Transport 2000 Canada Hot Line

12 November 2001

This is the Transport 2000 Canada Hotline, issue number 627, recorded on 12 November 2001, our 25th anniversary year, Harry Gow reporting.

Please accept the delay in recording this message which was caused by our board meeting over the weekend.

In this issue...

Rail, air, transit and policy items.

1 - Airbus crashes in New York

Late News: 260 people died in the crash of an Airbus on Queens, New York, 5 miles east of the J.F. Kennedy Airport. More people may have died in the houses destroyed by the plane. According to the press, this crash is apparently not the result of a terrorist attack. We extend our sympathies to the families of the victims and to the citizens of New York City.

2 - Canada 3000 goes out of business

In Canada, a complete airline has just crashed: Canada 3000, which had shut down operations on Friday without warning, has left tens of thousands of passengers to make their own way home, and left 5000 employees without jobs. Transport 2000 considers that this demonstrates the need for some re-regulation and some longer-term policy work to stabilize the airline industry and provide alternatives.

3 - Amtrak expected to need funding beyond 2002

The Amtrak Reform Council met in Washington recently and approved a resolution, on a 6 - 5 vote, to report formally to Congress a finding that the ARC believes Amtrak will continue to require operating grants after December 2, 2002 - in other words, miss the 1997 legal requirement of operational self-sufficiently. Under the 1997 Amtrak reauthorization law, the ARC must produce a restructuring plan for passenger rail in the U.S., and Amtrak must produce a plan for its own liquidation, both within 90 days. The law adds that if Congress does not adopt the ARC's plan (or any other plan) during the 90 days after that, a "liquidation disapproval resolution" will be put before the Senate (but the law is not clear on what would happen if the Senate does not act at that point).

ARC's action raises two urgent concerns. First, as some ARC members (including the Bush Administration) argued, the nation does not need the additional confusion that would be the result of any potential Amtrak liquidation. Congress and the Administration are already preoccupied with aviation issues arising from the September 11 attacks, and their immediate ability to give deep attention to a radical restructuring of passenger rail is questionable. The Administration asked that ARC to wait two or three months until it could decide what it wanted for passenger rail reauthorization starting in 2003. The ARC vote also means that an Amtrak whose resources already are stretched to the limit must find time to write its own liquidation plan, and spend more time reassuring those who hold Amtrak's debt.

Second, given recent past ARC publications, anything that the ARC proposes is likely to require significant capital funding from unidentified sources. There is no reason to think - in the absence of such capital funding - any ARC restructuring will be better for railroad passengers (on corridors or long-distance trains) than what exists now. In other words, the true problem is inadequate funding for passenger rail, not quasi-ideological perceptions about corporate structure.

4 - Amtrak Acela success

Amtrak reports that Acela Express/Metroliner ridership for October was 43% above a year ago and 11% above plan. Sleeping car occupancy remains strong, with high-fare solo businesspeople traveling now where couples using cheaper fares were traveling a year ago.

5 - Bombardier sues Amtrak over Acela

Bombardier, the builder of the Acela Express train sets, filed suit against Amtrak in federal court on November 8th, seeking "at least" $200 million damages. Bombardier claimed that Amtrak owes it for cost overruns associated with indecision and that Amtrak didn't provide "adequate" track upgrades (though tracks were approved by the Federal Railroad Association). Amtrak responded that Bombardier failed to adhere to a process for submitting claims and hearing from a dispute resolution board before suing, and that Amtrak is allowed to assert $250 million in claims of its own against Bombardier under the terms of the 1996 contract.

6 - Transport 2000 call for National Transportation Strategy

The following transportation policy was adopted by the Board of Transport 2000 Canada on Sunday, November 11th.

Towards an Effective National Transportation Strategy

Whereas the unfortunate events of September 11th, 2001 resulted in the complete shutdown of Canada's air transport network; and

Whereas the decline in the economic climate has caused reduced demand for air travel with particular emphasis on business travel; and

Whereas the total demand for domestic air travel in Canada has been static for the past twenty years as established by the Centre for Sustainable Transportation; and

Whereas the emergency federal response to date has been to give airlines an array of financial support through insurance, employment insurance, loan guarantees and compensation for airport closures which have, in part, allowed them to engage in pricing which is unsustainable and predatory to other modes;

Whereas there is a need to guard against a longstanding trend to differentially assist the air mode;

Whereas national unity is significantly enhanced by the mobility of all Canadians;

Whereas Canadians have a strong concern for the environment and a need to ensure that precious energy resources are made in recognition of the marked differences in the energy efficiencies of the different transportation modes;

Be it therefore resolved that the Government of Canada recognize the need for a balanced, strategic and sustainable approach to transportation recognizing the need to make appropriate investments in all modes. And furthermore, be it resolved that the Government of Canada must assume leadership in the preparation of a comprehensive transportation plan for Canada which will provide all Canadians with a mix of transportation options and ensure that they are not held prisoners in their own communities in the event of diminished levels or service curtailments within any of the various modes.

Thanks to the NARP Hotline for some of the above items.

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www.transport2000.ca.