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Amtrak Presentation to the California Transportation Commission February 19, 2009 Anne Witt, Vice President Amtrak Strategic Partnerships

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Todays Discussion Amtraks California Partnership New Federal Mandates Implications of Success / Issues Moving Forward

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Amtraks National System Amtraks national system spans 21,000 route miles and serves 527 stations in 46 states

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Amtrak Short Distance Corridors Includes 19* State-Supported and 8* System Corridors *3 Corridors are partially state funded

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FY08 Ticket Revenue & Ridership Actuals

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California: Amtraks Premier Partner Approximately 70 daily intercity trains Three State Sponsored Corridors Four Long Distance Trains Two Major Maintenance facilities Los Angeles Oakland In Fiscal Year 08: More than 1 in 5 Amtrak riders in California Corridors equal 19.3% of Amtrak system ridership 11,866,636 total boardings/alightings 2,740 CA residents employed $127,700,783 spent for goods and services Capitol Corridor San Joaquins Pacific Surfliner

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CorridorRidershipLengthChange from FY07Frequencies NEC 10,897,852 457 mi +8.6% 158 Surfliner2,898,859 128 mi +7.1% 25 (SD-SLO) Capitol1,693,580 133 mi +16.8% 32 (SJ-Sacramento) Keystone1,183,821 104 mi +19.8% 29 Empire 994,391 141 mi +3.8% 24 San Joaquin 949,611 315 mi +18.0% 12 Cascades 760,323 467 mi +12.8% 12 Hiawatha 749,659 86 mi +25.9% 14 Chicago-St. Louis 476,427 284 mi +16.5% 8 Downeaster 474,492 116 mi +31.2% 10 Top Ten Corridors by Ridership, FY 08 Green highlight indicates corridor is also one of the ten fastest-growing corridors #2 #3 #6

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CorridorRidershipLengthChange from FY07Frequencies Downeaster 474,492 116 mi +31.2% 10 Piedmont 65,941 173 mi +30.4% 2 Kansas City- 151,690 283 mi +30.2% 4 St. Louis Hiawatha 749,659 86 mi +25.9% 14 Albany-Toronto 354,492 403 mi +22.9% 2 Hoosier State 31,774 196 mi +20.6% 2 Keystone 1,183,821 104 mi +19.8% 29 Chicago-Quincy 202,814 86 mi +19.8% 4 Chicago-Carbondale 271,082 284 mi +18.5% 4 Heartland Flyer 80,892 116 mi +18.5% 2 Ten Fastest Growing Corridors, FY 08 This is a healthy cross-section of service types, frequencies, regions, and services

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Amtrak State Supported Services Revenue From States Legislation authorizes States to buy service from Amtrak States Pay Amtrak through combination of: State Supported Train Passenger Revenue -Ticket sales -Food -Baggage charges State Support Payments -Gap between Direct Costs and Revenue FY 08 Total State Supported Passenger Ticket Revenue:$233.8 million* Total State Support Payments:$165 million Average Fare Box Recovery Ratio for States in FY 08:57%** *Includes fully and/or partially state supported routes **Measured as Passenger Related Revenue/Direct Costs

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Amtrak California Corridors FY 08

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State Supported Services Costs Billed to States Direct Costs billed: Direct Incremental Costs -Eliminated if trains eliminated -e.g. host railroad payments, T&E and OBS crews, fuel, most mechanical cost, dedicated route stations Other Direct Costs -Costs shared with other trains/routes -directly shared e.g. shared stations, mechanical overhead, insurance, yard ops, marketing and advertising, -indirectly shared e.g. police and security, environmental and safety, crew management Costs not currently billed to States: Amtrak owned infrastructure fixed maintenance (capital) Capital charges for equipment System overhead (indirect office rent, data center, etc.) Interest Depreciation

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Major Drivers of Operating Expenses Labor Presidential Emergency Board Ruling -Average 28% wage increase -7 years back pay Fuel Expired Hedging Agreements Market volatility versus demand-based variations Security New concerns and requirements Initial growth versus steady-state operations On-Time Performance Affects costs: fuel, overtime, accommodations Affects revenue & ridership

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Workforce: Continued Productivity Focus Fiscal Year Employee headcount Double-digit ridership growth absorbed within current workforce - Controlled Management Ratio - Technology Applications Internet Sales Point of Sale/Fare Collection - Work Methods Reliability Centered Maintenance

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Amtrak Financial Transparency: Long-term and Growing Issue Financial systems are complete and accurate But designed for other applications/purposes Required to capture all costs in zero-sum manner -Change in one place affects all other numbers -Not policy-driven Financial systems do not meet State pricing needs Backward-looking: FY 07 results just completed Based on national network and then allocated to routes Unsuited for forecasting, multi-year contracts, future service scenarios Requires protracted, iterative (frustrating) negotiations

