Solving the Amtrak Conundrum
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15,000 The Antiplanner 14,000 Dedicated to the sunset of government planning 13,000 12,000 Antiplanner Policy Brief Number 14 August 6, 2019 11,000 Solving the Amtrak Conundrum 10,000 mtrak is a conundrum that has been difficult for 46 states, but in most of those cities it is Aboth politicians and Amtrak managers to solve. virtually irrelevant. Just 9 cities—New • Politicians and the media act as if it is an important York, Washington, Philadelphia, Chica- mode of travel, yet it carries less than 1 percent as go, Boston, Los Angeles, Oakland, San 9,000 many passenger miles as domestic airlines and just 0.1 Diego, and Sacramento—produce more percent of total domestic passenger miles. than half of all of Amtrak’s boardings/ • Rail advocates claim intercity passenger trains are eco- alightings. Another 125 cities produce 8,000 nomically competitive, yet Amtrak fares per passenger 40 percent of customers. The bottom mile average nearly three times airline fares, and when 153 cities produce less than 1 percent of subsidies are added Amtrak costs four times as much Amtrak’s customers, with fewer than two per passenger mile as the airlines and well over twice dozen people a day getting on or off an 7,000 as much as driving. Amtrak train in each of those cities. • Amtrak claims that some of its trains earn a profit and The Interstate Highway System is overall passenger revenues cover 95 percent of its op- 48,000 miles long and connects virtually 6,000 erating costs, yet even the Rail Passengers Association, every major and most minor urban areas the leading supporter of intercity passenger trains, in the contiguous 48 states. By com- believes Amtrak’s accounting methods misrepresent parison, Amtrak’s route system is only reality. 21,000 miles long, and the vast majority 5,000 of those miles see no more than one The Insignificance of Amtrak train a day in each direction. Las Vegas, According to the Bureau of Transportation Statistics, the the nation’s 23rd-largest urban area and a 4,000 325.1 million people who resided in the United States popular tourist destination, is the largest in 2017 traveled an average of 14,900 miles by automo- but far from the only major urban area bile (including 72 miles by motorcycle), 2,100 miles by not served by Amtrak. domestic airline, 1,060 miles by bus (excluding urban Just because Amtrak serves your 3,000 transit), and 170 miles by urban transit. Based on DOT’s city doesn’t mean it can take you where 2017 National Household Transportation Survey, Vir- you want to go when you want ginia Tech planner Ralph Buehler estimates (on page 183 to go there. Want to go from of this report) that Americans walked 33.7 billion miles Indianapolis to Chicago? Amtrak 2,000 and cycled 8.5 billion miles, for an average of 100 miles could take you, walking and 26 miles cycling. but just once a Amtrak, meanwhile, carried the average American 1,000 just 20 miles. That’s right: federal taxpayers spent nearly $2 billion in 2018 subsidizing Amtrak so Americans Light Trucks, & Motorcycles Urban Transit Walk Amtrak could ride intercity trains fewer miles than they ride Bicycle Buses* Domestic Airlines Cars, bikes. Of course, the average American doesn’t ride 0 intercity trains: I rode Amtrak more than 11,000 miles The average American traveled well over 18,000 miles in in 2017, so to compensate for just my travel, 550 other 2017, with Amtrak contributing just 20 of those miles. *Bus category Americans didn’t ride it at all. excludes urban transit buses, which are included under urban transit. Amtrak brags that it serves more than 500 cities in Non-commercial air and other minor forms of travel are not shown. Amtrak’s route map showing the Northeast Corridor in red, state-supported day trains in blue, and long-distance trains in yellow. Most long-distance trains also use the Northeast Corridor or state-supported tracks for parts of their routes. day, until June 30 when it was cut to three times a week. in a fantasy world. In a 2018 speech, he claimed that At least a dozen buses per day serve this route. Indianap- Amtrak is “debt free” and is “stockpiling cash” for fleet re- olis to Cincinnati? Amtrak is there, but only three days newals. In fact, according to Amtrak’s 2018 consolidated a week, compared with 16 buses a day. Indianapolis to financial statement, Amtrak has liabilities of $5.9 billion, Cleveland? Only if you are willing to take 23-1/2 hours including long-term debts of $908 million. to do it, including an 11-1/2-hour layover in Chicago. Amtrak should be saving money for fleet renewals, Several buses a day serve this route in under 7 