    [House Hearing, 110 Congress]
    [From the U.S. Government Publishing Office]

                    AMTRAK'S FISCAL YEAR 2008 STRATEGIC PLAN

    =======================================================================

                                    (110-51)

                                    HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON

                 RAILROADS, PIPELINES, AND HAZARDOUS MATERIALS

                                     OF THE

                                  COMMITTEE ON
                       TRANSPORTATION AND INFRASTRUCTURE
                            HOUSE OF REPRESENTATIVES

                           ONE HUNDRED TENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 JUNE 12, 2007

                                   __________

                           Printed for the use of the
                 Committee on Transportation and Infrastructure

                                       ____

                        U.S. GOVERNMENT PRINTING OFFICE
    36-682                      WASHINGTON : 2007
    _____________________________________________________________________________
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                 COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                     JAMES L. OBERSTAR, Minnesota, Chairman

    NICK J. RAHALL, II, West Virginia    JOHN L. MICA, Florida
    PETER A. DeFAZIO, Oregon             DON YOUNG, Alaska
    JERRY F. COSTELLO, Illinois          THOMAS E. PETRI, Wisconsin
    ELEANOR HOLMES NORTON, District of   HOWARD COBLE, North Carolina
    Columbia                             JOHN J. DUNCAN, Jr., Tennessee
    JERROLD NADLER, New York             WAYNE T. GILCHREST, Maryland
    CORRINE BROWN, Florida               VERNON J. EHLERS, Michigan
    BOB FILNER, California               STEVEN C. LaTOURETTE, Ohio
    EDDIE BERNICE JOHNSON, Texas         RICHARD H. BAKER, Louisiana
    GENE TAYLOR, Mississippi             FRANK A. LoBIONDO, New Jersey
    ELIJAH E. CUMMINGS, Maryland         JERRY MORAN, Kansas
    ELLEN O. TAUSCHER, California        GARY G. MILLER, California
    LEONARD L. BOSWELL, Iowa             ROBIN HAYES, North Carolina
    TIM HOLDEN, Pennsylvania             HENRY E. BROWN, Jr., South
    BRIAN BAIRD, Washington              Carolina
    RICK LARSEN, Washington              TIMOTHY V. JOHNSON, Illinois
    MICHAEL E. CAPUANO, Massachusetts    TODD RUSSELL PLATTS, Pennsylvania
    JULIA CARSON, Indiana                SAM GRAVES, Missouri
    TIMOTHY H. BISHOP, New York          BILL SHUSTER, Pennsylvania
    MICHAEL H. MICHAUD, Maine            JOHN BOOZMAN, Arkansas
    BRIAN HIGGINS, New York              SHELLEY MOORE CAPITO, West
    RUSS CARNAHAN, Missouri              Virginia
    JOHN T. SALAZAR, Colorado            JIM GERLACH, Pennsylvania
    GRACE F. NAPOLITANO, California      MARIO DIAZ-BALART, Florida
    DANIEL LIPINSKI, Illinois            CHARLES W. DENT, Pennsylvania
    DORIS O. MATSUI, California          TED POE, Texas
    NICK LAMPSON, Texas                  DAVID G. REICHERT, Washington
    ZACHARY T. SPACE, Ohio               CONNIE MACK, Florida
    MAZIE K. HIRONO, Hawaii              JOHN R. `RANDY' KUHL, Jr., New
    BRUCE L. BRALEY, Iowa                York
    JASON ALTMIRE, Pennsylvania          LYNN A WESTMORELAND, Georgia
    TIMOTHY J. WALZ, Minnesota           CHARLES W. BOUSTANY, Jr.,
    HEATH SHULER, North Carolina         Louisiana
    MICHAEL A. ACURI, New York           JEAN SCHMIDT, Ohio
    HARRY E. MITCHELL, Arizona           CANDICE S. MILLER, Michigan
    CHRISTOPHER P. CARNEY, Pennsylvania  THELMA D. DRAKE, Virginia
    JOHN J. HALL, New York               MARY FALLIN, Oklahoma
    STEVE KAGEN, Wisconsin               VERN BUCHANAN, Florida
    STEVE COHEN, Tennessee
    JERRY McNERNEY, California
    VACANCY

                                      (ii)

    ?

         SUBCOMMITTEE ON RAILROADS, PIPELINES, AND HAZARDOUS MATERIALS

                       CORRINE BROWN, Florida Chairwoman

    JERROLD NADLER, New York             BILL SHUSTER, Pennylvania
    LEONARD L. BOSWELL, Iowa             THOMAS E. PETRI, Wisconsin
    JULIA CARSON, Indiana                WAYNE T. GILCHREST, Maryland
    GRACE F. NAPOLITANO, California      STEVEN C. LaTOURETTE, Ohio
    NICK LAMPSON, Texas                  JERRY MORAN, Kansas
    ZACHARY T. SPACE, Ohio               GARY G. MILLER, California
    BRUCE L. BRALEY, Iowa                HENRY E. BROWN, Jr., South
    TIMOTHY J. WALZ, Minnesota           Carolina
    NICK J. RAHALL II, West Virginia     TIMOTHY V. JOHNSON, Illinois
    PETER A. DeFAZIO, Oregon             TODD RUSSELL PLATTS, Pennsylvania
    JERRY F. COSTELLO, Illinois          SAM GRAVES, Missouri
    EDDIE BERNICE JOHNSON, Texas         JIM GERLACH, Pennsylvania
    ELIJAH E. CUMMINGS, Maryland         MARIO DIAZ-BALART, Florida
    MICHAEL H. MICHAUD, Maine            LYNN A. WESTMORELND, Georgia
    DANIEL LIPINSKI, Illinois            JOHN L. MICA, Florida
    JAMES L. OBERSTAR, Minnesota           (ex officio)
      (ex officio)

                                     (iii)

                                    CONTENTS

                                                                       Page

    Summary of Subject Matter........................................    vi

                                   TESTIMONY

    Kummant, Alexander, President and Chief Executive Officer, Amtrak     3
    Laney, David, Chairman, Amtrak Board of Directors................     3

              PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

    Brown, Hon. Corrine, of Florida..................................    31
    Costello, Hon. Jerry F., of Illinois.............................    35
    Cummings, Hon. Elijah E., of Maryland............................    37
    Mica, Hon. John L., of Florida...................................    43
    Oberstar, Hon. James L., of Minnesota............................    47

                   PREPARED STATEMENTS SUBMITTED BY WITNESSES

    Kummant, Alexander...............................................    51
    Laney, David M...................................................    70

                           SUBMISSIONS FOR THE RECORD

    Kummant, Alexander, President and Chief Executive Officer,
      Amtrak, response to questions from the Subcommittee............    55
    Laney, David, Chairman, Amtrak Board of Directors, response to
      questions from the Subcommittee................................    73

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                          AMTRAK STRATEGIC INITIATIVES

                                  ----------

                             Tuesday, June 12, 2007

                      House of Representatives,
        Committee on Transportation and Infrastructure,
           Subcommittee on Railroads, Pipelines, and Hazardous
                                                     Materials,
                                                        Washington, DC.
        The Subcommittee met, pursuant to call, at 2:05 p.m., in
    Room 2167, Rayburn House Office Building, Hon. Corrine Brown
    [chairman of the Subcommittee] Presiding.
        Ms. Brown of Florida. Will the Subcommittee on Railroads,
    Pipelines and Hazardous Materials come to order.
        The Subcommittee is meeting today to hear testimony on
    Amtrak's Strategic Initiatives. Let me start by expressing my
    disappointment that the Board has not approved the Amtrak
    fiscal year 2008 strategic plan. I do not understand why Amtrak
    has not followed my newest request to have this plan ready. We
    were told in April that it was going to be approved in May, and
    we were told a few weeks ago that it was going to be approved
    prior to this hearing. We are now 8 months into the fiscal year
    2007. If the Board drags this out any longer, there will be no
    point in approving the plan.
        You have to start setting the stage for the initiatives in
    2007, and we want to see them succeed in 2008. At the rate that
    we are going, we will be in 2008 before we ever see a final
    plan.
        I did, however, review an earlier draft, and there is good
    news for Amtrak. Amtrak is projected to deliver the best
    ridership numbers and revenues in history with the projection
    of 25.3 million trips and $1.5 billion in revenues. Ridership
    in the first quarter of 2007 increased 7 percent over last year
    where ticket revenues were up 14 percent. Accelerated ridership
    alone was up 20 percent, and with the ever-increasing price of
    gas, ridership can only increase.
        I do not think there is a doubt that Amtrak has made
    significant improvements in the system over the last several
    years and has an ambitious agenda for future improvement, but
    Amtrak must also address some challenges before it can reach
    its full potential. It must improve its on-time performance on
    long-distance routes, replace aging rolling stock and
    infrastructure, improve safety and security, and resolve the
    longstanding disputes between management and labor.
        It is particularly important that Amtrak reach a labor
    agreement that is fair. Most of the Amtrak workforce has gone
    without a renewable contract for over 7 years. You cannot reach
    your ambitious goal of the company with employees who feel that
    they have been treated unfairly. The freights have made
    significant progress with their contracts, and I hope this
    inspires Amtrak to do the same.
        I look forward to hearing from Mr. Laney and Mr. Kummant
    today about these issues.
        Before I yield to Mr. Shuster, I ask that Members be given
    14 days to revise and extend their remarks and to permit the
    submission of additional statements and material by Members and
    witnesses. Without objection, so ordered.
        I yield to Mr. Shuster for his opening statement.
        Mr. Shuster. I thank the Chairwoman for yielding and for
    holding the hearing today.
        It seems that Amtrak has always been a contentious issue
    since, I guess, it was formed in the 1970s. Arguments over
    funding levels, corporate mission, corporate structure,
    allegations of wasteful spending have always been out there,
    but there is no argument, I think, that this Nation needs a
    safer, faster, more efficient passenger rail system than we
    have today.
        The Acela, as Mr. Mica likes to point out, only averages 82
    miles an hour. Wow. The intercity trains cannot even compete
    with the intercity bus service that we have in the country
    today, so Amtrak needs to be better managed, to manage better
    its resources than it has.
        I read through your plan that you put in place. It looks
    like a good plan, but historically as I look back through at
    Amtrak, it always has a good plan. It just does not seem to
    work out the way it should, and that is imperative that we do
    that.
        I know that Amtrak has brought in new management. I would
    like to welcome the new President and CEO--not new anymore--Mr.
    Kummant, who has been onboard now for several months or going
    on almost a year, I believe it is.
        I also welcome Chairman Laney for being here before us.
        I know you have also brought in a new CFO and a new general
    counsel, so we are looking forward to that management team
    doing good things.
        We still have a long way to go, but it appears that we are
    hopefully beginning to see some progress even on the long-
    distance trains. The legacy of the 1950s was the interstate
    highway system, and I hope that our legacy in this new century
    will be a fast, efficient, high-speed rail system.
        It was about several months ago, maybe a year ago now--I
    think it was only several months ago--that we just passed in
    America the population threshold from 200 million to 300
    million people, and it took 65 years. I was reading a newspaper
    and saw the projections. We are going to go to 400 million in
    just 35 years, and when you look at the math and look as the
    population grows across America, the density of the population
    in the corridors that Amtrak serves is going to remain dense,
    and so it is for the future extremely important that we have an
    efficient passenger rail system. It is going to be something
    that future generations are going to rely on.
        So I am looking forward to hearing from you today, and I am
    looking forward to working with you as we try to improve Amtrak
    and improve the transportation system in this country.
        I yield back.
        Ms. Brown of Florida. Thank you.
        Ms. Brown of Florida. I would like to welcome our witnesses
    today at the hearing. Our first witness is David Laney, who is
    the Chairman of Amtrak's Board of Directors.
        Our second witness is Mr. Alexander Kummant, who is the
    President and Chief Executive Officer of Amtrak.
        Let me remind the witnesses that under our Committee rules,
    they must limit their oral statements to 5 minutes but their
    entire statements will appear in the record. We will also allow
    the entire panel to testify before questions to the witnesses.

