Monday, December 5, 2011

You have to ask what the real reason is that the Administration and Congress won't let go of High-Speed Rail

Here's a good one from the Boston Herald. It's an opinion piece by Cornelius Chapman who has written books with Joseph Vranich, who we often quote in this blog.

When professional guys with in-depth railroad experience in their background want to be critical about high-speed rail, we better pay attention. Chapman points out that Amtrak has been around for over thirty years, and has lost about one billion dollars each of those years.  And what about its ridership, which is so critical to understand regarding our high-speed rail project in California? "One-tenth of 1 percent of America's travellers."  If someone can't make a good business out of this, and there are so few riders that it really doesn't justify government sustenance, why are we keeping it alive?  

I'm trying to resist the notion that there should be no more rail development for passengers in the US.  That sounds, even to me, like a step too far.  Yet, except for commuter and regional rail around the US, I see no compelling reason to keep passenger rail on the taxpayers' heart-lung machine.  The Amtrak that's out there now rides on far less track than passengers did fifty years ago; it's slowly sinking into the sunset. 

There are reasons for that.  And, there will be more, and more compelling, reasons in the future for abandoning inter-city rail in the US. One of the reasons that the California High-Speed Rail Authority is pouring its millions into public relations is that it is selling us something that we neither need or want.  HSR is trying to create a market by buying all the marketing tools at its disposal. Too bad we are the ones having to pay for this advertising campaign. 

To be clear, high-speed rail is a fancy and much more expensive version of regular passenger rail.  We tend to think about passenger rail as something for everyone to use; the train for the masses. Not so. And the statistics tell us not so. Certainly not in the US.  In Europe or Asia, yes, but not here.  That's why every Amtrak ticket except the Acela loses money.  

The marketing program of the CHSRA is trying to tell us to ignore all that; that very fast trains will turn that passenger service under-use around and create huge demand.  'Build it and they will come,' as the movie romantically suggested.  

A rail system is huge, complicated and cumbersome to manage and to operate.  It's like a mechanized 'factory' spread out over large regions. There are far too many moving parts. High-Speed Rail is much more so.  Therefore it takes tremendous demand to justify its expensive existence, especially if it loses money and must be taxpayer subsidized.

While Chapman argues that this is "no way to run a railroad," perhaps it's just possible that it is not possible to run an inter-city passenger railroad in the US any longer.  The demand, even if it is increasing, is trivial and the costs to the government are too high for the benefits. 

It is gradually becoming clear to everyone, for or against high-speed rail, that all the supposed benefits attributed both to the construction (jobs), and operation (economy), of this California train project have been grossly exaggerated in order to sell us this mega-infrastructure project, especially with its over-the-top costs.  Have we not yet learned that if something sounds too good to be true, it is?  That is, it's not true.

The rail authority persists in its claims that the HSR will make profits.  That's sheer nonsense.  The passenger rail service was certainly not profitable for the private rail operators during the peak years of passenger rail service.  It was a kind of loss leader, although a few of the most fashionable and in high-demand services did do better than break even.  Nonetheless,  if passenger rail had been profitable, would they have been so delighted to give it up to Congress which created money-losing  Amtrak to operate those trains?

Mr. Chapman is yet one more highly informed voice calling for the termination of this project.  I agree with him.

No way to run railroad
By Cornelius Chapman  |   
Monday, December 5, 2011  |  |  Op-Ed

Ten years ago, after three decades of losses, Amtrak tripped a legal requirement that it go out of business. Vice President Joe Biden, then a senator and now America’s best-known Amtrak rider, attached an amendment to a defense bill that kept it alive.

With an eye on that looming trainwreck, I and two co-authors prepared a liquidation plan that was published on the date Amtrak’s would have been due absent Biden’s interference.

A decade later, who was right?

Amtrak lost money at the rate of $1 billion a year during that period, a lot to pay for the government-owned rail company that carries only one-tenth of 1 percent of America’s travelers.

Supporters of Amtrak like to point to Japan and Europe, areas that have sufficient population density to make passenger rail feasible. In America, Amtrak runs trains through sparsely-populated areas such as Montana for political reasons. Amtrak’s long-distance routes account for only 15 percent of its passengers, but 80 percent of its losses.

That’s no way to run a railroad.

The issue is timely because President Barack Obama wants to put high-speed rail within reach of 80 percent of Americans by 2025, but taxpayers are resisting. Three states have canceled projects, and a proposed line in California has been scaled back.

Even when Amtrak’s ridership increases, as it did in 2010, it can’t make a buck. In a classic case of a business trying to make up in volume what it loses on each sale, Amtrak had a near-record loss that year, with $560 million required to close its deficit on top of a $1.6 billion appropriation.

In 2009 Biden hailed an additional $1.9 billion in stimulus money for Amtrak, saying his preferred mode of commuting was “a necessity.”

There’s gotta be a cheaper way for Joe to go.

In the 19th century, when railroads were the primary mode of intercity passenger transit, 67,000 miles of track were put out of service and no national crisis ensued. Then as now, America had an oversupply of passenger rail, the product of a bubble that assumed rail travel would grow rather than shrink.

In the 19th century the losses were borne by private investors, however, while Amtrak’s losses are borne by taxpayers.
The Washington to Boston route is Amtrak’s crown jewel, for which there would be plenty of bidders if it were put up for sale. The dogs in its portfolio—the Sunset Limited between New Orleans and Los Angeles loses $462 per passenger — should be killed.

As someone who has sat across the negotiating table from Amtrak several times in my career, I’ve noticed something about its designated representatives. They always travel by plane.

© Copyright by the Boston Herald and Herald Media.

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