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Richard Anderson knows exactly why so many people hate air travel. And as the former chief executive of Delta Air Lines Inc., he appears ready to exploit each of those pain points in his new role—as president and co-CEO of Amtrak. The railroad has launched a new advertising campaign focused heavily on why so many airlines have been despised by so many for so very long.
From free Wi-Fi to the absence of middle seats to the two bags you may check for free, Amtrak is pitching itself as a more comfortable, civilized travel alternative to an airline—albeit not as fast, but you can’t have everything.
“The coach on Amtrak is better than the first-class product on any domestic airplane,” Anderson said Thursday in an interview. The new campaign, though it predated his arrival, is “spot-on in terms of the contrast” with U.S. carriers, he said.
Anderson, 62, arrived at Amtrak in July and will assume the CEO title at year’s end, when co-CEO Wick Moorman steps down. Anderson said his first priority is to make the trains run on time; most depart punctually but then suffer delays en route and often arrive late. The company is also working to upgrade the interiors of passenger cars and will need to invest more on engineering work for Northeast Corridor tracks and other infrastructure, said Anderson, who moved to Washington this month.
Congress created Amtrak in 1970 via the Rail Passenger Service Act, and train service commenced the following year. The company’s ridership has been heavily concentrated in the Northeast, with service connecting New York, Boston, and Washington. That’s also the only region where Amtrak operates its high-speed Acela service, which began in 2000. Service in the corridor, however, is centered on the universally despised Penn Station in New York, a rat maze buried beneath Madison Square Garden. (Plans to expand Penn into a massive former post office at street level—and even clean up its nightmarish bathrooms—are gaining steam, though.)
During his nine years at Delta, he becrrame famous for the ferocity with which he battled subsidies.
Financially, the enterprise has struggled, even as it boasts more than 30 million annual passengers. Its long-haul routes are among the most challenged, but Amtrak sees huge potential in “state-supported” routes of less than 750 miles, such as Milwaukee-Chicago, Los Angeles-San Francisco, and Seattle-Portland—the kinds of urban corridors whose population density has increased.
“You’re probably not going to build another freeway, and you’re probably not going to build another airport in those places,” Anderson said, noting the need for U.S. subsidies for rail travel, much as Congress appropriates large sums for America’s highways.
Amtrak also operates under federal subsidy, which helps to keep its average fares low, although the appropriate level of Congressional generosity for the rail system has been hotly debated over the years. Ultimately, Anderson said, Amtrak’s goal is to reach break-even on an operating basis within the next few years.
Anderson’s position on subsidies is noteworthy. During his nine years at Delta, he became famous for the ferocity with which he battled subsidies he believed competitors enjoyed, from sources including the Export-Import Bank and a trio of Middle Eastern governments that U.S. airlines accuse of giving unfair aid to their carriers. Under Anderson, Delta led an effort to cut off federal support for the ExIm Bank, which was a key element in many sales of Boeing Co. jets abroad.
Amtrak, meanwhile, provides an “essential service” for many Americans, Anderson said, and enjoys broad Congressional support. Earlier this month, the House of Representatives rejected a proposal by Representative Mo Brooks, an Alabama Republican, to eliminate federal funding for Amtrak; a Senate committee has also set aside a budget request by the Trump administration to eliminate money for Amtrak’s long-distance routes.
Running a passenger rail company “is a lot more complicated than an airline,” Anderson said, because the railroad also owns its “air traffic control” system in the form of tracks, switches, and other equipment.
Anderson, who retired as Delta’s CEO in May 2016, isn’t collecting a salary in the Amtrak job. He was paid $53.2 million during his last four years as Delta’s chief executive. “We’ve all been very fortunate, right, so this is a great opportunity,” he said.
©2017 Bloomberg L.P.