How Amtrak Could Become a Robust, Profitable Enterprise
Over the last 15 years, Amtrak ridership has grown 55 percent, outpacing population growth by a factor of three. It’s the fastest growing means of domestic transport, and shows no signs of slowing down.
So why do its routes continue to lose so much money?
The answer, according to a report released today by the Brookings Metropolitan Policy Program, is that Amtrak comprises two different and increasingly divergent systems of passenger rail.
"We have the efficient portion," says Adie Tomer, a fellow at the Brookings one of the authors of "A New Alignment: American Passenger Rail in an Era of Fiscal Constraint." "And then we have the geographically equitable portion of it."
Taken together, the 26 of Amtrak’s 44 routes that run less than 400 miles had a positive operating balance in the 2011 Fiscal Year, with a surplus of $46 million. The 14 routes longer than 750 miles posted a loss of $597 million. The former account for 83 percent of ridership; the latter 15 percent.
What makes these routes successful? In part, as this interactive ridership-funding map makes clear, it’s because they fit a vision of passenger rail service as short, quick, intermodal transport. America’s 100 largest metros generate 88 percent of Amtrak’s ridership, though they make up only 65 percent of its population.
Contrary to popular opinion, the Northeast Regional and Acela Trains are not the only routes in the country with a surplus. The Adirondack and Washington-Lynchburg Routes were also in the black in FY 2011. And several other routes aren’t far off. The Downeaster (Boston to Brunswick, ME), the Piedmont (Raleigh-Charlotte), the Pere Marquette (Chicago-Grand Rapids), Washington-Newport News, the Missouri River Runner (Kansas City to St. Louis), the Vermonter (D.C. to Vermont), and the Carolinian (Charlotte to D.C.), were each within $2 million of an even operating balance.
But many of Amtrak’s recent success stories, the report argues, can be attributed to a new model through which states take increased responsibility for funding – and management – of their own train lines. Some states, particularly California and Illinois, have contributed hundreds of millions to their own passenger service since 2007. Direct state funding for the 24 routes shorter than 400 miles was responsible for turning those lines, taken as a whole, from the red into the black.
There's more state money on the way later this year. As a requirement of the 2008 Passenger Rail Investment and Improvement Act, Amtrak will demand "uniform cost structure," shared between states for routes under 750 miles. A moment’s thought reveals how difficult it is to transfer funding requirements from the federal government to the states. How to evaluate the benefits different states receive from different lines? What if one state refuses to contribute?
So far, it seems to be working in a variety of different ways. Illinois and Wisconsin split their share of the Hiawatha service connecting Chicago and Milwaukee 25-75. Texas and Oklahoma go dutch on the Heartland Flyer. North Carolina has provided all the state funding for the Carolinian service to New York City.
"They’ve shown they can come together and form these compacts. They’ve shown a willingness to partner," Toomer says. He and his co-authors, Robert Puentes and Joseph Kane, believe that forcing states to collaborate on funding is not only an efficient tactic of decentralization, but compels them to assign value to the various segments of Amtrak routes, changing train times, frequency and stops to accommodate partners.
It was always supposed to be this way. The Rail Passenger Service Act of 1970 intended for national passenger service to grow out of hubs in New York and Chicago, as determined by cost efficiency. But, the authors note, "political resource allocation abounded throughout the system" and many more routes were added.
One of the next steps they advocate is to require state-funding partnerships for all routes, not just the ones shorter than 750 miles but the longest and least profitable lines. What happens when Illinois, Missouri, Nebraska, Colorado, New Mexico, Arizona and California try to work out a funding arrangement for the Southwest Chief, whose operating deficit in 2011 was over $66 million?
That remains to be seen. "One can want it, but not necessarily take responsibility for it," says Tomer.
For routes shorter than 750 miles, meanwhile, states came to a funding agreement in March 2012, and their compacts will go into effect in October of this year.