Passengers wait to board the Silver Star Amtrak in Tampa, Fla. (Marjie Lambert/Miami Herald/MCT/FILE/NEWSCOM)
An Amtrak comeback?
By Eoin O'Carroll | 06.13.08
Things are looking up for Amtrak. The House overwhelmingly approved nearly $15 billion for the national passenger railroad Wednesday, more than doubling its funding, just as ridership is at the highest point in its 37-history.
Wednesday’s bipartisan bill passed 311-104, a wide enough majority to override the veto that the White House has promised, saying that the bill failed to hold Amtrak accountable. Similar legislation has also passed in the Senate, also by a veto-proof majority.
The House bill called for the creation of a high-speed rail between New York and Washington, a provision that the Senate bill lacked. The Associated Press details the difference between the two versions:
Unlike the Senate version, the House bill includes a requirement for the Department of Transportation to seek proposals from private companies to create a high-speed service that would take travelers from Washington to New York City in two hours or less. The idea has long been championed by [Florida Republican and prominent Amtrak critic John] Mica, who says the United States must catch up with European and Asian countries on high-speed rail travel.
Critics say the proposal would undermine Amtrak by peeling off its most valuable asset, the Northeast Corridor.
But Pennsylvania congressman Bill Shuster said provisions such as the one that open the door to private investment should help ease the concerns of fellow Republicans who have balked at supporting Amtrak.
But those provisions could complicate things when the House tries to work out a compromise bill with the Senate.
The bill comes just as ridership is hitting a record high. According to Reuters, the railroad saw ridership up 12.3 percent from a year earlier, and ticket sales up 15.6 percent. This is the sixth straight year of record numbers, Amtrak President Alex Kummant told the news agency. Mr. Kummant attributed about half that growth to rising gas prices.
Amtrak has long been regarded as a struggling entity. Indeed, a Google search for “beleagured” and “Amtrak” brought up almost 9,000 hits. And that’s without even spelling “beleaguered” correctly. According to a sidebar to the Reuters story, Senate Republicans report that Amtrak loses more than $700 million annually.
According to Reuters, Amtrak’s passengers amount to less than 1 percent of the America’s traveling public. Britain, France and Germany, by contrast, each have passenger rail systems that account for about 6 to 8 percent of passenger miles traveled.
Amtrak’s trains are significantly slower than their foreign counterparts. The Acela Express, which serves the Northeast Corridor, has an average speed of 82 miles per hour, although it can hit 150 miles per hour on stretches of track in Rhode Island and Connecticut. Reuters notes that “Japan, France and Germany have developed nationwide rail systems capable of speeds of 150 mph to 185 mph on dedicated tracks with sophisticated signaling systems designed for high-speed trains.”
In a Q&A with Reuters, Amtrak’s Mr. Kummant said that the money will fund some improvements, but it’s not nearly enough to bring America’s passenger rail up to the standards of the rest of the industrialized world:
<< EarthTalk: Greener ways to cut the grass | Main“Clearly, we would all love to have TGV-style 200 mph trains. But there are a couple of things there. Those are tens of billions of dollars of investment. So the question becomes: How do we find the public, financial and political lift for that?’ We get beaten up every day over raising an appropriations request for $40 million. And in the next breath we are asked ‘Well, when are you going to go high-speed?’ And the answer is, ‘If you have $40 billion we will talk about it.’
“So there has to be a genuine political will and genuine political headroom to do that. Not to go too far afield here, but it begs the overall question on ‘When is the federal government going to get serious about fundamental spending on infrastructure in this country like it did in the 1950s and early 1960s?’ We are way below the GDP levels of spending as a percentage of the federal budget. That’s a question for people that are in a higher pay grade than I am in terms of the political realities here. But that’s still what it comes back to.”
Comments
2. elizabeth miller | 06.13.08
Taking the train versus driving or flying is a no-brainer… No long lines checking in at security 3 hours before, lots of leg and elbow room (versus sitting like a sardine), great scenery and fuel efficiency. Maybe if federal/state governments subsidized AMTRAK and regional rails the same way they have subsidized polluting highways and airlines, then rail would be in the profit arena too. If Europe can do it, we can too.
