Trains magazine columnist Don Phillips is an unabashed enthusiast for passenger trains. Yet his latest column lashes out at Amtrak for repeatedly misrepresenting the Acela–the closest thing Amtrak has to a high-speed train–as profitable.
Amtrak Acela train entering the Washington, DC station. Flickr photo by Steve Wilson.
“Seldom in my life have I seen such a mass of misinformation spread about any one subject as is being spread now about the American passenger train,” Phillips begins. “The misinformation is spread by confused and shallow politicians, young reporters who have no idea what they are talking about, and by Amtrak officials who have learned that they can count on the first two groups to not understand their technical jargon.”
“Combined, Amtrak’s short-distance corridors generated a positive operating balance in 2011,” says the Brookings Institution’s new report on Amtrak. This suggests that the United States should “invest” more in such short-distance routes.
The problem with this is that just one short-distance route, the Boston-to-Washington Northeast Corridor, dominates all the other routes. That one route carries as many passenger miles of travel as all the 27 other short-distance routes put together. Of those 27 routes, only three–the Carolinian and trains from Washington to Lynchburg and Washington to Newport News, Virginia–had a “positive operating balance,” to use Brookings’ term, in 2012. But all of those routes actually start in either New York or Boston, so really they are Northeast Corridor trains too.
In using the term “positive operating balance,” Brookings–with the help of Amtrak’s non-standard accounting methods–is being highly misleading. First, both Brookings and Amtrak count state subsidies as “revenues,” so Brookings doesn’t count a train’s operating loss that is offset by such subsidies against that train’s “operating balance.” Since only short-distance trains receive state subsidies, this leads to a strange recommendation from Brookings that Congress should encourage state subsidies of long-distance trains, as if that would make the subsidies go away. As someone told USA Today, “A subsidy is a subsidy whether it’s coming from federal, state or local taxpayers.”
Intercity passenger trains are experiencing a “renaissance” with Amtrak ridership growing “faster than other major travel modes,” says a new report from the Brookings Institution. Unfortunately, the authors of the report are guilty of selectively using data to make their case.
“Amtrak ridership grew by 55 percent since 1997,” says the report. Why 1997? Fifteen years is a strange time period to use unless there were no data before then; but annual passenger travel data go back many decades before 1997 so that’s no excuse. As it happens, in 1997 Amtrak was nearing bottom: gas prices were low and few people felt the need to resort to government-subsidized travel. Ridership actually bottomed out in 1996 at 5.1 billion passenger miles, but grew to just 5.2 billion in 1997. This makes the growth since 1997 look especially impressive.
Another problem with Brookings data is that it is based on trips rather than passenger miles. A journey of 1,000 miles potentially accesses four times as many destinations as a journey of 500 miles, so measurements based on passenger miles are a much better indication of value than measurements based on trips.
The Auto Train, which carries passengers and their autos between Virginia and Florida, was a “private failure” but a “public success,” says the January, 2013 issue of Trains magazine. For those who don’t know the story, the Auto-Train began as a private venture when a Department of Transportation employee named Eugene Garfield took a DOT feasibility study and $56,000 of his own money to begin the service from Lorton, Virginia (outside of DC) and Sanford, in central Florida. When it began service a few months after Amtrak took over most of the nation’s passenger trains, the Auto-Train was heralded as a great success, earning a profit as early as its second six-months of operation.
The original Auto-Train.
In 1974, however, Garfield bet the company starting a second route from Louisville to Florida, hoping to capture some of the Chicago market. Even without this failed investment, the profits Auto-Train reported only covered operating costs, not maintenance. As so many railroads have done in the past, it was deferring maintenance hoping for more profits to cover those costs in the future. That deferral contributed to at least two accidents that cost the company millions of dollars. The hoped-for long-term profits didn’t happen–Trains reports that it only netted a profit in 1973, ’74, and ’75–and the company went out of business in 1981.
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.
A transit advocate who calls himself Captain Transit asks, “How can Amtrak charge so much for the Northeast Corridor?” His answer, which he claims to have arrived at with the Antiplanner’s assistance, is that buses carry the low-income passengers in this corridor, so Amtrak can get away with charging first-class rates for high-end passengers.
That’s not exactly correct: there are low-cost buses in a lot of Amtrak corridors, but only in the Northeast Corridor does Amtrak collect average fares exceeding 32 cents per passenger mile. In fact, fares for the Northeast “regional” trains (which is what Amtrak calls the non-Acela trains in the corridor) average 42 cents a passenger mile, while the Acela fares average more than 75 cents a passenger mile (these numbers are from 2011 and are calculated based on page C-1 of Amtrak’s end-of-fiscal-year performance report).
