The Case for Privatizing Amtrak

On Monday, the Cato Institute will release the Antiplanner’s latest paper, Stopping the Runaway Train: The Case for Privatizing Amtrak. Antiplanner readers can preview the paper today.

Amtrak’s Empire Builder outside of Glacier National Park, September 13, 2010. (Click image for a larger view.)

The case against Amtrak is simple. Before Amtrak took over the nation’s passenger trains, average rail fares were a third less than average air fares. Today, thanks to four decades of government management, average rail fares are more than twice average air fares. Moreover, subsidies to passenger trains are nearly ten times as great, per passenger mile, as subsidies to airlines (and more than twenty times subsidies to highway travel). When fares and subsidies are combined, Amtrak spends nearly four times as much moving one passenger one mile as the airlines.

The Antiplanner compared air fares with rail fares on a variety of routes and found that Amtrak was generally less than the airlines only on some routes under 400 miles. Buses were less than Amtrak regardless of the length of the route. Amtrak has become a classic example of government giving heavy subsidies to a service that is no longer competitive even with the subsidies.

Still, there might be a case for Amtrak if it were a major transportation provider. It is not. The average American travels about 1,900 miles a year by plane, 15,000 miles a year by car, and around 20 miles a year by Amtrak. Despite Amtrak’s brags about record ridership, last year’s average of 21 miles per capita was less than in 1990, when it was 24 miles per capita.

Even in the Northeast Corridor, Amtrak’s most important market, Amtrak is insignificant. The average resident of the urban areas from Boston to Washington rides Amtrak all of about 42 miles per year. If Amtrak disappeared tomorrow, by Monday no one would notice any increase in highway or airport congestion.

Some, including Republicans on the House Transportation Committee, are looking at ways to reform Amtrak. But reform is pointless, argues the Antiplanner; so long as Congress is funding it, routes will be determined by politics, not markets, and the system will waste a lot of money.

Privatizing Amtrak doesn’t mean an end to all passenger trains, though it probably means an end to some. Based on data provided on pages 19 and 20 of the report, I suspect passenger trains in the Boston-to-Washington corridor would survive, along with New York-Florida; New York-Charlotte; New York-Montreal; and a few other Eastern and Midwestern corridors. Whether those trains could earn enough money to pay for new equipment after the current equipment (which Amtrak would sell to private operators) wears out is another question.

Amtrak’s California trains are highly questionable as they are some of the poorest performers in the Amtrak system. Daily long-distance trains in the West would probably be replaced by weekly and/or seasonal cruise trains. When Canada stopped running trains from Vancouver to Banff and Calgary, a private company called the Rocky Mountaineer entered the market with cruise trains, and it has since grown to offer four different routes. Such cruise trains typically operate only about once a week and are aimed at completely different markets from Amtrak.

As a rail fan, I would be sad to see the trains go except they are so poorly run by Amtrak that I don’t even find them all that interesting anymore. As an economist, I have to argue that Amtrak should be abolished, but that this should be done in the context of a complete reform of our transportation system, including ending subsidies and other preferences to all forms of travel.

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17 thoughts on “The Case for Privatizing Amtrak

  1. OFP2003

    If everyone that voted for Obama understood the ramifications of his policies/actions (and I’m convinced a good majority didn’t) then this will fall on deaf ears. No one will believe the government can’t do a better job.

    But since I don’t believe they understood, I say: “Keep up the good work!”

  2. msetty

    It would help when you quote miles traveled by various modes such as air, to quote only intercity travel by automobile, which is only about 12%-15% of the total, e.g., 2,000-2,500+/- total annual miles per capita. By that figuring Amtrak provides roughly 0.5% of total intercity mileage. In intercity markets where Amtrak operates–only a fraction of the U.S. total–this share is probably a few percent, mainly due to a lack of competitive service and/or adequate connections.

    Amtrak is hardly insignificant in the Northeast Corridor, with 6% of the total intercity market for trips of over 50 miles. Metro North, New Jersey Transit, MARC and VRE probably add a few percent to this total for longer commute trips, such as New Haven-New York. In Germany, intercity rail has about 15% share for trips within the country, with profuse rail and often bus connections to almost every burg of any significance.

    As Greg Thompson pointed out in his 1993 book, The Passenger Train in the Motor Age, the biggest problems with passenger trains in the 1930’s was (1) the industry failed to reduce fares sufficiently during the early Depression to keep most of their riders; and (2) after a brief flirtation with lightweight trains as you profusely document at your Streamliners website, the industry completely failed to understand the connection between excessive tare weight and high operating costs. One thing Thompson points out is that railroad management didn’t think the streamlined lightweight trains “looked like trains” so you had follies like so-called streamliners weighing 3-4x per passenger as the old wooden cars, particularly after the war.

