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HomeMy WebLinkAboutMTWYarpMTWYarp OCT/NOVEMBER 2002 Planes, Trains and Politicians By Allan Sloan Tuesday, October 1, 2002; Page E03 Okay, it's time for a pop quiz. The subject is transportation. Ready? Here goes. What two things do Amtrak and the airline industry have in common? The first one's easy: Both of them are running around Washington looking for federal money. What's the second one? Give up? Okay, it's that neither one makes money. One key difference, though, is that airlines, unlike Amtrak, are designed to be profitable. It all makes for quite a show. We have Amtrak running around trying to beat a few hundred million extra dollars out of Uncle Sam. Meanwhile, the airlines -- those folks who scarfed up $5 billion of taxpayer aid after 9/11 -- are back asking for yet another handout. The airlines say that security costs have put them on the brink oftbe financial abyss, and a war with Iraq will shove them into it -- unless Uncle Sam comes 9cross with major money. But, look at the different ways these unprofitable outfits are treated. Amtrak is rebuked for not breaking even, while the airlines, which were in big trouble even before 9/11, get treated mostly with respect. Why the disconnect? Largely, I think, because few people outside the airline industry realize what dreary financial performers, airlines have been. Believe it or not, U.S. passenger airlines, those folks who charge $2,000 for a coast-to-coast trip in a seat suitable only for contortionists (and another 80 bucks if your suitcase is a freckle over the size limit) have barely broken even over their entire existence. By the end of this year, according to Air Transport Association statistics, the industry's total profit since 1938 is likely to be down to a mere $3 billion or so. In other words, you'll be able to attribute the airlines' entire profit over 65 years to the $5 billion that we taxpayers graciously gave them as compensation for having the air traffic system shut down for several days after 9/1 I. Talk about nonprofit organizations. Once you see the airline industry for what it is -- a public works project for airline employees and airplane builders -- you feel lots less sympathetic to the industry's laments. Sure, 9/11 hurt air traffic. But it hurt a lot of non-airline businesses, too, and they didn't get federal handouts. Airlines are important, but so are other things, including train service. And it's not as if the airline industry has been a golder~ enterprise tarnished by problems that 9/11 created. Far from it. For more than 60 years, airlines have been an up-and-down business, so to speak. They make money for a while and then suffer losses because of overexpansion, excessive debt and high labor costs. In fact, the industry had a cumulative $4.9 billion loss from 1938 through 1994, before embarking on a winning streak that probably would have ended even without 9/11. It's not that Amtrak doesn't deserve scrutiny. It's clear even to a train fan like me -- I live in Amtrak's core Northeast market, and I prefer taking the train to flying or driving -- that Congress has been quite right to press Amtrak to show better financial results. Without outside pressure, Amtrak would still be the total mess that the government inherited from bankrupt rail lines. Now it's only a partial mess. But why is Amtrak expected to break even and cover its own capital expenses and serve financially hopeless routes, such as Orlando-Los Angeles? And why doesn't the airline industry, heavily subsidized by general tax revenue and ticket-tax money, get laughed out of town when it begs for money without cleaning up its financial act? Call me a cynic, but I suspect it has something to do with more politicians flying home from Washington than taking the (1) train. There are lots of theories why the airlines -- except Southwest and some start-ups -~ don't make money. I'm no gum. But even an amateur like me can see that Southwest and the successful start-ups have different route structures and business models than the major airlines do. And management and labor seem to get along rather than always fighting to the death. The industry has very high fixed costs for planes, labor costs and debt. But, it has low costs for each extra passenger. So it's tempting to add passengers, even at very low fares. That has created a pricing system in which higher-paying customers feel abused. It generates a huge amount of customer ill will, which isn't good for any business. Amazingly, the airline loan-guarantee program set up last year as part of the post-9/11 