End of the line for Amtrak subsidies?

• Author: Love, Jean

In 1970, Congress created Amtrak, the National Passenger Railroad, as a publicly owned for-profit company. A quarter-century later, Amtrak remains heavily dependent on public subsidy. Taxpayers contributed more than $1,000,000,000 to Amtrak in 1995 and, between 1970 and 1995, provided more than $13,000,000,000 in Federal capital and operating support of the passenger rail system. States have contributed additional funds. More than two decades after Congress intended it to become financially solvent, Amtrak commercial revenues cover less than two-thirds of total costs.

Amtrak is unique among forms of intercity transportation -- including airlines, buses, and private vehicles -- in several respects. First and foremost, it is the only publicly owned form of intercity transportation. It has by far the highest unit costs per passenger mile of any intercity mode, carrying the smallest number of passengers and serving a disproportionately high percentage of affluent riders. Moreover, Amtrak is the only intercity mode that requires net public subsidies.

Amtrak now needs additional public financing and has asked Congress to create a trust fund for its capital requirements. Unlike the trusts for highways and air, derived from taxes on their respective users, the proposed Amtrak trust fund would be financed not by ticket taxes paid by its passengers, but by taxes on road users -- that is, on people who do not use Amtrak. There is little evidence that, over its years as a Federal enterprise, Amtrak has made progress toward financial self-sufficiency. Indeed, the railroad's management has been agitating for more than a $1,000,000,000 infusion of funds for the purchase of new trains and equipment. Proponents normally cite one or all of the following 10 myths as justification for continuing taxpayer subsidies:

Myth #1: Amtrak is a crucial component of the nation's transportation system. To support their claim, they cite that 55,000,000 passengers each year depend upon Amtrak service, 33,000,000 of whom use the railroad to commute to work. This figure appears impressive, but is highly misleading.

When transportation professionals use the term "passengers," they are not referring to individuals, but to the number of person trips. Americans made 50,300,000,000 work trips in 1990. The 33,000,000 passenger trips on Amtrak for commuting to work that year -- more than half of the total patronage -- represent less than .007% of the total number of work trips. Four and one-half times as many workers used bicycles to get to work as rode Amtrak, and 25 times as many people walked to work. Put into context, Amtrak makes an inconsequential contribution to getting the nation's workers to their jobs.

Even as a form of intercity transportation, Amtrak's contribution to the nation's mobility is marginal at best. Americans made 3,000,000,000 intercity person trips in 1990. More than 90% were by cars and other private vehicles. Airlines contributed more than 25% of intercity trip mileage, while 70% of intercity mileage was by private vehicles. Intercity buses provided more than one percent of trips, but contributed less than one percent of the mileage. Amtrak's share of the intercity market was the smallest of any mode -- 0.4% when measured by person trips and 0.6% when measured by person miles.

Myth #2: Amtrak provides essential service to the poor: One justification for continued subsidies is that it provides essential intercity transportation for poor and middle-income passengers, who can not afford airline tickets and do not have access to cars. Yet, the poor are not especially heavy users of Amtrak. Three-fourths of its passengers have incomes above the national average. Travel on Amtrak by persons with incomes above $40,000 is the highest of any mode -- 3.5 times more than on buses and nearly 1.5 times greater than on airlines. Nearly one-third of Amtrak passengers have household incomes of $75,000 or more, and 20% earn $100,000 or more. For intercity travel, low-income Americans are much more likely to ride buses, which serve more communities, are cheaper, and are operated privately by profit-making, tax-paying firms.

Amtrak caters to its comparatively affluent market through the provision of luxury services, such as sleeping cars and first-class (parlor car) accommodations. Along the Northeast Corridor, Amtrak is the only major carrier offering first-class service. airline shuffles that operate between Washington and New York and between Boston and New York offer just coach-class service. Yet, Amtrak's subsidized first-class fares in the Northeast Corridor are similar to airline shuttle coach fares.

Limited coverage

Myth #3: Amtrak is a transportation system serving the entire nation. Six states -- Alaska, Maine, Hawaii, New Hampshire, Oklahoma, and South Dakota -- are not served by Amtrak trains. Neither are one-fourth of the 100 largest metropolitan areas in the contiguous 48 states. Moreover, 10 other metropolitan regions are served by Amtrak three days or fewer per week, including four with...