Out of Control Policy Blog

When Is Losing $112 Per Passenger Good News?

When you're Amtrak, says Nick Gillespie.

Read on, here. (Nick also digs into Amtrak's lousy food service and–with toilet doors spontaneously flying open–bathroom service doesn't seem much better.)

His post spurred quite a lot of discussion about subsidies and whether Amtrak is more of a drain than say, highways, transit, or the airlines (who are always happy to receive government bailouts).

Here I give the lowdown on federal subsidies, highways vs. transit.

And here Bob Poole cites this Bureau of Transportation Statistics study and adds other modes to the mix:

    The results should put to rest spurious claims that highways are more subsidized than Amtrak. On the basis of net federal subsidy per thousand passenger miles, Amtrak finished first, at $186 per thousand, over the 1990-2002 period. In second place was transit, at $118 per thousand. For highways overall, the comparable figure was minus $2–i.e, highway users paid in more than they got back. And in aviation, the airline subsidy was $6 per thousand, while general aviation's was $90 per thousand.

    And in case you are wondering what might be obscured by the normalization by passenger miles, let's also look at the total dollar amounts of net federal subsidy. By this metric, urban transit got the most, averaging $5.1 billion a year (in 2000 dollars) during this time period. Airlines were second, averaging $1.9 billion a year (mostly for FAA safety-related costs covered by general fund appropriations). Amtrak was in third place, averaging just over $1 billion per year over this 13-year period. And over this same period, the highway system was a net provider of federal funds to the tune of $7.4 billion per year (though that's been trending downward since it peaked at $11.7 billion in 1998).

And here (no link) Bob cites the Federal Highway Administration's 2002 Highway Statistics report to go beyond federal subsidies:

    Table HF-10 of that report shows that gas taxes, other auto excise taxes, and tolls amounted to over 76% of total federal, state, and local highway spending. Even after accounting for the fact that nearly 14% of those user tax monies are diverted to non-highway purposes, the table still shows that 60% of total highway spending comes directly from user taxes and tolls. A longer-term analysis shows that monies collected from highway users over the years 1961 through 2002 ranged from a low of 66% of all highway spending (in 1981) to a high of 92% (in 1996).

Even if all of our cars vanished we'd still need roads for, say, emergency services (better than having EMTs take heart attack victims to the hospital via Amtrak). Some say issues like that provide good justification for some general revenue dough going to roads. Plus the vast majority of stuff that we buy gets to stores by trucks that travel on roads.

And a bit more on transit: Although some vanpool services are in the black, all U.S. transit systems operate in the red (see the "recovery ratio" column on the far right).

And sadly, the fact that all transit agencies lose money is actually a rhetorical advantage for individual agencies. It gives the impression that transit is, by nature, a money loser.

That's not exactly true, but you'll have to leave the states to find examples of in-the-black transit. And even in America there are ways to lose less money (e.g. competitive contracting.)

BTW, Nick points to this article. Some nuggets:

    The Bush administration yesterday endorsed a recommendation from the Transportation Department inspector general that Amtrak eliminate its food service and sleeper cars on some long-distance routes in a drastic effort to cut costs.

    The dining and sleeper cars cost Amtrak more money than they generate, but railroad officials have told Congress they are important parts of their customer service.

    "Overall, our analysis shows that eliminating sleeper cars, dining cars and other amenities on Amtrak's long-distance routes could save between $75 million and $158 million per year in operating costs and avoid an additional $79 million in planned annual capital expenditures," a report released yesterday by Transportation Department Inspector General Kenneth Mead said.

    Other amenities the report recommends cutting include on-board entertainment, lounge seating and checked baggage service.

    ...

    Last year, Amtrak lost $600 million on its 13 long-distance routes of more than 500 miles.

    They include the Capitol Limited that operates between Washington and Chicago and the Auto Train the runs between Lorton, Va., and Sanford, Fla., near Orlando.

    The Capitol Limited lost $208 per passenger in sleeper cars last year compared with $112 per coach passenger.

    None of Amtrak's routes nationwide operates profitably, when infrastructure costs are included, including the 23 shorter regional routes, such as Pennsylvania's Keystone route and California's San Joaquin route.

For more background on Amtrak, go here.

Ted Balaker is Producer


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