Amtrak loses a ton of money each year. It doesn’t have to.

March 1, 2013

Amtrak is coming under heavy scrutiny these days. The passenger rail service needed $1.4 billion in subsidies from Congress in 2012, and many Republicans are skeptical that the government should be losing so much money on train travel.


We can save it. (Washington Post)

But, as it turns out, there's a fairly straightforward way to put Amtrak on a financially sustainable footing — it mostly involves dealing with the system's 15 little-traveled longer routes that lose nearly $600 million each year. That's one upshot of a big new report about Amtrak from the Brookings Institution, out Friday.

As Adie Tomer, one of the report's co-authors, explained to me by phone, the best way to think of Amtrak is that it's essentially two different train systems rolled into one. One system is quite successful, the other isn't.

First, there are Amtrak's shorter passenger routes that run less than 400 miles and tend to connect major cities. Think of the Acela Express in the Northeast, or the Pacific Surfliner between San Diego and Los Angeles. These 26 routes carry four-fifths of Amtrak's passengers, or 25.8 million riders per year. And they're growing rapidly. Taken as a whole, these shorter routes are profitable to operate — mainly because the two big routes in the Northeast Corridor earn enough to cover losses elsewhere.

Then there are Amtrak's 15 long-haul routes over 750 miles. Many of these were originally put in place to placate members of Congress all over the country, and they span dozens of states. This includes the California Zephyr route, which runs from Chicago to California and gets just 376,000 riders a year. All told, these routes lost $597.3 million in 2012.

Brookings has a neat interactive tool that lets you scrutinize each of Amtrak's routes, looking at how many passengers they carry and how much money they make (or lose) each year.

So what can be done? The Brookings report argues that Congress should arrange a deal with the states for these 15 longer money-losing Amtrak routes. If a route is losing money, then the states along its path should negotiate how best to provide financial support and fill the hole. (Under the Brookings plan, they'd be allowed to use federal transportation funds.) If the states can't or won't chip in, then the routes get pared back.

As it happens, this sort of arrangement is already in place for Amtrak's 26 short-haul routes — Congress set it up back in 2008. States have already been supporting these shorter routes, and this fall, they'll have to increase their share. That's expected to reduce Amtrak's operating losses by a further $180 million. The Brookings report essentially argues that Congress should set up a similar deal for longer routes — a complicated but doable task.

To see how this would work, check out Pennsylvania, where the legislature has been debating how best to finance two Amtrak routes inside its borders. The state is expected to chip in an additional $8 million each year for the Keystone, a popular route between Harrisburg and Philadelphia. But the Pennsylvanian, which runs once a day between Harrisburg and Pittsburgh, may not survive.

All told, a deal with the states could trim the need for subsidies by some $800 million per year — at that point, Congress would no longer need to cover Amtrak's operating losses. The main thing the federal government would still need to pay for is the capital and overhead costs, such as upgrades to the tracks that Amtrak currently owns in the Northeast Corridor. In other words, Amtrak would become just like any other infrastructure project that Congress helps build and repair (but doesn't pay to operate).

"If all Congress is paying for is track on a popular route in the Northeast, that becomes a lot more palatable," Tomer says.

Even those remaining congressional subsidies for the Northeast's overhead costs could conceivably dwindle in the years ahead. The Brookings report notes that the Acela and Northeast Regional routes, which carry some 11.4 million people each year, now earn an operating profit of some $205.4 million. That's still not enough to cover all of the Northeast Corridor's capital costs just yet, but the route is earning more and more money each year.

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