    STATEMENTS OF DAVID LANEY, CHAIRMAN, AMTRAK BOARD OF DIRECTORS;
     AND ALEXANDER KUMMANT, PRESIDENT AND CHIEF EXECUTIVE OFFICER,
                                 AMTRAK

        Ms. Brown of Florida. I now recognize Mr. Laney for his
    testimony.
        Mr. Laney. Madam Chairwoman, thank you.
        Mr. Shuster, I appreciate your comments.
        I appreciate the----
        Ms. Brown of Florida. Excuse me. Would you pull that mike--
    yes, sir.
        Mr. Laney. Thank you for the invitation to appear before
    the Subcommittee today. I am glad to be back. I am glad to see
    you again, Madam Chairman. We are very glad that Congress is
    turning to Amtrak's reauthorization and hopeful that there will
    be a very constructive outcome. I will make my stated remarks
    very short, and you can use my written statement for reference
    and for questions if you would like.
        As you know, the last time Amtrak had an authorization was
    10 years ago, and I believe it is now in everyone's interest
    that Congress has this discussion and, ultimately, adopts a
    reauthorization that provides a clearer direction for Amtrak
    and its role in shaping the future passenger rail in this
    country.
        It is worth reminding you that the talent and experience
    housed in Amtrak represent virtually all of the passenger rail
    expertise remaining in this country today. I believe that
    expertise is worth protecting and worth growing, but I know
    also that it will not survive unless we at Amtrak successfully
    continue to rebuild Amtrak's credibility with Congress and the
    administration, with the American public, and in the commercial
    marketplace in which we operate.
        That is our challenge. And afforded even the bare minimum
    of necessary operating support which we received during the
    last years, we are, I think, very successfully tackling that
    challenge; not as fast as I would like, but faster than I
    expected. We are nowhere near anything resembling what I would
    consider an end zone. Still, the progress is significant and
    tangible, thanks largely to the remarkable expertise and almost
    inconceivably steady commitment to Amtrak by its workforce.
        There are a number of challenges, Madam Chairwoman, as you
    mentioned, and I will highlight only a few. But one of the
    principal challenges is on-time performance, particularly of
    our long-distance and corridor operations on host or freight
    railroads. I would add, in response to your comment earlier
    about our tardiness in terms of the strategic plan, that
    apparently on-time performance has also affected the Board. My
    apologies. We will have a plan to you shortly, and I am glad
    you had a chance to see a draft.
        We also have a challenge with respect to our equipment. We
    need to replace a very old, and, some people might say,
    antiquated and deteriorating equipment fleet. We continue to
    have the challenge of the rationalization of our long-distance
    routes, and we need to rebuild relationships with States,
    particularly as we focus our energies on State corridors for
    the future. Reauthorization is a critical need, and in that
    reauthorization, we sincerely hope that there is a Federal-
    State match without which there would not be a very robust
    future for passenger rail in the near term.
        You mentioned, Madam Chairwoman, our labor contracts. We
    are very sincerely and very actively trying to move forward,
    and there are at least some indications of positive movement
    with respect to a resolution on a number of different fronts in
    that regard.
        Passenger security, on a different note, remains front and
    center for all of us. Those are challenges, but we have a
    number of remarkable achievements as well.
        We have reduced Federal operating support consistently. Our
    revenue in ridership growth, as you mentioned, Madam
    Chairwoman, is extraordinary. We have on-time performance
    levels, really for the first time, in its history of the Acela,
    approaching 90 percent. And I think we will be targeting 90
    percent as a minimum going forward.
        With respect to the reduction of Amtrak's debt, we reduced
    it by over $500 million over the last 4 years, and with respect
    to the success and the growth of our State corridors, I will
    refer only to the States of California, Washington, Illinois,
    Wisconsin, the Keystone Corridor in Pennsylvania, and the
    continued growth on the Northeast Corridor.
        The catalog of these positive results could continue, and
    there are a few more mentioned in my written statement. But let
    me close with a perspective on our employees, on our management
    team, on the working support we have had from the Department of
    Transportation, and now Secretary Peters, the Federal Railroad
    Administration, and Joe Boardman who is the head of that
    agency. All of these, I think, are in excellent shape, and that
    is at least some room for comfort that we will stay the course
    going forward.
        Finally, I believe you have a very independent, talented
    and proactive Board which continues to make a difference.
        I thank you for the invitation again, Madam Chairman, to be
    here today, and now I would like to answer any questions or to
    defer to our President and Chief Executive Officer, Alex
    Kummant.
        Ms. Brown of Florida. Mr. Kummant.
        Mr. Kummant. Thank you, Madam Chairwoman and Congressman
    Shuster. I will also try to keep my comments brief and not
    cover too much of the same ground.
        Again, it is a pleasure for us to be here and to engage in
    a very important topic here of the overall strategic future for
    Amtrak.
        First, on performance and key indicators, for another
    year--as has been mentioned in a couple of comments here
    already--Amtrak will set new ridership and revenue records.
    There are a number of contributing factors for this that I
    think we all understand quite well: the rising cost of
    gasoline; we have also added frequencies in a number of key
    States--California, Illinois, Pennsylvania--and there is
    clearly a shift in the ridership in terms of really looking for
    other modes.
        In the Northeast, the challenges of air travel combined
    with gas prices are clearly factors also as to why the Acela
    ridership has grown, as was referenced earlier, at 20 percent
    year over year. Another key ingredient which was referenced is
    the very strong, additional on-time performance of the Acela,
    reaching 88 percent, year to date, for this year with a target
    still of 90 percent.
        This improved on-time performance is a function of our
    investment in the Northeast Corridor infrastructure as well as
    sustained improvements in day-to-day operating efficiencies.
    Revenues for the year are 11 percent higher than last year for
    the total system. In addition, we continue to improve our
    safety numbers, and we are increasing our focus on passenger
    security.
        We have not assumed any new debt in 4 years, as Chairman
    Laney mentioned, and at the same time, we have also paid down,
    as was also referenced earlier. So, again, all of our
    indicators are moving in the right direction.
        Going forward, clearly we have challenges. All of this good
    news, again, does not mean that we do not have serious issues
    to tackle. It has become clear to me over the first months here
    at Amtrak that we are really at a crossroads. The company must
    do everything in its power today to position itself for the
    future. The decisions we make, the service we provide, the
    product we deliver today, will determine if Amtrak will truly
    play a key role as a provider of passenger rail service down
    the road.
        In order to realize the potential, we are developing a
    strategic plan, which we will have to you shortly, that focuses
    on continued companywide cost reduction initiatives that will
    help reduce Amtrak's reliance on Federal operating assistance.
    Increasing revenue is also, clearly, a key element of the plan
    and will hinge on Amtrak's ability to add frequencies and to
    improve revenue management.
        Our other key goals and objectives include containing cost
    growth, improving financial transparency, providing a safe
    environment for employees and passengers alike, improving the
    management of our human capital, and, finally, conserving
    natural resources. By increasing revenue and containing costs,
    it is our intent to reduce our dependence on Federal operating
    support over the next 5 years.
        Rail infrastructure continues to be a key issue, as you
    mentioned, of long-distance performance as well. America's rail
    infrastructure capacity is significantly stretched,
    particularly in those corridors that are most likely candidates
    for expansion. No matter what else is done, we will have to
    address capacity bottlenecks and shortfalls in many parts of
    our national rail system, most of which is not owned by Amtrak.
        Central to our strategy is to position ourselves to expand
    State corridor service where circumstances and resources
    permit. It is where the growth and ridership and revenue will
    lie in the years ahead. If you want to look at models of
    successful State programs, again as mentioned before,
    California, Washington and Illinois are great examples.
        Overall, our goal for our reauthorization bill is to
    solidify Amtrak's role in providing intercity passenger rail
    service. That includes a Federal policy for corridor
    development and for the improvement of our long-distance
    services so that they better link State and regional corridors
    and become a more relevant transportation alternative. Amtrak's
    reauthorization should also help us take advantage of
    opportunities to connect Amtrak's intercity trains with other
    modes of travel.
        For each of the strategic goals and objectives we are
    developing, we will outline a series of specific actions to be
    taken. It is clear to me that our future hinges on our ability
    to become more cost efficient and to develop a superior product
    for our passengers. As I have stated, the central part of our
    strategy is to focus our efforts on meeting the needs of
    States, but while we work with States to develop and to expand
    intercity corridors, we will not forget or overlook the
    importance of the Northeast Corridor.
        The Northeast Corridor is the realization of what a mature
    corridor should be. As future hearings will address Amtrak's
    specific capital needs, at that time we will talk more about
    what we need to do and would like to do in the Northeast
    Corridor.
        Again, in conclusion, it is remarkable that a few years
    ago, many felt Amtrak would continue moving into more and more
    serious difficulty. That is no longer the case. Reliability,
    mobility, and environment, these are things that consistently
    resonate with America's traveling public, particularly in an
    era of rising fuel prices, highway congestion, and heightened
    interest in environmental protection. Amtrak continues to be
    the most promising and welcomed alternative.
        Thank you for your time, and I will be happy to answer any
    questions.
        Ms. Brown of Florida. Thank you to both of you.
        You know, if you do not have a plan, then in the next 5,
    10, or 15 years, we could end up anywhere. And so that is why
    the plan of having those benchmarks and of having that
    information is important for us as we develop our budget, as we
    develop how we can assist making sure that the infrastructure
    is in place. And so I would like for you all to explain to us
    when we get back--it's June 12th, 2007, and we have been asking
    for this since April-May. I mean we really started asking for
    it in January when we took over the House of Representatives,
    when we started a new direction for Amtrak.
        So as we leave--we are going to have to adjourn for about
    45 minutes--perhaps that will be the first question that you
    could answer when we come back. We have three votes, and then
    we have got to take our class picture, so we will be back in
    about 45 minutes.
        Mr. Shuster. You are going to get plenty of time to think
    about it.
        Ms. Brown of Florida. Yes.
        Mr. Shuster, do you want to add anything to that?
        We will start off with that. Thank you.
        [Recess.]
        Ms. Brown of Florida. Okay. We can come back to order.
        I think I had given the first question, so you have had
    plenty of time to tell us what the status is and to explain for
