AmtrakPerformance Overview, Corridor Development and Impact of PRIIA

Stephen Gardner

Vice President, Policy and Development

September 21, 2010

2

Overview

• System Overview and FY10 Performance Review

• Introduction of New On-board Technology

• Focus on Corridor Development

• PRIIA – General Overview and Key Provisions

3

The Amtrak system in perspective

• Record ridership – Six straight years of growth (FY 2002-2008)

– Record years in 2007, 2008 (28.7M riders)

– FY10 performance should be strong- Ahead of FY 08 by 20K riders in August- No $4 gas to spur growth this time

• Building blocks for future growth– Strong Administration, Congressional and public support for passenger rail

– Blueprint legislation lays foundation for growth and development

– State corridor services: Partnerships with 15 states

– High-speed experience: Only maintainer and operator of 100+ mph service in Western Hemisphere

• Amtrak’s challenges– Manpower: 3000 fewer employees than in 2002

– Readiness: Prohibited from planning HSR/new services from 2002-2008

– Equipment: Older than any time in Amtrak’s history – and it’s showing its age

– Funding: Nearly 40 years of chronic under-funding and still not funded at the authorized level in recent years

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The Amtrak system

Cascades

CaliforniaCorridors

Chicago Hub

NortheastCorridor

Long distance routesconnect major hubsand corridor services

5

FY10 Intercity Travel Market

• US travel market has been shrinking due to recession and high unemployment

– Amtrak is growing

– US Outlook- Leisure travel - modest growth

(~50% of Amtrak ridership)- Business Travel – flattening

(~46% of Amtrak ridership)

• Amtrak market share strongest in high frequency markets, mainly in NEC and West

• Near-term growth through increasing rail market share

– Southeast corridors (DC-Richmond-Charlotte)

– California corridors

– Chicago – Midwest

Market Share

NEC 17%West 5%Midwest 1%Long Distance <0.5%

Overall 1.90%

Market Share

NEC 17%West 5%Midwest 1%Long Distance <0.5%

Overall 1.90%

Amtrak vs. US Travel Market(FY06=100)

80859095

100105110115120

FY06 FY07 FY08 FY09 FY10

Non

-Com

mut

ing

Trip

s

US Trips (non-commute)

Amtrak Trips (non-commute)

Amtrak vs. US Travel Market(FY06=100)

80859095

100105110115120

FY06 FY07 FY08 FY09 FY10

Non

-Com

mut

ing

Trip

s

US Trips (non-commute)

Amtrak Trips (non-commute)

6

Amtrak’s ridership strength is in short-haul “corridor” markets

Trip length… %

0 - 400 miles 5

401 - 1,000 miles <1

Over 1,000 miles <1

Total all trips 1.9

Amtrak share ofFY10 Total Intercity

Amtrak Trips Travel Market

28.6

(millions)

25.5

2.3

0.8

Amtrak share of Intercity

Corridors… %

Washington-Boston 17 NY-DC 65%

New York-Albany 11 NY-Boston 52%

Philadelphia-Harrisburg 11

California Corridors 5

Pacific Northwest (Cascades) 5

Hiawatha 3

All others < 1

Total Amtrak Corridors 5

Travel MarketAmtrak share of air-rail market

(FY10 1st quarter)

7

Key Ridership Drivers – Fast, Frequent, Reliable, and Comfortable

• “Hard” service improvements

– On-time performance

– Faster trip times

– Frequency of service (departures)

– Information (i.e., Info/announcements when trains are going to be late)

• “Soft” service improvements

– On-board amenities/service

– Station and equipment design features/elements consistent with customer expectations

– Comfort, convenience

– Personal space

– Productivity support, business amenities (especially Acela)

NEC Spine Customer Satisfaction Index

71% 70%

75%

78% 78% 78%80%

60%

65%

70%

75%

80%

85%

FY04 FY05 FY06 FY07 FY08 FY09 FY10thru May

NEC Spine Customer Satisfaction Index

71% 70%

75%

78% 78% 78%80%

60%

65%

70%

75%

80%

85%

FY04 FY05 FY06 FY07 FY08 FY09 FY10thru May

NEC Spine On Time Performance

72%

75%

80%82%

79%

83%

77%

65%

70%

75%

80%

85%

FY04 FY05 FY06 FY07 FY08 FY09 FY10thruuJune

NEC Spine On Time Performance

72%

75%

80%82%

79%

83%

77%

65%

70%

75%

80%

85%

FY04 FY05 FY06 FY07 FY08 FY09 FY10thruuJune

8

• Amtrak now outpaces the airlines in the NEC

– Frequency, competitive trip times, OTP drive share shift

• Acela product quality also critical to increased share– Wi-Fi, Leather seats, quality of customer experience– Improved Food and Beverage service– En route cleaning, customer service focus

