Amtrak: "A massive failure"?

Amtrak Turns 40…Called a ‘Massive Failure’ by its Founder
May 7, 2011
by Mike Opelka

This week kicks off the 40th Anniversary of the money-sucking, inefficient, outmoded national rail system we call Amtrak.

Amtrak, the National Railroad Passenger Corporation (that’s the official name), was born during the Nixon administration.

Amtrak is:
Government owned and controlled
Union-operated, employing more than 20,000 workers
Has a CEO appointed by the president of the United States
Its annual budget is allocated by Congress.

What could possibly go wrong? Plenty.

Let’s start with money. Amtrak loses bucketloads of money every day. The national rail system operates in the red, generating huge losses and has done so each and every year of its existence. And they are not shy about it. From the Amtrak website;

In FY 2010, Amtrak earned approximately $2.51 billion in revenue and incurred approximately $3.74 billion in expense.

That’s over $1.2 billion in losses for the most recent year, putting the overall tab for this antiquated, bloated and inefficient system around $50 billion dollars of taxpayer money.

The embarrassment of Amtrak has even struck a chord with someone who rallied for its creation. Anthony Haswell, founder of the National Association of Railroad Passengers and a person widely recognized as the inspiration for Amtrak, is not happy with the current state of the railroad’s affairs. Mr. Haswell opines on Amtrak in ‘Red State Uprising: How To Take Back America.’

Amtrak is a massive failure because it’s wedded to a failed paradigm. It runs trains that serve political purposes as opposed to being responsive to the marketplace. America needs passenger trains in selected areas, but it doesn‘t need Amtrak’s antiquated route system, poor service and unreasonable operating deficits.

When the Founding Father of Amtrak calls it a ‘massive failure’ and states that the politicians involved are getting more benefits from it than the passengers and taxpayers, you would hope that someone in the Federal government would respond.

Washington did respond. Their answer to Amtrak’s problems? Spend more money. Throwing money at a problem rarely solves it. Amtrak’s losses have topped a billion dollars each year since 2000. But that won‘t deter the current administration from pushing it’s plan to spend $53 billion dollars over the next six years on questionable high-speed rail systems.

Transportation Secretary Ray LaHood is bouncing all around the country next week, announcing plans to spend tens of billions of dollars on a high-speed rail system that should lose even more money than Amtrak. (High speed rail does not have a great track record. Just days ago, our own Dan Andros covered the massively over-priced system in China.) There is a certain amount of irony in the fact that Secretary LaHood will make high-speed rail project announcements in both New York City AND Detroit on Monday, but he’s getting from one city to the other via airplanes (we assume the Secretary to be flying on private, government jets too). It would be much more convincing if he chose to travel from NYC to Detroit on Amtrak, highlighting the current system and giving us an idea of just how much time will be saved when the new faster trains are up and running.

Most private transportation companies have been forced to apply real world solutions in these difficult economic times, yet Amtrak rolls on, acting as if they were exempt from the problem.

An independent 2009 study of Amtrak’s operations and revenue offered some startling facts:

Forty-one of Amtrak’s 44 routes lost money in 2008 with losses ranging from nearly $5 to $462 per passenger depending upon the line, according to analysis by Pew’s Subsidyscope.

The line with the highest per passenger subsidy—the Sunset Limited, which runs from New Orleans to Los Angeles—carried almost 72,000 passengers last year. The California Zephyr, which runs from Chicago to San Francisco, had the second-highest per passenger subsidy of $193 and carried nearly 353,000 passengers in 2008. Pew’s analysis indicates that the average loss per passenger on all 44 of Amtrak’s lines was $32, about four times what the loss would be using Amtrak’s figures: only $8 per passenger. (Amtrak uses a different method for calculating route performance).

The Northeast Corridor has the highest passenger volume of any Amtrak route, carrying nearly 10.9 million people in 2008. The corridor’s high-speed Acela Express made a profit of about $41 per passenger. But the more heavily utilized Northeast Regional, with more than twice as many riders as the Acela, lost almost $5 per passenger.

According to the Pew report, only 3 of Amtrak’s 44 lines are making any money. That statement alone might inspire the CEO of the failing rail service to consider cuts and changes. Of course, having more than 20,000 union employees (85% of those folks are covered by collective bargaining) makes it difficult to change anything that might cause a job to be lost or a benefit diminished.

And so nothing changes, except the amount on money being wasted on an antiquated mode of public transportation. It is not as if we could not or did not anticipate this situation. Back in 1958, the Interstate Commerce Commission reviewed all transportation modes and decided that passenger rail travel would soon “take its place in the transportation museum along with the stagecoach, the side-wheeler and the steam locomotive.”

That statement was made 53 years ago, over a decade before Amtrak was created. And instead of letting passenger rail travel pull into the terminal of the museum system or even allow the private sector have a less-regulated whack at it, Amtrak rolls on.

Amtrak is proud of this as they are celebrating 40 years of costing you money while providing bad service at a high price combined with unpredictable arrival times. We are not kidding. Starting today, the Amtrak 40th Year Anniversary Train is traveling all around the country...

Thanks to High-Speed Rail Talk for the link.