Amtrak's Last Train

By Daniel Eisenberg

As the Acela Express zooms along the New England coastline at up to 150 m.p.h., bare trees and backyards flying by, it's hard to believe that the nation's first high-speed train is really the work of Amtrak. Where is the sluggish, lurching ride we've come to count on--and curse--from the nation's famously floundering passenger-rail operator?

It's still there, in most of the U.S. But a trip from New York City to Boston that can take close to five hours is now over in about three and a quarter, thanks to a new "tilting" technology that helps the Acela negotiate curves. More than a year behind schedule and millions of dollars over budget, the Acela, which is expected to launch in the Washington-Boston Northeast corridor on Dec. 11, is Amtrak's last chance to prove that intercity passenger rail can be a legitimate travel alternative in the U.S., as it is in Europe and Japan. "It's a stake in the ground," says CEO George Warrington, who envisions Acela as the first of a necklace of high-speed rail corridors (such as Los Angeles-San Francisco and Chicago-Milwaukee). It has to move fast though. With Congress set to cut off operating subsidies by the end of 2002, Amtrak has to run in the black or face liquidation.

Given the company's 30 years of spotty service, many observers think Amtrak's termination wouldn't be such a bad thing that only by opening up train service to the free market will high-speed rail have a real shot at success. Since it was cobbled together from the ruins of the freight railroads' dying passenger business in 1971, Amtrak has chugged through $23 billion in federal funds and been plagued by an entrenched bureaucracy, pork-barrel politics, high labor costs and stagnant ridership--all the things, in short, you might expect from a state-run monopoly.

Now that the $800 million Acela has finally arrived--after a series of engineering snafus, fights with Canadian manufacturer Bombardier and a premature ad campaign--Amtrak is confident that it can steal a large chunk of the airlines' shuttle business, adding close to 2 million passengers and $200 million annually to the bottom line. It needs the money. Even with a record 22.5 million customers, Amtrak lost $520 million last year.

Acela will offer passengers roomier seats, beer on tap and midtown-to-midtown travel at $120 to $143 one-way in coach. Gone are the dreary, cargo-like conditions inside. Thin slits of glass that once shut out the light have been replaced by oversize windows, and the tiny, smelly toilets have been transformed into spacious, bright rest rooms. Still, creaky infrastructure will prevent Acela from reaching its top speed most of the trip, but it should cruise consistently at around 100 to 120 m.p.h., more than enough, in Amtrak's mind, to change people's travel habits.

To help prop up its balance sheet, Amtrak is busy building its mail and express business, which hauls letters, packages and even freight for such clients as the Postal Service and UPS. Within a few years, that too could bring in a few hundred million dollars in additional revenue.

But in its effort to move goods, which can add time to trips, Amtrak risks alienating people. And all the cargo in the world won't make a national high-speed rail system a reality; money, and lots of it, might. So for the past few months, Amtrak has been lobbying Congress to pass a bill that would authorize it to issue $10 billion in tax-exempt bonds to help fund infrastructure in 10 federally designated corridors, from Texas to the Pacific Northwest. Critics view it as a risky scheme. "To think that we'll ever have a viable train system that will make money is crazy," says Arizona Senator John McCain, chairman of the Senate transportation committee.

But is it so crazy? Like the popular Metroliner, which speeds from New York City to Washington in three hours, the Acela Express, Amtrak hopes, will grab more than 50% of the passenger traffic between New York and Boston. The initial signs are encouraging; on the Acela Regional, a slower version of the new train that started running earlier this year, ridership has increased more than 40%. Given that Acela is going up against the hated airlines and crowded roads, consumers may be willing to give it a fair shot. If Acela doesn't deliver, Amtrak won't get another.