• True HSR eliminates airline service in these markets

Fast/Frequent Service Induces Modal Shift – NEC

Trends in Amtrak Share of Air-Rail Market

0%

10%

20%

30%

40%

50%

60%

70%

NY-DC 36% 45% 56% 50% 50% 51% 55% 56% 63% 61% 65%

NY-Boston 18% 27% 41% 35% 39% 38% 36% 41% 49% 50% 52%

FY99 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10

Trends in Amtrak Share of Air-Rail Market

0%

10%

20%

30%

40%

50%

60%

70%

NY-DC 36% 45% 56% 50% 50% 51% 55% 56% 63% 61% 65%

NY-Boston 18% 27% 41% 35% 39% 38% 36% 41% 49% 50% 52%

FY99 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10

Daily Round Trips

New York - Washington 36New York - Philadelphia 46New York - Boston 19

*Q1

*

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Ticket Revenue by Business Line

Long Distance, $446m,

26%

Acela, $435m,

25%

Northeast Regional, $458m,

26%

State Corridors, $390m,

23%

Ticket Revenue by Business Line

Long Distance, $446m,

26%

Acela, $435m,

25%

Northeast Regional, $458m,

26%

State Corridors, $390m,

23%

FY10 Revenue and Ridership Breakdown

• NEC makes up over half of Amtrak revenue

• State Corridors make up nearly half of Amtrak ridership

• Amtrak receives an additional $192m from the States to cover corridor service losses

NEC

Ridership by Business Line

Northeast Regional,

7.2m, 25%

Acela, 3.2m, 11%

State Corridors,

13.8m, 48%

Long Distance,

4.5m, 16%

Ridership by Business Line

Northeast Regional,

7.2m, 25%

Acela, 3.2m, 11%

State Corridors,

13.8m, 48%

Long Distance,

4.5m, 16%

NEC

Amtrak’s Business Lines: NEC and Long Distance

• Ridership growth on the NEC has averaged 2% per year over the last 5 years, largely due to growth from Acela

• Acela ridership growth has averaged 4.2% since FY2006

• The average net ticket price on the NEC has increased from $76.44 in FY06 to $85.69 in FY2010

Northeast Corridor (NEC)

Long Distance (LD)

• After flat growth in FY09, LD Ridership is projected to record ridership of 4.5 million riders in FY2010

• Ridership & Revenue has increased primarily on the East Coast routes such as the Silver Service and Auto Train

NEC Ridership and Net Ticket Revenue (in millions)

0.0

200.0

400.0

600.0

800.0

1,000.0

FY2006 FY2007 FY2008 FY2009 FY2010

Net

Tic

ket

Rev

enu

e

8.5

9.0

9.5

10.0

10.5

11.0

11.5

Rid

ersh

ip

NEC Revenue NEC Ridership

Long Distance Ridership and Net Ticket Revenue (in millions)

0.0

100.0

200.0

300.0

400.0

500.0

FY2006 FY2007 FY2008 FY2009 FY2010

Net

Tic

ket

Rev

enu

e

3.23.4

3.63.84.04.2

4.44.6

Rid

ersh

ip

LD Revenue LD Ridership

*FY 2010 results preliminary and unaudited10

Amtrak’s Business Lines: Short Distance Routes

• SD routes have added 2.7 million riders since FY06, the largest contribution in growth among Amtrak’s route groups

• Routes with notable increases in revenue and ridership include the Illinois Downstate (Illini, Zephyr and Lincoln), Keystone, Downeaster, New VA Services, Piedmont and West Coast routes

• Many state supported routes have experienced improved financial performance, including the new Washington-Lynchburg Service, reducing the size of state support payments

•NC, OR, PA, WA are other examples

Short Distance Routes (SD) Short Distance Ridership and Net Ticket Revenue (in millions)

0.0

100.0

200.0

300.0

400.0

500.0

FY2006 FY2007 FY2008 FY2009 FY2010

Net

Tic

ket

Rev

enu

e

-

2.5

5.0

7.5

10.0

12.5

15.0

Rid

ersh

ip

SD Revenue SD Ridership

Amtrak Ridership Growth by Route GroupAverage Annual Grow th FY06-FY10

1.8%

3.9%

4.9%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

North East Corridor Long Distance Short Distance

*FY 2010 results preliminary and unaudited11

Amtrak Operating Results - Overview

• FY10 Revenues, recovering from the recession experienced in FY09, are exceeding budget primarily due to an increase in ridership