    us why we have not gotten the information we requested and how
    we are going to move forward.
        Mr. Laney. Let me answer that question, Madam Chairman, if
    I may.
        We have, as you know, a new President and Chief Executive
    Officer. We have a virtually entirely new management team,
    senior management team. We have three of five Board members who
    are relatively new. And I guess I will assume the
    responsibility for the delay because it has been my job, as
    best I can, to align what amounts to very independent, very
    involved opinions, all very focused on the future of Amtrak.
    And we have been at this process longer than I would like. I
    think we are all a little weary of it. And we have known, at
    the same time, that you and your staff have been very anxious
    to have a copy of a final, publishable version of this plan.
        As you know and I know, you have a draft, and with that
    draft came a little bit of a cautionary note that the front
    end, first few pages of that, would change fairly dramatically
    or might change fairly dramatically; and in fact, they have
    changed very dramatically. But the financial piece of that, as
    well as the strategic targets and actions over the next 18
    months and beyond to deliver the results that we have focused
    on, are there very clearly delineated in the draft that you
    have. You should have the final copy, I believe, of the plan no
    later than midweek next week. And in fact, I would be able to
    deliver one to you today, but there are a couple of outstanding
    issues that are very material that need slightly more
    refinement and resolution. And part and parcel of the challenge
    is we have Board members who are scattered to the winds and who
    have their own independent lives and livelihoods they need to
    take care of, and it is hard to get everyone at the same place
    at the same time.
        It is no excuse. It has been my decision to slow it down
    for quality's sake. I would much rather deliver something of
    higher quality than of higher speed, so we will have it to you
    shortly. My regrets.
        Ms. Brown of Florida. Well, let me ask one other follow-up
    question here.
        Mr. Kummant has been the Amtrak President and CEO since
    September 2006. How would you rate his performance?
        Mr. Laney. Well, he probably cringes as I punch my talk
    button and begin the discussion here, but Mr. Kummant has
    stepped into a whirlwind of activity, and has been on a very
    steep learning curve, and has learned and has understood this
    business, principally I think because of his background and his
    training, faster than I could have imagined. I expected that at
    the time we hired him, and he has done a superb job of
    assembling a senior management staff, and has in effect taken
    control of an organization that was already moving fairly
    quickly forward in a direction. He picked up on that direction
    and gave it a little more shape and direction, and worked very
    carefully with the Board to try to deliver what you are about
    to see next week. So I give Mr. Kummant a very strong "A" for
    performance over the last few months.
        Now, that could slip, of course----
        Ms. Brown of Florida. Of course.
        Mr. Laney. --but so far so good.
        Ms. Brown of Florida. So far, that is good. That is very
    good to hear, too.
        Mr. Shuster.
        Mr. Shuster. Thank you.
        I mentioned in my opening statement the importance of some
    of these high-density corridors, the Northeast Corridor I think
    being the number one corridor in the country for your train
    service. And I see you have had some significant improvements
    there, not only in ridership but in improved revenues.
        Have the folks at Amtrak done any recent studies on the
    price tag of what it would cost to make the Northeast Corridor
    a truly high-speed rail corridor where you could have a train
    getting speeds up to 180 miles/200 miles an hour?
        Mr. Kummant. Let me answer that in a general case.
        First, what we have looked at is a gradual increase of
    velocity and, really, of the reduction of trip time and of the
    reduction of slow orders. The notion of even taking that
    corridor to sort of a European high-speed standard is really,
    frankly, very remote, given the commuter traffic on that line
    as well. And we do run in a mixed mode. There are something
    like 50 freight trains on that lane as well. So the notion that
    it is going to be a true, dedicated high-speed line is probably
    not in the cards for a long time.
        What we are looking at and, in fact, are in the process of
    launching--we are meeting, in fact tomorrow, with very high-
    level folks from all of the Departments of Transportation, the
    States, and the high-speed corridor--is to really create a
    capital master plan looking out over the next 10 to 20 years in
    order to identify what really needs to be done on capacity
    overall.
        So that is: What do we need to do with bridges? What do we
    need to do with tunnels? How do we get through New York City
    faster? How do we get through Baltimore faster? How do we
    expand slots for commuters? How do we increase overall train
    miles for Amtrak?
        So that work will be going on here very seriously over the
    next year. But as to the notion of pure velocity, I would say
    it is highly unlikely you will see much more than what we see
    at our peak in Connecticut and in Rhode Island of 150 miles an
    hour.
        Mr. Shuster. And unlikely unless we build a dedicated line?
        Mr. Kummant. Yes. It would have to be, really, a
    dramatically new structure. And in fact, you would have to
    decouple the commuter network from our network because it is
    unlikely that you would really mix those two modes.
        Mr. Shuster. Would you have to put a 100 percent dedicated
    rail or----
        Mr. Kummant. Yes. I mean that would be the extreme. I would
    imagine, you know, you might have to put some sort of--and I am
    just making this up, and there are probably people cringing in
    the audience, but I mean you would have to put major bypasses
    around cities in order to do that----
        Mr. Shuster. Right.
        Mr. Kummant. --of probably large sections that would be
    completely new at a very high cost.
        I would say there is a great deal that we think we can do
    with the existing structure, and the real trick here is not so
    much reaching higher speeds, but it is reducing disruptions.
    Again, an example is we drop down to 20, 25 miles an hour for a
    pretty long stretch through Baltimore. So if you would
    eliminate that, you would get a whole lot more out of that than
    if I took 150 miles an hour to 160 miles an hour through some
    of the wide open stretches. So it is really reducing those rail
    delays that is key.
        Mr. Shuster. Do you think you can get the Acela up to the
    speed of 110 miles an hour?
        Mr. Kummant. Well, on an average basis, I would have to
    talk to the engineers about that sort of calculation, but we do
    hit 135 south of New York, and we do hit 150, again, north of
    New York, and I think we can certainly--south of New York,
    there are a lot of projects. The quality of the catenary, the
    actual conductive wires that run over the track, is something
    that we will be gradually renewing south of New York, and that
    is very much a determining factor as well on velocity. So there
    is a lot we can do.
        Mr. Shuster. I know the Keystone Corridor has been very
    successful--Harrisburg to Philadelphia. The average speed is
    110; is that correct?
        Mr. Kummant. Yes, I think we get up to that. And you know,
    we cut--I do not know--something like over a half an hour in
    travel time, and we are up to 85 percent on-time almost. So----
        Mr. Shuster. It has been very, very successful.
        Are you going to be able to use that as a model or to
    duplicate that in other places in the country?
        Mr. Kummant. Yes. I think there are some unique issues
    there. One is that there are very few highway crossings and
    very few road crossings there. It was a very well-engineered
    railroad to start with. It was originally electrified. I think
    there are a couple of other areas around the country we would
    like to look at, but I think one of the more interesting things
    as well is to look at some of the bigger corridors between
    population centers where, nevertheless, we could cooperate with
    the freight railroads and perhaps with major capital infusion.
        If you look within Florida, Florida certainly has a great
    population center, opportunities out of Miami. D.C. south to
    Richmond is very congested. There are very big needs. If you
    look at L.A. North to the Bay Area, there would be
    opportunities there. You know, you are talking about
    significant capital, but you are also talking about significant
    population centers. Detroit to Chicago would be an example.
    There is a 35-mile stretch across Indiana that is very
    difficult to get across, but we actually own almost 100 miles
    of track into Michigan where we run almost 100 miles an hour,
    95 miles an hour. So there is a lot, I think, around the
    country that could be done.
        Mr. Shuster. I have one last question. I see my time has
    expired.
        Are we going to get another opportunity?
        Ms. Brown of Florida. Yes.
        Mr. Shuster. Okay.
        Just really quickly, how many high-density corridors are
    there in the country? I think I read somewhere there are 17.
    Does that sound right?
        Mr. Kummant. Forgive me, I would have to ask. There are
    designated corridors--I can look over my shoulder here.
        There are 13 designated corridors.
        Mr. Shuster. All right. Thank you.
        Mr. Kummant. Sure.
        Ms. Brown of Florida. The Chairman of the Full Committee
    has joined us, Mr. Oberstar.
        First of all, let me just thank you for conducting the last
    two hearings when I had to be in Florida with family
    obligations, but I know no one missed me because the
    transportation guru was here. And I am just really pleased with
    the leadership that you have provided for our Committee, and we
    are moving forward. I will turn it over to you at this time for
    any comments and questions that you may have of our panel.
        Mr. Oberstar. Thank you, Madam Chair. On the contrary, you
    were very much missed. Your insight and your driving force and
    your commitment to Amtrak and to passenger rail service and to
    the whole issue of freight rail is well-known and greatly
    appreciated. And we missed you, and we certainly hope your
    family, your mother and grandmother, are doing well.
        Ms. Brown of Florida. Yes.
        Mr. Oberstar. That is reassuring. That is wonderful.
        Mr. Kummant, you come to us, for once, with some good news
    about Amtrak. It is not a surprise because those of us on the
    Committee have been following things very closely. And I liked
    Mr. Shuster's question, but I did not like the answer.
        When are you going to get up to speeds of 185 to 200 miles
    an hour as they do in Europe? It is a good question. The answer
    is, as you said, not for a very long time, maybe not at all.
        I cannot accept that answer, because we can achieve those
    speeds. We can improve. It is a matter of priorities. It is a
    matter of capital investment. It is a matter of the mechanics
    of the operation of our passenger rail system, and whether this
    Nation--it is not whether Amtrak is willing but whether this
    Congress, speaking for the people of the country, is willing to
    prioritize and to make the investment that we need to make in
    the capital account to make Amtrak the best that it can be, the
    best that we know it can be.
        You cited a moment ago the need for improvement in the
    catenaries. That is just one of the capital investment needs of
    Amtrak not only in the Northeast Corridor, but it is one of
    many capital investment needs across the country.
        I have to tell you that I am disappointed that 3 months ago
    I asked for a listing of the capital investment needs of Amtrak
    in a meeting that we had in my office, and it took 2-1/2 months
    to get a document. Now, if Amtrak is serious--and you know what
    your needs are; you know what the requirements are; this was
    not a list that I asked for as an endorsement by Amtrak, but as
    simply a listing of all of the capital account requirements
    that then we could evaluate and prioritize and decide which
    ones we were going to fund first and which ones we could get
