The Brookings Institution released a report earlier this month on our national passenger rail system, Amtrak. Many news and blog articles about the study took the report to mean that if Amtrak were to get rid of its long-distance trains, the company could provide rail service without taxpayer subsidy.
That’s not actually true, nor is Brookings suggesting getting rid of long-distance trains. The crux of the Brookings report, something that has not been picked up by much of the media, is not that Amtrak should drop the long-distance trains; rather, Brookings wants the states to pick up the tab to operate them. That’s not the right policy.
Amtrak operates trains across the United States. In addition to busy urban corridors like the one between Washington and Boston, the railroad also serves growing numbers of riders on corridors like Charlotte-Raleigh and Chicago-Milwaukee. Ridership has increased by over 55% since 1997, outpacing population growth, economic growth, and growth in all other travel modes.
Without long-distance trains, Amtrak is profitable? Not really
The report crunches the numbers on how many riders each route carries, how much it costs to run the trains, and how much revenue they generate. A number of people read the numbers to conclude that if Amtrak cut its 15 longest routes, Amtrak would operate in the black.
But this depends on how you define “in the black” or “operating profit.” Cutting those trains would eliminate the need for a federal subsidy, but the states also contribute money for short-distance trains, and Brookings counts that as “revenue,” not “subsidy.”
The Adirondack, for example, runs between New York City and Montreal, via Albany. The report says that this train has a positive balance of $1.3 million. Amtrak makes a profit on it!
Not really. It costs $13.3 million to operate, and the train earns $7.0 million in revenue. That equals a loss of $6.3 million, but New York state pays Amtrak $7.6 million a year to operate the train. Add that in, and the “balance” ends up being a positive $1.3 million.
All told, the states fund Amtrak to the tune of $190.5 million a year. Counting that but no federal payment, Amtrak would have ended up with a surplus $30.9 million without the long-haul trains.
Even this doesn’t mean the short-distance trains can be profitable. The report doesn’t include the major cost of capital maintenance on the Amtrak-owned Northeast Corridor, which passenger revenues will never be sufficient to cover. Projects like the Gateway Tunnel, which will add capacity into Penn Station and new rolling stock to replace aging cars are also capital costs that can’t be covered by the operating profit alone.
Coverage or ridership?
One of the biggest problems with Amtrak from a political perspective is that people don’t agree about the goal of the railroad. Is Amtrak supposed to make a profit, as conservatives tend to insist? Or is Amtrak supposed to provide a transportation service to much of the nation, as liberals tend to claim?
The Brookings report makes it clear that there really are two Amtraks.
One of the Amtraks is efficiently providing frequent short-haul service within or between metropolitan regions, such as on the Washington-Boston Northeast Corridor, Los Angeles-San Diego Surfliner, and Chicago-St. Louis Lincoln Service. A few services like these can run operating profits, but most still don’t even if they’re successful.
The other Amtrak provides basic service to other parts of the country. This service was never meant to make money. It was meant to include more states in the system and provide another (or in some cases the only inter-city) transportation alternative to rural communities.
Lawmakers did intend for the company to be profitable, despite evidence that it would not be, but that was changed in 1978 when it became clear that was unlikely to happen.
In this respect, Amtrak is like many transit systems. When Congress created Metro, they assumed it would run self-sufficiently without government support, too, but that didn’t happen either. No transportation system, not roads, rails, or aviation, actually makes a profit when you incorporate all of the infrastructure.
Amtrak is a basic system plus extra short-distance services
The way Amtrak was set up is an important part of understanding the current situation.
In 1971, as Amtrak was coming together, a basic system was drawn on a map. This base would provide some minimum level of service across the nation, and be funded initially through federal subsidies and ticket revenue.
The Pacific Surfliner is a good example of a state partnership that grew out of the base system. In 1971, there were 3 roundtrips between Los Angeles and San Diego. These 3 roundtrips were part of the Amtrak basic system.
By 1976, California wanted more service, so it paid to add a 4th roundtrip. This train was specifically a California-subsidized train, while the other 3 were Amtrak-subsidized trains. Over the next 2 decades, California continued to add trains to the corridor, and Amtrak added 2 more to the basic system.
In 1995, California and Amtrak agreed to end having some individual trains be part of the basic system and others state-subsidized. Instead, California and Amtrak would split the cost of the San Diego-LA service proportionally. At the time, California covered 64% and Amtrak covered
36%. It’s now 70%/30%.
This seems like the best approach. Amtrak, in consultation with the US Department of Transportation and the states, and input from stakeholders, including organizations representing passengers, should determine what the basic federal system should look like. If the states want additional service beyond that amount, they can pay for it, perhaps with federal assistance in the form of competitive, merit-based grants.
