Wednesday, October 19, 2011

Amtrak is a bad role-model for High-Speed Rail

The papers are full of information about Amtrak and that it reached a record 30 million annual passengers.  That fact has become an additional argument for advocating high-speed rail, which, the promoters tell us, will carry more people than we expect, causing them to stop flying and driving. The data cited in the article claims otherwise.

That is, don't believe that the increased number of Amtrak riders indicates increased rail travel demand that is sufficient to justify the trillions of dollars necessary to build HSR on the eleven designated HSR corridors.

As the article from the WSJ tells us, that ridership increase does not make a dent in operating expenses.  Amtrak will continue to require massive subsidies.  And you better believe that high-speed rail is far more expensive to operate than regular Amtrak Diesel trains. 

Furthermore, even with that ridership increase, the gross number of Amtrak riders is trivial compared to all other transit modes.

Which leads me to my final point here.  One of the arguments leveled against those of us who complain about the huge development costs (now exeeding $100 billion) of the California HSR, is that were we not to build it, it would cost $100 billion to increase highway lanes and runways.  The preposterous claim is that it's less expensive to build this high-speed train than to not build it, therefore requiring that we accommodate those huge population growth numbers with more highways and runways.  That's a nonsensical argument.  

If the discussion is about moving Americans (and Californians in particular), it is less expensive to have them drive, or for them to fly, than to take a train, particularly if it's a high-speed train.  We do not yet appreciate the dazzlingly expensive aspects of high-speed rail, both for construction and operation.

Think Formula I race cars.  These are multi-million dollar operations and cost a fortune to build and to maintain. Needless to say, wear-and-tear is considerable.  That's the way it is with HSR compared to the regular Diesel heavy-rail system operated by Amtrak.  And Amtrak, as we are told here, costs taxpayers subsidies for every train ticket they sell.

Whereas the highways and commercial aviation, although also subsidized in many direct and indirect ways, is nonetheless far less costly per passenger mile than rail travel.

In short, even with increased ridership, Amtrak is not a model to emulate.  It is not an argument to justify the development of high-speed rail.   

OCTOBER 19, 2011
Amtrak's Banner Year
Even as ridership increases, it still can't cut its losses.

Amtrak announced last week to great media fanfare that the national train service carried a record 30 million passengers last year. A banner year on its 40th anniversary of government ownership, right? Well, no.

Here's what Amtrak didn't trumpet: It lost a near-record amount of money in fiscal 2011, with some $560 million from the feds required to cover its operating deficit.

This isn't an operation that can make up losses with greater volume. The curse of Amtrak is that its operating costs are so high on most routes, and its fares so inadequate to cover those costs, that even as more people hop on board it still can't cut its losses. It currently loses about $54.50 per passenger, and the Sunset Limited line between New Orleans and Los Angeles loses $390 per ticket, according to the House Transportation Committee. Since Richard Nixon nationalized passenger rail service in 1971, Amtrak hasn't made money in a single year.

Oh, and those 2011 operating subsidies are only a portion of Amtrak's line of taxpayer credit. The House Budget Committee says the railroad also received nearly $1 billion in capital subsidies, $52 million in debt restructuring relief (which climbs to $125 million in fiscal 2012), and access to a $562.9 million low-interest loan with the Department of Transportation. Amtrak's management has also requested $117 billion over the next 20 years to modernize the nation's tracks for 150 mph bullet trains.

Even the 30 million passenger trips on Amtrak are hardly a transportation milestone. Planes carry roughly two million passengers a day, or about as many passengers every two weeks as Amtrak carries in a year. For every person who rides Amtrak, more than 100 drive their cars from one city to another.

Beyond the Washington-Boston corridor, trains account for 0.5% of all intercity trips, meaning that in most parts of the country Amtrak is an inconsequential and anachronistic mode of intercity travel. 

Building more lanes on the most congested interstate highways would be a far more efficient way to move Americans than continuing to fund Amtrak at $1.5 billion a year—or spending $20 billion on high-speed rail, as President Obama wants to do.

It's worth contrasting Amtrak's financial performance with what may be America's fastest-growing mode of transportation: new tech-savvy buses run by companies like Megabus, Coach USA and BoltBus, whose business was up 24% in 2010. These buses typically travel between major U.S. cities—say, from Chicago to St. Louis or Des Moines.

The fare from Manhattan to downtown Washington, D.C. can be as low as $10 or $20, compared with $150 or so for even a non-Acela Amtrak ticket. When Coach USA CEO Dale Moser was asked about these prices, he said, "you cut all that overhead out of your business, you find you can pass the savings on to consumers."

That is what Amtrak could have been doing for 40 years, but who needs efficiency when a rich Uncle covers the overhead?

1 comment:

Macy said...

Yes, and what about the multi-billion government subsidiary of the interstate highway network over the past 50 years ??!!!