International Policy

Heritage Backgrounder: Industry Offer To Buy Amtrak

Officials at the U.S. Department of Transportation and members of the congressional transportation committees have reportedly received at least three serious inquiries or offers from major transportation businesses and investors to acquire Amtrak's intercity rail passenger service.

Privatization has been used to revitalize passenger rail service in Europe, Asia and Latin America, say analysts, and should be considered in the United States.

In recent years, Amtrak's operating costs have exceed its revenues and the federal subsidy, and Amtrak has had to borrow increasingly larger amounts to stay in business.

  • Since Amtrak's inception in 1971, Congress has appropriated $21 billion (or about $30 billion in 1998 dollars) to subsidize Amtrak operations .

  • Today Amtrak carries only 0.3 percent of the country's intercity passengers --about the same number that travel through the Charlotte, N.C., airport each year.

  • Amtrak's cumulative annual losses have exceeded $750 million, and it is now diverting significant portions of its capital budget to pay operating expenses.

As a result, Amtrak's debt and lease obligations soared from less than $50 million in 1988 to nearly $1 billion in 1996.

Despite this emerging interest in privatizing Amtrak rail service, in late 1997 Congress approved two pieces of legislation that together will amount to one of the most extraordinary bailouts in the history of the United States -- promising Amtrak more than $7 billion over the next five years.

Source: Ronald D. Utt, "Congress Should Accept Industry Offers to Buy Amtrak," Backgrounder No. 1179, May 15, 1998, Heritage Foundation, 214 Massachusetts Avenue, N.E., Washington, D.C. 20002, (202) 546-4400.

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