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2008 PASSENGER RAIL INVESTMENT & IMPROVEMENT ACT Recognized Need for Improved Model: TITLE II AMTRAK REFORM AND OPERATIONAL IMPROVEMENTS Sec. 201 National Railroad Passenger Transportation System. (a) The national system is defined as: the segment of the continuous NEC between Boston and Washington DC; other high-speed corridors designated by the Secretary but only after regularly scheduled intercity service has been established; long distance routes for more than 750 miles operated by Amtrak on the date of enactment hereof; short distance corridors of not more than 750 miles operated by Amtrak or another rail carrier that receives funds under Sec. 301 (State Capital Grants). (b) and (d) Amtrak is authorized to contract with a State, regional or local authority, or another person to operate a route not included in the national system, and to discontinue it on the failure of financial support from such entity. (c) Amtrak is also authorized to continue to develop non-high-speed intercity service. (e) Amtraks mission shall be to provide high quality service that is trip-time competitive with other intercity travel options, and its goals shall include providing complementary intercity transportation in times of national disaster. Sec. 209 State-Supported Routes. Within two years of the date of enactment, Amtrak shall, in consultation with the Secretary and Governors of affected States, establish a standardized methodology for allocating capital and operating costs between Amtrak and the States supporting Amtrak services. If such a methodology is not adopted and implemented within 5 years of date of enactment, the STB shall determine and require the implementation of same.

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New State Pricing Tool

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New Federal Mandates: Passenger Rail Investment and Improvement Act (PRIIA) Gives lead on passenger rail growth to States State Matching Capital Grant Programs (Total FY09-13 Authorizations) -Capital Assistance For Intercity Passenger Rail ($1.9 Billion) -High-speed Rail Corridors ($1.5 Billion) -Rail Corridor Congestion Grants ($325 Million) Requirements -State rail plans -Standardized methodology for allocating capital and operating costs of all corridor trains among states and Amtrak -(adopt by Oct 2010 and implement by Oct 2013 or STB does)

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New Federal Mandates: Passenger Rail Investment and Improvement Act Next Generation Corridor Equipment Pool Committee ($5 million FY10) Includes states, Amtrak and FRA, other stakeholders Standardized/Interoperable types of corridor equipment -(California Surfliner III as bi-level standard) Determine specifications, procurement, ownership, etc. Other miscellaneous requirements New Metrics and Measures OTP enforceable by Surface Transportation Board Studies re service restoration including Pioneer, Sunset, North Coast Hiawatha

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A New Federal Mandate: Economic Recovery Act (Stimulus) $8 billion appropriation for three new Capital Grant Programs Capital Assistance For Intercity Passenger Rail High-speed Rail Corridors Rail Corridor Congestion Grants 100% Grant no match Specific Priority to High Speed Rail State Rail Plans waived Federal DOT Schedule: 60 days: Submit plan to Congress 120 days: Issue draft regulations for each program Grants remain available through September 30, 2012

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Financial Implications for Amtrak California Partnership FY2010 numbers provided with more understandable transparency Support services linked to direct benefits Line-item costs enumerated and explainable Cannot subsidize or absorb caps Quarterly reconciliations Forecasts dependent on fuel price assumptions/economic realities Define contingencies and/or pass-though of actuals where necessary Final Amtrak pricing policies subject to national process Potentially complicates individual state schedules Costs will not go down commensurate with PEB labor rate increases Costs will likely increase as additional components charged re PRIIA e.g. Equipment capital charge Concurrent with state matching fund availability

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Implications for Amtrak California Partnership All tools to reduce net costs will require examination Efficiencies -Mechanical services/equipment availability -Point of sale -Automated fare collection -New food service vendor/options Fare structures -Rail 2 Rail Impacts/Revisions -Revenue Management potential -Connection to call center/Amtrak support system Non-passenger Revenues -e.g. Advertising Service configurations -Schedule, consists, load factors, etc.

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Success Implications for Amtrak California Partnership The best of times in the worst of times Expanded expectations out of line with State/Amtrak resource and staffing capabilities New funding is capital, not operating -Requires increased revenue, ridership, and/or state support Waiver of state rail plans opens competition for new federal funds Current financial systems/budgeting processes currently inadequate Equipment Capacity : -Improved maintenance, availability, reliability -Surfliner IIIs status: -Utilization and load factors -in relationship to Next Generation Corridor Equipment effort in PRIIA -per State bonding issues

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Amtrak: Committed to a Successful California Partnership Proud of Heritage and Success Committed to addressing Shortcomings Financial Systems Mechanical Operations Open-minded in Emerging New Environment Offering Important and Unique Advantages to State

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California Corridor Growth: Amtraks Unique Added Value Access to railroad expertise Operations/transportation Engineering Mechanical Institutional/Legal Access to equipment/expertise/interoperability Access to host railroads at incremental cost Access to insurance/liability coverage Access to IT systems support (reservations, train status, ticketing) National visibility and voice in support of passenger rail

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Amtrak Ridership: All-Time Highs FY 08 ridership was 28.7 million Up 11.1% from FY 07 Fuel Volatility Improved On-Time Performance Improved Customer Service/Satisfaction

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Amtrak Revenue Exceeding Ridership Growth FY 08 ticket revenues were $1.734 billion Up 14.2% from FY 07 Grew 21.8% faster than ridership - Market pricing actions - Revenue management Revenue Yield Per Passenger Mile*

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Safety: Primary Focus now combined with Security NOTE: Based on the FRA standard of reportable injuries per 200,000 hours worked. Fiscal Year Injuries per 200,000 hours worked

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Corporate Debt: Managing within our Means Fiscal Year

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Federal Support for Operations Responsible Stewardship Fiscal Year NOTE: Financial adjustments in FY01 included losses which should have been included in FY00. FY 09 funded at a continuing resolution level through March Federal government spent $400 million to support Amtrak operations in FY 08 -About $1.31 per American -Covers about 14 percent of Amtraks operating expense