The Case for Privatizing Amtrak

November 28, 2012

Despite being touted as a cheap, attractive option for intercity travel, Amtrak has become an insignificant mode of transportation that is bloated with government subsidies. It is increasingly important to evaluate Amtrak before Congress approves its future budget requests, says Randal O'Toole, a senior fellow at the Cato Institute.

  • The average American travels about 15,000 miles by automobiles around 2,000 miles by air.
  • However, the average American only travels about 20 miles a year on Amtrak.
  • As a result of Amtrak taking over the nation's passenger trains, rail fares have increased by 110 percent since 1970.
  • Passengers pay more per mile on Amtrak fares that they would on airfares, yet it receives almost nine times more subsidies than the airline industry and more than 20 times more subsidies compared to driving.

Proponents of the passenger train have long touted the energy savings that riders could benefit from when compared to planes and automobiles. However, a look at the data may prove that claim to be false.

  • At 2.4 people per car, the average automobile uses 2,226 British thermal units (BTU) per passenger mile.
  • However, Amtrak uses an average of 2,271 BTU per passenger mile.
  • Moreover, airline energy efficiency has been growing at 3.1 percent a year, meaning that it will become more energy efficient than Amtrak by 2023.

Passenger trains fail to gain the necessary ridership to make them independent of government support. There are several factors that have resulted in the decline of popularity of trains like Amtrak:

  • Unions that insist on antiquated work rules.
  • Government regulators that place unnecessary burdens on railroads.
  • Subsidies to other transportation industries.
  • Unfair taxation of railroads when publicly owned airports and highways pay no taxes.
  • Railroad managers that would rather cater to freight trains because they are profitable.

Rather than continuing to subsidize an inefficient and unpopular mode of transportation, the federal government should privatize Amtrak. To make it effective, Congress should also level the playing field by reducing or eliminating subsidies for other modes of transportation. This would incentivize private operators to innovate and provide passenger rail services where it is needed most. Furthermore, private operators would find ways to make their services more efficient.

Source: Randal O'Toole, "Stopping the Runaway Train: The Case for Privatizing Amtrak," Cato Institute, November 13, 2012.

 

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