Trains For America

More choices for better transportation

Amtrak and profits: Rush Loving Jr. tells it like it is

For a change of pace from all the stimulus news in recent weeks, let’s kick off this Monday with a very well-argued piece about Amtrak from someone definitely in the know: Rush Loving. He wrote a book about the rail barons of yore called “The Men Who Loved Trains.” Not the sort of nostalgic thing we usually talk about here at TFA, but the man clearly knows his stuff when it comes to modern rail management as well. He discusses the myth of profitable railroads, and mentions David Gunn, probably Amtrak’s best former head. Here’s a sample:

The entire history of Amtrak is replete with examples of CEOs who have tried to get government to commit long-term funding for the company, only to be ignored. Unfortunatel y, all but David Gunn made a fatal mistake: They never told Congress Amtrak couldn’t ever make money.

None the wiser, Congress has always expected a profitable company, and over the decades Amtrak’s chief executives dutifully have talked of putting Amtrak into the black.

In the mid-1990s Tom Downs went so far as to declare that Amtrak was on “a glide path to profitability.” His successor, George Warrington, went along with the dream, pouring so much money into schemes to raise earnings he blew away all the company’s capital. In the end, just to meet the payroll, Warrington was forced to mortgage one of its most visible assets, New York’s Penn Station.

You don’t hear much talk about Amtrak ever being profitable anymore. With stronger awareness about the environment and the economic benefits of greater transportation options, it seems that more politicians are correctly starting to talk about passenger rail in terms of “investments,” like they have have about highways for decades.

Filed under: Amtrak, Passenger Rail Politics

10 Responses

  1. Adron says:

    Under the current Union, Amtrak, and Congress/President Controlled monopoly on passenger railroads, you’re right, they’ll never be profitable and always be a massive drain for a minimal amount of patrons carried. However, it could all change easily if people would get rid of their entitlement mentality and stop thinking transportation is an owed right. It isn’t, it is an earned privelige. I however, don’t think it will ever change as society has enabled those with entitlement mentality far and above their means of attainment.

    Now, in a real sense, we do owe those people roads, passenger rail, and all sorts of things of that nature.

  2. BruceMcF says:

    Before we ask Amtrak to be profitable, how about we ask the rest of the Interstate Transport system to be profitable … get the drivers on the Interstate to refund the gas sales tax receipts used to drive on city streets paid for out of sales and income taxes … get the airlines to cover the operating costs of the FAA …

    … with the big players as heavily subsidized as they are, if Amtrak was making a profit, it would be proof that it was delivering too little service.

  3. Adron says:

    Hey, I’m all for that. Systems should be environmentally AND economically sustainable. I hate that auto usage gets such a MASSIVE free ride. It’s the LEAST sustainable (environmentally and economically) of all modes and gets the fattest check.

    Airlines could easily shave the fat. The only reason they have the big ole’ crazy airlines and are so excessively used is because of subsidies, but they started on their own because they can be VERY efficient. Especially for long distance (far more than a train) and should be utilized, but for what they’re good at.

    …anyway, I’ll make a post and lay all of this out.

  4. fpteditors says:

    Follow the money. Who benefits from bad management of public transportation? Congress isn’t ignorant, it is in the pocket of oil, coal, and auto. It’s hard to believe, after all the open theft going on by the banks, that anyone is still talking in terms of “profits”. Capitalists hate capitalism. As soon as they have any power, they subvert competition.

  5. NikolasM says:

    Airlines came into their own because railroads were taxed to fund the construction of airports all over the country. The government taxed and regulated the railroads into passenger irrelevance. Airlines certainly do serve a purpose for long haul routes but where rail can compete, rail should prevail. In France, where the TGV goes, airlines have exited. Amtrak owns over 50% of the NYC-DC market even though a plane can cover the distance in 1 hour and the train takes 2:45. Think about that. If we had real HSR here the results would be even better.

  6. Allan says:

    First of all … if roads didn’t exist, we’d have to invent them … in fact, a railROAD is just another type of road.

    In TN, the road fund has been raid to supplement the general fund and to subsidize transit … so don’t tell me that roads aren’t paying their own way.

    Usually, when people try to say that roads are subsidize, they include city streets which are funded by local taxes. I wouldn’t be able to get to my house without a road now would I? So don’t you think that I’m ok with the my property taxes and local sales taxes being used for local roads? I sure am.