3. G.Matthews | 06.13.08
Comparisons in this article and others between Amtrak and German, French, Japanese, and British rail systems are absurd, and point to a lack of understanding of tranportaion funding. I hear the words “make Amtrak more competitive”, and it makes me want to throw something.
Competitive with what?
Most first world nations have NATIONALIZED rail systems. That is, like the infrastructure our US interstates, ports, and airorts, the rail infrastructure is 100% provided by the government. Trucking companies and airlines would not even exist today if they had to provide their own roads, bridges, airports, air-traffic control, etc.
There is an Jimminey-Crickettesque, “when you wish upon a star” expectation that Amtrak will somehow turn a profit and be “competitive” while the government refuses to commit to an “Eisenhower Interstate Rail” program as it did for highways, and modeled again for our currently over-built airports. If we (as a country) wish to remain competitive, investing in a nationalized rail system is an imparitive whose time has come.
4. Eoin | 06.13.08
In that Rueters Q&A, Amtrak President Alex Kummant notes the subsidies that go toward other modes of transport. He points out that the Highway Trust Fund gets $10 billion a year. The FAA gets $2.7 billion, and airport security gets $1.5 billion. Cruise ships get $8 billion in security and life safety funding. Amtrak pays for all of its own security.
Check out the Q&A here: http://www.reuters.com/article/inDepthNews/idUSSIB27628520080612?sp=true
5. Daniel Menter | 06.13.08
Subsidies???
“Historically, Air travel has survived via State Support …either equity or subsidies…as a whole the Airline Industry has a cumulative loss in the past 120 years.” (Wikipedia)
Dan
Littleton, CO
6. Monty | 06.14.08
I used to take long journeys on the train but it has gotten too darn expensive. It is so much safer than getting out on the highways with tired or crazy drivers, not to mention the trucks, bad weather, and traffic. Folks say long distance rail makes no sense but with that reasoning long distance driving (or highway building) makes even less. Unfortunately it remains the economic leader for several travelers in one vehicle. I wonder if publicly maintained track could really get ticket prices down? Maybe with private operators (Southwest Rail anyone). How does a rail ticket in Europe compare to driving? The American economy/infrastructure is so out of fashion these days what with all this exciting globalism.
7. Hitoshi Maruyama | 06.14.08
I am amazed by reading many comments on nation-wide high speed train networks because Americans have been launching very big things such as sending people to moon, building space station and sending soldiers to Iraq for not clear purpose.
Yet many people still don’t like to spend money to build the train networks because of money. I am sure that they have been enjoying this fabulous highway systems that started to create in 50s. I have no idea how much money spent totally up to today.
I also think that some of those people who are against the train system are also complaining high gas price. A comprehensive national train sysTems will solve PERMANENTLY the gas problem, I hope that they understand the meaning of creating the system for them.
Don’t forget the American’s LOVING BIG IDEARS.
8. Robert | 06.14.08
Now is the time to invest in Amtrak and other transit infrastructure. We need to rebuild the USA. China is modernizing like the USA did in the 1950s, while USA infrastructure built in the 1950s is remaining stagnant. Let’s support Amtrak - ridership on Amtrak and Mass Transit is going to increase as long as fuel prices continue to escalate.
9. Peter | 06.14.08
We need to invest more in passenger rail. I hope California readers support High Speed Rail on the November ballot.
Amtrak is more comfortable and much more friendly
than airlines. But it runs too seldom and has too few routes.
Try going one-way from the Democratic convention
(Mon-Thu August 25-28, Denver, Colorado) to the
Republican convention (Mon-Thu September 1-4, Minneapolis, MN), a distance of 960 miles northeast.
You have three days (Friday-Sunday) to make the trip.
There may be competition from other Labor Day weekend travelers.
Try to arrange a DEN to MSP trip leaving anytime Friday
August 29, at http://www.amtrak.com. Both cities have train service. The only displayed Amtrak itinerary departs Denver at 8:05 am, a convenient time if you have a downtown Denver hotel. But the itinerary goes west, with transfers in California, Oregon, and Washington. If you remain on schedule, you reach Minneapolis at 7:05 am September 2 after 94 hours. You missed the first day of the convention.