• Forecasted year-end ridership, at 28.7 million riders, is approaching record levels of FY2008

• Revenue Growth has averaged 5.3% over the last 5 years, with Short Distance Routes increasing 7.2% per year on average

• Increased expenses are primarily a result of non-recurring ARRA related projects that have presented opportunities to overhaul aging Amtrak assets—leading to improved on-time-performance and increased passenger satisfaction

• Core Operating expenses are being actively managed to improve cost recovery, reduce third party support and provide cash flow to pay down existing debt balances

3

Forecast Operating Results for the Year Ending September FY10

(Figures in millions)

Amtrak Ridership and Net Ticket Revenue (in millions)

-

500.0

1,000.0

1,500.0

2,000.0

FY2006 FY2007 FY2008 FY2009 FY2010

Net

Tic

ket

Rev

enu

e

22.023.0

24.025.0

26.027.0

28.029.0

30.0

Rid

ersh

ip

Amtrak Revenue Amtrak Ridership

*FY 2010 results preliminary and unaudited

Year-End Year-End Fav/(Unfav)

FY10 Budget to Budget

Revenues:

Adjusted Ticket Revenue $1,708.1 $1,619.1 $89.0

Food & Beverage 95.5 94.0 1.5

State Support 189.8 191.5 (1.7)

Total Passenger Related 1,993.4 1,904.6 88.8

Other Revenue 535.2 522.5 12.7

Total Revenues $2,528.6 $2,427.1 $101.5

Total Expenses $3,763.5 $3,688.1 ($75.4)

Net Loss from Operations $1,234.9 $1,261.0 $26.1

Cost Recovery Ratio

• A key metric for Amtrak’s financial performance is the Cost Recovery Ratio (CRR), explaining the percent of expenses that are being covered by revenue

• Favorable CRR for Amtrak is largely being driven by increased ticket revenue

Route Group FY09YE ActualFY10YE Budget

Jul 2010 YTD Actual

Fav/UnFav) to Budget

National Train Service 74% 73% 77% 4%Northeast Corridor 109% 99% 117% 18%Short Distance 71% 74% 76% 2%SD Exc. Subsidy Revenue(2) 50% 50% 52% 2%Long Distance 48% 48% 46% -2%(1) CRR Metrics exclude Commuter, Reimbursable and Project Related Costs. Costs are allocated across

routes using the Amtrak Performance Training (APT) methodology.

(2) Excludes subsidy revenue from State Transportation agencies. Not all routes in this group receive subsidy

revenue.

CRR Metrics by Route Group(1)

*FY 2010 results preliminary and unaudited13

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We are America’s most efficient passenger rail carrier

Farebox Recovery Ratio

0 10 20 30 40 50 60 70

AmtrakMetro-North Commuter Railroad

VIA Rail CanadaSEPTA

NJ Transit

MBTA( Boston)Metrolink (LA)

South Shore (NICTD)LIRR

Caltrain

VRE (Virginia)Metra (Chicago)

Alaska RRNCTD - San Diego

Altamont Commuter Express (ACE)MARC

Sound Transit

Tri-Rail (South FL)Music City Star (Nashville)

Utah Transit AuthorityCONNDOT

TRE (Ft. Worth)

NM Rail RunnerTRE (Dallas)

Recovery RatioSource: APTA, VIA, NMDOT and AmtrakAll data calendar year 2008, except NM Rail Runner (2009)

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Liquidity and Debt - Overview

*FY 2010 results preliminary and unaudited

• Amtrak’s debt peaked at $3.9 billion in 2002 and has declined to $2.0 billion by August 31, 2010

• Debt reduction was achieved through: (i) the arrangement of no new debt; (ii) scheduled amortizations; (iii) lease terminations; and (iv) periodic opportunistic early debt pre-payments

*reflects current debt level as of August 31, 2010

Amtrak Debt Outstanding: FY02 - FY10($ billions)

0.00

0.501.00

1.50

2.002.50

3.00

3.504.00

4.50

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10*

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Introduction of New On-Board Technology

• Introduction of new technology over the next several years will further improve the bottom line through enhanced customer service and revenue optimization

– Wi-Fi (national vendor contract to be awarded in September)

- Rollout schedule being developed, beginning with NEC trains (Acela already in place)

- States to have opportunity to participate in deployment

– E-Ticketing with on-board validation

- Print at home ticketing

- Precise inventory management and control

- Dramatically improved ridership and revenue data availability

17

Introduction of New On-Board Technology (continued)

– NTAMS (National Train Activity Monitoring System)

- Now in place across virtually entire diesel fleet

- Provides accurate real time train positing data, available through all distribution channels (Amtrak.com, Julie, Call Centers, Ticket Agents)

– POS for food service operations (FY2012 full deployment)

- Automates food service transactions including sales and inventory management

- Allows for combo meals, customized offerings, etc.

