Riding the Subsidized Rails of Amtrak at a Loss of $32 per Passenger

The Pew Charitable Trusts SubsidyScope Project has just released a new report that finds 41 out of Amtrak's 44 routes lose money. The losses ranged from nearly $5 to $462 per passenger, depending upon the line, and averaged $32 per passenger. According to the report:

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.

Nothing succeeds in DC like repeated and costly failure. The Obama administration put $13 billion for building various new high speed rail lines in its $787 billion dollar stimulus package.

Go here for a nifty interactive map of the Amtrak system that details the profit and losses on each route.

Disclosure: I intend to keep riding the new daily Amtrak train between Charlottesville, Va. and Washington, D.C. as long as taxpayers can be hornswoggled into subsidizing me. Thanks y'all. 

Comments

[Andrea Yates]

$32,is that all? Hell,AMTRAK sounds like a government success story if that's all they're losing.

[John Thacker]

I intend to keep riding the new daily Amtrak train between Charlottesville, Va. and Washington, D.C. as long as taxpayers can be hornswoggled into subsidizing me. Thanks y'all.

That one, at least the Charlottesville extension, is primarily state-funded, like the Carolinian and Piedmont.

I need to dig into their numbers to see if this is the federal subsidy, or the total federal+state subsidy. (Amtrak has been known to report that routes are "profitable" by including state support in the revenue.)

[Ray Butlers]

Is subsidizing the rail system bad? Every other country on earth does it. I might add that the "for profit" rail system of our recent past was also heavily subsidized. As as the freeways. As are automobiles. As is fossil fuel.

[John Thacker]

You might add that. You'd be wrong, though. Very wrong.

But I'm sure it's nice to believe that in order to avoid any cognitive dissonance.

[John Thacker]

*Disclaimer-- I'm talking about federal subsidies, same as this report. States and especially local governments do subsidize with non user-fees. But 72.5% of all spending is from user fees. (Except when Democrats employ stimulus.)

Table HF-10 is confusing because one-sixth of the user fees are diverted to subsidize mass transit and other non-highway purposes. (And yes, the FHWA defines any government-owned road or street as a highway.)

[Ray Butlers]

...thus subsidized. I didn't specify federal government. Subsidized.

[briareus]

I like your style, Mr. Thacker.

[Tulpa]

Uh, yeah, it was subsidized by the extremely profitable freight business that used the same rails. But subsidized by government, no.

You know what killed passenger rail service? The interstate highway system, which effectively subsidized interstate trucking at the expense of freight rail.

[Ray Butlers]

it was subsidized by the extremely profitable freight business that used the same rails

also known as taxes. Subsidized

[Bergholt Sidney Johnson]

Freight charges levied by private companies = taxes? O rly?

[J sub D]

Is subsidizing the rail system bad? Every other country on earth does it.

Is restricting free speech bad? Every other country on Earth does it.

Hell of an argument there Roy. Let's see what else ya got.

I might add that the "for profit" rail system of our recent past was also heavily subsidized. As as the freeways. As are automobiles. As is fossil fuel.

That's right Ray. Everything is subsidized and the only way anything gets built at all is when the government makes it possible.

Here's your gold star. ?

[Andrew Lynch]

I'm having a blast reading Hayek and learning about the context for what "other countries" (even if it's not "every other country") means in an ideological discussion. Anybody have a guess as to when this idea of "everybody else is doing it, so why shouldn't we?" became standard parlance for "we're obviously not smart enough to figure out things for ourselves, so let's do it the way all those other countries do it?"

[Robert]

Well, you must admit there's some logic to it. People don't do shit for no reason, so if something goes on in most of the world then it's presumptively a good thing, and if it's not, you need to figure out why so many people are so wrong about it.

It's like when you see all the trucks stopped at a diner, that's a presumptive case for its having good food. You might, however, find other reasons so many trucks are there that undercuts that evidence.

[Andrew Lynch]

I'm reminded of Sagan: if over 5 billion people believe in one or another sort of all-powerful supernatural being, isn't it likely that one exists? Bullshit.

