In the United States, passenger trains operated at their peak in the late 19th and early 20th century. However, with the advent of the automobile and air travel, ridership on the nation’s passenger services starkly dwindled away. The final blow to the nation’s passenger trains came in the form of the postal service no longer transporting mail by train, instead, favoring the less costly truck transport.
So why is train travel so expensive? Train travel is so expensive in the United States because Amtrak, the national provider of passenger rail service, receives very little funding from the government compared to its counterparts, such as roadways and airports. Furthermore, Amtrak only owns 613 miles of its own track, with the remainder of its services operating on tracks owned by freight carriers, as privately owned freight networks dominate the American rail system.
In the sixties and seventies, the utilization of the nation’s passenger trains by the postal service was keeping them afloat. However, in the early seventies, the postal service abandoned the railroads in favor of road and air transport. To relinquish the burden of operating these trains, the government formed the National Railroad Passenger Corporation (later Amtrak), of which, most of the railroads took advantage. Many of the locomotives and rolling stock owned by the private railroads were turned over to Amtrak to utilize, leading to colorful consists in the early seventies.
Although Amtrak is partially funded by the government, it is operated as a for-profit company, lead by individuals with experience, who have successfully run these types of companies prior. A prime example is the current CEO of Amtrak, Richard Anderson, who previously served as the CEO of both Delta and the defunct Northwest Airlines. Although the company operates as a for-profit, the main stockholder is the federal government, as they invest billions annually in the company’s operations.
Besides the bustling Northeast Corridor, which is one of the few routes where the railroad earns a profit, the Amtrak system operates mainly on right-of-way owned by private freight operators such as BNSF, Union Pacific, CSX, Norfolk Southern, and Canadian National. Surprisingly, even a portion of the Northeast Corridor is owned by the Metro-North Railroad in Connecticut, of which Amtrak pays a fee to operate over. These various shortcomings of the system significantly contribute to the higher fare prices.
Although Amtrak receives assistance from the government, the agency is exceedingly underfunded compared to the roadways and the airline industry. Very few Amtrak routes have ticket prices that compete with airlines, as taking the train is an exceedingly more expensive option. The only line that comes close to turning a profit is the busy Northeast Corridor between Boston and Washington D.C., however, it is still more expensive than flying in some respects. For example, according to railpac.org, the Northeast Corridor generated a revenue of $1 billion mostly being generated from its business traveler oriented Acela Express service, and its Northeast Regional services.
Some of the expenses paid for by the traveler are the fees Amtrak must pay for a short stint north of New York, as the track is owned by the Metro-North Railroad, which also severely restricts the speed trains can travel. However, Amtrak has the airlines beat in convenience, as the downtown to downtown service the Northeast Corridor provides connects various large cities, making the train a viable option for business travelers.
The average ticket price for a trip between New York and Philadelphia is $104.00, which is not much less than an airline ticket, and when factoring the amount of time saved when flying, many decide to hit the skies rather than take the train. Although the Northeast Corridor is one of Amtrak’s most sought after routes for commuting and business travel between some of the nation’s largest cities, daily or tri-weekly cross country routes cause the railroad to lose money.
The chart below compares the fare charged by Amtrak compared to a competing airline.
|Amtrak Fares||Chicago-Los Angeles:
Superliner Roomette: $867 one-way
Superliner Bedroom: $942, one way.
|Airline Fares||Chicago-Los Angeles:
Coach: $495 round trip.
First Class: $1,014 round trip.
Cross country routes, such as the various overnight trains from Chicago to the west, along with various eastern seaboard services operating to Florida, and the lone train between New York and Chicago, the Lake Shore Limited. These trains are not usually utilized by business travelers, rather, they provide passengers with an unmatched traveling experience, that focuses more on the travel, then the destination.
Perhaps the most prominent reason for high ticket prices is the utilization of privately owned freight rail tracks, as Amtrak must pay a fee to operate over. Amtrak pays an annual fee of around $140 million for trackage rights, which works out to roughly $5 per mile traveled. According to Business Insider, the company oftentimes charges high prices for its profitable Northeast Corridor services, and allocated some of these funds to the less traveled transcontinental and state supported routes.
Calls for Amtrak’s Privatization
Because of the lack of government funding provided to Amtrak, many have called for its privatization. Many refer to the era that dates back to the late 19th and early-to-mid 20th century, when passenger trains were thriving when privately operated. Furthermore, although cross country routes are popular with those that would like an alternative to driving or flying, these routes incur the most losses. According to the Government Accountability Office, Amtrak long-distance routes account for a minuscule 15% of the company’s profits, however, they account for 80% of losses.
Many believe the demise of the passenger train began when airplanes and automobiles became commonplace. Heavy government subsidies were given to roadways and airports, however, little was given to the railroads. Furthermore, railroads were burdened with high regulations and property taxes. When Amtrak operations commenced in 1971, the initial plan was to subsidize Amtrak until it earned enough of a profit to operate solely on its own. However, the plan failed to materialize, and Amtrak has failed to turn a profit annually, thus, Amtrak continues to receive insufficient funds from the government.
However, the future ahead looks positive, as according to Amtrak itself, all operating losses are to be eliminated by the year 2021. According to Amtrak, the railroad has attempted to privatize various aspects of their operation on state supported routes in the Midwest. However, this arrangement lasted just one year, as ridership on these routes fell by 10.5%, and mechanical failures experienced by locomotives and rolling stock increased by 35%(Amtrak).
Future of Passenger Rail
In addition to Amtrak, private carrier, Virgin Train USA has taken over Brightline operations in Florida on their route between Miami and West Palm Beach, with an eventual extension to Orlando International Airport. As a private carrier, Virgin Trains USA charges a price of just $12 for the 72 mile journey between the two destinations in southeastern Florida. In addition to the Florida services, Virgin Trains proposed a planned route between Los Angeles and Las Vegas in the western portion of the country.
Although Amtrak has its flaws, the company provides prompt service on the Northeast Corridor, and a scenic trip across the country for leisure travelers. As previously stated, Amtrak is expected to turn a profit in the coming years, and could potentially support itself as initially intended. The future of Amtrak looks bright, as the current profit trajectory continues to increase exponentially.