Why Delta’s Richard Anderson went from planes to trainsRichard Anderson announces his new role on Twitter (Source: Amtrak)
By Maria Saporta
As published in the Atlanta Business Chronicle on Sept. 15, 2017
Make no mistake about it. Richard Anderson is now a railroad guy.
Anderson, the former CEO of Delta Air Lines Inc., became co-CEO of Amtrak — the nation’s passenger railroad system — in July. His co-CEO is Wick Moorman, who served as both CEO of Norfolk Southern Railroad and as Amtrak’s past CEO.
“I don’t work in the airline industry anymore,” Anderson was quick to say in a brief interview on Sept. 9 when he was in Atlanta to be honored at a gala of the American Cancer Society. “I work for Amtrak.”
Then Anderson went on to talk about the relative advantages to riding trains instead of airplanes, such as comfort and style.
“It’s far easier to travel on a train than it is on an airplane,” Anderson said. “It’s just slower.”
One of the reasons train travel is slower is because the United States has not invested in a high-speed rail system infrastructure in the same way Japan and countries in Europe have been doing for decades.
But Anderson has great hopes for the future of rail transportation in the United States.
“The opportunity for Amtrak is that it is an iconic transportation asset,” said Anderson, adding that its trains enable the travel of about 250 million people a year.
“When you think about where the future lies, the automobile companies are selling fewer and fewer cars,” Anderson continued. “And car rental companies are in a bit of stress because ride sharing (Uber and Lyft) has become the more predominant way for people to travel in urban areas.”
“The second thing is our demographics in America have dramatically changed. Seventy years ago, we were dispersed across a very wide rural geography. If you look at the last census and the trends of the last three or four census, people are moving to urban areas and urban corridors in greater and greater numbers. And those corridors are not going get more freeways, and we are not going to add more runways at our airports in congested cities.”
“So rail transportation, in the short haul, is going to become increasingly important.”
And then there’s the question of the environment.
“By far it is the most environmentally positive form of transportation,” Anderson said of rail transportation.
When Anderson, 62, was talking about Amtrak, it became apparent that his role as co-CEO is a mission for him. He agreed to take the job for three years for zero pay (even though the Amtrak board has the discretion to give him a $500,000 bonus).
“The opportunity to give something back after the opportunity we have all been given was just too attractive,” Anderson said.
When it was announced he was taking the Amtrak co-CEO job, Anderson was supposed to assume the title of CEO in January, when Moorman was supposed to step into an advisory role.
“I hope he will stay on as co-CEO,” Anderson said of Moorman. “I want him to stay. He’s a great Georgia Tech engineer.”
Either way, Anderson is on board to help run Amtrak, which he predicted will be able to operate without a federal subsidy in the foreseeable future.
“Amtrak is the most efficient passenger transportation system in the world,” Anderson said. “The government subsidy and operating cost, we are going to get that to break even. Right now Amtrak covers about 94 percent of its operating costs.”
But Amtrak has been having to invest in improving its infrastructure, particularly in the Northeast corridor, including tracks and stations. To do so, it needs Congress to invest in the system, and over the years, Amtrak has been a target of certain legislators who want to zero out funding for the passenger rail system.
Anderson, however, did not seem concerned about future funding for Amtrak.
“Both the Senate and the House have proposed significantly different budgets for Amtrak,” Anderson said. “We will ultimately end up with an allocation that will more than support the continued operation of Amtrak system.”
Still Anderson is looking to expand another model for Amtrak, receiving more state support to fund the system in areas outside of the Northeast corridor.
“Actually half of Amtrak’s business on Amtrak trains is in state-supported routes, which is about 28 routes around the United States,” Anderson said.
Some of those are some of the most successful routes in the system, including the Hiawatha that runs between Milwaukee and Chicago, the Wolverine that runs between Detroit and Chicago, and the Cascades that runs between Vancouver, B.C., Seattle, and Portland, Ore.
“We carry about 14 million to 15 million people a year on the state-supported system,” Anderson said. “That piece of the business needs to grow.”
Then he brought it closer to home.
“If you think about it, look at Atlanta-Charlotte,” he said. “You should run the trains as fast as you can and do it a couple of times a day in a corridor like Atlanta-Charlotte on a nonstop basis. That’s really how we have to evolve.”
When asked whether the United States would ever develop a high-speed rail system like the one in Europe, where railroads and airlines provide nearly seamless transportation solutions, Anderson was less optimistic because railroad hubs and airports are not “co-located.” Railroad stations tend to be located in the heart of cities while airports tend to be located away from a city’s center.
“In most airports in the United States, there are not connections to rail, and those connections are really expensive to build,” Anderson said.
Then Anderson, who is a lover of history, provided the context.
“The problem in America is we made a decision in the ‘50s that we were going to rely on cars, not mass transit,” Anderson said. “Given the deficits our country runs and the deficits that are run in local governments and the controversy in funding infrastructure in federal and local governments — that’s just not realistic.
“Europeans made that choice a long time ago. We made the choice to put huge subsidies into the interstate highway system, and that was a good decision when (President Dwight) Eisenhower made it. But nonetheless that’s the decision we took.”
On all of its state-supported and long distance routes, Amtrak operates on the private freight rail network.
Unlike Europe, the United States doesn’t have a dedicated passenger rail system — tracks that only carry passengers rather than freight.
“Europe made the decision to dedicate those at a very significant government expense,” Anderson said.
But he added there are conversations between governments (federal, state and local) and railroad companies to improve nation’s rail infrastructure so it can accommodate both freight and passengers, including double-tracking routes in the railroads’ right-of-way on key corridors.
“We are doing it in the Northeast corridor. I’m good with that,” said Anderson, who then added with a twinkle in his eye: “Let’s double-track Atlanta to Charlotte.”