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End Amtrak Failure: Privatize Passenger Rail

By: Nick Zaiac - @NickZaiac - May 20, 2015, 12:37 pm
Under a cloud: alongside last week’s derailment, the profitability of many Amtrak services is in doubt. (Wikimedia)

EspañolLast week the nation was glued to the news after the latest disaster in the nation’s transportation system. Amtrak’s Northeast Regional Train 188 derailed near Philadelphia, killing eight people and injuring around 200.

The derailment has broadly been attributed to a speeding train without the safeguard of positive train control, a system to prevent excessive velocity. The system is an industry standard for many railroads, and is in place on most other segments of the Boston-Washington rail corridor.

Before the blood was dry, we heard calls for yet another pile of money to be handed to Amtrak to improve safety. This is a common demand after anything goes wrong with the nation’s passenger rail operator. The answer to any issue is always more money. Yet the answer might simply be that Amtrak is spending the dollars allocated to it badly.

Put simply, Amtrak service can be broken into two parts: the Northeast Corridor (NEC), and everything else. The NEC is the stretch of the system between Boston and Washington, by way of New York, Philadelphia, and Baltimore. This segment accounts for 11.6 million of the system’s 30.9 million passengers, but it’s the only route that comes close to breaking even in passenger revenues.

Many of the remaining passengers come from regional connections to the NEC, including routes into Massachusetts, Vermont and upstate New York, Pennsylvania, and Virginia from their respective hub cities. Together, they add another 4-4.5 million passengers.

Amtrak's route network (via Amtrak website)
The majority of long distance rail routes would never exist under a private operator. (Amtrak)

Altogether, the NEC and its adjoining routes account for over half of all ridership. If passenger rail makes sense anywhere, the NEC is it, with large, dense cities the correct distance apart to make it better than either driving or flying.

The rest of the system is only sparsely used given the number of stations served and miles of track. It loses significant amounts of money just to be kept operating. Providing regular rail service to rural North Dakota and Texas isn’t cheap.

Nor are long-distance services between cities like Los Angeles and New Orleans particularly practical: it takes 24 hours by rail, when the flight is just 2.5 hours. These are routes that would never exist under a private operator. They are in place not to serve any particular market segment, but to please the congressmen in charge of funding Amtrak.

Meeting Markets

Amtrak service is a luxury, one consumed primarily by the well-off. Most US Americans go about their year without once stepping foot on an Amtrak train. The question is why all US taxpayers are subsidizing this largesse. It’s time we rethought passenger rail in this country. The best option would be to privatize the service.

Elsewhere in the world, private rail operators have shown they can reliably and profitably provide passenger rail service. Even in the United States, we’re seeing see private companies like All Aboard Florida and the Texas Central Railway come up with proposals to provide high-speed intercity services to areas poorly provided for by Amtrak.

This would not be easy. Privatization would mean the end of intercity passenger rail service in much of the country. One could no longer travel around the country by rail, disappointing writers beset by wanderlust, train enthusiasts, and maybe a few retirees. The average person’s life would not be affected in the slightest.

That isn’t to say there would be no service outside of the NEC: it wouldn’t be surprising if private operators could pick up some under-performing services (San Franciso-Los Angeles or Milwaukee-Chicago, for example) and turn a profit.

The NEC service would certainly remain, and a private operator would probably improve the corridor’s infrastructure more quickly than Amtrak ever will. This would help prevent crashes and derailments like the one we saw last week. A private operator has every reason to make sure that safety infrastructure is in place.

This is very different from Amtrak, which, on top of normal bureaucratic incentives to lethargy, has the added problem of a $200 million cap on their liability for damage in the case of a rail disaster.

Amtrak has failed to prove since its creation that there is a nationwide market for passenger rail. Its long distance trains are creatures of politics, not consumers. Even its short-distance trains in the NEC make less money than one would expect from one of the world’s greatest urban corridors.

The answer is privatization. It’s time to end the waste, end the subsidies, and end government-run passenger rail service once and for all.

Nick Zaiac Nick Zaiac

Nick Zaiac is a public-policy researcher in Washington, DC. He also serves as a policy analyst at the Maryland Public Policy Institute. His column, The DC Leviathan focuses on the often-ignored bureaucratic agencies, from the Department of the Interior to the General Services Administration. He has been published in the Baltimore Sun, City AM, CapX, and other outlets. Follow @NickZaiac.