The 40-year Train Wreck

uExpress ^ | 27 May 2012 | Scott Burns

[smokingfrog]

The cover of the 2011 annual report for Amtrak, our government-owned passenger train service, celebrates its 40th anniversary as a business. Well, kind of. It can certainly celebrate its endurance as an organization drawing unending support from the U.S. Treasury and its many, many bondholders.

But as a business? I don't think so.

In every year since 1971, Amtrak has lost money. Real businesses don't lose money for 40 consecutive years. When they lose money for a year or so, the top dogs get heaved. If the losses go on much longer, the company is taken over, dismembered and sold for parts. While capitalism can be as dumb, arrogant and shortsighted as government, no one can say capitalism is sentimental. Bad or outmoded products and services die. Good products and services thrive. We benefit.

Sadly, it doesn't work that way when the enterprise is supported with tax dollars. Amtrak executives have appeared before Congress with plan after plan, swearing to approximate a break-even enterprise, but it never materializes.

In the late 1970s, when there was pressure to shut it down, Amtrak survived by claiming that pension costs would exceed any benefit in closing shop. Today, an entire generation of workers later, it is still losing money.

How much money? In 2011, in spite of rising ridership, Amtrak collected $2.7 billion in revenue but lost a bit more than $1.3 billion. The good news is that the loss is less than double its $763 million loss in 1984, which was a long time ago. So relative to all the other losses our government has, Amtrak is moving toward the accounting obscurity of becoming a federal rounding error.

[Portcall24]

I agree with you. I probably should have said that the railroad infrastructure is not designed for passenger travel because it is less profitable than freight. And while they have invested a great deal of money in the last few decades there still are bottlenecks and passenger service suffers. Regarding luxury on the passenger trains...the people who can afford that, are busy earning the money to be able to afford it and that means moving between locations in a timely manner that only air travel provides.