NEWS RELEASE

URPA Proposes Win-Win Solution for Amtrak

For Immediate Release

February 5, 2002

JACKSONVILLE, FLORIDA - United Rail Passenger Alliance today released its proposal for a win-win resolution to Amtrak's perennial funding crisis.

On February 1st, Amtrak said it could not function without a more-than-doubled subsidy from the federal government; that it needed $840 million in subsidy to run the Northeast Corridor (NEC), but only $200 million to run train service in the entire rest of the nation; and that unless Congress appropriated the entire $1.2 billion, Amtrak would eliminate all long distance passenger train service outside the NEC.

The Amtrak Reform Council had earlier found that Amtrak's NEC cost $1 billion a year. ARC will recommend removing the extremely costly NEC infrastructure asset from Amtrak to a new agency, leaving Amtrak free to concentrate on operating train service.

URPA President, Bruce Richardson, described URPA's plan for Amtrak as follows: "Amtrak's admission that its national system trains cost less than a quarter of the subsidy of the NEC, and its stated intention to get out of the long distance train business, creates a great opportunity for Congress to separate the responsibility for long distance interregional trains into a new, independent business corporation, leaving Amtrak to operate its Acela program in the NEC unburdened and undistracted by long distance services it clearly does not understand or value."

URPA's Vice President - Law and Policy, Andrew Selden, said, "The long distance trains, contrary to what many people believe, already earn as much revenue and produce half again as much transportation output as the entire NEC, on 5% of its capital base, and less than 25% of its subsidy. Its trains already have twice the load factors of NEC trains. They are popular and heavily used. The only reason they haven't grown in the last decade is because management has not expanded the route system, or capacity, in the national system. We think it makes a superb business opportunity for new management with a vision for success."

Selden continued, "The NEC is a unique and separate operation, much more like a transit district. It needs its own subsidy program and its own separate management. It can, and should, be run separately. On the other hand, we could operate the national system of interregional passenger trains with no increased subsidies and no reduction in employment or train services. America has far too few long distance train services, not too many. With carefully planned growth, the new company could break even in about five years on about three times today's output and revenue. It would be hard not to succeed at this."

URPA's comprehensive plan to reorganize Amtrak from being a financially failing national monopoly into a group of smaller, more focused, separate business units, is available at the group's web site: www.unitedrail.org.

Selden added: "We are concerned about proposals to franchise out individual routes to different operators because single routes lack the economies of scale, and the traffic synergisms of a larger network, necessary to be financially successful. Like the trunk airlines, with high fixed costs and relatively high labor costs, a national rail passenger service, to be successful, absolutely depends on having a national and growing network of high revenue long distance routes."

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