1182, 95thCongress, Second Session, 15): Section 9 amends section 301 of the RPSAto conform the law to reality, providing that Amtrak shall be operated and managed as a for-profit corporation. Do airlines count subsidies, tax breaks, etc., in their books? In fact, it loses money big time. The trains are an afterthought. The National Highway System and airports, both funded by the government, competed directly with the railroads, which paid for their own infrastructure. How many state treasurers paying such excessive charges and denied to work with any competitive force understand how Amtrak does not even charge the states along the Northeast Corridor for their intercity trains? 232 pages. This is hardly a new development. . Government investment, whether in Amtrak, green businesses, new ATC technology, job creation, etc. This is a "public" transit system, not a "for profit" business, regardless of the original concept of Amtrak. Large transportation networks simply aren't sources of profitability, whether public or private: the only way to carve out a profit is to operate within the kind of constraints seen with a carrier like Southwest. They still do rail freight, because that is actually profitable. Theyre obviously planning on staying alive via profit as opposed to subsidies. Sign up for notifications from Insider! This is because it misstates the purpose of federal investment and overlooks the significant value that Amtrak creates for the entire country, cities and rural towns alike. The CEO in question is Honeywells David Cote, and the stimulus grant involved came from the Department of Energy to advance Obamas green energy agenda. It still had a total operating loss of $194 million. The technology is there." Amtrak has never turned a profit Before the pandemic, Amtrak's ridership saw steady growth each year, but it was still dwarfed by automobile and air travel. Amtrak has unveiled a plan to further connect the US by rail but it doesn't include high-speed rail. The company also had its best operating performance in its history, with revenue of $3.5 billion, an increase of 3.4 percent over its previous fiscal year. Case in point: the persistent myth that Amtrak must turn a profit. Advance purchase EasyJet R/T flight from London to Rome 2 hours 10 minutes, $189 with one piece of luggage. document.write(new Date().getFullYear()) Miles and Points Consulting LLC - All Rights Reserved. Ironically, those states along the NE Corridor would then be required to eat the full operational and infrastructure costs between BOS-WAS. Required fields are marked *. And so is the need to replace older rail cars approaching or past their expected life at a cost of $4 billion. It stays in business thanks to a healthy annual government subsidy of around $1b a year. Its like complaining about the postal service or PBS not turning a profit. Now try to run a high speed route from San Francisco to San Jose. See more videos about Amtrak Trend, Amtrak Hacks, Amtrak Conductor, Amtrak Train Texas, Tour Amtrak, Amtrak Sleepercar. Construction is currently underway with the 800-mile line taking at least 14 years to complete at an estimated cost of at least $68 billion, according to Architect Magazine. But to be clear, it's the banks that are in charge, not the railroads. Yes, even the ones that have great relationships with innovative local food banks. President Joe Biden's planned $4 trillion infrastructure bills, billions to give service to rail-strapped cities like Phoenix, Las Vegas, and Nashville, Tennessee, and upgrade existing lines, Amtrak's most nostalgic offerings cut in a bid to save costs, Here are 9 hurdles Biden's infrastructure plan would have to overcome in Congress before it can become law, Amtrak has its only high-speed service with the Acela, new trains to the Acela line but those will only travel slightly faster than the current train sets. The justification for this legislation was fourfold: Congress authorized $40 million to assist the new corporation in. Fares are comparatively lower than flying and trains can better accommodate passengers that face issues when flying, whether it be because they require medical devices or the nearest airport is hours away. But Mathews believes that's alright because the rail corporation's purview, after all, is to serve the entire country profitable or not. Amtrak projects a need for $151 billion more for Northeast corridor high-speed rail. Another example of inaction by Congress to ensure oversight; to not even require an external forensic audit to validate collection of all revenues and accurate allocation of costs. It turns out that the belief that Amtrak makes money in the Northeast corridor is based on faulty accounting. Yes, I really doubt that Amtrak persists because of the fear of losing votes from its 20,000 employees! For the same reason that other national rail systems have trouble breaking even: it isn't a priority. Earlier this month I traveled to Cut Bank, MT, to speak to your Associations Northwest Division