    I need to do some more research, but I am 95% certain that Amtrak’s biggest problem is excessive weight per passenger, particularly on its long distance trains. Sure, bureaucracy and politics play a role, but having up to 5-6 tons of rolling stock per passenger on long-distance trains in particular savage their economics far more than Washington politics. Tentatively I say NO to “Amtrak reform” until this problem can be dealt with. I’m not referring to DMUs, though they’re part of the solution. I know of a technology that will have a major positive impact on reducing tare weights, but I have to wait until an associate of mine is ready to start working in the steel/metals area.

    The Antiplanner Reply:

    MSetty,

    Where do you get 12 to 15 percent? Rural vehicle miles is about 31 percent of total automobile vehicle miles, and at least some intercity miles are done in cities. Plus, intercity driving has about 50 percent higher auto occupancy rates than urban driving. That would make intercity passenger miles more than 40 percent of the total.

    I agree with you that weight per passenger counts against Amtrak, but what are you going to do when you run passenger trains in the same corridors as freight trains? Even lightening the trains up to TGV standards, which could pose dangers for passengers, would still result in higher weights per passenger than automobiles and buses. I don’t think there is a way to fix that problem that can’t be applied to autos with much greater effect.

    the highwayman Reply:

    Mr.Setty, Cambodia has private for profit passenger rail service.

    http://www.youtube.com/watch?v=yvwwp2941yE

    Though they can do this, because their government treats railroads the same way as roads.

    Iced Borscht Reply:

    Though they can do this, because their government treats railroads the same way as roads.

    Welcome back. Where have you been? It’s been a while since someone has started a sentence with the word “though.”

  3. msetty

    The Antiplanner:
    Where do you get 12 to 15 percent? Rural vehicle miles is about 31 percent of total automobile vehicle miles, and at least some intercity miles are done in cities.

    Huh? Are you talking about intercity vehicle miles in the U.S. or Germany?

    In Germany, according to DB statistics, there are roughly 130 million intercity trips by rail–which runs at a profit based on fully allocated costs, BTW (the big rail losses you allude to are almost exclusively local trains which should be compared with local transit, not Amtrak; same situation in France, Switzerland and a number of other northern European countries)–producing around 18-20 billion passenger miles, which is about 12%-15% of their intercity trips within the country. This doesn’t include “international” trips within the continent by rail, air, bus or car, where rail generally has a lower percentage, car and air much higher.

    The numbers you quote also appear to include local rural auto travel, most of which is well below 50 miles, if a lot higher than typical trip lengths in urban areas. The numbers I quote are for strictly intercity trips over 50 miles in length, as defined by USDOT.

    As for the technological improvements I’m talking about, they can easily meed and exceed current FRA “crush strength” requirements, even with train weights well below TGVs. Better yet meeting the new de facto FRA standards established by minor upgrades to the Stadler (Swiss) design used by DCTA north of Dallas. In one industrial application, my associate’s design approach reduced weight by 80%+ while being 2-3x stronger than the materials it would replace in production.

    So you know I’m not blowing smoke up your posterior, take a look at this: http://www.tessellated.com/. Using this kind of technology, railcars could be put on a significant diet but still meet any applicable FRA standards, as I said preferably the DCTA one. I can’t reveal all details right now, but the compression tests on the materials yielded results far higher than traditional designs, and that’s just for packaging.

    As for the claim that the tech could be applied a lot faster with automobiles, well, no. New railcar designs could be designed and built within three years, quite a bit shorter than it would take to have auto manufacturers take full advantage of the approach. As for autos, they’ve already stretched thin steel/unitbody designs near the limit, so there is a lot less to make up compared to rail cars. What my friend’s tech can do is reduce the need for exotic materials such as expensive composites, gaining similar weight reductions that those promise.

  4. msetty

    About FRA approval of light weight rail cars:

    http://www.masstransitmag.com/press_release/10725306/fra-approves-first-integrated-use-of-stadler-gtw-rail-vehicle-for-dct

    C. P. Zilliacus Reply:

    But Denton County, Texas is serving relatively short (in terms of trip length) commuter trips, nothing that even comes close to Amtrak’s N.E. Corridor.

    Not sure that the decision to allow light(er) weight DMUs there is relevant to Amtrak operations.

    msetty Reply:

    The DCTA rolling stock acceptance by FRA is important because it means the FRA will accept trains with energy-absorbing ends–like the “crumple zones” of automobiles–in lieu of the 1,000,000 pound compression requirements that cars like Superliners meet. Obviously light weight long distance rolling stock will necessarily be relatively heavier per passenger than short distance commuter cars due to the requirements for more water, food service areas, larger engines and fuel tanks, allowances for baggage, sleeping car accommodations in trainsets designed for that, etc.

    The Stadler cars used by DCTA are roughly the same weight per foot/meter of length as the Talgo cars used by the Cascade Corridor, exclusive of the standard Amtrak locomotives used for that service. FRA accepted the Talgo equipment due to end cars, and locomotives meeting the 1,000,000 pound requirement.