[John Markley]

"People don't do shit for no reason, so if something goes on in most of the world then it's presumptively a good thing..."

Yes, certainly, but a good thing for whom?

[Ray Butlers]

if arguments are what you want, make one. A non-sequitor is only a non-sequitor.

...and more non-arguments. You seem to be imagining things that I never said and don't agree with.

[JW]

Ray didn't listen to his mother and jumped off the cliff. He's been bitter about it ever since.

[jtuf]

If all the other countries jumped off a bridge, would you?

[John Thacker]

The other amusing thing is that when trying to sell rail service, railfans often argue that it's profitable in other countries. However when that's used as an argument to say it should be able to run without subsidies, well, let Subsidyscope say it:

In August 2009, the Congressional Budget Office considered the option of reducing Amtrak's federal subsidy by about $200 million a year for five years. Amtrak officials and passenger rail advocates say this is impractical, noting that no passenger rail service in the world is profitable and arguing that Amtrak would cease to exist without the federal money.

[briareus]

Paging Dagny Taggart, paging Dagny Taggart.

[HeadTater]

Both the Texas Eagle and the Missouri Routes run right through my town (I can see them as I am two blocks away right now in my house). Because of Obama's hard-on for the high speed rails, my town is screwed. Either we allow it to take one route and let our sewers get shaken to bits or we let it take another and have our minor league/high school/college baseball stadium forcibly renovated. Either way traffic will be paralyzed. And the gov't is assisting Union Pacific in sending even more freight (50-80 a day on the high end) regardless of what Amtrak does.

It sucks to be in a rail town.

[John Thacker]

Also note that they based this on September 2008, a pretty good time for passenger rail, for obvious gas price reasons.

[andrew cabal]

Actually, the $32 per passenger subsidy is an improvement over the last few years. Interestingly, the Pew fellows failed to mention the amount of hidden highway subsidy that we American taxpayers underwright the motoring public. It makes Amtrak's subsidy pale by comparison.

As Amtrak's former CEO, David Gunn said, no form of transportation in the world pays for itself. It's there for society to benefit from the customers that they carry. That's the real benefit for society.

[prolefeed]

As Amtrak's former CEO, David Gunn said, no form of transportation in the world pays for itself. It's there for society to benefit from the customers that they carry. That's the real benefit for society.

And you believed this guy feeding at the government trough?

If by this he meant "every form of transportation has government intrusion of one sort or another", OK, but that's different from saying private profitable transportation services like airlines or FedEx or whatnot are exactly like welfare queens like AmTrak.

[TP]

Amtrak is just too damned big, and almost everything goes through Chicago. It seems it's the recreational travel lines that are losing the most money, while the business or commuter lines do the "best" (I use that word lightly).

If the new HSR lines are geared toward business travelers, that's not too bad. But if it's geared for people to visit Grandma on the Holidays, then it's probably a waste.

Isn't one of them going to be to Vegas? I'll tell you right now, the Gambler's Express (Philly to AC), run by NJT, and subsidized by the state of NJ is the biggest waste in the history of NJ. It's wierd, because it's about 1/3 the price of the equivalent bus route (for the passenger), and nobody uses it. However, the Camden/Trenton light rail is so successful, they had to add trains to keep up with demand.

[max hats]

I guess roads are free now? Or they somehow don't count? Every road and highway based business in the country currently benefits from massive subsidies. So does every airline. But point out the rail subsidies, and the glibertarians cluck, cluck away.

[Ray Butlers]

Thank you for that sensible comment. Libertarians seem to live in a world where they can simply ignore anything that proves them wrong.

[D.R.M.]

Ah, the traditional uninformed gliberal resort to "Roads coast money too!"

The actual Federal numbers were provided by John Thacker above, showing that the Federal money for roads comes from Federal motor fuel and vehicle taxes?that is, de facto user fees.

