Transit trouble in many modes
Operational woes at Amtrak coincide with harsh business climate for US airline, rail, and bus companies.
A well-known name in transportation saw its operating profits drop by 95 percent from a year ago. It faces competition from deep discounters who offer fares so low it's impossible to meet them. And, as competitors declare bankruptcy, the value of its assets has been steadily declining.
No, it's not another airline. This time it's Greyhound Lines, the nation's largest bus company.
In fact, whether it is planes, trains, or buses, many of the nation's long-haul transportation providers are either operating in the red or just barely making money. A good portion of the cause is the soft economy. Some of the red ink is still related to Sept. 11: schools canceling trips, conventions being scaled down.
But transportation is also an industry with high fixed costs. There are flight crews to pay regardless of how many passengers are on an airplane. Amtrak has at least one run from Los Angeles to New Orleans where it loses $300 per passenger. Other costs are soaring: Insurers have raised premiums because they can't count on investments in the stock market to supplement their income.
Competition, in the meantime, remains cutthroat. Over the past year, airfares are down 5.5 percent. New bus lines, often using smaller vehicles, are siphoning customers from lines such as Greyhound with tickets costing 60 percent less. Good for the consumer, bad for the business.
"I think these are the worst times in my memory," says Damian Kulash, president of the ENO Transportation Foundation in Washington.
Recent troubles in this vital sector include:
United Airlines, facing a huge debt repayment, says it may go bust within 30 days if it does not get employee concessions. US Airways is already in bankruptcy.
American Airlines plans to lay off 7,000 workers, ground jets, and change how it connects passengers. Chairman Don Carty calls it "the worst financial crisis in the history of the industry."
Most Acelas, Amtrak's fastest and newest trains, have been yanked off the tracks for safety reasons. On Friday, the troubled rail system found problems with other trains and reduced Northeast-corridor service by 25 percent.
Transportation experts believe the future will be one of consolidation, shrinkage, and, perhaps, higher prices for consumers. "It's unrealistic to expect any industry to offer services at a price where they can't stay in business," says Dick Barsness, a management expert at Lehigh University in Bethlehem, Pa.
This is far cry from 14 months ago, when the main transport worry was congestion. Airports were adding new runways. Rail freight lines were busier than a Lionel set at Christmas. And bus companies were snapping up new motor coaches with luxury seats and DVD systems. Over the past year, the focus changed to security. Congress passed an aviation act dealing with such issues as airport screeners and cockpit security. Bus security is pending.
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