Amtrak Might Soon Be Profitable?

Posted by

Our growing membership base is driving The Urban Phoenix Forward! If you love what we do, please consider becoming a member for just $4 a month! Receive exclusive content for the price of a latte!

If there’s one thing that’s defined Amtrak’s fifty years of service in the US, it’s running late. If there’s another characteristic that has defined it’s legacy, it’s running in the red. Badly.

An extensive article in The Wall Street Journal suggests that the latter might soon be a thing of the past… but not without some difficult decisions. Amtrak’s new (as of 2017) chief executive, former Delta Airlines CEO Richard Anderson has taken an aggressive, no-nonsense approach, with a goal of doing something Amtrak hasn’t done in 50 years of operation: make a profit. In 2018, the passenger rail giant, which is almost wholly government owned, ran at a $170 million loss. Anderson has a plan that he says will allow Amtrak to break even within the next 12 months.

This lofty goal has garnered some significant pushback from railfans, lawmakers and communities who’s stations may soon be on the chopping block. To understand all of this, it’s important to note that Amtrak’s Northeast Corridor is the only route in the country where the passenger service makes money (as well as one of the few places where Amtrak actually owns its own right-of-way instead of “renting” space on freight railroads). The WSJ reports that Amtrak makes $524 million from this busy section, which acts as a practical transportation option for business travelers. But the long distance routes, like the California Zephyr, Southwest Chief, and even The Lake Shore Limited which traverses Upstate New York, operate at an annual loss of $540 million, an unsustainable financial burden in the eyes of the new cost-cutting CEO.

Anderson has already cut the famous dining car service from many of its long distance trains, opting to employ only “cafe car” service, which includes more ready-to-serve and microwavable options. But this is just the beginning in the dismantling of the traditional, romanticized amenities of train travel. Many of the aforementioned long distance trains are next, as Anderson continues to push for the abandonment of Amtrak’s dead weight.

Lawmakers aren’t making the CEO’s fight easy. Representatives of rural states currently served by Amtrak’s long distance routes highlight the fact that the passenger rail giant is often the only mass transit option for their constituents. Doing away with the storied routes, according to these officials, would result in the loss of hundreds of millions of dollars in economic revenue, while severing the connection between citizens of these rural counties and the rest of the country.

Anderson, however, is of the mind that bringing Amtrak back to the point of profitability would do wonders to legitimize the passenger service’s standing, leading to greater private investment. He does, however, admit that every transportation system (including the automobile) is government subsidized, and says that Amtrak is no different.

Could Amtrak actually become profitable? If it is, how much of its service will be lost? What will happen to rural communities when long distance routes are cut? And most importantly, if Amtrak does begin to turn a profit, will its improved financial legitimacy lead to a renewed interest in private passenger rail investment? These are all questions that will likely lead to more questions. But one thing’s for sure… this CEO is taking a vastly different approach, and it might be just the thing Amtrak needs.

Like the blog? Check out the Podcast!

Advertisements