Commentary: Amtrak Illustrates Inefficiency Of Publicly Funded Transportation

Spending, Transportation — By on October 29, 2011 3:04 pm
Print Friendly
Perennially failing model continues to consume tax dollars, government subsidies

The debate over reducing government subsidies to Amtrak intensified last week when House Transportation and Infrastructure Committee Chairman John Mica (R-Florida) labeled the railway a “Soviet-style monopoly.” While the severity of this statement may be questioned, it is a matter of fact that Amtrak continues to run at heavy losses for which the taxpayer is left holding the bill, strengthening the argument that it should be privatized or defunded altogether.

As revealed in a report by the Transportation Committee, the Sunset Limited line connecting New Orleans with Los Angeles operated at a loss of $417.92 per passenger in 2010. Overall, Amtrak’s 15 long-distance routes averaged a loss of $117.84 per passenger. Despite increasing ridership, Amtrak operated at a $506 million loss this past fiscal year, and expects a loss of $616 million next year.

Amtrak’s failings are easily attributable to its poor operating procedures, which Mica accurately terms as “antiquated.” These procedures include expensive ticket prices, extremely long travel times compounded by extended layovers, and limited days of operation- all of which entice potential passengers to use airlines instead. In addition, union friendly labor practices have raised costs considerably at the expense of progress.   

While this would ostensibly indicate a failing business model, Amtrak nonetheless has ardent supporters who contest that the private sector would not fare any better. Proponents such as Mayor Landrieu and Sen. Mary Landrieu argue that Amtrak is indispensable to the local economy because of New Orleans’ dependence on the tourism industry.

While transportation plays a pivotal role in shoring up local tourism, leaving transportation to the private sector seems logical at this point. No viable enterprise would hope to operate at a profit with the extremely inefficient procedures currently used by Amtrak. Furthermore, while a  privately-run line would be more efficient, many commuter rail lines may just simply not be responsive to the market. With the availability of planes, cars, and buses, passenger trains are no longer a practical option to many consumers.

Amtrak can afford to continue with such impractical operating rules because it is being paid for by someone else- taxpayers. Amtrak’s history has been one of consistent financial loss and government bailouts. The tired argument that it needs further subsidizing to be resuscitated is rendered null and void by the fact that Amtrak was dead on arrival.

Related posts:

  1. Commentary: Obama’s Deficit Reduction Speech Illustrates Fundamental Misunderstanding of America’s Fiscal Woes
  2. Transportation Scholar Refutes Case for N.O.-B.R. High-Speed Rail
  3. Privatizing Federal Assets And Operations
  4. Wall Street Not the Only Place for Taxpayer-Funded Bonuses
  5. Commentary: Obama High Speed Rail Plan Officially DOA
Tags: , ,
  • Anonymous

    It’s always interesting to see how AMTRAK gets beat up by inaccurate reporting, and also by a small segment of the population who think train systems are socialist.  The facts are that AMTRAK is the least subsidized form of travel in the United States, with airlines being the worse. The United States has even subsidized foreign airlines!  There are airline subsidies in the U.S. for some flights that amount to a few thousand dollars per person per flight!  Not one public airport in the nation makes money!  And for this year alone airlines are looking at a loss of billions!   AMTRAK had 30,000,000 riders this past year and has continued to grow in it’s ridership year after year.  Airlines are subsidized the worse, the next are roads and the least are the railroads.  Your entitled to your own opinion but your not entitled to your own facts.  Let’s look at the other subsidies and losses in other modes of transportation if you want to really see Soviet Style!

  • Anonymous

    John Mica has always been an arrogant, self-impressed blowhard, and his absurd comparing of Amtrak to a “soviet-style railroad” is the best possible proof.
     
    For all of Amtrak’s faults — most of which are attributable to the near starvation-level of funding that Republicans like John Mica have given it over the years — the railroad does a remarkably good job. What better proof than steadily increasing ridership year after year, culminating with an all-time record of 30.2 million passengers for this past year. Furthermore, system-wide, Amtrak covers 86% of its operating costs from fares and other revenue, an accomplishment no other national rail passenger system anywhere in the world can come close to matching.
     