The Amtrak reservation program does not display a
Denver-Chicago-Minneapolis (DEN-CHI-MSP) itinerary, which would be
8:10 pm Friday Leave Denver
3:50 pm Saturday Arrive Chicago
2:15 pm Sunday Leave Chicago
10:31 pm Sunday Arrive Minneapolis
Each segment has only one daily train, so you
must wait 22 hours in Chicago. This journey is 49 hours,
almost twice as fast as the west coast itinerary,
Obama’s plans call for high speed rail in the midwest,
which would include frequent Chicago-Minneapolis trains.
When you inquire at http://www.greyhound.com, you get five convenient choices leaving Friday, taking 21-27 hours each with 1-2 transfers each. You might use one weekend day for travel and two days for tourist activities
in Denver or Minneapolis. Amtrak should allow this flexibility in travelers’ schedules.
Both Amtrak and Greyhound give good scenery,
not the bland view from high-altitude planes.
Greyhound charges nothing for the first checked bag and $5 each for the next two. Amtrak allows three free checked bags.
10. O.M. Amundsen, Jr. | 06.15.08
Amtrak has served as a “place holder” for a national railroad passenger system and now what has always been obvious to the rest of the world has become visable to more people in this country: railroads can be fast, effective and efficient systems for moving both freight and passengers. It is not an all or nothing situation, planes and cars/trucks are better then rail for some aspects of transportation but, both heavy and light rail have a vital place in a national transportation system. To often the word “system” is taken lightly, it means coordinated, well thought out, holistic construction of an integrated mix of modes of travel which will serve the needs of urban, suburban and rural citizens. This also means that low density areas of our nation will be partially supported by high density areas for some types of service. Rail critics should really be more aware of dismissing long distance rail passenger service based upon Amtrak’s accounting methods, perhaps the huge capital investment in the NE is actually drawing away adaquite funding for rolling stock and consequential low frequency of service for the vast majority of other parts of the nation…the NE is, after all, only a small part of our nation. Washington, D.C. is not the center of the universe, nor is New York City or Boston!
11. Ronald C Wallace | 06.16.08
Last year we took the Empire Builder from Chicago to Portland. I ordered tickets 6 months ahead and was told I got the last room for that week. There are three sleepers, one to Portland and three to Seattle …all filled. The Caniadan train from Vancouver had nine sleepers, six were filled. Amtrak does not have enough equipment to do a better job, but they do very well with the little they have. We need a bigger and better Amtrak.
12. Andrew Selden | 06.16.08
The comment about the “profitability” of Amtrak’s various segments reflects a widespread but very wrong misunderstanding about the economic performance of Amtrak’s routes.
The Long Distance (”LD”) routes as a group cost Amtrak a total of about $300 million a year in subsidy (about $200+ million in cash; the rest is G&A, insurance and other indirect costs). The remainder of the annual subsidy (about a billion dollars a year out of a total of about $1.3 to $1.4 billion a year, lately) is consumed on the regional corridors, and of that about 90% is consumed in the Northeast Corridor. Amtrak plays a semantic shell game with this by calling the subsidy to the LD segment an “operating” subsidy, but the subsidy to the NEC a “capital” item because the money goes mostly to infrastructure: track, power generation and distribution, stations, commissaries, police, etc. But to say that the NEC is “profitable” in any sense is absurd, partly because it isn’t true and partly because the “operating/capital” distinction is arbitrary and misleading. The NEC trains wouldn’t turn a wheel without these “capital” items and the billion-dollar-a-year subsidy.
Amtrak’s propaganda about the NEC is like an airline saying that its landing fees, gate rentals and heavy aircraft maintenance items aren’t “operating” costs but “capital,” and that the airline is very “profitable” on an “operating cost basis.” When WorldCom did this, executives were indicted. When Amtrak does it, they get more subsidies.
If Amtrak’s segment subsidies are divided by revenue or transportation output (i.e., revenue passenger miles), you will also see that the LD trains are a far more productive investment of public funds. Per dollar of public subsidy, the LD services produce more than five times the number of passenger miles and dollars of ticket revenue as any corridor, including the NEC.
Another productivity factor that you never hear Amtrak discuss is load factor and market share. Amtrak’s load factors in the NEC are well under 50%; indeed, on some NEC services, under 30%. They can’t give away their inventory there, proving that these markets are over-served relative to actual market demand. That in turn helps explain why Amtrak’s total market share in the NEC (for all intercity passenger trips of 100 miles or more) is about 1%. That’s all we get for a billion dollars a year in the “corridors”: half-empty trains and trivial market share (i.e., congestion mitigation).