    Now, this change in FRA rules could lead to much lighter and cheaper to run equipment, even without my associate’s technology. Of course, there will always be a lower limit to powered axle loadings to maintain required traction. I’m not sure exactly what this is based on various potential train weights, but I’m sure these lower limits are a lot less than the 35-ton axle loadings of a typical Amtrak diesel locomotive designed to pull Superliners or “California Cars” weighting 75 tons each or Amfleet cars coming in at 55-60 tons.

    C. P. Zilliacus Reply:

    The DCTA rolling stock acceptance by FRA is important because it means the FRA will accept trains with energy-absorbing ends–like the “crumple zones” of automobiles–in lieu of the 1,000,000 pound compression requirements that cars like Superliners meet. Obviously light weight long distance rolling stock will necessarily be relatively heavier per passenger than short distance commuter cars due to the requirements for more water, food service areas, larger engines and fuel tanks, allowances for baggage, sleeping car accommodations in trainsets designed for that, etc.

    Amtrak does not fund any of its rolling stock purchases out of passenger ticket revenue, does it? All such purchases are funded by federal taxpayers, right?

    Will lighter Amtrak cars lead to lower Amtrak operating deficits?

    The Stadler cars used by DCTA are roughly the same weight per foot/meter of length as the Talgo cars used by the Cascade Corridor, exclusive of the standard Amtrak locomotives used for that service. FRA accepted the Talgo equipment due to end cars, and locomotives meeting the 1,000,000 pound requirement.

    Aside from Southern California, I have never seen any of Amtrak’s rolling stock in the West. In the East, along the N.E. Corridor, Amtrak runs the “usual” assortment of Amfleet locomotive-pulled cars, and the Acela trainsets. The only Superliners I’ve ever seen in the East are those used on the Auto Train, and on the Capitol Limited between Washington, D.C. and Chicago (overhead clearance limitations preclude the use of Superliners on the N.E. Corridor).

    Now, this change in FRA rules could lead to much lighter and cheaper to run equipment, even without my associate’s technology. Of course, there will always be a lower limit to powered axle loadings to maintain required traction. I’m not sure exactly what this is based on various potential train weights, but I’m sure these lower limits are a lot less than the 35-ton axle loadings of a typical Amtrak diesel locomotive designed to pull Superliners or “California Cars” weighting 75 tons each or Amfleet cars coming in at 55-60 tons.

    I really doubt that new Amtrak rolling stock will lead to lower Amtrak deficits (be they the gross Amtrak-wide annual deficit, the per-passenger deficits or the per-passenger-mile deficits).

    Recall that Amtrak’s management at the time claimed that if Congress bought the Acela trainsets it wanted for the N.E. Corridor, it would set Amtrak on a “glide slope” toward not needing taxpayer operating subsidies.

    the highwayman Reply:

    This is really a question about Transport Policy.

    Roads don’t have to make money, railroads shouldn’t have to make money either.

    prk166 Reply:

    Roads don’t have to make money? Tell that that to the bondholders of toll road issued bonds and let us know how they respond.

  5. C. P. Zilliacus

    The Antiplanner wrote:

    Privatizing Amtrak doesn’t mean an end to all passenger trains, though it probably means an end to some. Based on data provided on pages 19 and 20 of the report, I suspect passenger trains in the Boston-to-Washington corridor would survive, along with New York-Florida; New York-Charlotte; New York-Montreal; and a few other Eastern and Midwestern corridors. Whether those trains could earn enough money to pay for new equipment after the current equipment (which Amtrak would sell to private operators) wears out is another question.

    I think the Auto Train (runs Lorton, Virginia to Sanford, Florida) would survive under private ownership, though it might have to raise fares so that it could replace and maintain its capital equipment.

    Wonder why there has never been an east-west Auto Train (perhaps from Chicago (or someplace east of Chicago) to the Southwest (Las Vegas, Arizona or Los Angeles))?

    msetty Reply:

    My point is that much lighter equipment can reduce the direct costs of operating passenger trains by 50%-70%, mainly through reduced fuel usage and maintenance. Improving labor productivity is an institutional question, not technological.

    It is altogether another question if Amtrak as an institution would be smart enough to take advantage of such economies. Assuming Florida’s All Aboard Florida operation succeeds, we’ll then have a reliable benchmark to determine the real economics of passenger rail untainted by D.C. politics and log-rolling.

    prk166 Reply:

    If one took the train to Vegas, wouldn’t it be cheaper to just rent a car in Las Vegas than pay for one to be hauled there?

  6. the highwayman

    Rocky Mountain Rail Tours is a land cruise, it isn’t real passenger rail where people are going from point A to point B.

    Amtrak isn’t perfect, but it is better than nothing.

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