Next Stop: Independence : Amtrak Is Getting There, but Uncle Sam’s Ward Still Faces Steep Hill

Sitting in the lounge car of this train that runs along the West Coast, Linda King and husband Paul Smith rest their infant daughter between them and gaze at the San Francisco skyline passing outside their window.

The Santa Barbara couple are devoted train travelers, even though they have often endured the typical Amtrak ride during the railroad’s 25-year history: one characterized by shoddy service, late arrivals, lousy food and, in King’s words, “old cars that just bang and rattle.”

But this train, which hugs much of the coastline as it travels 1,389 miles between Seattle and Los Angeles each day, is different, they say.

“This is the best I’ve ever seen it,” says Smith, 41, noting the Coast Starlight’s clean and smoke-free cars, elegant cuisine, on-time arrivals, anxious-to-please attendants and often breathtaking scenery. “We’re going to write a letter to them to say how great the trip was.”

Long derided as a clattering relic kept alive only as a ward of Uncle Sam, Amtrak is trying to make a comeback. With fresh management, long-delayed spending on new equipment, cost cutting and rising employee morale, the performance of the nation’s only passenger railroad is improving and its customers’ gripes are falling.

“They have made considerable progress,” said Ross Capon, executive director of the National Assn. of Railroad Passengers, a trade group in Washington.

Amtrak, in fact, sees the Coast Starlight as a showcase of the overall service it hopes to provide at the dawn of the 21st century--50 years after U.S. passenger railroad service began its long descent with the arrival of the jet age.

But Amtrak, which carries 21 million passengers annually on 24,000 miles of track, still has a steep hill to climb in order to achieve its primary financial goal: to become independent of the taxpayer subsidies that so far have ensured its survival.

Thomas M. Downs, Amtrak’s chairman and chief executive, readily admits that the Coast Starlight is one of Amtrak’s premier trains because the railroad last year made a focused effort to buy new cars and beef up amenities.

Much of Amtrak’s remaining system is still plagued with old equipment, schedule delays, dirty bathrooms and indifferent service, which continue to alienate travelers, soil the railroad’s image and limit its sales, railroad experts say.

“The service on many routes is still spotty,” said Frank N. Wilner, a staff officer of the U.S. Surface Transportation Board, the successor of the Interstate Commerce Commission, and author of the 1994 book “The Amtrak Story.”

Indeed, even fans of the Coast Starlight said they were dubious about riding Amtrak elsewhere for fear of being disappointed. So it is Downs’ mandate to extend the comfort of the Coast Starlight to Amtrak’s California Zephyr, which runs from Oakland to Chicago; to the Sunset Limited, which connects Phoenix and Miami; and to dozens of similar long-haul routes throughout Amtrak’s system.

“We have to have consistent quality and new equipment,” said Downs, a former New Jersey transportation chief who took Amtrak’s helm 2 1/2 years ago. “We’re trying to provide all of the things that rail passengers have been led, by their experiences, to not expect.”

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That consistency won’t be easy. Though privately run, Amtrak has needed more than $7 billion in operating and capital-equipment subsidies since its inception, but Congress is determined to end at least the operating grants by 2002.

Already, lawmakers have shaved Amtrak’s operating subsidy for its current fiscal year ending Sept. 30 to $285 million from $392 million the previous year, and from $554 million six years ago.

So Downs, 53, is under pressure to make Amtrak a profitable, self-sufficient enterprise within five years. “There’s no place to turn,” he said. “The Congress has said we have to be out of the subsidy business by 2002. That means we have to make it on those terms.”

A key part of his solution to replacing the lost federal dollars is to change Amtrak’s mission: Besides being mere transportation, Amtrak must offer more “train experiences” like the Coast Starlight, in which “the trip itself is an experience,” he said.

These trains, which Downs calls “land cruises,” command premium fares and are the best hope for increasing Amtrak’s revenue, which totaled $1.5 billion in fiscal 1995. And Amtrak can easily create such trains by hooking fancy sleeping and parlor cars to the conventional coach-passenger trains it already operates.

“The one thing you can do with a train, that you cannot do with an airplane, is add businesses on the back of the train,” Downs said.

“If we’re going to survive, about 60% of the improvement in our bottom line from here out has to come from revenue growth and new businesses” such as the Coast Starlight and other premium-fare services, he said. The rest will come from slashing Amtrak’s costs even further.

To be sure, a big chunk of Amtrak’s service still involves simply moving people from one city to another, such as Los Angeles to San Diego, New York to Washington and Minneapolis to Chicago.

“Especially in a lot of winter markets, there’s not a lot of air service [when the weather is bad] . . . and we’re the only thing running,” Downs noted.