industry bailout has done something unusual and beneficial. Airlines have to clean up their act to qualify for guarantees. That's why most of the $10 billion loan fund is still unspent. The House and Senate are squabbling over a $400 million difference in what Amtrak gets: a rounding error relative to what the airlines will extract: It would be nice if Congress leaned on the airlines the way it has leaned on Amtrak. That, alas, is about as likely as airlines' treating coach-class fliers as customers rather than trying to play them for suckers Sloan is Newsweek's Wall Street editor. His e-mail address is sloan@panix.com. GIL MALLERY -- He cut his teeth on Clark County transportation issues in the 1980s. Today Gil Mallery wanders the nation, looking for states willing to partner with Amtrak. Although his offices are in Oakland, Calif., and around the District of Columbia, Mallery, 54, has never given up his Portland-area ties; he's a frequent flier home to West~ Linn. His promotion in Amtrak came during a sudden, quiet coup this summer. One morning, 86 vice presidents, including Maliery, went to work. When the day ended, 16 still held the title. As a survivor, his domain expanded from the West Coast to the entire nation. As head of Amtrak West, Mallery had put together partnerships with Washington, Oregon and California. Now he's in charge of partnering with the other states. Mallery has no false hopes. "Amtrak will never be elf-sufficient," he said. "There are n_o~rofitable lines,just different degrees of loss." Mallery rep0~sOirectly to David Gunn, An~trak's president and chief executive officer. Mallery "can do a thousand things at once, remember everything and do a good job," said Dean LookingbiH, who heads the Vancouver-based Regional Transportation Council. Mallery hired him in 1980 when it was the Clark County Regional Planning Council. "He can handle chaos and uncertainty calmly," Lookingbill said. "Somehow he has a personality that doesn't use anger to control people or to make his point." Mallery, arcady a familiar face at Portland International Airport, increased his travels with the new nationwide territory. "I fly in every Friday evening and out Sunday nights," he said. Instead of flying home from offices in Los Angeles and Oakland, he may start from the nation's capital or any of the states interested in sustaining train service. In the 1980s, Mallery, trained as an economist, moved from the Regional Planning Council to director of Clark County's Intergovernmental Resource Center, a quasi-government group that did extensive transportation planning. Then he moved to the state's rail division office in Olympia, and in 1995, he was named head of Amtrak West. He made a name for himself lobbying with Washington, Oregon and California, campaigning for state support of Amtrak service. He also worked closely with transit districts in Portland, Seattle, San Francisco, Los Angeles and San Diego. In the new job, Gunn put Mallery in charge of contract commuter services, state partnerships, capital planning, new and expanded corridor services, and analysis of existing Amtrak service from the aspect of business and finances. Transportation fairness issues Mallery may get a helping hand from Sen Patty Murray, D-Wash., who says it's not fair that her state is paying "top dollar" for extra rail service between Portland and Vancouver, B.C., while some areas, such as the Northeast corridor between Boston and the nation's capital, are getting the best service while contributing nothing. Washington and Oregon subsidize the Cascades trains -- Washington's goal is to increase to 13 trains between Vancouver and Seattle daily -- while states along Amtrak's 150-mph Northeast corridor pay no subsidies for premium service. Washington's Cascades rail service, using Talgo train sets between Canada and Eugene, hauled 564,827 passengers last year, making it a showpiece for Mallery. He also has had successes in California, running commuter lines. Now officials are talking about a Talgo train between Los Angeles and Las Vegas. Oklahoma and Texas recently agreed to become partners in exchange for rerouting trains to larger cities. (2) But Mallery's job is getting tougher: Passengers want more service, but more states, including Oregon, are talking of slashing Amtrak support. If Oregon voters reject a temporary sales tax increase early next year, money for two Cascades trains to Eugene will be eliminated. Thus far, Washington lawmakers have protected the subsidy to keep a half-milll%n cars off busy Interstate 5. "Some people want to kill Amtrak, others want to slowly starve