    money through the Appropriations Committee for, those for which
    we could bring the administration along, but it did not need to
    go before the Amtrak Management Board to be reviewed. I have to
    tell you that. I am very, very disappointed about that
    attitude.
        I have said many times how my own experience with passenger
    rail deteriorated over the years. I have seen it unfold before
    my eyes. When I was on my way to graduate studies in Europe in
    1956, I went by train from Minneapolis to the East Coast. The
    first leg was on the Milwaukee 400-- 400 miles in 400 minutes.
    That was the premiere passenger service of its time; at least
    we thought so in the Midwest. Now you can hardly get to Chicago
    by air in 400 minutes. By the time you drive to the airport,
    park your car, go through security, have a ground stop and an
    air hold and a weather problem, you cannot even do it by air.
    But we can do that by rail if we ignite the Midwest Rail
    Initiative, which was one of the projects recommended in the
    study of passenger rail initiatives, corridors, in pursuance of
    the direction and the funding for it in ISTEA of 1991. I was
    the author of that language.
        So of nine of your studies, six were recommended. The
    Midwest Rail Initiative was the primary hope for success.
        Let me ask you and Mr. Laney: What does it take, now going
    forward, to sort of inspire the Midwest Rail Initiative to get
    started?
        Mr. Kummant. Well, I think--well, what we are working very
    hard at, as I have alluded to in the past, is in pivoting our
    whole organization to face the States. So as we engage with the
    State DOTs and with the States and with the groups of regions,
    I think we really can articulate their particular needs, and,
    as you said, we can come up with very specific capital plans.
    But we also have to do that in conjunction with the freight
    railroads because, again, those are clearly along those rights-
    of-way, but we continue in those dialogues very intently.
        I am very interested, for example, as I have alluded to
    before, in looking at Chicago-Detroit. There is, I think, a
    large but manageable piece of capital that would get us across
    Indiana much more quickly. And I think all of those dialogues
    are occurring with a lot more intensity as we pivot our whole
    organization to make that our future. We have said very clearly
    that, going forward, the States are our future, and that is
    really where the ridership is going to be.
        Mr. Oberstar. There is the Northeast Corridor where you
    have this massive population concentration, where there is a
    rail infrastructure in place for passenger service, and it can
    go all the way down the East Coast to Florida.
        Then you have the Midwest. Then you have the long line
    across the northern-tiered States to the Pacific Northwest,
    Seattle. Then there is the California connection where, as your
    figures showed, passenger service is growing some 21 percent,
    and the State of California is a willing partner.
        Here in the Midwest, within 300 miles of Chicago, are 17
    percent of the flights in and out of O'Hare. If we removed 15
    percent--even, say, 10 percent--that would be a reduction of
    about 100,000 operations at O'Hare Airport, freeing up short-
    haul airspace and taxiways and landing and parking space. Free
    that up for long-haul service, which is far more valuable than
    300-mile short-haul service in aviation, and provide that by
    rail.
        St. Louis lost its nonstop service to London Heathrow when
    Carl Ichan bought TWA, sold it off, sold off that nonstop route
    to American Airlines. Then, eventually, TWA declined and was
    absorbed by American. They have no nonstop service abroad.
        You could take a high-speed train from St. Louis to
    Chicago, be there in 2 hours, have your bags checked through
    security, carried on a secure railcar, check right into O'Hare
    and, as a passenger, board in a secure environment and get
    frequent flyer miles for your rail travel, fly off to London or
    wherever else in Europe that passengers typically go from that
    airport, and continue that service Chicago, Milwaukee, Madison,
    Minneapolis-St. Paul.
        Then you cited the sections going east. That makes so much
    good sense to have an intermodal passenger rail service system.
    We need the Midwest Governors to get on board and to be part of
    this thing. I have a problem in my own State. My own Governor
    of Minnesota does not see the bigger picture, but I am working
    on that. I would like Amtrak to take some initiative here and
    to lead the way. Stimulate the States. Motivate them to get
    going.
        Now it has come back to the Northeast Corridor. As Mr.
    Shuster said, we would sure like to see much higher-speed
    traffic on the East Coast. You would have a massive growth in
    passenger service. Ms. Brown has advocated this many, many
    times throughout hearings we have held over previous years.
        You mentioned that in the Baltimore area, speeds are
    reduced to 20, 25 miles an hour. What does it take to upgrade
    the speeds there?
        Mr. Kummant. Again, that is the fundamental tunnel issue,
    and that is a multibillion-dollar issue. It is probably about a
    $2 billion issue to build either a new set of tunnels or to
    entirely refurbish those tunnels.
        If I may, sir, I would like to go back and just, again, tip
    my hat to Illinois. You pointed out the tremendous
    opportunities there. Now, we are talking about the conventional
    speeds, but that is a State that has doubled its commitment,
    its financial commitment, and it is pushing very, very hard to
    even put, you know, multibillion dollars out from a State
    level. So I think that is a great story, and we expect to
    continue to work very closely with them as well. But, again,
    Baltimore--getting back to Baltimore, again, a multibillion-
    dollar new tunnel issue is the fundamental----
        Mr. Oberstar. That needs to be spent for security purposes,
    a good deal of it for safety purposes and the balance for
    improving travel speeds in the corridor. But give us some
    figures on this. Give us some hard numbers and analyses and a
    suggested incrementalization of the investment. We will address
    the funding issues. We will be the advocates for it here on
    this Committee, but we need you to help us with the numbers.
    You are the ones who are "in the know" on the capital
    requirements.
        I will withhold further, Madam Chair, at this point.
        Ms. Brown of Florida. Thank you, Mr. Chairman.
        Mr. Brown. Did he leave? He stepped out. Okay.
        Mrs. Napolitano.
        Mrs. Napolitano. Thank you, Madam Chair.
        I was reading also, with great interest, a portion of our
    memo that gives us information, and it talks about the track
    conditions of the private rail that you use.
        In what condition would you need them to be to be able to
    provide either faster service or on-time delivery service?
    Because if they are not upgrading their infrastructure, you are
    suffering. How is that affecting you to be able to carry out
    your mission?
        Mr. Kummant. Sure. There is no question it is a significant
    issue. We, for example, have just signed a new 6-year agreement
    with Union Pacific where they have specifically designated a
    reduction in delay time that is associated with slow orders. So
    there is no doubt, if you look at some of our major routes,
    slow orders are a big issue for us and hurt us on some of our
    long-distance routes.
        We also have in the summer heat order issues where, when
    temperatures rise over a certain degree, different railroads
    have different approaches to slow down their railroad for
    safety reasons; and that, in a sense, is also an infrastructure
    expenditure issue.
        So, again, it is a difficult dilemma for the freight
    railroads. They are fundamentally geared economically toward
    supporting freight and freight velocity, and they are trying to
    generate a return on capital for their shareholders.
    Nevertheless, clearly, there is a bit of a natural conflict
    with the type of slow order reduction velocity we need to
    really be effective. So that is a challenge, and we continue to
    work through that with each of the railroads.
        Mrs. Napolitano. Well, given that, especially on the West
    Coast, you are going to have an increase in traffic that is
    going to further constrain the use of the UP or of the NSF
    lines, how are you working that out? Are you working with not
    only the railroads but also with the States to be able to find
    a way to be able to do all of the above--upgrade the
    infrastructure, find a better relationship so that you will be
    able to share more of it? Because they are going to be
    increasing the use of their rail capacity. What will you do
    then?
        Mr. Kummant. Well, again, there are no silver bullets
    there. It is day-to-day management. It is bringing the
    respective organizations closer together. We are spending more
    time with their dispatch operations to understand how they can
    dispatch more effectively. Our engineering groups do get
    together. Again, we have got very specifically targeted capital
    programs to reduce slow orders. And going forward, I can
    certainly envision, as we talk about Federal-State capital
    grants or matching grants, that those funds can go to
    debottlenecking very specific capacity constraints. And then
    that is an area in which we will have to continue being active,
    going forward, where we just really sit down with the freight
    railroads and say, you know, "Here are a whole series of
    projects. What is the schedule? How do we get through them? How
    do we fund them?" it is about capital. It is about reducing
    constraints.
        At the same time, certainly, every projection one reads
    over the next 15 years is still for dramatic freight volume
    increase, so there is no doubt there is an overall challenge
    with the capacity of the entire freight network.
        Mrs. Napolitano. How are you planning to address it?
        Mr. Kummant. Well, again, we do not have a simple solution
    to that other than going through, identifying and prioritizing
    bottlenecks and working with the freight railroads to put
    capital into those areas.
        At the end of the day, it is an intersection of essentially
    a private company and public policy where--and this is just a
    personal view--we are collectively going to have to find more
    and more ways to get public capital into debottlenecking the
    overall rail network.
        Mrs. Napolitano. Well, Amtrak got to reach much of the
    ridership gains in recent years due to collaborative efforts
    with the State governments.
        Can you describe what those partnerships have been? How
    have they been successful? Are you continuing to press forward
    on those?
        Mr. Kummant. Sure.
        Great examples, again, have been mentioned here in some of
    our opening comments. California, for example, since 1990 has
    put somewhere between $1.8 billion and $1.9 billion into the
    railroad infrastructure themselves, and those are unmatched
    dollars. Illinois has done something similar. They also have
    doubled their support number over the last couple of years. The
    State of Washington has done a very good job in collaborating
    with BNSF in terms of putting something between $300 million
    and $400 million into their rail infrastructure. And if you
    look at those three States, that is where the frequencies are;
    that is where the real growth has been; and that is where the
    State corridors are doing very well.
        Mrs. Napolitano. So there is a correlation, then, between
    the success for economic development, so to speak, and the
    ability to get your goods delivered on time.
        Mr. Kummant. Very much so, yes.
        Mrs. Napolitano. Thank you, Madam Chair. I will wait for
    the next round.
        Ms. Brown of Florida. Yes.
        I see that the Ranking Member, my colleague from Florida,
    has joined us. Mr. Mica.
        Mr. Mica. Thank you.
        I am pleased that the Rail Subcommittee is asking for some
    of Amtrak's strategic reform initiative information.
        I probably share the Chairman of the Full Committee's
    interest, too, in trying to get in the United States one high-
    speed rail corridor. I was not here during his questions. I was
    preoccupied. It was my understanding that Mr. Oberstar had
    requested information on what it would take to get the current
    Northeast Corridor up to a higher speed.