Amtrak also operates a variety of commuter services around the country, including Metrolink in Southern California, although that sector accounts for only 14% of Amtrak’s total revenue.

Certainly, Amtrak generally is at a disadvantage to the airlines in point-to-point service. The one-way Coast Starlight fare for the 36-hour ride between Los Angeles and Seattle ranges from $150 to $650, depending on accommodations. A coach seat on an airline, meanwhile, can be as low as $99 one way, and the flight is two hours.

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Yet people take the train for many reasons other than getting from one town to the next. They’re leisure travelers with time and income, and they want to see the countryside, but not from behind the wheel of a car. Some passengers are simply afraid of flying.

Others ride the train “out of a sense of nostalgia,” Downs said. Case in point: Don Wilson, a 37-year-old salesman from Seattle who was riding the Coast Starlight with his two preschool sons.

“My mother used to take me to Chicago on the train, and so I wanted to take my boys on the train, and I’m very satisfied,” Wilson said as he watched the pine trees of Northwest Oregon race by on a sparkling-clear morning. “Plus, I don’t have to drive.”

But it will take many more Don Wilsons for Amtrak to live down its past and generate the growth it needs to prosper independently.

Even Downs acknowledged that many people “have collective memories of trips from hell” aboard Amtrak trains and that the only way Amtrak will climb out of that public relations pit is word of mouth about trains such as the Coast Starlight.

“If people have a good experience now, with good equipment, and they talk about it to their family and friends, that’s the ultimate antidote” to Amtrak’s woeful image, he said.

That image dates back to Amtrak’s birth in 1971. Formally known as the National Railroad Passenger Corp., Amtrak was created to take over intercity train travel from the nation’s privately owned railroads. With air and automobile travel soaring, the railroads were losing millions of dollars annually and wanted out.

Not surprisingly, Amtrak was troubled from the start. The equipment it inherited was old and in poor shape. There was little marketing by the front office. Amtrak’s ability to process credit card payments, link its computers with travel agents and other administration tasks were a decentralized, bureaucratic nightmare.

Amtrak over the next two decades also was routinely short of cash to upgrade its fleet and stations. Union work rules kept labor costs high. Cheap airline fares enabled that industry to continue absorbing would-be train passengers.

The Reagan administration even tried to kill Amtrak in the 1980s and, despite failing, slashed its subsidies and helped keep the railroad in a cash crunch. Between 1984 and 1995, the railroad suffered operating losses totaling $7.5 billion.

The recession of the early 1990s only exacerbated Amtrak’s woes. It lost another $808 million in fiscal 1995 alone, and there was speculation last year that the railroad might soon collapse.

But Downs kept plugging. Last year he shuttered or scaled back 16% of Amtrak’s loss-plagued service and reduced its work force by 9%, or 2,200 people, including 600 managers. He also removed 212 old locomotives and cars from its fleet and began taking delivery of a $500-million order of new cars.

Predictions that Amtrak would end 1995 with a $240-million cash shortfall never materialized; in fact, the railroad generated $13 million of excess cash.

Then in March, Amtrak moved to bolster its busy Northeast commuting service by choosing a French-Canadian group to build America’s first high-speed trains. The $754-million project, the largest equipment purchase in Amtrak’s history, is scheduled to give the railroad 150-mph service on its routes serving Washington, New York and Boston by 1999.

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Amtrak expects that new service to generate at least $150 million in additional revenue each year, a projection some critics have called too optimistic. Regardless, it will take more than $1 billion more to modernize the rest of Amtrak’s system, a tall order when Congress is talking about weaning Amtrak from the government dole.

Wilner said that even if Amtrak’s operating subsidies are phased out, taxpayers should keep providing grants for Amtrak to buy trains and other capital equipment. He argued that every type of U.S. transportation is subsidized by taxpayers, who have paid tens of billions of dollars for air-traffic-control systems, interstate highways and new airports. Amtrak, because it gets a direct subsidy with its name attached, is unfairly targeted by budget cutters, he said.

But he also argued that Amtrak must stop being a transcontinental railroad if it hopes to survive. Just as most airlines now focus on high-density regions of the country that are profitable, so must Amtrak use that strategy to be more efficient and lower its costs, he said.

“There’s not a lot of justification for running an Amtrak train from Chicago to Los Angeles,” Wilner said. With jets available that are cheaper and faster, such rail service “is the equivalent of a rolling national park.”

But like everything else about Amtrak, that idea is hotly debated. Capon of the passengers group wants more Amtrak service around the country, not less, and he said ending government aid would force Downs to further slash Amtrak’s reach.

“I’m not confident if Amtrak’s system is going to expand the way it should,” he said, “and we think there are parts of the country where their service already is grossly inadequate.”

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