Join the discussion on the following article:
Brookings Institution issues new report on passenger rail
Brookings fell into the trap of taking Amtrak’s cost classifications at face value, which blinded them to the simple fact that the 400-mile corridors are Amtrak’s weakest in true business financial terms, and that the NEC alone incurs an annual loss exceeding $600 million, using GAAP accounting.
It also blinds them to the fact that apart from meaningless transaction volume (“ridership”) data, the long distance trains produced more than half again the transportation output as the entire NEC, and even the lowly regional corridors had greater output than the entire NEC. (The Empire Builder alone produced nearly 60% of the output of the entire Acela operation, at a small fraction of the cost.)
Brookings also missed the simple fact that all of the short corridors (including the NEC) range from 30 to 50% load factors, demonstrating convincingly that Amtrak is already heavily overinvested in those markets, while the long distance trains are statistically nearly sold out, reflecting substantial underinvestment, and unmet demand, in those markets.
That was some really good fantasy writing by the Brookings Institute. But now, for something completely different. A dose of reality:
http://www.cato.org/blog/brookings-glosses-over-amtraks-failings
And then, for something completely more insane, a government that can’t stop spending money it doesn’t have.
Probably worth noting that the media’s reportage of this has been “Brookings say Amtrak can be profitable if you cut all routes over 400 miles”. No justification as to why it has to be profitable while the airline industry and roads should continue to be subsidized, and no historical acknowledgement of the actual results of massive railroad cuts, which historically have caused greater losses as fewer people consider rail travel to begin with.
But we continue to have a government and establishment that’s actively rail hostile. The coverage of this report is yet more evidence of that.
Quite frankly, Amtrak will never be “profitable” by Republican Congressional standards. That said, passenger rail historically has NEVER been profitable - even before the creation of Amtrak. For the freight railroads passenger trains were an “accommodation.” They were a cost of doing business - most having been required in exchange for government land grants. Freight paid the bills, and dining car service was typically among the “loss leaders.” With the creation of Amtrak, in effect, passenger service became an “accommodation” of the government since there was no freight to cover passenger costs.
A good part of the enjoyment of this forum is “seeing how Jeffery Guse will pull our chain this time.” I had fun composing a limerick about his skill as a chain puller, but am sure the moderator would rule it out as frivolous.
It appears as though there are too many variables to come to a concensus of if any given train in the Amtrak system does better or worse than any other. Indeed, there are parts of the long distance network with low patronage, and others where trains consistently sell out. Likewise for corridor trains. Ideally, all trains should be full or mostly full for their entire trips. But would, for example, cutting a long distance train at its halfway point where the train goes from mostly full to mostly empty help? Would the train still be mostly full at its new starting point? Probably not, since close to half the passengers come from the portion of the trip where the train is less than half full. I’ve observed this phenomenon on the NYC subways, where trains slowly fill up crossing Brooklyn, then packed in Manhattan. They’re not packed in Manhattan just because there are lots of people in Manhattan, but because a lot of those people got on in Brooklyn and stayed on till someplace in Manhattan, where others got on when they got off. So the question is: what can we do to fill those trains where they routinely run at well less than full, and: where they do run full, would they still run full if they didn’t go to areas where they mostly picked up passengers before getting full?
@HAROLD CASTLEMAN - the “passenger service is never profitable” meme is popular but patently untrue. To give one example, in one year shortly after WW-II, the Silver Star made more money by itself than one year of Depression Era Seaboard’s losses.
It is true that in the 1950s, passenger service declined and that resulted in real problems for most operators. Even in the late sixties, however, many private railroads were making profits on passenger service. The ACL would be but one example.
The major issues with making profits on passengers are:
- Prior to 1971, it was overregulated, and by the 1950s most railroads couldn’t charge reasonable ticket prices.
- During the 1950s, the government ramped up government subsidies for competing transportation frameworks, and made walkable neighborhood development effectively illegal (forcing car ownership)
- Government ownership of railroads across the world massively increased, with subsidies introduced to effect social policies. As an example, the NY subway is subsidized to ensure people can afford to live there across the social spectrum, but it’s clear that the subway could easily raise its prices, without affecting its ridership numbers significantly, by more than enough needed to be profitable.
Passenger service has never been as profitable as freight, but that’s a long way from saying it can’t be done profitably.
Steve, I agree with Paul from Florida. Send the limerick and let’s see what happens.
@STEVEN SMITH - Post it anyway. If the moderator isn’t doing anything about the charity spam, there’s no reason to think something mostly on-topic would be censored. I’m not sure there is any moderation going on, I think it’s just they’re using some pretty gused up forum software.