So when comparing the Federal subsisdy to Amtrak to the Federal subsidy to roads, the Amtrak subsidy is $32 per passenger, and the roads subsidy is $0 per passenger.

[max hats]

You think federal money is the majority of total road funding, and I'm uninformed? Ever heard of city or state highways? Or is your house, place of business and grocery store all right off the five? "User fee" my ass - you pay it whether or not you use federal roads. And as for non-federal roads, they get paid out of non-federal coffers, usually the state or city general fund. Not everyone has a car, but everyone pays for roads.

And that aside, how exactly is pointing out roads are subsidized "liberal?"

[D.R.M.]

There are state-level subsidies to Amtrak, too. Since the study above only measures losses made up by federal subsidies to Amtrak, not state ones (which Amtrak has a history of booking as revenue), the relevant domain for comparison is federal subsidies.

But, hey, sure, let's look at the states.

The amount states spent for roads in 2007 was 105.0 billion. The amount that states received from state motor fuel taxes, vehicle taxes, and tolls was 78.4 billion. The amount of money the states received from the Federal Government Highway Fund for roads (money that was paid to the Federal government as motor fuel and vehicle taxes) was $32.5 billion. The amount paid for collection expenses on the taxes was $3.6 billion.

Thus, combined state and federal revenue from motor fuel taxes, vehicle taxes, and tolls was $110.9 billion, while the expenditures on roads and on collecting the taxes was combined $108.6 billion, for a net subsidy to the roads of negative $2.3 billion on the combined state and federal level.

It's not until you get to the purely local level that you have roads that are not paid for (however distorted in the specific allocation) by road users in particular, but by general taxes that hit people who use rail, or telecommute, or whatever.

Since Amtrak-style passenger rail does not in any way compete with local surface streets, and cannot substitute for them, there seems to be no point in considering that subsidy in a comparison of roads and passenger rail.

Unless, of course, one is an ideologue who wants to make the superficial argument that "roads" as an undifferentiated mass are "subsidized", as an excuse to shovel money to Amtrak.

[max hats]

What's your source on this?

[max hats]

Also, even State and Federal roads aside, that does not account for what are perhaps the majority of miles of asphalt - county and city roads. Not quite sure why you consider these some screwy exception barely worth mentioning and below consideration.

[max hats]

That said, Amtrak is a disaster out in the west. But that has nothing to do with the premise of the post, which is LOL RAIL SUBSIDIES (READ RAND!!)

[briareus]

I see zero instances of LOL or Rand mentioned in the post. The post was about the unsustainable losses that comprise AMTRAK railroad subsidies. Some might call AMTRAK a disaster.

Like this recent commenter who said,

"That said, Amtrak is a disaster out in the west."

Oh look, that commenter was you! So you agree with the premise of the post. Have a nice day.

[max hats]

First, unless we are talking in geologic time, the Amtrak's losses are completely "sustainable." Second (and less nitpicky), how are Amtrak's subsidies any different than the subsidies for every other major mode of transport?

[Neu Mejican]

*I believe Amtrak accounts for about 1% of the dept of transportation subsidies for transportation in the US. Highways get about 50 or 60 times the budget of rail with user fees covering only about 60% of all federal transportation dollars spent. If you have a gripe with subsidies for transportation, Amtrak is small potatoes. Smarter policies would work towards the most efficient multi-modal system. Coordination between systems results in an overall efficiency. The US system does very little coordination except in highly dense areas. Other countries have done a better job integrating systems in less dense areas.

*(this is all "iirc" but the figures won't be too far off, methinks).

[Ray Butlers]

Thank you! Well said! Some people sure love to ignore the obvious.

[Colin]

Disclosure: I intend to keep riding the new daily Amtrak train between Charlottesville, Va. and Washington, D.C. as long as taxpayers can be hornswoggled into subsidizing me. Thanks y'all.

You're welcome.

I wonder how much we've been subsidizing Biden alone through the years.

[fortyouncer]

I can get drunk on the Amtrak. So, while subsidized, it's last on my list to go.

