Intercity Passenger Rail: Amtrak Needs to Improve Its
Decisionmaking Process for Its Route and Service Proposals
(12-APR-02, GAO-02-398).
Due to the continuing deterioration of its finances and its
attempt to eliminate its federal operating assistance by December
2002, Amtrak undertook several actions to improve its financial
condition, including changes in its routes and services. In
December 1999, Amtrak's board of directors implemented the
Network Growth Strategy to shift its route and service plans for
new routes and expanded services on the freight tracks over which
it operates. Amtrak has not been successful in implementing its
Network Growth Strategy. Two years after announcing the new
strategy, Amtrak has only implemented three routes, one of which
was later canceled. Amtrak still plans to implement the remaining
three routes, although later than planned. The overestimation of
express revenue and an inability to reach agreement with freight
railroads over various aspects of implementing the proposals
contributed to the cancellation of any proposed route or service
action. Increased mail and express revenues were the cornerstone
of the Network Growth Strategy. However, Amtrak overestimated the
mail and express revenue expected. According to Amtrak, this
overestimation occurred because (1) it had no empirical basis for
its revenue estimates and (2) express shippers were reluctant to
enter into contracts for service that did not yet exist. Six of
the planned route actions were canceled because Amtrack
overestimated the revenues associated with them. Amtrak was not
able to reach agreement with freight railroads since they were
concerned about (1) Amtrak's plans to operate additional trains
in already congested areas, (2) Amtrak's plans to carry express
merchandise that might compete with their own business, and (3)
compensation that Amtrak would pay for use of their tracks.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-02-398
ACCNO: A03054
TITLE: Intercity Passenger Rail: Amtrak Needs to Improve Its
Decisionmaking Process for Its Route and Service Proposals
DATE: 04/12/2002
SUBJECT: Financial management
Railroad transportation operations
Railroad industry
Strategic planning
Cost control
Program evaluation
Amtrak Network Growth Strategy