Off the Rails?
Amtrak's Future Remains in Doubt; Should It Make a Profit?

By Peter Dizikes

N E W Y O R K, March 4 — You might not think that Larry Bonderud, the mayor of tiny Shelby, Mont. (pop. 3,000), would be deeply worried about the future of Amtrak.

But Bonderud is among those concerned that Congress will discontinue its funding of Amtrak this year — meaning the national passenger railroad would likely eliminate long-distance trains such as the Empire Builder, which passes through Shelby en route from Chicago to Seattle.
He says having no train would mean fewer jobs in town and no way for travelers to get around except by car.

"It would be devastating," says Bonderud. "We have 50 jobs here based on Amtrak and for a community our size to lose jobs would be devastating. And it's the only means of public travel by which people can go east and west from here — there's no buses and there's no airplanes."

But with the congressionally appointed Amtrak Reform Council last month recommending the breakup of Amtrak, lawmakers may decide to stop subsidizing passenger trains. And unless Congress comes up with $1.2 billion in funding, warns Amtrak President George Warrington, long-distance routes will be shut down on Oct. 1. So far the Bush administration has set aside just $521 million for Amtrak in its proposed annual budget.

The Money Train

Amtrak's financial picture seems complex, but the problem underlying its balance sheet is simple: Trains on the densely populated Northeast Corridor, from Washington to Boston, turn a profit, while passenger routes virtually everywhere else in the country are money-losers.

Amtrak System Map

Many in Congress, which has given generally bipartisan support for Amtrak since its inception in 1971, continue to press for changes in order to make the railroad self-sufficient.

"Amtrak's financial condition and its underlying structure have got to be dealt with," said Rep. Harold Rogers, R-Ky., at a recent hearing in Congress on the railroad's future. But given Amtrak's prescribed role as a national passenger carrier, losses seem inevitable. Roughly a quarter of Amtrak's routes lose at least $100 per ticket sold.

"There's no way in hell that [Amtrak] can succeed given the mandates, just none, as far as I can see, because almost all of those lines run at a deficit," said Rep. John Olver, D-Mass., at the same congressional session.

Still, no one seems to know how to make passenger rail profitable in the near future. In its report this month, the Amtrak Reform Council called for one company to actually run the trains, a separate company to maintain the Northeast Corridor track and a new board of directors.

The report also suggests opening up some routes to private companies, arguing they "would drive down costs and improve service quality," but concedes private-sector competition "in all likelihood would not eliminate the need for operating subsidies" for long-distance trains.

Double Standard That Benefits Airlines?

The reform council's belief that subsidies are necessary has rail advocates wondering why profitability should even be a goal of passenger train operations.

"This whole reorganization schtick is a distraction from the fundamental issue," says Ross Capon, executive director of the National Association of Railroad Passengers in Washington, D.C. "Americans want more transportation choices, not fewer."

Indeed, rail advocates, while agreeing Amtrak needs to be efficient, claim trains are held to an unfair standard since the government pays much more for interstate highways and airports without expecting a profit in return.

"This is a public utility, much like a highway is," says Tom Beaumont, a Minneapolis resident and frequent train passenger who serves on the Amtrak Customer Advisory Committee. He dismisses the idea that long-distance trains like the Empire Builder are just for nostalgic rail fans.

"These are trains that go long distances but serve a number of communities in between," says Beaumont. "Sixty or 70 percent of the people [on board] don't ride from one end to the other."

As Bonderud notes, it only took Congress a couple of weeks to produce a $15 billion bailout package to the airlines after the Sept. 11 terrorist attacks. By contrast, Amtrak lost $1.1 billion in 2001, although the railroad also has a wish list of several hundred million dollars in capital improvements.

"You give them airports, you give them $15 billion, and they want to say that you're not subsidizing these things," says Bonderud.

Where Are the Riders?

Still, Amtrak's ability to attract new passengers is in question. Ridership did not increase dramatically after the Sept. 11 attacks; the peak monthly gain in late 2001 was a four percent increase in revenue-passenger miles in December, compared to the previous year.

Capon says Amtrak's performance compares favorably to the passenger losses suffered by the airlines — and argues the issue is a red herring because of Amtrak's struggle to become profitable.

"Self-sufficiency pushed the organization in exactly the opposite direction of high ridership," claims Capon. He says Amtrak's fare increases in the mid-1990s "took a toll on ridership" but "did the job they were supposed to do" by increasing revenues.

Even so, with Amtrak remaining in the red, its fate rests in Congress' hands. Will the lawmakers come through with $1.2 billion?

"We're going to work our hardest, but I wouldn't stake my life on it," says Capon.

Amtrak Snapshot: Facts and Figures

Amtrak began service on May 1, 1971, taking over the inter-city passenger train operations of all but three railroads (which have since dropped their passenger service).
Amtrak's official name is the National Railroad Passenger Corp.

The railroad serves 46 of the 50 states. The exceptions: Alaska, Hawaii, South Dakota, and Wyoming.

Amtrak runs 265 trains a day on weekdays. Traffic between New York and Washington is enough to fill 121 airplane flights.

Amtrak's 10 busiest stations: New York; Philadelphia; Washington, D.C.; Chicago; Newark, N.J.; Los Angeles; Trenton, N.J.; Baltimore; Boston; and Princeton Junction, N.J.

The longest Amtrak train is typically the Auto Train, which operates between Virginia and Florida, and has 40 cars.

The Sunset Limited, running between Orlando and Los Angeles, is Amtrak's longest inter-city route at 2,768 miles. The Hiawatha, which connects Chicago and Milwaukee, is the shortest, covering 86 miles.

Amtrak has 343 locomotives, more than 2,000 cars and more than 25,000 employees.

Source: Amtrak

But I see the writer took at face value Amtrak's convoluted accounting regrading the profitability (or lack thereof) of various trains. Not even the ARCs auditors could deteermine that for certain. But there's only so much a reporter can do on a deadline.

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Trust God, love your neighbor, and never mistake opinion for truth.
-Mr. Toy