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National Railroad Passenger Corporation (NRPC)
Background Information
www.trainweb.com/webwork/nrpc_background.html
BACKGROUND ON
NATIONAL RAILROAD PASSENGER CORPORATION
AND
THE BASIC NATIONAL RAIL PASSENGER SYSTEM
BACKGROUND
The country's increasing reliance during the past four decades
on the private automobile and the airplane as the preferred forms
of intercity travel has left the country with a serious imbalance
in its transportation network.
These modes of travel which drained away the railroads passengers
merket now face serious problems of their own. Highway and airport
expansion cannot and will not be able to keep pace with the growing
numbers of intercity travelers. While significant improvments
will be and ought to be relied upon exclusively for future intercity
travel needs.
Moreover,expansion of highways and airports is limited by considerations
of land use,noise and air pollution,and other environmental problems.
Without disparaging the enormous contributions that the automobile,the
airplane and the bus have made to intercity travel,it has become
clear in the last few years that they cannot do it alone.
Especially in high density corridors,rail passengers service has
unparalleled capabilities for helping alleviate the burden on
the other modes,and is obviously essential for a balanced handling
of intercity travel demands of the 70's and beyond. Yet,in the
past several years,the country has been faced with the possibility
of losing this capability entirely.
CURRENT STATUS OF RAIL PASSENGER SERVICE
With a few significant exceptions,rail passenger service in the
country has eroded-both in image and in fact-to a low level. The
number of trains in operation has declined from about 6,000 at
the close of World War II to fewer than 300 today,and the extent
of services provided on these trains has been severely diminished.
Important supporting services such as reservations and ticketing
are often inefficient and not responsive to public need.
Equipment on trains now operating-with the exception of innovative,subsidized
efforts like the Metroliner-has deteriorated in age,cleanliness,and
level of maintenance. At the same time,deficits for all intercity
rail passengers service have grown to a level ranging annualy
from $210 million to $410 million (depending on the cost basis
used)on revenues of some $600 million.
This erosion in service and the mounting deficits have continued
even in the face of some notable efforts by the railroads to reverse
the tide. Now,faced not only with the deficit but also with staggering
capital cost to replace obsolescent equipment and upgrade track,the
railroads generally wish to be relieved of this burden.
CONGRESSIONAL MANDATE
The Rail Passenger Service Act of 1970 identifies three underlying
purposes that will share the fundamental philosophy and objectives
of the new corporation. Specifically,the NRPC is charged by the
Congress to:
1.Provide modern,efficient intercity rail passenger service within
the basic rail system of the nation.
2.Employ innovative opertaing and marketing concepts to develop
fully the potential of modern rail service in meeting intercity
transportation needs.
3.Operate on a "for profit"basis.
Public reactions to the law range widely from a complete skepticism
that the mandate can or will be achieved to a vision of the NRPC
as an instrument for widespread revitalization of rail passenger
service in the United States. Clearly the spirit and intent of
the law present an image of the new corporation as a largely private,for-profit
enterprise;but one that,above all else,embraces the significant
public trust of rebuilding rail passenger service into a viable
part of the nation's transportaion system.
BACKGROUND OF NRPC
November 3 0 1970,a Preliminary Report containing the Secretary's
recommendation for the Basic System was submitted to the Congress
and Interstate Commerce Commission,as well as State regulatory
commissions representatives of railroad and railroad labor organizations.
It was simultaneously made available to the public. Many comments
were filed with the Department in response to the Preliminary
Report.
After review of the comments,the Secretary.on January 28, 1971,
issued his Final Report on the Basic System. It included a listing
of points between which intercity passenger trains shall
be operated,all routes over which service may be provided,and
defind basic service characteristics. The Secretary also charged
the new corporation with the following:
"If rail passenger service is to be a viable element in a
national transportation system,it must reverse the severe decline
in patronage experienced in recent years. Only major improvments
in the quality of service can generate increased demand.
There is little doubt that much of the resently existing rail
passenger service is uneconomic and is not required as part of
a total transportation plan. Even if the continuance of all present
service were desirable,operation of the total existing system
would be far beyond the financial resources of the corporation.
With these considerations in mind,final designation of a viable
Basic System must be based on a careful identification of potential
opportunities for the operation of improved passenger service
,and the system must be operable by the Corporation within the
limits of available capital. Available funds must,therefore,be
channeled into a limited number of routes--routes which show some
promise of success--in order to produce the changes that are necessary
to attract a greater share of the traveling public."
THE CHALLENGE
Viewed against the prespective of the current status of the passenger
service,the Congressional mandate presents a difficult challenge
to the National Railroad Passenger Corporation: Turn around a
key element of the transportation system by rebuilding both the
image and subtance of rail passenger service.
