NCPA - National Center for Policy Analysis

Opinion: Only Privatization Can Save Passenger Rail

January 29, 2002

Despite robust passenger growth over the past five years, Amtrak's operating loss in 2001 was $1.1 billion -- $129 million greater than in 2000 and the largest loss in the national passenger railroad's history. It has lost over $25 billion taxpayer dollars in 30 years. Late last year, Amtrak asked for another $3.2 billion.

Business analysts say Amtrak's record could constitute a handbook on how not to run a railroad.

  • Labor costs are immense, with some union workers being guaranteed up to five years in severance pay.
  • Swimming in a sea of red ink, Amtrak is engaged in launching new routes in low-ridership areas.
  • Amtrak's system is deteriorating for lack of capital spending -- the Washington-Boston corridor needs $3 billion alone, and delays have increased 75 percent since 1998.
  • Much of the deterioration came because Amtrak spent money in failed short-term projects to reach its operating self-sufficiency goal.

Congress established an Amtrak Reform Council in 1997 and set a deadline of December 2002 for the railroad to begin operating without subsidies. This month the council voted eight to one to end Amtrak as presently constituted -- perhaps by opening America's entire intercity rail system to private competition.

  • Worldwide some 40 countries are ditching Amtrak-style arrangements for more competitive systems.
  • Sweden and Japan have privatized parts of their rail systems with great success.
  • In Britain, where private companies bid to operate specific routes, ridership is up significantly.

Four British companies have already expressed an interest in operating trains in the U.S.

Source: Editorial, "Train Robbery," Wall Street Journal, January 29, 2002; and Don Phillips, "Report: Amtrak's Financial Woes Have Worsened," Washington Post, January 26, 2002.


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