meeting, and the focus of my remarks was on the value of the Empire Builder to Cut Bank, to Montana, and to all the states that the Builder serves. Sunday musings: Amtrak lies about profits, Slow airport construction, - Travelers United, Leaked Memo: New Fees Coming To Amtrak - View from the Wing, The 747 Supertanker Is Ending Operations - View from the Wing, Very Odd Stories Pushing For Amtrak Subsidies At The Points Guy - View from the Wing, CitiBusiness / AAdvantage Platinum Select Mastercard, Capital One Venture X Rewards Credit Card, Many Of You Think Tipping Is Needed At Airport Self-Checkout And For Landlords [Roundup], British Airways Catered A Transatlantic Flight With KFC One Piece Of Chicken Per Person, Two Ways That Airlines Engage In Marketing Fraud [Roundup], Angry American Airlines Flight Attendants Could Start Giving Away Buy On Board Food For Free, Citi AAdvantage Executive Card 100,000 Mile Bonus Offer Is Here, Delta Agent Begs Passengers To Take $1300 Cash And Volunteer For A Later Flight, The "American Airlines Credit Card" Will No Longer Be Accepted For Payment Online By American Airlines, Man Whose Photo Appeared Taped On Side Of Southwest Passenger's Luggage Revealed [Roundup], Be Careful Redeeming American Airlines Miles: Price Goes Up After You Put Award On Hold, In fiscal year 2019 passenger revenue covered 99% of operating costs, Amtrak will be profitable in 2020 (for the first time ever), They do not count capital expenses or depreciation (wear and tear) as expenses, even though these represent about 20% of expenses, As a result Amtraks 2019 losses are about 35 times greater than they claim. But thats because, as the Inspector Generals report underscores, Amtraks poor accounting procedures make it impossible to know. As others pointed out, airlines get subsidies in different forms, not least of which are the airports we build for them! Callum Keown. That's like getting angry when frogs can't fly. I find it interesting that you endorse forensic accounting of Amtrak yet give the Middle East airlines a complete pass on their even more dubious accounting. Whats the big difference between those 3 and Amtrak? California has even taken up the mantle with a new high-speed rail line between Los Angeles and San Francisco. But the routes also have a strong fan base of train . Is Amtrak Worth It? - Business Insider Amtrak Concedes Perpetual $1 Billion/Year Operating Losses Only around 10% of riders take the full length of a long-distance service like the Empire Builder between Chicago and Seattle, for example, whereas most customers are taking the train between intermediary stops. There is no reason for the government to try to run businesses like ATC or railroads. Michael Boldin on the constitution, history, and strategy for liberty today, 2-4 minute videos on key Constitutional issues - history, and application today. Privately-owned railroads finance their own capital investment to maintain their private infrastructure, which is thoroughly taxed by every jurisdiction. Looking at other domestic and foreign passenger rail operators, these results are truly industry-leading, and this efficiency enables us to dedicate the highest possible proportion of our federal support to vital capital investments in safety, capacity and upgrades to enhance our customers experience while travelling, said Amtrak President and CEO Richard Anderson. No one cares whether the ambulance "makes a profit" it's about time we decided as a society that transportation is also a necessity in an evolved society, and provide appropriate support to all the smart solutions, instead of just the heavily-lobbied air and highway industries, which bask in subsidies. The. Reddit, Inc. 2023. Rail passenger service can help to end the congestion on the highways and the overcrowding of airways and airports. It should all be auctioned off to the highest bidder and all passenger rail service made private again as it was for more than 100 years. But I can if you want me to. Amtraks routes create value in every community they serve. Richard Anderson, the former CEO of Delta Air Lines who now runs Amtrak, claims that: Both of those statements are false. The entire infrastructure of the airline industry is paid for with tax dollars; airports and air traffic control, which makes air travel possible is a public, government function. AeroVironment (AVAV): Revenue Growth Does Not Translate Into Amtraks cost allocation process may have its weaknesses (like many businesses), but without getting in to the details no conclusions can be made. @Sidhedevil: Yup. Why is Amtrak not profitable despite massive subsidies? Coast Starlight - Wikipedia New routes will be added and current routes will be upgraded as Amtrak aims to repair its network. