Congress Should Choo Choo Choose Not to Fund Amtrak

Amtrak turned 40 years old in May.  When people turn 40 they may have a midlife crisis which could involve buying a new car or taking a fancy trip.  Amtrak’s midlife crisis is defined by continually losing money and, now, asking for more money from taxpayers.

Congress set up Amtrak in the Rail Passenger Service Act of 1970.  According to the Department of Transportation’s website, “The National Railroad Passenger Corporation (better known as Amtrak) is a for-profit corporation that operates intercity passenger rail services in 46 States and the District of Columbia, in addition to serving as a contractor in various capacities for several commuter rail agencies.”  Amtrak has had a troubled financial past and the future doesn’t look too bright.

Since 1971, Amtrak has received $40 billion in federal subsidies and has been a losing proposition for taxpayers.  In September 2000, the Transportation IG said that Amtrak could be self-sufficient by 2003:  “Last winter when we testified on this subject, we stated that it would be possible for Amtrak to achieve operating self-sufficiency by 2003…”

A 2009 Pew Charitable trust study may explain why self-sufficiency might be unattainable, “the average loss per passenger on Amtrak’s 44 nationwide routes was more than $32 in FY2008, according to analysis released today by Pew’s Subsidyscope project.  This is four times higher than the loss of $8 per passenger, which was calculated using Amtrak’s own figures.  Further, 41 of Amtrak’s 44 lines lost money, between $5 and $462 per passenger depending on the route.”

The following comparison provides some insight into why Amtrak isn’t profitable and struggles to compete with the airline industry. 

Scenario #1:

Flight to Chicago from DC with one weeks’ notice is $350, total travel time is 4 hours

Train to Chicago from DC with one weeks’ notice is $252, total travel time of 41.5 hours

Scenario #2

Flight to Chicago from DC with two weeks’ notice is $302, travel time is 4 hours

Train to Chicago from DC with two weeks’ notice is $219, travel time is 41.5 hours.

Now, there is a plan to spend $53 billion for high speed rail.  Robert Poole of Reason writes that among the reasons that don’t support the implementation of high speed rail is that, “Political pressures (e.g. for extra station stops or to serve low-traffic points) often lead to higher costs and decreased benefits; These economics cast doubt on the use of public-private partnerships in HSR projects.” There are also concerns about how fast the trains will actually be able to travel therefore not achoeiving any time savings.

Amtrak is a business model that does not work and Congress should turn off the subsidy spigot and determine if Amtrak can survive on its own.