Several successful services have grown out of arrangements like that, including the Surfliner, the Charlotte-Raleigh Piedmont Service, and the Cascades between Eugene, Oregon and Vancouver, British Columbia.
Congress is shifting costs to the states
However, the funding environment is changing.
Under Section 5 of the Passenger Rail Investment and Improvement (PRIIA) Act of 2008, starting in October, California will have to cover 100% of the
operating deficit of running the LA-San Diego service. That’s because all Amtrak routes less than 750 miles in length must become state-supported or be terminated.
The Brookings report supports shifting almost all
deficits to the states for long-distance Amtrak trains as well.
That’s the wrong approach, and would likely mean the end of most of the long-distance trains.
It is difficult to expect all the states served by each of the long-distance trains to support their own routes consistently, much less to agree on schedules, service amenities, and cost allocations. Many states are already facing a huge challenge in coming up with the funding to keep existing short-distance service running under the PRIIA mandate.
Just as governors in Ohio and Wisconsin blocked high-speed rail funding, some states will refuse to pay. Many have no history of supporting train travel at all in the modern era, and have conservative or divided legislatures. Long-distance routes would either have to stop at the state line or run through without stopping within it, neither of which makes for a useful transportation service.
Other states have no history of supporting Amtrak routes financially, and conservative or divided legislatures would make it unlikely that those states would step up to the plate to fund what has so far been a federal commitment.
Right now, several states are having the discussion about whether to keep their short-haul trains. While New York, California and several other states have budgeted the required funds to keep their short-distance trains running in fiscal 2014 (starting October 1, 2013), Pennsylvania could cut its Pittsburgh-Philadelphia/New York train and Indiana could lose the Indianapolis-Chicago Hoosier State unless their citizens convince state lawmakers to appropriate the needed funds
We need a national network
It’s important to keep Amtrak’s long-distance trains, even though they’re not profitable. A recent white paper from the National Association of Railroad Passengers elaborates on many points.
One major reason is that the long-distance trains and shorter ones fit together into a system. They’re not completely isolated.
The Southwest Chief might run over 2200 miles across the nation. But many riders are not going all the way from Los Angeles to Chicago. Some are only going between Los Angeles and Flagstaff. Others ride between Albuquerque and Trinidad. And Kansas City to Chicago is a very popular pair of stations on the route.
Brookings seems to think that 400 miles is where passenger rail stops being competitive. And that may be the case. But just because the train goes more than 400 miles doesn’t mean that the passenger has to.
From the whitepaper by the National Association of Railroad Passengers and the Midwest High-Speed Rail Association.
For example, the report lists the Bay Area to Sacramento Capitol Corridor as one of the examples of a good corridor. The same corridor is also covered by the Coast Starlight, which continues north of Sacramento and south of the Bay Area.
Further north, the Coast Starlight overlaps with another success story from the report: the Cascades, which runs between Eugene, OR and Vancouver, BC. It provides an additional frequency on both corridors, and connects them with each other and points in between.
Having long-distance trains also creates a market and proves the demand for short-haul trains. One of the 3 profitable routes in the system, informally dubbed the “Lynchburger,” only exists because of the longer New Orleans-New York Crescent. People wanting to take that train between Lynchburg and Charlottesville and Washington were having trouble getting a ticket because the Crescent would sell out frequently.
As a result, Virginia decided to pay for a new train to run between Lynchburg and New York/Massachusetts. It’s proven to be so popular that it actually covers its costs with ticket sales. And Governor McDonnell has proposed funds to extend the train to Roanoke.
But the Lynchburger probably wouldn’t exist if the Crescent hadn’t demonstrated the demand. It’s also very difficult (though not impossible) to get the host railroads to agree to passenger trains where they don’t already run.
There are many other reasons as well. Having a national network also makes possible many operating efficiencies, such as the ability to move equipment to other parts of the system to meet demand, which would otherwise be lost.
Besides, ridership on state-supported short-distance routes has only grown so much because state investment has translated into increased capacity. If a similar investment were made in long-distance trains—meaning additional frequencies or longer trains—their ridership would soar as well.
Report is useful for its data, but reaches the wrong conclusions
The Brookings report provides a wealth of insight into Amtrak’s operating costs and revenues. But the report is misguided in its suggestion to turn the primary responsibility for the basic national system over to the states.
Passenger rail is an essential component of our transportation network. The 55% increase in ridership since 1997 is an indication that more federal and state investment is needed, not less.
Improving service on the long-distance trains will lead to ridership increases just as improvements to the short-haul trains did. Now is not the time for the federal government to waver in its commitment to passenger rail.