Build It and They Won’t Come

It’s too soon to know what caused the Saturday derailment of Amtrak’s Empire Builder that took the lives of three people. What we do know is that a train that had room for at least 350 paying passengers was carrying fewer than 150 (reports vary between 141 and 147).

Amtrak’s Empire Builder in Montana.

This raises the question of how well individual Amtrak routes are doing now that highway travel has pretty much recovered to pre-pandemic levels and air travel in July was nearly 80 percent of pre-pandemic levels. I’ve reported that Amtrak was at 68 percent of pre-pandemic levels in July, but that could vary tremendously from route to route.

During part of the pandemic, Amtrak cut all but one of its long-distance trains to three days a week, but restored them to daily service in May (except for two that had been three-days-a-week prior to the pandemic). That means we can compare Amtrak’s monthly performance report for July 2021 with the one from July 2019 without any distortions caused by the shifts in service.

Page 5 of the reports presents total year-to-date seat-miles and passenger-miles. July’s numbers can be calculated by subtracting the numbers given in the June 2019 and June 2021 reports.

The results show that Amtrak offered 28 percent fewer seat-miles July 2021 than in 2019, but train-miles declined only 16 percent. It could offer fewer seat-miles without reducing the number of trains by operating shorter trains. For example, the normal length of Amtrak’s summer Empire Builder in Montana is 11 cars, but according to press reports the Empire Builder that derailed had only 10 cars. Passenger-miles dropped by 32 percent, showing that Amtrak’s reduction of seat-miles was justified.

Page 7 of the reports presents results for individual trains: the Acela, other Northeast Corridor trains, 29 state-supported trains, and 15 long-distance trains. Ridership in the Northeast Corridor was down 38 percent but revenues were down 49 percent. This is probably due to Amtrak’s yield-management system: the first seats are sold at the lowest prices, and if no other seats sell, average revenues per rider drop.

As of July 2019, Amtrak filled 59 percent of the seats on Northeast Corridor trains, 40 percent on state-supported trains, and 58 percent on long-distance trains. In 2021, this had fallen to 33 percent in the Northeast Corridor, 23 percent for state-supported trains, and 45 percent for long-distance trains. (These are year-to-date numbers as Amtrak didn’t provide monthly numbers for 2019.)
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The state-supported trains lost 43 percent of passengers but revenues were down only 29 percent. Similarly, long-distance trains were down 26 percent but revenues were down only 12 percent. This is probably because the average length of trips grew so the average passenger paid more per trip in 2021 than in 2019. Nationwide, average trip lengths in 2019 were under 200 miles but in 2021 were more than 238 miles. People probably reduced their use of Amtrak for shorter trips by more than for longer trips.

Although revenues declined, Amtrak appears to have made little effort to reduce its costs. Operating expenses in the Northeast Corridor actually grew by 0.6 percent. Expenses for long-distance trains declined by only 3.2 percent. State-supported train expenses fell by 12.9 percent, probably because some states reduced their subsidies to Amtrak.

The result, of course, is that losses massively grew. Amtrak claimed that the Northeast Corridor earned $45 million more revenues than its operating costs in July 2019, a claim that was possible only by ignoring depreciation. But in July 2021, as Amtrak reports it, the corridor lost nearly $10 million. Losses on the state-supported trains grew by $11 million and on the long-distance trains by $4 million.

Some trains did better than others. The Los Angeles-New Orleans Sunset Limited actually had more riders in July of 2021 than 2019, while the Los Angeles-Chicago Southwest Chief lost 46 percent of its riders. Again, that’s probably because the latter train lost lots of its short-distance riders east of Kansas City while the Sunset didn’t have as many short-distance riders to lose.

The “build-it-and-they-will-come” theory is that if someone provides a transportation service, people will use it. This is supposedly bad for highways (“more roads mean more congestion!”) but it used to justify expansions of Amtrak and transit services. It isn’t really true, but many people believe it.

Based on this theory, Congress wants to give Amtrak at least $66 billion, much of it for expanding services. Amtrak says it will use some of this money to increase service in some corridors where it already runs trains and add service in some corridors where no passenger trains currently operate.

Amtrak’s recent performance data shows that this is a pipe dream. Amtrak offered about as many train-miles in July 2021 as in 2019 but lost nearly 40 percent of its riders. The losses seem to be concentrated among short-distance trips, which are the kind of trains Amtrak wants to add with its $66 billion. While some people may still be willing to take a train for longer trips, it appears that many are substituting driving for shorter trips, and that trend will likely continue long after the pandemic.