KPMG: California and the US North East Corridor are developing plans for high speed rail systems. What's driving that renewed interest in both of those regions?
Amtrak: In the North East corridor, we already have a very successful rail system, so our challenge here is centered on taking an asset that is – today – doing a pretty good job, but has some major challenges, and improving and expanding it for future needs. For us, it's really about expanding the capacity of the corridor overall using different technologies and investment approaches to drive change across all of the segments that we already serve.
California: For our part, we're seeing some significant population growth, particularly in two very separate areas. So we really need to connect the state, both to reduce congestion on the roads, but also to create efficiencies to help drive the State's economy. In comparison to the North East, we're fairly lucky in that we still have a relatively open – albeit agricultural – central valley system that gives us the space to build across some pretty long distances by laying down a fairly small footprint, particularly when compared to other transportation systems like roads.
Amtrak: That's a good point. Our population density in the North East is a bit of a double-edged sword for high speed rail. On the one hand, it gives us the critical mass to create real value for a huge segment of the population by pairing major cities, but it also means that we have some of the most expensive land and an ingrained and highly trafficked system that sees roughly 2,200 trains travelling the system each day. We are dealing with a network that includes commuter trains, regional trains, some freight activity and the higher-speed, limited-stop network that all work together, so integrating high speed rail technology within the system will be a challenge.
KPMG: Is there an appetite from stakeholders to develop the system?
California: One of the biggest challenges we face in the US – particularly in California – is that there isn't a really good understanding of the efficiencies that high speed rail can deliver. Most mass transit systems in existence today are generally highly subsidized, but this is not the case with high speed rail in various parts of the world; it's really a very attractive investment opportunity and economically viable, at least from an operations perspective. That's been very hard for Americans to understand.
Amtrak: Absolutely. I think the hard part is not only painting that picture, but then connecting actions to it; taking that broad idea and turning it into investment. It has always been – and will continue to be – a challenge to explain and help people understand the broader impact of these types of investments, not only in transport or rail, but the general benefits that these investments will provide through infrastructure improvement. We're really trying to gain a level of awareness among the business community around the role of high speed rail and the possibilities and opportunities that an expanded and improved service can provide for the region.
California: To that end, we're trying to bring forward the business case for private investment by looking at examples from other parts of the world. In Italy, you see NTV cutting through as both an operator with rolling stock and depots and as a partial investor in public private partnership arrangements for infrastructure. There is a similar story in Spain and France with tunnel investments, real estate and station area developments that are being delivered with private participation.
KPMG: Is there a need for a cultural change before the US sees broader acceptance of high speed rail?
Amtrak: Certainly there will need to be a cultural shift, but that is already underway. America is currently in the midst of a change in terms of travel patterns that is being driven by rising fuel costs and a significant change in the way people live, move and work and I think that high speed rail is ready to capitalize on that if we can create the right product in the right markets. If we can create a competitive and reliable service, I think that Americans are very interested in that.
California: The bigger challenge from our perspective is getting policy-makers to acknowledge that we need to work together to find the funding and to create a longer-term vision. The US tends to make shorter-term project decisions, whereas high speed rail spans many political election cycles. We certainly have capacity for longer-term investment, particularly in infrastructure; California has built dams, viaducts and freeways, so the challenge is to ask – if our forefathers could do that – why can't we repeat it?
Amtrak: In essence, we are building assets that will deliver value for 100 years or more, so a big question is what America is going to look like in 2100. Looking back 100 years, the railway is one of the only things that has stood the test of time. It is one of the things that we are really excited about and that makes us deeply confident that high speed rail is not only needed, but also a very noble and important function. But as with any project where you are planning that far into the future, no one knows for sure what the nation will need in 50 years, let alone 100. It's a major challenge indeed.
By Darryl Murphy, KPMG in the UK