NCPA - National Center for Policy Analysis

Amtrak Should Be Privatized

March 13, 2015

The bipartisan Passenger Rail Reform and Investment Act of 2015 could subsidize Amtrak by an estimated $7 billion from 2016 to 2020. If the bill becomes law, taxpayers will continue paying for Amtrak's losses for at least five more years. Despite generous taxpayer subsidies, Amtrak has run operation losses every year since it began operating in 1971.

  • There were operating losses of $227 million and a total loss of $1.1 billion in 2014. The operating loss is unlikely to continue to decline due to the losses in Amtrak's long-distance routes, which bleed about $600 million annually.
  • Amtrak lost over $900 million from 2003 to 2013 on food services alone. A provision in the 2015 bill requires Amtrak to develop and implement a plan to eliminate the losses from its food and beverage in five years, but a similar rule passed decades ago failed to achieve savings.
  • Employee-pass riders who are offered free trips on Amtrak also received complimentary meals, resulting in a $240,000 loss for the railroad in 2012.
  • Amtrak's largest expense is labor, salary and benefits, which cost over $2 billion in 2014. The average onboard employee made $41.19 an hour in 2012, while railroads that contracted out services to private companies paid their employees $7.75 to $13.00 an hour. In addition, employees received $185 million in overtime pay in 2013 due to regulations and poor oversight.
  • Management activities took up 46 percent of the $100 million budget, $6.5 million was spent on unrelated projects, and an undetermined amount was shipped out of state on non-ADA projects. 

Amtrak has never made a profit because it does not need to. Privatizing Amtrak is the only option certain to prevent billions of taxpayer dollars from being wasted while providing the benefits that accompany competitive services.

Source: Matthew Sabas, "Amtrak Bill Continues History of Wasted Subsidies," Economic Policies for the 21st Century, March 6, 2015.

 

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