A major snowstorm hits the Northeast. Flights are cancelled, roads are impassable. What better time to showcase the advantages of rail, with a dedicated track and electric cars?
Yet on Thursday, two days after the storm, Amtrak is still flailing. Its high priced Acela trains are cancelled. In Washington, its regional trains leave late because they are being “de-iced.” In New York, regional trains are hours late because they have not left the yards.
With the weather forecasters clearly predicting cold temperatures all week, why can Amtrak not plan ahead and get staff to de-ice its trains in advance so they can leave on time? Trains operate in far colder temperatures in other parts of the globe, so why can they not run on time in America?
One answer is that Amtrak is hobbled by its union contracts. Representation from multiple unions leads to Amtrak workers earning average salaries and benefits 20 percent higher than comparable private sector workers. Amtrak is vastly overstaffed and has little flexibility with overtime hours.
To liberals, Amtrak is one of the greatest embarrassments to their model of government-run industries. To conservatives, Amtrak is one of the best examples of private enterprise’s superiority to government bureaucracy.
Even though it is publicly owned, funded, and operated, Amtrak is technically managed as a for-profit corporation. You would not know it from its 33-year streak of failing to turn a profit.
Amtrak received $1.4 billion in subsidies in 2012. It also “celebrated” its smallest operating loss since 1975, $361 million. With 31.2 million riders per year, the federal government pays nearly $50 per ticket sold. Some Amtrak tickets do not even cost $50.
With such large levels of public funding, one would at least expect Amtrak to provide a quality product. Unfortunately, Amtrak’s overall on-time performance rating is about 70 percent. On long-distance routes over 750 miles, this rating falls to 42 percent. When long-distance trains were late, 75 percent were more than an hour late, and 25 percent were more than three hours late.
Even the much-heralded Acela train fails to meet quality standards. Its on-time performance rating is 83 percent. By comparison, JetBlue Airways, US Airways, and United Airlines all have 90 percent on-time ratings on flights from Ronald Reagan National Airport in Washington to Logan International Airport in Boston. According to Daniel Hanson of the American Enterprise Institute, the Acela’s fastest trip from Washington to New York is still 15 minutes slower than the speed the Penn Central Railroad completed the route in 1962 at just $102 per ticket in 2013 dollars.
To be fair, Amtrak is profitable on its shorter routes of 400 miles or less. The Acela and Northeast Regional routes carry 11.4 million riders a year and have an operating profit of $205.4 million.
Long-haul routes of over 750 miles are where Amtrak needs to consider serious reform. These routes lost a combined $597.3 million in 2012. Long-haul routes lost nearly three times more than the Acela and Northeast Regional routes made, while carrying 69 times fewer passengers.
With over $11.3 billion in assets, Amtrak would be wise to sell its unprofitable assets on long routes. The service cannot compete with the speed of air travel or the convenience of driving. Its shorter, profitable routes of 400 miles or less in California and the Northeast should be sold to the private sector, which would have an incentive to make a profit. Private ownership would have to get the trains out on time, even in storms, to compete with air and bus travel.
Taxpayers would not only gain billion of dollars from the sale, but they might get better service. And they would be finally freed from the Amtrak albatross.