it to death, while some politicians want service limited to their areas," Mallery said. One of his biggest hurdles will be getting the public to realize that "Amtrak is near bankruptcy, but our airlines and our highways would be bankrupt, too, if they were not getting federal handouts and subsidies," Mallery said. "Look at the airlines. They were near bankruptcy before Sept. 11, and they are lined up for grants and low-interest loans worth about $10 billion." He added that akhough cars are driving more miles today, they are getting better mileage, essentially freezing highway revenue from gas taxes. "The result is all sorts of subsidies to highway users," he said. "The gas tax hasn't covered construction costs in years." Fruit-hauling idea faulted. One of Mallery's special projects, Amtrak Express, is under fire from his new boss. Mallery pushed the concept of picking up refrigerated rail cars full of Northwest fruit and coupling onto an eastbound passenger train. Gann said the project isn't paying for itself in all areas. Even in the Northwest, the concept has been lagging. "I have always thought there is a good market for Northwestern salmon and other fish in California and fresh fruit in the East," Mallery said, "but that hasn't taken off." Bill Stewart: billstewart@jtews.oregohian, com ANNUAL MEETING We had a good meeting in Columbus, Montana, thanks to Tammy McGill. The business meeting went well with the decision to get 'bumper' stickers that say 'I RATItER BE ON THE TRAIN' and the second line saying "MONTANA/WYOMING ASSOCIATION OF RAILROAD PASSENGERS". We have done that and now have them available for $1 each. We would like to pass them out at the Region 8 meeting in Shelby on April 26, 2003. The meeting date and place were also approved during the business meeting. Two of us had caps made that has "MONTANA/WYOMING ASSOCIATION OF RAILROAD PASSENGERS" on them which can be - -~urchased for $10J They are 1Jlack with red lettering. For either, you better add a little for postage. The handling we will do for the good of the order. We have secured "Patti's Restaurant" in Shelby for the meeting and eating place. It is across the highway from the depot. We will have a lunch at noon and the meetings at 1:30PM. People from the West Coast plan on taking the Builder that gets into Shelby around 11:00 and then return on the Builder that evening at 5:30PM. Then some will stay and take the Eastbound the next day heading for Washington DC for the annual meeting of NARP which will be the following weekend. I probably will go back home and travel to Malta mid-week to go to the annual meeting. At the public meeting there were a lot of topics discussed. The meeting was closed with a talk by Dorothy Bradley. She spoke about her efforts back in the '70s and '80s in getting rail passenger service in different areas of Montana. She applauded us in our efforts and wished us well. PASSENGER RAIL TRAVEL In recent weeks excursion trains have passed through Southern and Western Montana. One of them around trip from Billings to Livingston and back was about sold out both Saturday and Sunday. The interest was increased tremendously when the SP&S 700 was at the lead. This excursion was for the true buff and rich. The interest generated along the route by both exeurslons makes me believe that our project has a lot of backers if we get the point that it looks more promising. I say it that way as too many people will be backers and supporters when they can see it will be a reality, so they jump on the band wagon. But, we need backers and supporters now. IT IS THAT TIME OF YEAR AGAIN! $24 DUES ARE DUE. WE ARE STILL ACCEPTING SPONSORSHIPS. $50 GETS YOU SPECIAL RECOGNITION IN OUR NEWSLETTER. MT/WY ASSOCIATION OF RAILROAD PASSENGERS 2110 WINGATE LANE BILLINGS, MONTANA 59102 406-652-1339 NON-PROFIT ORG U.S. POSTAGE PAID PERMIT NO. 471 BILLINGS, MONTANA Mayor, City of Laurel Laurel, Mt 59044 hhhhh,lh,,,h,hh,lh,hl THiS EDITION OF THE OFFICIAL NEWS FOR "MT/WY ARP "IS WITH THE SUPPORT OF THE FOLLOWING BUSINESS WE ASK YOU TO SUPPORT THEM!! WE NEED MORE LIKE THEM. WE NEED MORE TO PAY DUES, OR BE A SPONSOR, OR FIND THEM FOR US. WE WANT TO CONTINUE THE NEWSLETTER. PLEASE HELP!l!!!! LEWIS TREE SERVICE 225 SHERMAN ROCK SPRINGS, WY 307-382-8675 ACKLEY PAINTING 2009 So 9th St W. MISSOULA, MT 406-728-2178 THE BEANERY BAR & GRILL BILLINGS NP DEPOT COMPLEX 2314 MONTANA AVE BILLINGS, MT 59101 896-9200 RAY HUNKINS OF WYOMiNG SUPPORTS OUR PROJECT CHiCO HOT SPRING RESORT PRAY, MT 590 406-333-4933 DEPOT ENTERPRISES JANEL MADRAZO BUTTE, MONTANA 406-494-4968 TO SHOW YOUR SUPPORT LIST HERE NEXT MONTH