[Richard Arguile]

So when Amtrak is able to invest in a faster service i.e. Acela - it makes a profit. The problem is not that Amtrak is a money-losing disaster - it is that Republicans have deprived it of sufficient investment funds for many years so Amtrak couldn't improve its rolling stock or service levels.

[Rhywun]

And some of those Republicans serve nowhere-districts in say Montana that have Amtrak service but nothing else.

I have no problem with dumping the "recreational" lines and concentrating on the lines with more potential for making money, but slamming lines like the Northeast Direct because of its $5 subsidy seems a bit disingenuous considering all the other subsidies out there for airlines, highways, etc. After all, the Chinatown bus from NYC to Boston costs more than its ten buck fare but since roads are "free" no one seems willing to account for it.

[Tulpa]

The [relative] success of Acela is also largely due to the fact that the cities along its route are fairly close together. No matter how much money you spend, there is absolutely no way you're going to be able to make a train travel the distance from, say, Chicago to Los Angeles in a duration remotely comparable to that of an airplane flight of the same distance.

And I seriously doubt that Amtrak would be the first known example of a government monopoly that wisely invested extra money that gets added to its budget in the most efficient way possible.

[That Guy]

I suggest some of you listen to this extremely interesting conversation between Mike Munger and Russ Roberts about Chile's public transportation system from last year:

http://www.econtalk.org/archiv.....the_p.html

Not trains, but still...

[leviramsey]

The bulk of the subsidies are going to the long-distance recreational travel routes... the shorter-haul routes that are more business-oriented are doing well (with the one example of high-speed rail in the system being the only one that pays for itself).

If anything this indicates that upgrading lines where it makes sense to offer high-speed service and terminating the recreational services is the way to go (it also indicates that the operating part of Acela could be sold off).

What city-pairs would this make sense for? I'd guess:

* minimum population of at least 1m each (and the more the better)
* distance of about 300 miles or less apart
* downtowns that are business centers

With that short of a distance, HSR tends to offer an advantage over flying between suburban airports and driving to the destination downtown. If they're cities where a large proportion of the business is spread out outside of the city center, then the advantage of rail taking travelers to the city center disappears.

[Douglas Gray]

I went on AMTRAK from Albany to NYC a few weeks back. Very low faires, train is about 40% full or less, great way to go, but I am not surprised they are losing money. There are so many worse ways the Gov. wastes money. This isn't so bad, compared to aircraft carriers, helicopters and other toys of war.

[Rhywun]

I've taken Amtrak from NYC to Buffalo or Rochester many times and it was chock full every time. I've also taken it cross-country twice and it was largely empty most of the time. But getting drunk and playing cards between Chicago and whatever-comes-after-Chicago was totally worth it.

[Tulpa]

My Lakeshore Ltd experiences have been somewhat less pleasant. There was the 26-hour trip from Chicago where they had to keep stopping because of snow on the tracks and because the doors kept freezing shut. There was the time when the bathroom sink got stopped up and the door wouldn't stay shut, so that whenever the train wobbled from side to side on the tracks (ie, whenever it was moving) the door would slide open and shut and brown water would come splashing out of the sink.

Then there was the time that I had a fearsome case of blue balls crop up during the trip, but as hard as I tried I could not take care of that business in the bathroom, it was so disgusting. And I've jerked off in a lot of disgusting places, so that's saying something.

[affenkopf]

I would like to comment but I have to get my train, run by a private company, which is legal here in Germany. Germany FTW! We might suck but at least we get a few private trains! (plus one giant government owned train company which I like to ignore for the sake of argument)

[TB]

Sure they lose money on each passenger, but they'll make it up in volume!

Besides, how else is Ma Chalmers going to get her soybeans?

[jtuf]

Amtrak's policy of subsidizing unprofitable routes is a raw deal for me in two ways. First, it means my Northeast Corridor trips subsidize the rest of the country. Second, it distracts Amtrak from expanding services in the Northeast Corridor.

[JB]

AMTRAK = FAIL.

