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National Railroad Passenger Corporation (NRPC)
Background Information





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.


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.


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.


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."
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.
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.
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.
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.
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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