As near as I can tell, Amtrak’s route structure is politically determined. Amtrak trains serve at least one city in all but two of the contiguous 48 states, and that is several states more than when Amtrak was created in 1971. Amtrak could only benefit by adding routes through more states, each of which have two senators. (Significantly, the two contiguous states that Amtrak doesn’t serve, Wyoming and South Dakota, each have only one representative in Congress.)
On the other hand, Amtrak’s fare structure is market driven. This doesn’t mean Amtrak sets its fares to make a profit; obviously it doesn’t. Instead, it sets its fares to be as high as it can get in each market. For example, Amtrak fares between Chicago and Minneapolis are nearly twice airfares because Amtrak has only one train on this route that continues on to Seattle, and Amtrak doesn’t want Chicago-Minneapolis passengers to take seats that might otherwise be filled by Chicago-Seattle passengers.
Amtrak President Joseph Boardman scored a point when he announced that Amtrak operates the Rocky Mountaineer, a cruise train that takes passengers from Vancouver to Whistler and the Canadian Rockies. He made this announcement at the September 20 House Transportation Committee hearing about 41 years of Amtrak deficits.
The Antiplanner had offered the Rocky Mountaineer as an example of a private rail operator taking over when the government–in this case, VIA Rail Canada–stops serving a route. VIA ended service on the Vancouver-Calgary route in 1990 (the Antiplanner was on the last westbound train), and the Rocky Mountaineer almost immediately began offering cruise trains. Today this company offers several different routes, including some also served by VIA.
Not operated by Amtrak.
So when Boardman said the Rocky Mountaineer “is actually operated by Amtrak,” the mostly pro-Amtrak audience laughed at the Antiplanner’s silliness for using this as an example of privatization. The only problem was that Boardman’s statement was a slight exaggeration–as in totally untrue.
The London Telegraph reports that flying is less expensive than taking the train in about half the routes in Britain. This shouldn’t be a surprise: trains require far more infrastructure than planes and maintaining that infrastructure is expensive.
Passenger trains in the United States have an advantage over those in Britain: the former share most of their rail infrastructure costs with freight, but rails carry very little freight in Britain. According to data from the European Union, British lorries carry more than 6.6 times as much freight as trains, while data for the United States indicate rails carry at least 120 percent as much freight as the highways.
Partly due to this advantage, but mainly due to heavy subsidies from the state and federal governments, Amtrak fares are lower than airfares for many city pairs. Still, the airlines nearly meet and sometimes beat Amtrak fares in a number of corridors. American Airlines fares between Portland and Oakland start at $79 compared with Amtrak’s $80. Delta is $112 between Baltimore and Atlanta vs. Amtrak’s $115. Jet Blue is $60 between Los Angeles and Oakland, compared with Amtrak’s $56.
The New York Times reports that “Amtrak Dominates Northeast Corridor Travel.” That’s absolutely true–as long as you don’t count buses. Or cars. Or intermediate points between Boston, New York, and Washington.
The Times says that Amtrak has a 75 percent share of the “air/rail” market between Washington and New York, but it only has a 54 percent share of the “air/rail” market between New York and Boston. It doesn’t say anything about intermediate points.
In a more realistic assessment, page 4 of Amtrak’s 2010 Vision for the Northeast Corridor reports that Amtrak carries 6 percent of travel in the Northeast Corridor, while planes carry 5 percent and the remaining 89 percent goes by highway. Amtrak doesn’t break out bus travel, but I estimate buses carry significantly more passengers than Amtrak, or approximately 8 to 9 percent of the corridor market.
House Transportation Committee Chair John Mica says that Amtrak is losing $84 million a year on its food services. A recent report from the Amtrak inspector general says that at least part of the loss is due to thefts from Amtrak food-service personnel.
Florida Representative Sandy Adams–who, due to redistricting, is facing Mica in this year’s election–says that Mica’s criticism of Amtrak’s losses is “an election-year stunt.” Adams, who is supposed to be a Republican, is critical of Mica’s solution, which is to turn over food service to private companies. Why “put taxpayers on the hook to continue a subsidy to the companies who win the concession bid”? asks Adams.
Of course, the answer is that private companies are more efficient, less likely to have onerous pension and health care liabilities, and will probably have better methods of making sure employees don’t steal from them. Any Republican should know this answer, but Adams’ response to Mica is no doubt an election-year stunt.