If a private Passenger Rail Corporation were consistently losing $32 dollars per customer transaction, every shareholder and business-savvy individual would tell its management to cut their losses and run. Yet, for the National Railroad Passenger Corporation, better known as Amtrak, these rules of governance do not apply. Despite its name, Amtrak is better described as a nationalized company, run largely by the government and Congress, which keeps funding it with your money.
According to the Pew Subsidyscope project, Amtrak looses approximately $32 dollars for every passenger it welcomes aboard. The company actually looses far more on average, and but for the Acela Northeast Corridor line which actually turns a small profit, the news would even be worse. If Amtrak were an airline, it would have gone bankrupt long ago. That hasn’t happened, thanks to Congress.
Despite the failing corporation, Amtrak continues to operate in the red under the protection and support of the federal government. Taxpayers cover the economic losses every year; in 2012, that amount was a staggering $1.3 billion.
According to Amtrak’s own website, in 2011, Amtrak earned approximately $2.71 billion in revenue and incurred approximately $3.95 billion in expenses.
The statistics for Amtrak are bleak. Only three of Amtrak’s 44 lines finished in the black in 2008, despite the fact 2008 was the railroad’s second-best year for ridership. In 2011 Amtrak celebrated its 40th Anniversary by setting an all-time high ridership record. In its 2011 annual report, which you can read here, the company also noted that its revenues were up 8.5%. Yet with increased passengers came increased costs in 2011 as the company explained that revenue “covered 85% of its operating costs.”
Would any other company in American be celebrating when announcing its annual operating costs were 15% in the red?
Defenders of Amtrak — and of high-speed rail — argue that most of the nation’s transportation industry is subsidized. Amtrak’s subsidy, however, is by far the most generous. According to a 2009 study by the Heritage Foundation, Amtrak subsidies totaled $237.53 per 1,000 passenger-miles.
America’s love of Rail is an important part of our national identity and history, but now it is time to turn the page and let Amtrak become a truly private company. If it is successful, it will flourish. If however it cannot compete for riders in the transportation world, then it will join other great innovative giants like Pan Am and TWA.