    Republicans and conservative ideologues rant against Amtrak because it receives a relatively small annual subsidy of about $1.5 billion. (The U.S. sends that same amount every year in foreign aid just to Egypt, for heaven’s sake!) Yet they refuse to acknowledge that ALL forms of public transportation are subsidized — from the airlines to highways to bike lanes and
    sidewalks — which is the way it ought to work in a modern, civilized society.
     
    Every other developed and industrialized country in the world has long since realized that rail has become the preferred mode of transportation. The U.S. continues to fall farther and farther behind for which the blame — and eventually the judgment of history — will come to rest at the doorways of John Mica and others of his ideological ilk.

  • Willie Green

    Amtrak’s unprofitable transcontinental routes through sparsely populated western states are mandated by the same congressional delegation that whines about providing subsidies. And upgrade of Amtrak service along the more profitable regional routes is also thwarted by the political influence of Special Interests who oppose more competition in the marketplace.

    If John Mica sees signs of Soviet subversion, he must be looking in a mirror.

  • Anonymous

    Contrary to widespread opinion, privatization is not the solution to every U.S. problem; particularly not for intercity rail passenger service. Any private business must make a profit to continue operating. Thanks to huge federal, state and local government subsidies to all other forms of transportation and to local/state taxation of railroad infrastructure, passenger rail service cannot make a profit because fares high enough to theoretically make that happen would in fact be far higher than the user out-of-pocket costs for any other transportation mode.
    FACTS not opinions:
    1. Amtrak recovers more than 85 percent of its operating costs from operating revenues — a higher recovery rate than any other form of U.S. transportation.
    2.Not one single national rail passenger service system on planet earth makes a true profit — total system revenues exceed total system operating and capital costs.
    3. Amtrak cannot and will not be the first national system to earn a system profit.
    4. In every nation reporting profitable high speed rail passenger service, governments have made huge, long-term predictable, well-conceived investments in rail infrastructure, while the U.S. has made only tiny, irregular, uncoordinated rail infrastructure investments. Each such nation — and most other modern industrialized nations — continue to maintain extensive conventional-speed urban and intercity rail passenger services, something that has not existed in the U.S. since before Amtrak began operations in 1971.
    5. No other nation on earth is so intensely auto-dependent as is the U.S., and that dependence has been created primarily by illconsidered public policies or transportation, land use and energy efficiency. In turn, most nations with better urban and intercity rail passenger service long ago adopted public policies on transportation. land use and energy efficiency that discouraged heavy auto dependence in part by providing less expensive alternatives.
    6. Throughout the world, the standard cost measure for transportation modes is cost per passenger-mile, not per passenger. A passenger-mile is one passenger carried one mile. Using the common measure, Amtrak train unit costs are far less scary.
    7. In particular, Amtrak’s Los Angeles – New Orleans Sunset Limited train operates only three days per week in each direction. This less-than-daily operation decreases maximum total operating revenue while also decreasing equipment and crew usage efficiency — that is raising the operating loss per passenger mile. When Amtrak proposed daily operation of the Sunset Limited, the freight railroad that owns the tracks used — Union Pacific — insisted charging Amtrak for a multi-billion dollar track and signal upgrade before the daily service could begin.
    8. All of the complaints voiced by Congressman Mica can be attributed to consistent Congressional failures to provide Amtrak with a set of clear operational expectations and adequate funding to carry out such expectations. Amtrak management has thus been forced into annual struggles for survival, and to maximize fare revenues rather than to assist in ensuring that all Americans have available alternatives to driving or flying, the two most energy-inefficient and environmentally destructive travel modes known to humankind.

  • ryanov

    Doing some back of the napkin math here, I think we’re talking about $4 per citizen annually. We should be upset about this why, exactly?