In the LD markets by contrast, the trains are statistically sold-out most of the year (by the nature of a long distance route, a LD train with a 67% load factor is full–the seat or berth that is empty at any given point has been sold for use downline; indeed, most LD trains sell every seat and berth an average of 2 1/2 times on every trip) and the market share, in the markets served, is often as high as 5%. They would do better still if Amtrak put more cars on the trains.
13. avalanchecowpoke | 06.17.08
Dear M. O’Carroll
How about publishing the losses for the Airline’s and Highway systems? Isin’t it true they lose far more money than Amtrak?
14. Eoin | 06.17.08
I’m getting a lot of great comments asking me to look into Amtrak’s claims regarding their profits and losses. I’d like to write about this in a new blog post and not just in the comments section. But first I’m going to need to educate myself about the subject. Can anyone point me to some good online resources?
15. O.M. Amundsen, Jr. | 06.17.08
United Rail Passenger Alliance (unitedrail.org) on the web. Critical but worth contacting.
16. Tom | 07.03.08
Amtrak annual reports are notoriously opaque. For example, state-supported corridors count subsidies as revenue (?!), which is why they come close to breaking even.
To some extent, it’s Amtrak’s own fault that anti-rail Republicans get up and rave about the Northeast Corridor that ought to be privatized (big bucks! Yay!), and denounce the subsidy on the train in Montana. By delivering rolled-up numbers that hide the complex realities of rail funding. If the NE Corridor were really profitable, then why aren’t rail operating companies from other countries coming in here and demanding to privatize it?
However, I don’t subscribe to views that some have espoused on this forum that the NE Corridor is getting too much attention. The fact is — the NE Corridor gets capital subsidies because Amtrak has to maintain the tracks. Amtrak’s western routes basically get infrastructure for free, because the freight railroads get paid 1970s prices for track slots that are now worth ten times that in today’s congested railroading environment.
It shouldn’t get held against the Northeast Corridor that we didn’t manage to lay its costs on someone else. Instead, we should be realistic about what it costs to run a railroad. One way of allaying Republican rhetoric is to adopt the Western European approach, where a subsidized agency pays for infrastructure, and operating companies make an artificial “profit.” Then the rail infrastructure gets placed on a level field with highway infrastructure, which makes a 100% loss. And Amtrak no longer gets saddled with the “beleaguered” or “money-losing” designation.
17. Rob | 07.18.08
A couple of thoughts. First, I was skeptical of the Amtrak head’s subsidy figure for auwayto transportation, and I believe rightfully so. There is around $40 billion a year raised in gas taxes and $5 or %6 billion (this is all rough) go to Mass Transit, so there is a significant subsidy going away from the auto. It may be justified, but should be acknowledged. The subsidy he refers to, I believe, is money taken from the general treasury to cover capital improvements utilizing four future years of gas tax revenue (the portion the roads get to keep).
As for depreciation of business assets (private airplanes), well, it is no more a subsidy than if a privately owned rail car were depreciated (they are, if used for business). That just a dishonest argument.
One thing I notice is that the Amtrak price doesn’t seem to vary much. Airlines actively promote low prices to move empty seats. Amtrak has many, many unused seats and doesn’t seem to know how to fill them.
Another thing I have noticed is that bedrooms seem to always be booked in advance. It further seems that if you have something that sells out, you raise the price. I don’t doubt the intelligence of Amtrak’s management, so I may be wrong, or they may be faced with political pressure to not do the economic thing. Obviously, I suspect the latter.
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1. John Thacker | 06.13.08
If you take a look at Amtrak’s annual and monthly reports on their site, you’ll see that it makes an operating profit in the Northeast Corridor, makes a small loss in other short Corridors and state-supported routes, and loses a lot of money (130% of its operating losses) on long-distance trains. The long-distance trains are actually less profitable than last year; while ridership is up, it’s up proportionately higher on the shorter routes, and the added cost of diesel fuel alone is more than the extra revenue on the long distance routes. By contrast, the shorter routes have become more profitable with the higher gas prices, as added ridership has provided more money than extra fuel costs have consumed.
It’s disappointing; one might hope that high gas prices would make Amtrak more competitive. While true on the short routes, the long distance routes are actually doing worse.