Commentary: Amtrak Illustrates Inefficiency Of Publicly Funded Transportation

Commentary: Amtrak Illustrates Inefficiency Of Publicly Funded Transportation

Perennially failing model continues to consume tax dollars, government subsidies

The debate over reducing government subsidies to Amtrak intensified last week when House Transportation and Infrastructure Committee Chairman John Mica (R-Florida) labeled the railway a “Soviet-style monopoly.” While the severity of this statement may be questioned, it is a matter of fact that Amtrak continues to run at heavy losses for which the taxpayer is left holding the bill, strengthening the argument that it should be privatized or defunded altogether.

As revealed in a report by the Transportation Committee, the Sunset Limited line connecting New Orleans with Los Angeles operated at a loss of $417.92 per passenger in 2010. Overall, Amtrak’s 15 long-distance routes averaged a loss of $117.84 per passenger. Despite increasing ridership, Amtrak operated at a $506 million loss this past fiscal year, and expects a loss of $616 million next year.

Amtrak’s failings are easily attributable to its poor operating procedures, which Mica accurately terms as “antiquated.” These procedures include expensive ticket prices, extremely long travel times compounded by extended layovers, and limited days of operation- all of which entice potential passengers to use airlines instead. In addition, union friendly labor practices have raised costs considerably at the expense of progress.   

While this would ostensibly indicate a failing business model, Amtrak nonetheless has ardent supporters who contest that the private sector would not fare any better. Proponents such as Mayor Landrieu and Sen. Mary Landrieu argue that Amtrak is indispensable to the local economy because of New Orleans’ dependence on the tourism industry.

While transportation plays a pivotal role in shoring up local tourism, leaving transportation to the private sector seems logical at this point. No viable enterprise would hope to operate at a profit with the extremely inefficient procedures currently used by Amtrak. Furthermore, while a  privately-run line would be more efficient, many commuter rail lines may just simply not be responsive to the market. With the availability of planes, cars, and buses, passenger trains are no longer a practical option to many consumers.

Amtrak can afford to continue with such impractical operating rules because it is being paid for by someone else- taxpayers. Amtrak’s history has been one of consistent financial loss and government bailouts. The tired argument that it needs further subsidizing to be resuscitated is rendered null and void by the fact that Amtrak was dead on arrival.

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