        Is any information being prepared in that regard?
        Mr. Kummant. Yes. I mean, we certainly have prepared and
    have submitted quite a bit of information on trip time
    reductions which, in the end, are average velocity improvement.
        Mr. Mica. Right now, our average speed is, what, 84 miles
    an hour?
        Mr. Kummant. I understand it is something in that
    neighborhood. But I do understand his fundamental question or
    that the question at hand was: Will we anytime soon exceed 150
    miles an hour as a top speed? Given the current overall
    structure, I said that that would be highly unlikely, but we do
    have a whole series of projects that includes continuing trip
    time reduction.
        We are also, in fact tomorrow, launching a capital master
    planning effort in a collaborative effort with the States along
    the Northeast Corridor where we will go through and really look
    at a 20- to 25-year vision on how do we really grow the entire
    corridor, what is the future of the commuter, where do they
    need slots, how do we increase velocity?
        Mr. Mica. Okay. Commuter versus high speed, you are going
    to look at both?
        Mr. Kummant. Yes, sir. Well, we are looking at the corridor
    in totality in terms of----
        Mr. Mica. I think you--and again, I was not here, but first
    of all, what is the maximum speed you could get out of the
    system if you put into play all of the improvements that you
    could out of the current trackage that you have?
        Mr. Kummant. Well, again, our peak velocity is 150, and I
    would have to go back and look at what an overall average speed
    trip time would be.
        Mr. Mica. I have not seen anything that exceeds like 85, 89
    miles an hour. Is there something that you have?
        Mr. Kummant. It is probably not dramatically more than
    that, but we would have to go back and look at that.
        Mr. Mica. And I think you answered his question.
        To get to TGV speeds or true high-speed rail, you would
    have to develop a separate corridor?
        Mr. Kummant. Essentially. Or you would have to take major
    segments of the corridor and develop a dedicated line.
        Mr. Mica. Why not have us put out for bid a contract on the
    Northeast Corridor to put in high-speed service?
        Mr. Kummant. Well, again----
        Mr. Mica. I mean that is not your decision. That is
    Congress' decision. Would you oppose that?
        Mr. Kummant. I do not oppose in principle looking at new
    alternatives, looking at----
        Mr. Mica. Actually, it would do quite a bit to free up that
    corridor for both freight and commuter service.
        Mr. Kummant. Well, it is a very broad question.
        Mr. Mica. If I took Acela, your high-speed service, off
    there and we just did commuter and local and freight service,
    wouldn't that dramatically free up the corridor?
        Mr. Kummant. Well, if you look at overall train miles, we
    are still the dominant user in train miles. So certainly it
    would open up a corridor for commuters, but you would
    essentially lose, you know, 10 million riders that we have
    today.
        Mr. Mica. Ten million riders for what?
        Mr. Kummant. For noncommuter service. That is the Amtrak
    and----
        Mr. Mica. It is Acela?
        Mr. Kummant. It is Acela and our regional product, yes.
        Mr. Mica. Well, again, you have heard of Richard Branson
    and what he did. He bought into the two north-south lines--one
    going up towards Edinburg, the other having 33 million
    passengers. Your total passengers are, what, 26 million for the
    entire system?
        Mr. Kummant. Twenty-five million.
        Mr. Mica. Twentyy-five million for the entire system.
        Mr. Kummant. Right.
        Mr. Mica. He just took those two corridors--and we had the
    rail folks in-- he put 10 billion U.S. dollars and 5 billion
    pounds into it. He put in all new equipment. He increased the
    ridership from 33 million to, I think, in the 44-million range,
    and he paid a dividend for the last 3 years.
        Now, I have asked continually for you all to separate out
    the Northeast Corridor activities and finances. Has that been
    done yet?
        Mr. Kummant. We are in the process of really restructuring
    our whole system. Our whole financial reporting system is----
        Mr. Mica. Can you tell what it costs to run the Northeast
    Corridor?
        Mr. Kummant. You can essentially tell what it runs, but we
    have legacy financial systems that we are working through. We
    have a new CFO, a new CIO. It is a very broad effort to really
    improve the financial clarity and transparency that I have
    committed to.
        Mr. Mica. Do you have the authority to contract out for
    services? Say if we wanted to take the Northeast Corridor,
    which is the only asset you have, you accumulate scattered
    assets and bid that out, both for the development of the
    corridor and for the operation of the corridor, do you have the
    authority to do that now?
        Mr. Kummant. It is really varying opinions on that because
    there is a whole underlying tax structure of the organization.
    It is not entirely clear how easy it is.
        Mr. Mica. It might have to be separated out by law?
        Mr. Kummant. That is an under----
        Mr. Mica. It could be done.
        Mr. Kummant. It is not a piece of work we have worked on
    over the last year.
        Mr. Mica. Finally, I went up to New York City and got a
    briefing on the Madison Square Garden moving Penn Station; and,
    first, my eyes were opened. I never realized that Farley
    Square, the Farley Station, which is the principal rail station
    when all the mail was brought in, I guess, from the '30s
    separated in Farley Station, which is about a block long. You
    ought to go up and see it.
        Farley Station is basically vacant property. It is only the
    Federal Government could screw up a potentially productive
    asset, leave it sitting like that. I think they said they had
    12 stamp windows where they sell stamps. And the final decision
    on relocating the rail, part of the rail service in that
    location, part of the hang-up is getting Amtrak to make
    decisions. I am sure it is part of a larger picture.
        Do you have any idea when you would be prepared to make a
    decision on developing that asset? The plan, as I understand
    it, is to take Madison Square Garden, rebuild it where Farley
    Station is. That would be a new passenger terminal. Then go
    back, got Madison Square Garden, put a couple towers and
    additional service that would be sort of intermodal and sort of
    cross-platform transfer.
        When do you think we will be able to move on that?
        Mr. Laney. That is not our decision.
        Mr. Mica. Who would make the decision?
        Mr. Laney. The decision--we are part of the decision, and
    we are moving forward quickly, but it is led by some developers
    in New York; also, the State of New York; also, the City of New
    York. There is a development authority involved and a number of
    other parties. We are working as cooperatively and
    constructively and effectively as we can to move it forward,
    but it is a very complicated project, as you know. We would
    love to see it materialize. I think a lot of the oddsmakers put
    it at less than 50 percent.
        Mr. Mica. Well, there was about $300 million, I think, some
    seed money from Congress. The deal could be put together if
    everybody at the different governmental levels would make the
    decision, because there is nothing but revenue to be gained out
    of a project like that. It will support itself. I am just a
    small-town developer, but that project will work if we get a
    pledge from you all to continue working, which I am sure you
    will do.
        I have more questions, but I will reserve the balance of my
    time.
        Ms. Brown of Florida. All right. We want to give him as
    much time as he needs.
        Let's go to Congressman Cummings, then come back to you.
        Mr. Cummings. Thank you very much, Madam Chairlady.
        Mr. Laney, I have always had concerns over the last several
    years about Amtrak not getting the kind of support that it
    needs to sustain itself. As one who lives in the northeast
    section along that corridor in Baltimore, a lot of my folks
    depend upon Amtrak; and to that end I want to ask you just a
    few questions.
        First of all, going back, there have been all kinds of
    proposals about the States taking more--putting more money into
    Amtrak services. I mean, is that where the Board is going?
        Mr. Laney. The short answer is, yes, that is where the
    Board is going. Because, ultimately, we need support from a
    capital standpoint for growth; and as the Federal operating
    support diminishes, we are going to need some sort of
    supplemental support from States involved. A lot of States, as
    you heard already, are heavily involved on an unmatched basis,
    but we have been pressing very hard for the importance of an
    addition of a match funding program of some sort in the
    reauthorization. But, yes, sir, the short answer is yes.
        Mr. Cummings. With regard to capital funding--I don't know
    what you may have discussed before I got here, but I apologize
    to keep repeating--Amtrak's own fiscal year 2008 grant seeks
    $1.5 billion, is that right, on Federal funding--in Federal
    funding, including $760 million in capital funding, is that
    right?
        Mr. Laney. Yes, sir.
        Mr. Cummings. The DOT Inspector General has indicated that
    at least $1.4 billion, or roughly double what is requested by
    Amtrak, is required to keep the system from falling further
    into disrepair. Are you familiar with that?
        Mr. Kummant. Maybe I can chime in briefly. I believe the
    DOT Inspector General suggested that for a total funding level,
    including the operating support number, that he felt we would
    need 1.3 to 1.4 billion. So I believe the number that we are
    talking about is an all-in number, which actually is fairly
    consistent with our view.
        Mr. Cummings. So what do we need for capital repairs and
    maintenance. Is that the figure you are saying?
        Mr. Kummant. The $700 million really includes all those
    figures.
        Mr. Cummings. Now where are we on this labor agreement? I
    spoke before with the unions, must have been a month ago; and,
    you know, when they told me it has been 7 years, I just
    wondered why is it taking so long to come up with an agreement.
        Mr. Kummant. Let me address that, sir, if I may.
        First, I share that. I would love nothing better than to
    have that behind us so we can really get on and run the
    railroad.
        We are in the middle of actually very serious dialog with
    three different unions. We have one deal that is out for
    ratification, one that is I believe very close to a handshake
    deal to move forward, and another where we have had a high-
    level discussion and an agreement to come in and have a very
    detailed discussion.
        I think, as you know, the issues we really have on hand,
    first, we have put a very competitive pay package on the table
    that is very similar to what was just ratified with the freight
    railroads. So we are very consistent there.
        There does remain, obviously, a very difficult question of
    the unions asking for a back pay number. That back pay number
    in total would have a $200 million price tag on it. What we
    have on the table is a bonus payment, which is less per person
    clearly than the total back pay but is something that we can
    fit into our total financial profile. So, absent some sort of
    action entirely outside of our financial ability, that $200
    million would really be impossible for us to deal with. But, at
    the same time, I do think that there is a number of discussions
    and very serious, honest discussions we are having that are
    moving toward a potential agreement.
        So we do have a bonus payment on the table, we do have wage
    rates that are very competitive with the freight railroads, and
    we are clearly--and I am sure you have heard this. What is very
    important to us is workplace flexibility issues, and that often
    becomes one of the sticking points in our discussions with the
    unions.
        Mr. Cummings. I see my time is running out, but let me just
    ask this last question. The differential between--you kept
    mentioning freight, and I appreciate it, but what about the
    difference between Amtrak workers' pay and, say, transit
    agencies, other transit agencies?
        Mr. Kummant. Some of those gaps have grown; and, honestly,