[Norbert Sykes]

The funny part is that even with the federal subsidizing, Amtrak between Philly and NYC is still overpriced and inconvenient when compared to the Bolt Bus (a Greyhound experiment) or MegaBus...they are substantially cheaper ($12 each way as opposed to $60 for the Keystone or $100+ for the Acela), offer free wireless access, are more comfortable than the train (both the Bolt and Mega buses are brand new, roomy and clean)...if there is a downside it's that the buses take half an hour to forty five minutes longer.

We have the Chinatown to Chinatown bus system to thank for this ultra-convenient mode of travel between DC-Philly-NYC-Boston. The Chinatown bus companies undercut Greyhound a number of years ago (who was charging $40 each way from Philly to NYC).

[deluded1]

China Town Bus is awesome....20 bucks round trip, never takes more than 1.75 hrs (philly to nyc) and leaves every hour 6 am to midnight.

Just bring toilet paper

[Butts Wagner]

You are all forgetting that Acela tickets are much more expensive than regular Amtrak train tickets. If I'm not mistaken, a plane ticket costs less from Boston to DC than the Acela from Boston to DC.

[Aaron Z.]

Those "extra costs" (depreciation, etc.) are actually pretty significant in terms of WHY Amtrak is subsidized - the 1971 Act that created Amtrak put the burden on Amtrak to pay the pensions for retired railworkers for companies that couldn't pay. At least for the next 20 years, Amtrak is burdened with paying the pensions of people who never worked for them (until those people die). This is a huge burden and a large reason why their costs are so high.

[Ocean Railroader]

If Amtrack is only losing $32 pure passanger then it can still be turned into a money maker. There are several corrodrs that it showed in the northeast that where lossing around $100,000 to $300,000 and it showed the number of riders. Do to gas prices sky rocketing Amtrack usage went up by 30% in 2008 bringing in tens of thousands of first time passangers to the point that some routes simply didn't have enought passanger car space for them. If Amtrack invested on improving the tracks and adding more passanger cars to some of the over crowed routes and raised train speeds with high speed rail it would turn more of the money losing routes into to new Beasts of Burden Routes such as the North East Corridor. The Key Stone Corrdor looks like if it got 40% more riders it would become a new beast of burrden Another thing limiting Amtrack's growth is they have there trains come and leave at very odd times like in R ichmond VA they have a train leave 4.00AM many people that i talked to wish that they offered betting leaving and ariving times. Such as in Richmond if they had a train leave at 7.30AM a lot more people would take it to Washingtion.

[Mike]

If a $32-per-passenger subsidy bothers you, maybe you ought to do a story on airline subsidies. You don't *really* think airline ticket prices are paying for those airports, air control towers, and air traffic controller (federal employees) salaries, do you?

[NickK]

Just a view from the other side of the Pond...

In Europe, high speed rail is generally successful but the economics are murky. In some cases, new lines pay for themselves many times over just through external benefits, ie. private investment in urban regeneration and property development around stations. St Pancras in London is a case in point -- ridership on the high speed line to the Chunnel is down on original forecasts, albeit for reasons largely unconnected with high speed rail. That said, the railway is only 4 years old with a shelf life of 40+ so it's too early to be too critical.

In France and Japan, two commercial boom projects turned sizeable profits form day one -- Paris to Lyon TGV and the Tokyo - Osaka Sanyo Shinkansen. In both cases, they spurred a flurry of investment in other lines, but these proved not to be so successful, and quite disastrous in the case of the Joetsu Shinkansen in Japan. Building a 155 mph railway through a mountain range is not easy!

But the NE Corridor ticks lots of the boxes you'd look for in a sensible high speed rail project: high existing ridership, good market potential, infrastructure constraints on the existing railway/road; cities close-ish together; potential to serve airports etc, and -- who knows -- lots of development opportunities to exploit around city centre stations.

Oh and more room for freight on the existing railway once passenger trains have switched, with a knock-on effect presumably for truck miles. Even the gas-heads should like that...

[??? ???]

goood
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