WASHINGTON — According to a wire service, an advisory panel recommended an Amtrak restructuring proposal on Thursday that would break the cash-poor railroad into three parts and eventually allow the government to open its routes to private competition.
The proposal by the Amtrak Reform Council would dramatically restructure operations of the nation’s only long-haul passenger rail service for the first time since its inception 30 years ago.
The proposal that emerged weeks ago and was formally sent to lawmakers on Thursday recommended that Amtrak be split into three elements:
— A small government-run corporation would oversee key decisions for planning, operations and funding.
— A subsidiary would own and upgrade the profitable Northeast Corridor between Washington and Boston.
— Amtrak would morph into another subsidiary with rights to operate trains for a three- to five-year transition period. Routes would be contracted.
After this time, the government could open some or all of Amtrak’s routes and other businesses to private competition if they are not being operated efficiently. Amtrak would be eligible to bid for these services.
Some private rail companies have expressed interest in assets along the Northeast Corridor as well as some of Amtrak’s commuter and non-passenger services.
In a statement, Amtrak blamed what it called a flawed national rail policy and limited government support for its troubles, not its management decisions.
Amtrak said a strong commitment was needed from the government on the scope of rail service it envisions, funding and investment.
“Until these issues are resolved, the nation’s passenger rail system will continue to be torn by conflicting policy mandates and inadequate capital, whether operated by Amtrak or anyone else,” the railroad said.
Congress could ignore the reform council plan and restructure Amtrak as it sees fit, if at all. Many of Amtrak’s money-losing routes are important to powerful lawmakers who value the jobs and service to constituents they provide.
Still, the plan will force Congress to take its first hard look at Amtrak in five years.
The railroad’s president, George Warrington, put new pressure on lawmakers last week when he said Amtrak would halt all 18 of its long distance routes in October if Congress did not approve a $1.2 billion aid plan.
Amtrak lost $1.1 billion last year and currently receives $521 million in federal subsidies. The railroad has roughly $3 billion in debt.
In 1997, Congress ordered Amtrak to fix its finances and operate without federal subsidies by the end of this year. It created the reform council — made up of industry, labor and government appointees — to oversee this effort and recommend restructuring, if necessary.
Despite launching a successful high-speed service in the Northeast and adding other innovative businesses, Amtrak’s revenue has been insufficient to meet huge capital expenses and other costs. It will fall far short of its goal to become self-sufficient.
The reform council restructuring plan calls for government funding to help sustain operations. This would come from a combination of federal and state resources. A component of the plan would reward efficiency with subsidies.
Nine of the 11 reform council members voted for the plan, while Transportation Secretary Norman Mineta abstained and Charles Moneypenny, the labor representative on the council, voted against it.
Some experts have called for Amtrak’s liquidation and private operation of certain routes as soon as possible.
“Amtrak managers are incapable of turning around the failed railroad,” said Edward Hudgins, director of regulatory studies at the Cato Institute, a conservative think tank.
“It is time to allow private companies to salvage the potentially profitable parts of the system,” Hudgins said.