    that is the result of only having some COLA for 7 years.
    Sometimes you will hear gaps referenced that will be much, much
    narrower after a deal. But there is no doubt that large gaps
    have opened up along many of the trades and many of the types
    of occupations, and that is a big concern, and that is another
    reason that I very much would like to get some deals done. We
    will never be able to head to head completely compete with some
    of the very high-paid railroads, for example, Long Island
    Railroad, but we can close that gap substantially.
        Mr. Cummings. May I ask one more question, Madam Chair?
    Just one.
        Ms. Brown of Florida. Yes, sir.
        Mr. Cummings. Just one.
        I guess one of the things that concerns me is it seems as
    if we--the argument that you hear made all the time is we pump
    a lot of money into air, the air industry and others, and then
    when it comes to trains--the other day somebody stole my car,
    and I took the train over from Baltimore. And, I tell you, I
    had a chance to really talk to some folks. It was a blessing in
    disguise. But I said to myself, these people get up early--I am
    talking about I caught the train at 6:15--and they work hard.
        I am trying to figure out when you all look at your numbers
    are you all saying we just accept what we are told to accept?
    Do you all come up with the numbers? Does somebody else come up
    with them?
        Because, in other words, I am trying to figure out can we
    do more or are you all in the position as the Board to say,
    look, this is what we need to really do this, and this is what
    we need to run a first rate--and do you ever say, look at what
    you are doing for the airline industry?
        But we have got hard-working Americans getting up at 4:30
    every morning trying to make it and then these employees doing
    the best they can with what they got. Do you ever make any of
    those arguments?
        Mr. Kummant. We have got a great workforce.
        Mr. Cummings. I know. That is my point.
        Mr. Kummant. I will say this. The Board has moved
    substantially, and the numbers that we put on the table in
    March are very, very different and I think show a real
    commitment to trying to get there. So I would say we are doing
    everything we possibly can, and I am personally involved, I
    personally, through the numbers. I see the comparisons. So I
    say it is a very personal issue for me, and I am very committed
    to do what we can, and I think we have got some very fair
    packages on the table.
        Mr. Cummings. Thank you, Madam Chairlady.
        Ms. Brown of Florida. Thank you for raising those issues,
    all of the Members.
        Let me say for the past 6 years we have been doing all we
    can just to keep Amtrak afloat when the administration provided
    zero budgeting they recommended. So now that we have a change
    in leadership in the Congress I feel that we are moving forward
    and we are making progress, but it is very important on this
    one particular area in the area of labor negotiations and
    agreements that we do come to some conclusion because we want
    to move--I mean this Committee--we want to move the industry
    forward as we move freight; and we want to move Amtrak forward,
    also.
        So as a follow-up question, one that I have heard a lot
    about, back pay. It has been since 2000 when the contract
    expired, but the Amtrak board decision not to give back pay,
    can you talk to me about that? Because it is a major problem.
    It is like the story of the chicken and the pig. They have
    given all, the Amtrak employees. So where are we with this back
    pay issue?
        Mr. Kummant. It is no doubt a sticky problem; and let me go
    back a little bit, to 2002. David Gunn actually sat with a
    group of union leaders and laid out five principles for labor
    settlement back in 2002. The very first one is the freight
    railroads had just agreed to a deal; and he said, we will match
    that freight railroad deal or be competitive with that deal.
    Number two, we need workplace flexibility; number three, we
    need health insurance containment; number four, no workplace
    flexibility will result in a furlough of any employee; and,
    number five, we will not offer back pay. That was back in 2002.
        The intent at that point was for all parties to quickly try
    to move to some sort of resolution. Unfortunately, here we are
    7 years later; and that one principle has now ballooned into a
    $200 million issue. Again, that alone, if you were to say, hey,
    let's just write a check for that, we are not capable of doing
    that within the framework of our own financial structure. That
    is the simple reality of it. We can probably meet on a bonus
    payment something between 30 and 40 percent of that, and that
    is the basic structure, the types of offers we have on the
    table today for the back pay issue.
        Ms. Brown of Florida. Mr. Laney, can you speak with that,
    as chairman of the Board? Because, I mean, the Board has to, I
    guess, approve whatever recommendation.
        Mr. Laney. Yes, ma'am, we do. I don't know that I can add
    anything to that.
        Ms. Brown of Florida. I just want to hear you on the record
    where you stand.
        Mr. Laney. Well, let me just say that I have been here
    since about the time David Gunn mentioned or laid out to the
    union those principles, and I agreed with him then, and I agree
    with those principles now.
        The ultimate issue from our standpoint is workplace
    flexibility or, as you have heard it called otherwise, work
    rules. Without some additional flexibility in a significant
    way, there is not much future from an economic performance,
    financial sustenance standpoint for Amtrak, as far as I am
    concerned.
        Back pay is a sticking point, but, as President Kummant has
    just said earlier, I think we are within striking distance of
    some resolution with our major unions, and I would like to see
    us go there. It would be very helpful for all parties to move
    forward and move past the back pay issue.
        Ms. Brown of Florida. Okay. I would like to ask unanimous
    consent that Mr. Baker be allowed to participate in today's
    hearing and sit in with questions to the witnesses.
        Without objection, so ordered.
        Mr. Baker.
        Mr. Baker. Thank you, Madam Chair. I appreciate the
    courtesy extended and that of other Members and the witnesses
    who are anxious to get on with the matters at hand.
        Mr. Laney, I want to revisit what I think I heard you
    express a moment ago relative to workplace flexibility. Your
    response was to the point--and I want to make sure that I do
    not mischaracterize--that without appropriate flexibility and
    workplace environment that the financial future of Amtrak is
    cloudy at best.
        Mr. Laney. The short answer is, yes, sir. There is so much
    pressure in the rail industry generally and on ours in
    particular in terms of efficiencies from a financial
    standpoint, and our biggest challenge from a financial
    standpoint is our labor costs.
        Mr. Baker. Let me, if I may----
        Mr. Laney. Can I add one thing?
        Mr. Baker. Certainly.
        Mr. Laney. What we envision over time is, as you have seen
    and heard from all Members, is there are a number of pressures,
    whether it is rising trends in gasoline prices or congestion in
    air and highways and the inability to fund an expansion enough
    to handle the loads of traffic on our highways, there will be
    rising levels of demand for rail. We have got to be able to
    address that growth and address it from a financial standpoint
    in terms of efficiencies that we cannot deliver right now
    without----
        Mr. Baker. I certainly understand. I don't think we want to
    be in the position of the more service we offer, the more money
    we lose, which gets me to the operational metrics. I have been
    concerned--and let me acknowledge at the outset I have not been
    the most ardent of Amtrak supporters, but it is not because of
    the disagreement with the basic purpose of the operation. It
    has been with a frustration over the lack of what I call
    appropriate financial metrics to understand where the pressure
    points may exist and to what extent services may be modified or
    changed in order to achieve what I believe is the intent to
    provide economical, on-time service to people who otherwise
    would not be served by any other provider.
        To that extent, would either of you have--or let me back
    up. Since my last visit to this subject matter over the last 18
    months, have there been no reporting methodologies,
    establishment of new or different metrics or financials in a
    better condition to be able to report operational bottom line?
    Do we have a better cost per passenger mile operational
    assessment? Have we had customer satisfaction surveys to find
    out what is good, what is bad? What is the progress with the
    Acela line?
        In other words, make me feel good that where we are today
    is not where we were 5 years ago when we were collecting fares
    on cars with cigar boxes and wondering why we couldn't figure
    out the cash flow.
        Do you have financials that are deliverables, that someone
    could look at and objectively say I know where we are and I
    know how much we are going to lose, and this is why?
        Mr. Laney. That is a lot of questions, and I am not going
    to try to answer them all. Let me start with answer one. Then I
    would like to give it to our CEO for a little more detail.
        One is, are we today where we were 5 years ago from a
    financial standpoint, from a ridership satisfaction standpoint,
    from our allover ridership and revenue standpoint? Absolutely
    not. It is a different operation than it was 5 years ago as far
    as I am concerned; and, more importantly, it continues to head
    in the direction I think you would like to see it head. As I
    said earlier before you were here, it has moved farther than I
    expected it would move, not as fast as I would hope.
        Mr. Baker. How do you square that with the opening
    statement that, unless we get workplace flexibility, the
    financial future of Amtrak is very bleak?
        Mr. Laney. I expect we will have workplace flexibility.
        Mr. Kummant. Well, let me just make a couple of comments
    about where I think we are really moving the ball and then to
    your fundamental question about structure of the financials.
        If you look at the Acela product, for example, and we do
    plenty of customer surveying. Customer satisfaction numbers are
    up significantly, and the share numbers are up dramatically. We
    are actually taking share from the airline industry along the
    Northeast Corridor.
        Ridership is up over 20 percent year over year. Overall,
    Amtrak revenue is up 11 percent year over year. We have a very
    specific measure of revenue per available seat mile that is up
    in almost every category. So there are very specific measures
    that we are doing well in.
        Safety tends to be something that within the railroad
    industry is very, very meaningful to rail guys, because it is
    such a measure of how kind of management and front lines work
    together. Safety is improved on a reportable incidentbasis----
        Mr. Baker. Let me get a couple things on the record,
    because my time is about to expire. They extended courtesy the
    allow me to do this.
        For the record purposes, if you can provide the cost per
    passenger mile--you can pick any two routes you want--between
    route A and B. If you can give me some year over year data, if
    you can show me where the projected operational deficit will be
    reduced over time and for what reasons or factors.
        The other thing I was going to start out asking, but I got
    diverted, there is an act that was passed in 1993, the Federal
    Program Performance Review Act, which is subject--a number of
    governmental agencies are subject to some sort of metric
    analysis, and I can't see why Amtrak would have been exempt.
        And I know the GSE argument, that you are not really fish
    or fowl. I don't go there. I think as long as you are getting
    operational subsidies from the government, there is a standard
    to report to the government to disclose why we are in the mess
    we are in.
        If you can at some point respond--not today--to whether you
    would have a policy objection to being made subject to the
    Federal Program Performance Review Act, and that is simply an
    ability for us as indirect shareholders to be able to get a way
