Will Amtrak Turn a Profit This Year?

By Jedson Boyle

​Over a century ago, the railroad was virtually the only way that Americans would travel from city to city. In fact, in 1916, 98 percent of intercity travel was done by train. However, around that same time, Henry Ford began production of the first automobile that the average American could buy. Fast forward to 1970, the year of Amtrak's creation, and the railroad industry was broadly displaced by a system of highways and widespread ownership of cars, meaning most Americans seldom traveled by rail.

In order to rescue passenger rail services from near collapse, Congress passed the Congressional Rail Passenger Service Act, unifying twenty of the railroad companies in the United States into the National Railroad Passenger Corporation, typically known as Amtrak. Amtrak was still a for-profit organization, but it was to be owned and controlled by the U.S. government. Despite its nationwide presence, Amtrak has not drawn a profit in any year since its creation, and this year the (relatively) new CEO Richard Anderson, is trying to put a stop to that streak. Although the initial goal of Amtrak was to connect all of America by railroad, Anderson posits that it might be better if the federal government cut down on certain routes. After all, Amtrak services a variety of routes that differ in distance, demand, and profitability. 

The first category of Amtrak routes are those that run short paths along the East Coast, the most famous being the Acela Express (the line that runs from Boston, to New York, to D.C.). There are 26 of these routes and they carry 25.8 million passengers per year, comprising approximately 80 percent of Amtrak’s ridership. These are the lines that Amtrak generates a profit from, most likely because they are less time-exhaustive alternatives to flying between East Coast travel hubs. For instance, a train ride from New Jersey to D.C. may require less time than a flight from Newark to Dulles.

The other type of passenger rail service that Amtrak offers is long-distance routes, which are the routes that connect one part of the country to the other instead of just major cities in the same geographical regions. An example of this would be the Southwest Chief line connecting Chicago to Los Angeles or the Silver Star which connects New York to Miami. It is these routes that cost Amtrak money and prevent them from reaching a point of profitability. Even though most riders on long distance routes do not travel the whole route, these trains often go through less populated areas with lower ridership. In fact, ridership was down 4 percent on long-distance routes in 2018 alone.

Another major problem with these long-distance routes is that the trains on those routes tend to be late, only making it to the destination on schedule around 43 percent of the time. Most of the 21,400 miles of track utilized by Amtrak are owned by freight companies. Only 3 percent of the track is owned by Amtrak itself. Although federal law states that Amtrak trains have priority over freight, freight railroads often disobey this regulation. Freight companies are incentivized to flout this federal policy because the DOJ has only brought one enforcement action against a freight company throughout Amtrak’s history. Resultantly, the long-distance routes’ reputation for lateness has driven away potential riders, because delays don’t make an already long and grueling trip any more enticing.

It is not surprising that it is the long-distance routes that Anderson wants to cut, or even completely eliminate. Anderson has made it clear that he regards these routes as only appealing to “hobbyists” and “experience seekers,” groups that do not make up a large share of the population. Anderson reasons that, the distances between major cities outside the Northeast Corridor are so vast, no one will ride from endpoint to endpoint. Therefore, he believes, it wouldn’t make sense to invest in routes that don’t draw a profit.

However, not everyone shares this vision. “Not one element of Anderson’s stated rationale stands up to even superficial scrutiny. The easiest place to start is the nonsense about customers of the company’s business segment being mere ‘experience seekers.’” writes President Andrew Selden of the United Rail Passenger Alliance. “Catering to ‘experience seekers’ is a huge, profitable and rapidly growing business. Except apparently at Amtrak.” On the other hand, proponents of Anderson’s vision would argue that, while the tourism industry is large and rather profitable, most families don’t have the time (or the patience) to spend two days on the Empire Builder (a long-distance line that runs from Chicago to Seattle and Portland) to say, Spokane, Washington, as beautiful as the scenery may be. 

​Now the answer to Amtrak’s profitability problems seems simple, and that is to just cut the long-distance routes. But remember, Amtrak is publicly funded, and to keep funding from Congress, Amtrak has an obligation to consider the demands of congresspeople. Thus, cutting routes from, say, Kansas, might lose the support of Kansas’s Senator Jerry Moran (who happens to be fighting Amtrak over the Southwest Chief). And why should Senator Moran vote to fund Amtrak if Amtrak isn’t doing anything for his state or his voters?

Another wild card is former Vice President Joe Biden, often nicknamed “Amtrak Joe” who may be elected president this year. As a Senator for 36 years, Biden rode the Amtrak to and from Wilmington, Delaware each day on his way to work, and if he is elected president, Amtrak likely can count on receiving plenty of funding but may be subject to new political stipulations. 

Just like any corporation or for-profit organization, Amtrak leadership must walk a very fine line. Allow Amtrak to turn a profit for the first time in history, but not anger too many members of Congress. Given the inherent contradiction in these two goals, this task will prove to be quite a challenge.  It may no longer be 1916, and the American railroad may never relive its glory days, but if Richard Anderson succeeds, Amtrak could restore America’s status as a railroad capital. Only time will tell if Anderson’s plan truly gets Amtrak back on track.