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Here's a link to our Advertiser Disclosure. The at most 1 each way a day LD trains cant handle that shifted expense on their balance sheet and all of a sudden theyre money losers and should be discontinued if the likes of Mica are to be believed. It is a service that has to pay people to use. Also, when you take the train or a bus, someone is driving you, allowing you to read a book or look out the window or whatever. Earlier this month, Amtrak announced a smallest-ever adjusted operating loss of $29.8 million in the 2019 fiscal year, which ended in September, and said it is on a path to achieve operational breakeven in fiscal year 2020. Along with the news that Amtrak ridership had hit an all-time high of 32.5 million, this garnered some nice headlines. Do you need for the railway to make money for it to be good for the society? For Amtrak, the question becomes whether these subsidizes are worth it to the American people. The real solution to the LD trains losing money is doubling their frequency instead of cutting more. And they changed the law. , @Paul Also a loss on a taxpayer funded project can still be better than it being all private and each individual being forced to pay more, I guess you think tax dollars grow on trees, because when a tax payer funded project has a loss, someone needs to pay more taxes to cover the loss. Its a forced clientele, and to achieve that here, which some are actually proposing, would require forcing people to abandon their homes in the suburbs and move into the inner cities. I'm not sure there's any rail system anywhere that actually MAKES money, truth be told, but that's not the point. Amtrak's ridership and revenue has been steadily increasing over the last 10 years, and 2011 set a new ridership record with 30.2 million passengers, and $1.9 billion in ticket revenue. Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world. Why are Amtrak tickets so expensive? : r/transit - Reddit Read More: Here are 9 hurdles Biden's infrastructure plan would have to overcome in Congress before it can become law. But, he cant and that will not ever happen, nor necessarily should it if Congress deems loss-generating routes are a public benefit, as long as Congress pays for them. Before Amtrak can even consider a brand-new high-speed rail network, there's still a backlog of repairs to work through on its existing lines. Remember also that you vote with your dollars. What most Americans who take a train ride across the country probably dont realize is that the National Railroad Passenger Corporation (NRPC), better known as Amtrak, is also a government corporation. No. 1) Why should a public service be profitable? Jim Mathews, president of the National Association of Railroad Passengers, was also quoted in the story. Yes, it did say that. Archives The answer is: It isnt. Teething pains of China's high-speed rail are not material here: Have you ridden them? Notify me of follow-up comments by email. Railroad freight service is carried out by private corporations. Case in point: the persistent myth that Amtrak must turn a profit. I see Dons article and his argument is one ive been familiar with since back to about 1996 as something trying to get fair treatment for the long distance trains. Although Amtrak was supposed to be a for profit corporation, it has relied on government subsidies every year it has been in operation. Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Eurostar is superb. Theyre government backed and theyre going to run regardless of the truth. [], [] As the Washington Posts Philip Bump writes: []. True high-speed rail would require new infrastructure, including straight lines of track so trains can achieve their top speeds. And if you have that running it can also be used to subsidize LD trains. Amtrak is the # 1 passenger carrier mode between DC and NY, and youre asking why this is important? Jim Mathews, president and CEO of the Rail Passengers Association, told Insider that Amtrak may still be decades away from true high-speed rail and is still readjusting from an era of extreme cost-cutting. Amtrak is getting ready to spend $80 billion of the federal government's money as part of President Joe Biden's planned $4 trillion infrastructure bills. The Gubbment heavily subsidizes most of your existence, and without them youd be out on your ass. Amtrak's 2035 Map Has People Talking About The Future Of U.S - NPR | 45.8K Why are Amtrak Tickets so Expensive?? If you inflate Amtraks revenue and you ignore costs you can make Amtrak look like a financially responsible operation. Is this still a question, or are you just complaining about Amtrak now? All posts copyright their original authors. But Don Phillips has a piece arguing that the Acela trains actually lose a ton of money, and its the way Amtrak allocates costs (shifting them away from Acela and to the already even bigger money losing long-distance routes) that makes it look otherwise. Piratical looting would abound. Amtraks own, unaudited full cost allocation methodology ignores GAAP (Generally Acceptable Accounting Principles) by shifting costs onto the states unequivocally created only in the Northeast Corridor.
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