    in which we can look at operations and feel better or worse
    about where we are going.
        I hate that the time has been so limited. I am sure you are
    enjoying it, but I really, really want to try to work with you.
    This is not about shutting Amtrak down. This is about trying to
    get us on a basis where we can all say we are standing on solid
    footing.
        I thank the gentlemen and the gentlelady for yielding time.
        Ms. Brown of Florida. Yes. Mr. Baker, I want to make a
    point here, because I am glad you came to the Committee, and I
    am glad you asked the questions.
        But on the other half of my concern, you, coming from your
    area, I had a question that I want to ask them on the Sunset
    Limited, when the people from that region have come to my
    office and have discussed that particular route is not
    financially--one that is financial--but there are other things
    I want them to consider when they develop whatever model, and
    one of them is homeland security.
        We need to have another way to get those people from that
    area out of harm's way. Amtrak would be one way, but that is
    not a profitable line. That is a problem. The profitability
    cannot be the only factor. Clearly, we need to have a way
    that--economics is part of the plan, but also we need to look
    at security.
        I have had several meetings with them. I have called Mr.
    Laney about this issue, because I want them to put that train
    back on and run it at a time that--not 2:00 in the morning. But
    if we had another Katrina, we would already be up in operation
    and could get those people out of harm's way. But it does not
    work for them financially.
        So I want them to consider other things other than just
    finance when they consider it.
        Mr. Baker. Would the gentlelady yield?
        I don't dispute the Chairlady's observations at all. There
    should be other considerations in determination of whether a
    public service is continued. All really I am suggesting is that
    we have that discussion; and if the gentlelady chooses to
    support the continuation of a route even with the knowledge
    that it does not necessarily cash flow, that is fine with me,
    because we subsidize a lot of things.
        However, this is a little different. Certified annual
    financial reports, quarterly operating expenses and revenues,
    things that any other entity, Fannie Mae or Freddie Mac--that
    is a bad example because Fannie is kind of late right now on
    theirs. But my point is at least there is requirements; and all
    I am suggesting, Madam Chair, is if we can come to a standard
    for reporting and understand the scope of our liabilities, it
    will help the Congress plan and I think encourage Amtrak to
    make the proper decisions subject to----
        Ms. Brown of Florida. Perhaps we will let them answer that
    question, because they had discussed it earlier. Why don't we
    just give you a moment to answer.
        Mr. Kummant. We produce monthly performance reports that
    are sent to the Hill and are posted on our Web site. Can every
    financial system be better? Yes, and we certainly are beginning
    a process to put the entire company on an SAP enterprise system
    and again have brought in a new CFO, a new CIO. But there is
    plenty of financial information available, as well as on our
    route level.
        Mr. Laney. We also have annual independently audited
    financial statements available at any time to you.
        Mr. Baker. If I may, I am not disputing that there isn't a
    financial regime in place, Madam Chair. I am just saying the
    information we get does not address the concerns that I have
    raised. I have spent considerable time in past sessions in this
    endeavor, and I am confident new leadership now being at the
    table, that these gentlemen are very capable and sincere of
    achieving their goals, but the fact that we are just now
    engaging in implementation of SAP is an indication we have
    still got work to accomplish. Not being combative, just we are
    not where we need to be, and I think that should be
    acknowledged.
        Ms. Brown of Florida. Thank you, Mr. Baker. I wasn't being
    combative, also. I just want you to know that I am pushing them
    because the people in your area have been pushing me.
        We are going to do our last round of questioning and start
    with my colleague from Florida, Mr. Mica.
        Mr. Mica. Thank you again. Just a couple of quick
    questions, if I may.
        Over the period I have been on the Committee you have had a
    high of, I think, in the 25,000 number of employees. What is
    the current number? I see a nod there. Then it went down to
    about 19,000. Where are you now?
        Mr. Kummant. We are about 18,5. A large piece of that was
    the Boston commuter service that dropped out, and the rest has
    been a gradual attrition and management efficiency work.
        Mr. Mica. Okay. So about 18,500. Your operating subsidy,
    last year I think Congress gave you about 1.2 and what was----
        Mr. Kummant. Excuse me, do you mean the total number or
    actual operating support number?
        Mr. Mica. Total number.
        Mr. Kummant. The number for--I will have to look over my
    shoulder. For 2006, it was the 1.295.
        Mr. Mica. But that wasn't all operating subsidy, was it?
        Mr. Kummant. That included capital and debt service.
        Mr. Mica. What would you say the subsidy was? I have
    between 500 and 600 million.
        Mr. Kummant. It ended up being about 450 and the debt
    service----
        Mr. Mica. That makes the average subsidization of a ticket
    based on your ridership about $49 for every ticket?
        Mr. Kummant. I would have to do the math, dividing that by
    25 million riders.
        Mr. Mica. Well, it is too difficult. I think that is
    correct. I may be wrong. Your debt service was running around
    300 million.
        Mr. Kummant. A little over 300.
        Mr. Mica. About 300 million. And your capital--backlog
    maintenance, I am sorry, backlog maintenance at one time that
    was 4 to 5 billion. Is that still that high or has it been
    brought down?
        Mr. Kummant. Ongoing capital number has been between 4 and
    600 million. We have put 1.4 billion into the corridor.
        Mr. Mica. Okay, that is capital. What about your
    maintenance backlog for the whole system?
        Mr. Kummant. Basically, that essentially, as you pointed
    out earlier, is our system. So we pretty much have worked off
    the state of good repair types of issues to get to that point.
    The ongoing number to maintain state of good repair in the
    corridor will be about 350 million, and about 70 percent of the
    equipment has been refurbished.
        Mr. Mica. Not annualized but the total maintenance backlog
    would be?
        Mr. Kummant. The total maintenance backlog on the rest of
    the system is a freight railroad.
        Mr. Mica. You are not counting that.
        Mr. Kummant. No, sir.
        Mr. Mica. But to operate you are going to need 1.2 to 1.3
    billion budget per year, right?
        Mr. Kummant. In the range of 1.2 to 1.5.
        Mr. Mica. In the Lautenberg bill that was about 1.8 billion
    or something like that, that would give you about 4 to 500
    million a year extra, but that is not really going to bring you
    to a high-speed system based on any testimony we have ever had
    here.
        Mr. Kummant. No, sir. Again, we are talking about tens of
    billions for a radically different system.
        Mr. Mica. Last time we had someone testify it was 16 to 18
    billion, as I recall. But that has been years ago, too. I am
    not sure what that would have gotten you. Might have gotten
    some tunnels and bridges and all the other things, but I don't
    know if it would get you a full high-speed system. Because, as
    you testified earlier, you still have problems running it in
    the same corridor. It needs to be separated, right?
        Mr. Kummant. If you are looking for 300 kilometer an hour,
    200 plus mile hour system, you need a radically different
    system. There is no doubt.
        Mr. Mica. All right. One other thing that is in the--there
    are several measures, the environmental meltdown, the global
    warming. There is a proposal to have commuter rail and other
    passenger rail preempt freight as one of the measures that they
    are looking. Have you at all taken a position on anything like
    that, passenger service? In fact, I think you are still in
    charge of all passenger service.
        Mr. Kummant. Forgive me. Are you referring to the
    fundamental Amtrak right on host railroads?
        Mr. Mica. I think they are looking at beyond that in one of
    these proposals. Maybe you haven't seen it.
        Mr. Kummant. There are preemption discussions on local
    preemptions in the Northeast Corridor which we would be very
    concerned about very specific language on that. Because you end
    up have enormous system difficulties if any locality can
    preempt service on any kind of contiguous piece of the
    Corridor.
        Mr. Mica. In the Northeast Corridor you wouldn't favor
    that.
        Mr. Kummant. Because, again, you would probably destroy the
    value of actually having a corridor. It wouldn't become a
    corridor. It would become a local, fractured piece of locally
    controlled segments.
        Mr. Mica. But there are some proposals in Congress as part
    of the global warming initiatives and may be coming out of one
    of the Committees to do just that.
        Mr. Kummant. I am not intimately familiar with that.
        Mr. Mica. You wouldn't favor that?
        Mr. Kummant. In a general sense, and I may be misspeaking
    because I don't know the specific provisions, but if you split
    up until small, locally controlled pieces you will use the
    effectiveness of intercity passenger rail.
        Mr. Mica. Thank you. I appreciate the job you and Mr. Laney
    try to do. Thank you.
        Ms. Brown of Florida. Mr. Mica, have you finished? Thank
    you very much.
        I know that you know we spend close to $4 billion a week in
    Iraq for 28 million people. I would like to see what would a
    couple of extra billion dollars do if we put it into the system
    so we can move our citizens and get them to work and back and
    forth and free up some of the money that we put into the
    airports so that a lot of our aging population or elderly would
    love to be on the train as opposed to the plane and all that
    security the way they have it.
        Mr. Mica. If the gentlelady would yield. I would be happy
    to sign on to any legislation.
        We heard the request here that we need to draw private
    capital into the process. Private capital will flow into the
    process if they are allowed to develop and operate those
    corridors and you won't have to put--well, you have to put
    very, very little Federal money into it. We may require some
    Federal backing, maybe some exceptions like we do on some
    liability for airlines, and we will have high-speed corridors,
    rail passenger corridors throughout the United States.
        Ms. Brown of Florida. I am excited about that initiative,
    and I take back my time. I am just looking forward for them to
    come forward with the plans so we can figure out how we can
    assist.
        Mrs. Napolitano.
        Mrs. Napolitano. Thank you, Madam Chair.
        I am sitting here because I am listening to that, and I
    wish that we had all the money to be able to do those high-
    speed intermobile and everything else to move our product to
    market and our people to work.
        One of the questions that comes to mind as you are talking
    is about the pay raises that have not happened since, what, 7,
    8 years. Is it something that happened that management recently
    is going to be giving raises and not staff? Doesn't that kind
    of go against the wage increases of $1.70 for labor for the
    last 7, 8 years or whatever?
        And then, aside from that, have you lost personnel because
    of it? And then what are you going to do in having to train new
    employees who have to come and backfill, if you will, to be
    able on to take on those jobs, the time and money spent on
    that, and then what does that do to your accident rate?
        Mr. Kummant. All very good questions.
        Let me address there is a program that we had put in play
    which was to address hard-to-fill jobs in the management ranks.
    Let me just put that in perspective.
        The price tag on this for the company was in the 5 to $6
    million range, in contrast to a $200 million back pay issue.
    The intent there was to focus very specifically on jobs that