hours. as the average age of its passenger cars has risen to more How about to Columbus, Louisville, or Nashville? Sorry, than 30 years—the highest in Amtrak history and well Amtrak doesn’t serve those cities at all. past the expected service lives of those cars. Yet far from stockpiling cash, Amtrak’s cash and cash equivalent assets Trains Are Expensive declined from $1.1 billion in 2017 to $500 million in There’s a good reason for Amtrak’s insignificance: trains 2018, and Amtrak is relying on a $2.45 billion loan from are expensive. Average Amtrak fares in 2017 were 33.4¢ the federal government to replace its Acela trains in the per passenger mile, compared with 13.2 for airlines. Northeast Corridor. Americans spent $1.15 trillion on their cars in 2017 (see Anderson’s fantasy is just an extension of other table 2.5.5, lines 54, 57, and 116), traveling 4.8 trillion accounting fantasies that Amtrak has relied on for many passenger miles for an average cost of 24¢ per passenger years. According to Amtrak, its Northeast Corridor trains mile. earn a profit and all of its passenger revenues together Adding subsidies only makes it worse for passenger cover 95 percent of its operating costs. The latter claim is trains. Federal and state subsidies to Amtrak averaged at based on two significant subterfuges. least 34 cents per passenger mile in 2017. Federal, state, First, Amtrak counts subsidies from the states as and local subsidies to airlines and roads averages about a “passenger revenues.” Amtrak officials rationalize that penny per passenger mile. the states are effectively contracting with Amtrak to carry their residents around. In reality, the $234 million Amtrak’s Questionable Accounting collected from the states in 2018 is simply a subsidy Amtrak’s chief executive officer, Richard Anderson, lives without which Amtrak fares would have to be higher and its ridership lower. tance trains. Despite extensive media claims, Amtrak Second, when calculating “operating costs” Amtrak has never actually said it wanted to do this, and to do so conveniently ignores depreciation, which at more than would be political suicide as 23 of the 46 states reached $807 million is the second-largest operating cost listed by Amtrak are served only by long-distance trains, so in its financial statement. Depreciation is not just an terminating those trains would cost it half its support in accounting fiction; it is a real cost indicating how much Congress. a company needs to spend or set aside to keep its capital CEO Anderson has pointed out, however, that some improvements running at 100 percent of their capacity. changes will be needed. The biggest problem is with the Amtrak’s actual ticket sales (plus food & beverage Southwest Chief, which uses BNSF tracks between Chi- and charter train revenues) totaled to $2.34 billion in cago and Los Angeles. In 2010, BNSF stopped running 2018. Counting depreciation, Amtrak’s actual operating freight trains over 281 miles of this route between La expenses were $4.24 billion, which means passenger Junta, Colorado and Lamy, New Mexico, and informed revenues covered just 55 percent of operating costs, not Amtrak that it would have to pay all of the maintenance 95 percent as Amtrak claims. costs if it wished to continue using this route. Although Amtrak’s claim that its Northeast Corridor trains the states of Colorado and New Mexico have put up earn a profit is also a fantasy. This claim is based on a fa- some money for maintenance, Anderson has questioned miliar subterfuge: its cost accounting of each of its routes whether it is worth it for the few hundred passengers a leaves out depreciation. The “profits” it claims to earn on day who ride this route and suggested that Amtrak might Northeast Corridor trains are actually spent maintaining use buses to fill in the gap, an idea that outraged rail fans. that corridor – and fall well short of maintenance needs. The Southwest Chief situation should remind us Most of Amtrak’s infrastructure is in the Northeast Cor- that it is easier to make an economic case for passenger ridor, so most of the $807 million in 2018 deprecation trains when passengers can share infrastructure costs with should have been charged to those trains. In fact, Amtrak freight. Dedicating tracks solely to passenger trains could may be underestimating depreciation in the corridor. only make sense if there is demand for a lot of trains— According to a 2009 Amtrak report, Amtrak’s such as, possibly, the Northeast Corridor, but not on portion of the corridor had a $5.5 billion maintenance Amtrak-owned tracks in Michigan and certainly not in backlog. But a 2010 report found that the corridor has Colorado-New Mexico.