Rep. Crawford Raises Concerns about Amtrak’s Non-Profitability in Transportation Hearing

Sep 29, 2022
Transportation
FOR IMMEDIATE RELEASE
Contact: Sara Robertson (Sara.Robertson2@mail.house.gov

Rep. Crawford Raises Concerns about Amtrak’s Non-Profitability in Transportation Hearing

9/29/2022

Washington  Today, Representative Rick Crawford (AR-01) questioned Stephen Gardner, Chief Executive Officer of Amtrak, about the company’s continuing failure to achieve profitability, relying instead on U.S. taxpayers, who have been on the hook for the billions of dollars provided to Amtrak over the years. Most recently, the Infrastructure Investment Jobs Act (IIJA) allotted $66 billion over the next five years to railroads, with most of the money going directly to Amtrak.

“Amtrak has lost money every year it’s been in business,” Rep. Crawford said after the hearing. “It’s not asking too much for Amtrak to move to profitability, to give taxpayers a break as they face the highest inflation in decades.”

This Congress, Rep. Crawford introduced the RATES Act, which mandates that Amtrak aim to be an “economically sustainable” passenger rail system and ensure “route profitability proportional to the Federal share of investment” through their listed company goals. This was the stated goal of the company prior to the passage of the IIJA, which nixed Amtrak’s obligation to attempt to be profitable.

The hearing, in the House Transportation and Infrastructure Committee, was entitled, “Investing in our Nation’s Transportation Infrastructure and Workers: Why it Matters.”

Hearing excerpts below. Video of the full Q&A can be found here.

Rep. Crawford 

Thank you, Mr. Chairman. I have a letter here addressed to you and to the ranking member from the Transportation Alliance would ask unanimous consent to submit that for the record. 

Chairman DeFazio

No objection.

Rep. Crawford

Thank you, Mr. Chairman. Mr. Gardner, I wanted to visit with you a little bit about Amtrak. As you know, in March of this year, I introduced the RATES Act because of my concern with significant amounts of taxpayer dollars invested in Amtrak. When was the last time Amtrak was profitable? 

Mr. Gardner (Amtrak) 

Well, Congressman, thanks for the question. The company was never set out to be profitable. 

Rep. Crawford 

Okay. So the basically the answer to that question is never. 

Mr. Gardner (Amtrak) 

That’s right. 

Rep. Crawford 

So Amtrak is now not measuring profit and loss as a performance metric? Are we just looking at the service that’s provided or are we just looking at whether or not people are happy with their experience on Amtrak? What does success look like for Amtrak? 

Mr. Gardner (Amtrak) 

Well, I think the Congress actually just helped to reformulate that in the passage of the Infrastructure Investment and Jobs Act and the reauthorization. And really the focus is to operate the company as a business in pursuit of a public mission, to take the funds that we receive from the public and try and drive as much value and operate as efficiently as possible. 

Rep. Crawford 

So no profitability required there. In fact, 2019 was probably the closest year you came to profitability. And according to my records, you approached 90% of August 2019 levels, and that was the closest you’d ever come in the history of Amtrak to actually making a profit. So where does Amtrak expect to end this year in terms of profit and loss? 

Mr. Gardner (Amtrak)

Our anticipated year end results, which we’re still tabulating but are roughly $910 million operating loss that reflects very significant increases in cost structure since 2019. Still lagging revenue compared to 2019 and lagging ridership. But the overall trends of the year have been very positive and increasing ridership and revenue. 

Rep. Crawford 

So this a $910 million operating loss. This is after $3.7 billion in extra money in COVID money over the last 17 months. And you still have a $910 million operating loss?

Mr. Gardner (Amtrak) 

The dollars that were provided by Congress helped to stabilize the employees and the operation of the network. They provided the dollars that normally come from revenue. But after losing 97% of our business in one month, we did not have that revenue source. 

Rep. Crawford 

What do you attribute that 97% loss to? 

Mr. Gardner (Amtrak) 

Well, that occurred between March and April of 2020. So we had a massive shutdown of travel across the entire network. We suspended a huge amount of service and we did provide those important, necessary trips, but very few travelers in that period of time. And since we have been rebuilding ridership month over month, riding with the waves of COVID, of course, and seeing reductions in it as we’ve seen flare ups. 

Rep. Crawford 

So we’ve actually observed a trend where more people are working from home. That would mean that probably you’re experiencing less ridership. So what’s your plan to address that?  The new normal is a lot of people are working from home now. And so do you anticipate continuing to see ridership decline? 

Mr. Gardner (Amtrak) 

No, Congressman. In fact, Amtrak’s business is not really subject to the daily commute back, for instance, on the Northeast Corridor. Most of our trips are people who travel once a year. So we see, in fact, some parts of our network with growing ridership of people, have shifted their locations around the region and need to travel into those central business district once or twice a week. So we are growing ridership over time. We were about 80% of our pre-COVID ridership in August. 

Rep. Crawford 

So the one area where you come the closest to actually turning a profit in the commuter space is the area that you’re not focusing on. You’re saying that that your ridership is increasing with the one time a year people that are taking long hauls. Is that is that what I’m hearing from you? 

Mr. Gardner (Amtrak)

No, in fact, in the northeast corridor, we have folks who travel once a year. We have folks who travel once a month. The northeast corridor continues to be the real driver of growth in parts of the country. But our short distance quarters, which you make up half of our ridership have been historically our biggest source of ridership growth in the past decade or so. So we see value in many of these services. We see a much greater return for our business than some of our transit colleagues, because people are finding ways to find rail useful in this new arrangement. Certainly it’s changing over time. We see this as well in our own workforce, but we think rail is well positioned in the short distance corridors both here in the northeast corridor and around the country to provide value, particularly as folks have moved to different locations and need access to the central business district. And congestion, as we all see, still is back is raging back in many cities and people see trains. We see a huge portion of new riders coming to Amtrak because they’re attracted by the offer of passenger rail. 

Rep. Crawford So yes or no profitability in the future at any point? 

Mr. Gardner (Amtrak)

We’re working really hard to return the economics back to the train operating business here by driving revenue across our system. We also are returning more seats into the marketplace. We’re still below what we had, but we will in response to demand and will be looking to again in the train operation portion of our business, get our recovery back up to the kind of levels we had in 2019. It’s going to take several years to do so. The biggest issue for us is the loss of revenue associated with business travel, particularly here in the northeast corridor where business travel has not yet returned. We’ve been able to find folks to fill those seats, but it’s going to take a while to be able to gain the revenue that was associated with business travel. And I think that’s something that folks are looking at in systems all over the country. But we’re working hard to do that. 

Rep. Crawford 

I yield back.

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