    have remained open and frontline jobs that we simply haven't
    been able to fill in areas where our current pay was perhaps 25
    percent below local markets.
        I would also like to say that no one is well served, either
    management or labor, by not having jobs filled. I absolutely
    agree with that.
        Now that specific program we are going to take another look
    at, look at specific provisions. We had a geographic component
    that may have been a little too broad. It is actually a very
    modest program in contrast to some of the large issues relative
    to labor front, and it ended up being something like--I don't
    know--2 percent on the total salary. But, again, that program
    we are taking a look at and making sure that it is the right
    thing to do.
        I am not trying to pour the salt in anyone's wounds. I am
    trying to run an effective organization. That really was the
    thrust of that.
        To your other points, I simply say I agree with your
    concerns and worries. We do have difficulty filling jobs
    without having labor agreements. It does make training more
    difficult. So far, our safety numbers have held up. I agree
    that not having experienced people on the job sometimes can be
    a safety liability.
        But in the safety realm it is actually interesting, because
    it can cut both ways simply on how the numbers work. This is,
    believe me, not an argument to hire new people, but sometimes
    new people can actually be much more focused on safety than
    people on the job for a long time, not exclusively true, but
    that is why one can drive safety numbers effectively even when
    one has turnover.
        But there is a training cost, training liability, and that
    we need to fill jobs is absolutely true, and that is a problem.
        Mrs. Napolitano. But isn't it true that experienced people
    are necessary to be able to prevent accidents?
        Mr. Kummant. Yes, I agree completely. I only meant in some
    cases you can have fairly new workforces and see good safety
    numbers and you kind of wonder how can that be. That is not to
    say experienced workforce and sustaining it is not where it is
    at. I absolutely agree with that. No question.
        Mrs. Napolitano. Then one other area that is rather
    interesting is that you apparently have 70 percent of your
    rolling stock has been refurbished, but most of it is over 25
    years old. When and how and what plan have you got to be able
    to replace, modernize and be able to expand to be able to
    increase your ridership?
        Mr. Kummant. You are absolutely again right. That is really
    the centerpiece of where we believe we have to go forward
    strategically. We have to begin a whole new cycle of equipment
    procurement, even this year, even for our high-speed product.
        Mrs. Napolitano. Is that part of what you are presenting to
    Congress at all? Because if it is not being considered, how are
    we going to look at it?
        Mr. Kummant. This is part of the document we will be
    producing shortly. But, in all candor, it is something we have
    talk about at almost every hearing in terms of a very
    significant need for the system.
        We would also love to look for some demonstration train
    sets of modern equipment to show what that can do for ridership
    as well. We may be able to do some of that more quickly rather
    than major other procurement. But you are exactly right, and
    that is a key issue to focus on in the coming year.
        Mrs. Napolitano. I hope that Amtrak will move forward on
    trying to get this imminence of strike avoided.
        Thank you, ma'am.
        Ms. Brown of Florida. Thank you.
        Mr. Shuster.
        Mr. Shuster. Thank you.
        First, I just want to make a statement. I am very
    encouraged to see in your plan that you are going to use the
    Customer Service Index as one of your metrics as you go
    forward. I think in any business making sure customers are
    satisfied is the number one job. So I am pleased to see that.
        Also very pleased to see that you are, in your procurement
    for equipment in the future, to purchase DMUs, lower cost to
    operate and flexibility; and I am very interested in finding
    out if you are considering using them on the Harrisburg to
    Pittsburgh. There is about 70 to 75,000 boardings in that
    region. That is what I consider--I am sure you consider--lower
    volumes. Where are you looking at using them and can you
    generally comment has there been any discussion of the
    Harrisburg to Pittsburgh?
        Mr. Kummant. I am afraid I can't specifically comment on
    that, but that is exactly the type of service we look at in a
    development in a less dense area. I think along the gulf coast
    might also be an interesting area for DMUs and anyplace where
    we would like to build ridership. I think we are also looking
    at it in the Northeast.
        Mr. Shuster. I just think there are tremendous
    opportunities to build ridership.
        The final question I have deals with the food and beverage
    department. I know in 2006 the GAO had a study out there that,
    for every $2 in expense, you had brought in $1 of revenue; and
    in a time period from 2002 to 2004 Amtrak lost almost $250
    million, basically, selling ham sandwiches and chips. What
    reforms have you instituted and is it possible to get the last
    quarter profit and loss on the food and beverage department,
    see what you have done?
        Mr. Kummant. What I can tell you is this year we will
    continue improving that number. I think between 16 and $19
    million cost takeout.
        Let me also make the point, though, that you can go back
    and look at Santa Fe numbers from the 1950s and look at their
    food numbers. There simply is no way you are ever going to make
    money on food on trains. It is essentially part of what every
    seat pays for.
        So I do think we have to look at Amtrak in aggregate; and
    if you look Amtrak's fare box recovery overall we, in fact,
    stack up with anybody in the world, including the French,
    including the Germans. Our total fare box recovery of 70
    percent is a very good number and is in fact twice what
    transits run at, and that includes the entire food service.
        Now as far as the specific initiative, we do have
    areconfiguration of our dinners into a diner-lounge structure
    with a simplified menu, with a simply food and more flexible
    service that can be scaled up or scaled down depending on the
    service. That is really going to be our vehicle for efficiency
    and saving in the future, and I think we feel very good about
    that initiative.
        Mr. Shuster. In the last quarter, can you give me numbers?
        Mr. Kummant. I can give you the annual number, a savings of
    in excess of $16 million this year.
        Mr. Shuster. Again, thank you both for being here today. I
    appreciate your time, and I yield back.
        Ms. Brown of Florida. Thank you.
        My last question, I know I had a discussion, but I didn't
    get an answer, so let me just ask it in the form of a question.
    What is Amtrak's plans for the Sunset Limited route and when
    will those plans be finalized?
        I know that you all was in a board meeting when I tried to
    call you, Mr. Chairman, on this issue, because my office had
    been full of people from that region that came and talked with
    me about it. So I would like some discussion on that.
        Also, I can just fold in my other question, what is the
    largest challenges facing Amtrak; and, lastly, how can we in
    Congress assist you? If both of you could address those issues,
    I would appreciate it.
        Mr. Kummant. I would like to start with the Sunset. I do
    think what we would very much like to do, and it is in
    consultation with your office, is to focus on corridors along
    the same route in order to offer services that really work. I
    would, frankly, like to reduce or I should say eliminate the
    Sunset as this lightning rod for the--as an avenue of
    criticism. I think there is better and more effective service
    that we can offer your constituents and constituents along the
    whole gulf coast from Mobile to New Orleans as well as we
    discussed very specific corridors within Florida. And we also
    have different approaches on the western route in order to
    service that area and sustain the slot.
        So that is really how we want to move forward.
        The biggest challenges, again, I think we have addressed
    here today, which is, look, I will be the first to say we
    really want to come to a settlement with our whole workforce
    and our labor force. We want to be one team, move forward and
    really make this thing run.
        I do think the equipment procurement piece that we have
    talked about is substantial, and I think there again it is
    process, and it is capital, and there is, obviously, a lot of
    people committed to that.
        Finally, you have heard about the on-time performance
    challenges, and that is not an easy one. I think we are moving
    forward; and we do have a plan to continue working with the
    railroads, freight railroads. It is a personal view. But we are
    going to have to continue to find ways to put public capital
    into the real constraints in the freight network where both
    freight and passenger rail can get some benefit and drive on-
    time performance.
        Thanks for the time today.
        Mr. Laney. With respect to the Sunset Limited, Madam
    Chairman, part of our challenge, as you know and you have heard
    us talk about it, is restructure, rationalization of our
    resources and investment within the long-distance structure.
        I think you just heard from our President probably what is
    likely to be the ultimate sense of the Board in relatively
    short order; and that is, those resources, that investment is
    not best served in the Sunset Limited. It is best served in
    focusing it on corridors and, in particular, in that part of
    the country in the concentrated populated area of Florida.
        Our biggest challenges are I think fairly easily
    identifiable: on-time performance, equipment replacement, the
    Federal-State match and the implications that has for corridor
    growth, our labor contracts. And not in that order.
        Ms. Brown of Florida. How can we help?
        Mr. Laney. The starting point is reauthorization. It is
    vitally important that we have some form of Federal-State match
    that is enough of an invitation to bring the States to the
    table to work with us for the corridor development. That is, I
    think, first and foremost in terms of what you can do. We will
    be delighted to help in any way we can, but our primary care is
    to continuing the progress that I think we have sustained for a
    number of years by working with you, with DOT, with the FRA,
    good partners, with the States, and continue the progress and
    the growth of ridership and revenue and the containment of the
    costs.
        Ms. Brown of Florida. Well, we certainly want to work with
    you. My challenge is that it is very important that I
    understand the operations side, that is one side of it, but
    also we need to know long term what kind of investment that is
    separate from operation. But when we look at security, when we
    look at your stakeholders that we have to work with, whether it
    is bridges and tunnels, what we need is to make sure that we
    have a system 10 years from now or 15 years from now that is
    really moving America where we want it to go.
        When we look at gas prices at $3, $5--$5, people cannot
    afford it. So we realistically need to be together on a team to
    move this country where it needs to go. I think we have the
    vision and the leadership in Congress, and working with you all
    on the Board, we can move forward, but we cannot do it in a
    vacuum. We need the input from you all.
        Mr. Laney. We fully understand and agree and look forward
    to working with you, Madam Chairman.
        Ms. Brown of Florida. Thank you.
        I want to thank the witnesses for their testimony and the
    Members for their questions.
        Again, the Members of this Subcommittee may have additional
    questions for the witnesses; and we will ask you to respond to
    those in writing. The hearing record will be open for 14 days
    for Members wishing to make additional statements or to ask
    further questions.
        Unless there is further business, the Subcommittee stands
    adjourned. Thank you all very much.
        [Whereupon, at 4:35 p.m., the Subcommittee was adjourned.]

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