OK … Why Don’t We Privatize Amtrak?
Following the tragic accident last week near Philadelphia, conservatives have once again started to call for privatizing Amtrak. There’s an article in Forbes magazine with that as the subject and of course the libertarian “think tanks” and all the usual suspects in Congress are banging on that drum again.
The thing is, it’s never going to happen. Those folks must know that deep down in their little ideological hearts and if they don’t, they’re either delusional or smoking something.
When you hear someone talk about privatizing Amtrak, you have to understand that all they really want is the Northeast Corridor: Boston-New York-Washington. And that means if Amtrak is ever privatized, you can forget about the long-distance trains. With privatization, they’re history. Oh, theoretically it’s possible that someone might consider cherry-picking a couple of choice routes linking major urban centers—Los Angeles-San Diego or Chicago-Milwaukee could be possibilities, I suppose, or St. Louis-Chicago—but the rest of the country? Collectively screwed.
We constantly hear, even from those who probably know better, that the Northeast Corridor should be privatized because it operates at a profit. That’s also nonsense! If you believe the Amtrak accountants (and a lot of people don’t) revenues from the NEC exceed operating costs. But there are a couple of other very relevant factors to consider.
For one thing, Amtrak’s long-distance network feeds passengers into Northeast Corridor trains, and if the long-distance network goes away, the Northeast Corridor will lose some share of that business.
Then there’s the matter of Amtrak’s equipment, much of which is old and needs replacing.
But the real issue—the big bull elephant in the room—is the issue of the Northeast Corridor’s infrastructure. By that, I mean the repair, maintenance and upkeep of the 450-or-so miles of tracks and catenary, tunnels and bridges between Boston and Washington. Amtrak estimates that more than fifty billion dollars is needed just to bring everything up to a state of good repair.
So what do you think? Will a prospective buyer take on all that?
Absolutely … when pigs fly!
Why would you need long distance trains when airplanes get there in a fraction of the time for much less money? Only people that take those long distance rides are retirees and train enthusiasts who like to enjoy the view. We don’t need to spend billions of dollars to maintain what is essentially a cross country tour bus. As long as the train is there for cost effective short distance trips that is economically feasible that serves the need for majority of people who ride the train that is what matters. Furthermore, this subsidized dinosaur truly breeds the worst in customer service and has the rudest staff I have met in any travel agency.
I’m sorry to say that one of my favorite magazines, The Economist, ran a short story about the “money losing” Amtrak and how something needs to change. With its European slant, it should know better – no national rail system break even. Can you imagine the cost of adding capacity to the highways and airports in the Northeast if Amtrak went away! As you say why do we never read about the “money losing highways”. Amtrak is the most cost effective public transportation choice.
Well, I’m not saying it’s the way to do it, but the direction Europe is heading, is the public tendering of concessions to private operators on government owned tracks. Each concession is different, some are making a loss, and the government has to offer a subsidy to operate the trains, others are making a profit, and companies have to offer money to be allowed to operate it. Some give a lot of freedom to the operator to adjust the timetables, equipment, while others don’t even get ticket revenue, as ticket revenue goes to the organising body. Some have to buy their own equipment, while others have to use the equipment the government has bought for the concession. thus allowing shorter concessions and smaller competitors to give it a try.
On the plus side, the smaller competitors, with their smaller overhead and flexible management style, often managed to save some rural lines the big, national companies wanted to close because they made to much of a loss on them. This could be compared with the American Short-line railroads for freight, where smaller companies have saved a number of lines the big Class I railroads wanted to abandon.
On the downside, rail and train are seperated, often 2 different companies who have to work together, but don’t always have the same interests, as with railroad switches, which many infrastructure companies try to get rid of as much as possible, and the operating companies like to have the flexibility that offer those switches. Also, depending on the Level of Service Agreement of the concession, it’s not always easy to adapt quickly to new developments, e.g. almost no LSA asked for Wi-Fi in the trains, as no one had forseen the gigantic growth of mobile devices.
Even if America doesn’t copy the system, it wouldn’t be a bad idea to study it, I’d say.
Thanks for that. Interesting and informative. And it makes absolute sense: private companies run passenger trains over routes that can make a profit; government subsidizes companies operating trains where public transportation is a necessity, but ridership is not sufficient to make the routes profitable. The problem in the U.S. is that, outside of the Northeast Corridor, almost all of the track is owned by the freight railroads. Under the original agreement, they are obligated to run Amtrak trains and give them priority. But they are NOT obligated to run passenger trains operated by another company.
It’s an example from the local bus company where I live (De Lijn in Flanders, the northern part of Belgium), where for a very long time, already, about half of all bus routes are run by private companies as subcontractors to De Lijn, the regional government agency responsible for local public transport. Those busses are hardly distinguishable from ‘ordinary’ De Lijn busses, they look the same, the uniforms are, too, ticketing is the same…) The difference, often those subcontracted busses are much more recent and comfortable, because that’s how they got the contract from De Lijn.
Again, I’m not saying this is THE solution for Amtrak (making Amtrak an agency responsable for contracting out to private companies), your legal and geographical situation is not the same, but I would recommend looking at how others deal with similar problems as you, in Europe, but also in Japan, etc.
The issue of what would work with Amtrak is complex. Privatization is definitely a no go. Perhaps, amtrak should be reclassified into two entities; one side would be a public transit agency, and the other will retain the for profit side. The public transit agency side will run all of the long distance routes and the northeast corridor. The for profit side would operate in order to bid to run state supported services and commuter railroads since public transit agencies cannot bid on contract services. For the public transit agency side, since it is now a public transit agency, the gov’t must fund it and should to the tune of $5 billion a year plus up to 2.5%. This will ensure that capital projects like infrastructure, rolling stock, and motive power are always funded. The for profit side should also be able to share revenue with the public transit agency side as well. This is just an idea which I have lots of ideas that could very well work and keep the politicians quiet as the highway system cannot be unfunded so neither can a public transit agency. As long as amtrak is maintained as a for profit organization, these ideologues will be able to still get away at attacking it.
Perhaps so, although there are limits to treating a railroad line like an expressway with metered on-ramps. Virgin Trains might not be able to put in a faster service to Manchester or Glasgow because the West Yorkshire Passenger Transport Executive (a regional transit authority) owns a slot that involves a crossover move at Stockport that constrains the times available to the inter-city trains, and a change in the running times for the inter-city trains also involves a negotiation with the power company to change the running times of a coal train, and with Freightliner and time-sensitive containers. By contrast, the short line operators in the States run pickup freight services on secondary lines the trunk lines no longer wanted.