    And let me tell you why roads will always be funded. Simply because anyone with two feet, a bicycle, or a car can use one but only special equipment can use a railroad. In addition the railroads are privately owned. I can’t put those special steel wheels on my car and drive on a railroad but I can drive on any publicly owned road.

    There is an airline trust fund that is used for the ATC system and in addition to that an airline pays landing fees every time a one it jets touch down. On top of all that, passengers pay a tax for the system. The last I looked, the trust fund wasn’t bankrupt.

    Amtrak can make money. Saying that it can’t is just as bad as saying that transit system will always run a deficit but you have the Las Vegas Monorail that not only covers it O&M costs but also is paying down the debt used to construct it. It can be done.

    The truth is that Amtrak transports about as many people as do motorcycles in this country and on a per person count it is receiving subsidies well above other systems.

    Quit whining and get some decent management.

  7. Adron says:

    Hey Allen, don’t fall off the high horse.

    Fact: Passenger Rail doesn’t cover all costs.
    Fact: Passenger Airlines doesn’t cover all costs.
    Fact: Passenger Auto Use doesn’t cover all the costs.

    Fact: Heavy subsidization of all modes, no matter how unfair, unequal, and a plague of the redistribution of wealth mentality leads to – weak market indicators, low business interest, apathy by the public, VAST and drastic overuse of the Government preferred method (which is generally road subsidies), and a complete destruction and abusive tendency toward the environment and the human built environments of the city. Even if you are anti-global warming theories, just look at the HUGE benzine issues in the north west, the massive traffic congestion problems in California and the north eastern US. In any major city the tendency toward central planning (i.e. Interstate Consruction) has completely screwed the cities and the citizens.

    Just one more reason to get the Government types to tend to themselves and let people with real vested interest deal with these things. Just look at the cities where market choices made a lasting impression.

    42nd Street in New York.
    Penn Central Tunnel into New York
    Seattle Tunnel
    San francisco cable cars.

    All of it would not have been possible with the politicians fiddling in the business, as they do now. The results are, we don’t ever make any real progress, and are lagging if not completely incompetent compared to our previous generations.

    As far as your – anybody can use roads and no one can use railroads crap. That is the most frequent apologists comment I hear from Republicans for socializing/nationalizing the roads and making sure that minimal, if any private interests take control and actually expand roads in a useful and market derived basis. Instead the Republicans are usually more than happy to just haphazardly build the things everywhere and at any opportunity to milk a few more pennies from the public for the matter.

    I do agree with you on the fact – yeah FACT – that Amtrak could make money. It boils down again, to the Government having their fingers in em’, the Union being abusive toward the actual public’s interest in passenger rail, and management often being incompetent or hamstrung by the politicians and such. David Gunn and Alexander Kummant did a good job each, I believe Kummant also made mention several times, including to me in general conversation, that corridor operations should easily be competitive to airlines and also be able to stand on their own. Problem is, no one can legally run them as long as Amtrak hold right of refusal monopoly rights. Somewhere they even had a line item that things would be opened up.

    Amtrak, even though it carries as many people in the US as motorcycles (which is still a lot of people) could easily carry FAR more if it didn’t have to milk the long distance trains and could focus where people are, in corridors.

    Portland to Seattle are a prime example. Those trains are almost, even with the still horrible inefficiencies of labor Amtrak has, break even on operations. If they could run just one or two more trains they’d be net positive on operations and could focus that money on infrastructure.

    There are multitudes of other places around the country where this could be expanded.

    …but alas, I digress, I have things to do and some awesome maple bacon strawberry waffles to eat. I’m out. 🙂

  8. Adron says:

    btw – When reading the article by Mr. Loving, make SURE to read the comments. There are a few that set his politically motivated spiel to task.

    We know the system could be 10x better without needing to be demoralized by Mr. Loving’s idea that passenger rail is so worthless it could never make a cent above red.

    Many of us know this to be inherently false. 100+ years of American history would also prove him wrong on many accounts. But it is a matter of people finding that out by researching for themselves.

  9. Robbie says:

    I think I’ve read some where that out of the five early transcon lines completed in the 1860-90’s, that only the Great Northern which did not rely on land grants, did not enter any kind of bankruptcy throughout its existence.

  10. Adron says:

    🙂 Yes, it seems to be the historical record. They built it based on actual need and market growth. It was easily the smartest of all the transcon lines.

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