- Warehouse inventory management

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Amtrak’s Renewed Focus on Corridor Development

• Amtrak is committed to development of new and existing intercity rail corridors

• Establishing new High Speed Rail Department- Demonstrates Amtrak’s Commitment to Corridor Development

- Now in the staffing process

- Begin planning for true HSR in the Northeast

- Pursue HSR development opportunities across the country

• Southern Region Created with Policy and Development Department

- Allows more concentrated focus on emerging corridor opportunities throughout the south

- Covers VA, NC, SC, GA, AL, FL, MS, TN, LA

19

Successful Collaborations and Potential New Partnerships

Now:

• Washington: Seattle-Vancouver 2nd Frequency [Implemented]

• Virginia: NEC Regional trains to Lynchburg & Richmond [Implemented]

• North Carolina: Additional Piedmont frequency [Implemented]

Coming Soon or on the Drawing Board:

• Illinois/Iowa: Rockford/Dubuque and Quad-Cities/Iowa City

• Maine: Brunswick extension

• Wisconsin: Madison service

• Florida: FEC service

• Virginia: Norfolk Service

• Vermont/Massachusetts: Connecticut River reroute of Vermonter Service

20

Successful Collaborations and Potential New Partnerships

• New York: Empire and Moynihan

• Ohio: 3-C

• Connecticut: Springfield line upgrade

• Pennsylvania: Keystone improvements, Pittsburgh-Harrisburg

• Northeast Corridor: Northend and Southend upgrades

• California and Florida: HSR

• Nevada: Desert Express

• Kansas: OKC – KC

• Vermont: Western Corridor Development

• New Hampshire: Boston to Concord Service

Other Potential and On-going Opportunities:

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PRIIA is the foundation for future growth

• Clear vision for Amtrak and intercity passenger rail within the national transportation scheme

• Establishes a new partnership between Federal government, states, Amtrak, and host railroads:– States plan rail service

– US DOT integrates this state planning into a national system, administers capital grants

– Amtrak operates national network, helps design and operate services

• PRIIA grant programs to support intercity passenger rail have been infused with $10.5 billion since January 2009– PRIIA authorized a total of $3.4 billion over 5 years

– Does the policy framework need to be re-scaled?

This has created both opportunities and challenges

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Key PRIIA sections

Sec. 207 - Metrics and Standards: Amtrak and FRA must develop or improve metrics and standards to measure train performance and service quality

Sec. 207 - Metrics and Standards: Amtrak and FRA must develop or improve metrics and standards to measure train performance and service quality

Sec. 209 - State-supported routes: Amtrak, states, and FRA must develop and implement a single nationwide standardized methodology for establishing and allocating operating and capital costs among the states

Sec. 209 - State-supported routes: Amtrak, states, and FRA must develop and implement a single nationwide standardized methodology for establishing and allocating operating and capital costs among the states

Sec. 213 - Passenger Train Performance: Empowers STB to investigate poor OTP and enforce Amtrak preference rights

Sec. 213 - Passenger Train Performance: Empowers STB to investigate poor OTP and enforce Amtrak preference rights

Sec. 303 - State rail plans: States must complete state passenger and freight rail plans that are coordinated with other state transportation plans

Sec. 303 - State rail plans: States must complete state passenger and freight rail plans that are coordinated with other state transportation plans

Sec.305 - Next Gen Corridor Equip Pool: Amtrak, states, FRA, manufacturers, etc, to design and procure next generation corridor equipment

Sec.305 - Next Gen Corridor Equip Pool: Amtrak, states, FRA, manufacturers, etc, to design and procure next generation corridor equipment

Sec. 210 - Long Distance Routes: Amtrak must evaluate each long distance route annually, and develop performance improvement plans; implement them over the LD network by thirds, beginning in 2010

Sec. 210 - Long Distance Routes: Amtrak must evaluate each long distance route annually, and develop performance improvement plans; implement them over the LD network by thirds, beginning in 2010