilous gamble for millions of Americans. Our Association, our 28,000 members and the millions of American passengers call upon Congress to provide Amtrak with the necessary financial relief to operate a full network in this pandemic, and to include safeguards for all Amtrak-served communities and Amtrak’s workers facing cutbacks and furloughs.
Appendix A – Economic Analysis of Long-Distance Route Service Cuts
Appendix B – Announced Airline Service Cuts to Cities
Cities IN ALL CAPS are projected to see cuts to both air service and Amtrak service (long-distance and/or State-supported trains) on October 1st following the expiration of CARES Act service protections.
American Airlines will be dropping service to the following 15 cities:
Alaska Airlines will be dropping service to the following five cities:
Allegiant Air will be dropping service to the following six cities:
Cape Air will be dropping service to the following city:
Delta Air Lines
Delta Air Lines will be dropping service to the following 11 cities:
Frontier Airlines will be dropping service to the following five cities:
JetBlue Airways will be dropping service to the following five cities:
Silver Airways will be dropping service to the following five cities:
Spirit Airlines will be dropping service to the following five cities:
Sun Country Airlines
Sun Country Airlines will be dropping service to the following five cities:
United Airlines will be dropping service to the following 11 cities, tied for the most of any airline:
Source: One Mile At a Time, https://onemileatatime.com/us-airlines-will-stop-flying-to-dozens-of-cities/
"We would not be in the position we’re in if it weren’t for the advocacy of so many of you, over a long period of time, who have believed in passenger rail, and believe that passenger rail should really be a part of America’s intermodal transportation system."
Secretary Ray LaHood, U.S. Department of Transportation
2011 Spring Council Meeting