OBJECTIVES OF THE CORPORATION
Clearly,the enormity of the task emphasizes the fact that early
progress will be modest at best. Thus the underlying thrust of
the corporation's efforts will be aimed at a gradual revitalization
of public confidence in rail passenger service by demonstrating
an immediately increased regard for passenger needs through substantive
service improvement. These should dovetail over the long term
with the corporation's overriding objective to attract the traveling
public back to the trains. Increases in passenger traffic over
the longer term are imperative to (a) provide the tinancial means
to offer new services, and (b) ulimately position the new corporation
on a resonably sound financial footing.
In aming toward its longer term objectives of rebuilding public
confindence,attracting mr ore passengers,and developing a reasonably
viable system for an economic standpoint,the corporation set some
specific short-term or first-year goals. In summary terms,these
goals include:
Completing an efficient takeover of rail passenger service from
the railroads in accordance with the Congressional mandate.
Noticeably increasing the considerateness with which NRPC and
railroad employees handle the public. These qualities of consideration
and courtesy must exist in fact and equally important,be
perceived by the traveling public.
Improving the quality of service that can be noted readily by
the riding public. These service improvements will be directed
primarily toward on-time train performance and clean,well-maintained
equipment.
Building an effective,aggressive management team dedicated to
the long-term effort of making rail passenger service a successful
operation. Further,and more specifically short term,is the task
of developing positive programs to gain an increasing share of
the travel market.
Clearly,the first few years must be viewed as a start-up and building
period. While the corporation will aim during this phase to operate
as efficiently and effectively as it possibly can,it would be
unrealistic to expect either profitable or even near breakeven
operations. Rather,the main thrust will be to make progress in
upgrading service,rebuilding image,and attracting more passengers.
This stragety will offer the best opportunity long term to make
the rail passenger system most successful in term of both public
and sound finance.
ACTIONS BY INCORPORATORS
The enormity of the task which faced the eight Incorporators when
they begin work on January 1, 1971,is readily apparent. They had
to:
1. Begin organizing what is comparable to a $200 million public
service corporation.
2. Find the best managment talent available to run the corporation.
3. Decide what routes should connect the 21 "pairs"
of cities designated by tyhe Secretary of Transporatation.
4. Decide what trains,frequencies and typeof service to be operated
after May 1.
5. Draft and negotiate very complex contracts with up to 22 railroads.
6. Seek solutions to complex problems regarding passenger equipment,rail
terminals,ticketing and reservations,marketing of rail service,etc.
One of the initial steps taken by the Incorporators was to meet
with railroad industry representatives to discuss means of smoothing
transition from idividual railroads operations to the corporation.
Numerous sessions were then held with experts in a number of fields
related to the problems that had to be resolved. At the same time,the
Incorporators sought out the best full-time professional assistance
possible. A management consulting firm was hired to help develop
the organizational structure as well as provided interim staff
support until the corporation can could hire its own people.
Two executive search firms were put to work to find management
prospects. Lawyers began to work drafting articles of incorporation
and the contracts needed for the May 1 take over. Engineering
experts were sent out to the field to inspect and survey available
passenger terminals. A major airline was asked to study and make
recommendations on a nationwide ticketing and reservations system
and a new food preparation and service system. A leading design
firm was retained to develop a "new look" and name.
A national public relations agency was retained to help promote
increased passenger traffic. A major advertising agency will be
named.
Concurrently,work continued on the major job of route selection
and development of a coordinated passenger system.
ROUTE SELECTION PROCESS
Each of the 100-plus routes set down in the Secretary of Transportation's
January 28 report was studied individually and in relation to
the total network. All available data were tabulated and submitted
to the Incorporators. Criteria for route selection were developed.
These criteria were:
1. Market size-measured by total population of cities along route
and total air and rail passenger traffic between major cities
on route.
2. Physical characteristics of route and track-measured by route
miles,average authorized train speed,scheduled running time and
freight traffic.
3. Current train ridership-measured by passenger miles per year,passenger
miles per train mile and number of train per week.
Other factors evaluated included:
1. Current operating costs on route.
2. Relationships of route to other city pair route segments.
3. Mail revenue.
4. Adequacy of other travel modes on routes to be be elminated.
5. Service consideration,including scenery,etc.
SERVICE "PACKAGE"
DEVELOPMENT
After the route decisions were made,the Incorporators then began
the process of deciding what service should be provided over the
system.
Stationstopwere studied in terms of market size and population
served,average ridership now,projected cost of station relative
to passenger activity,and mail revenue ptential.
Train frequency was studied reguarding present ridership
demand patterns,estimated profit contribution,and potential public
needs.
Train schedules were studied in relation to ridership demand
patterns by time of day,schedule convenience at major cities,train
interconnections between routes,mail service requirements and
freight train interference.
Customer services were studied in relation to current practices
on trains,estimates of potential service demand,profitability
of current services and DOT minimum service guidelines.
* * *
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