How To Get Amtrak Back On Track

Hours after a tragic rail crash in Philadelphia, tawdry Democrats bombarded the media with irresponsible claims that Republicans were to blame for the Amtrak accident.  Democrats pointed fingers at the GOP for slicing funding for Amtrak in a House vote on the very day of the derailment.

"It is deeply troubling that my Republican colleagues defeated an amendment to fully fund Amtrak just hours after this tragic rail crash," huffed Democrat Rep. Nita Lowey of New York.  She contended that the Congress was "starving Amtrak of funding."

Her remarks and those of her brethren represent a new low in demagoguery, even for Democrats.  Amtrak's financials had nothing to do with an engineer's decision to rev up his locomotive to 106-miles per hour as the train approached a curve with a 50-mile per hour speed limit.

Far from "starving" Amtrak, the American tax payer has forked over $66 billion to subsidize the national passenger railroad service since it was launched in 1970.  Despite increases in passenger revenues, Amtrak has continued to lose money in every single year of its existence.

In its most recent fiscal year, red ink flowed again as Amtrak posted a $227 million operating loss.  Amtrak uses a clever accounting scheme to hide their real losses.  If it were a public company, Amtrak's deficit would have topped $1.1 billion after depreciation and other non-cash items that it excludes.

After every financial report, Amtrak's executives chatter about its glowing prospects.  While its losses have narrowed in recent years, the railroad still requires millions of dollars in taxpayer funding.  At its inception, lawmakers envisioned the railroad would one day stand on its own without federal subsidies.

That will never happen as long as it continues to operate as a quasi-government agency, much like the U.S. Postal System.  Amtrak is long overdue for an overhaul.

For one thing, the passenger rail system is too large to ever be profitable.  Amtrak operates more than 300 trains each day over 21,300 miles of track with connections to 500 destinations in 46 states. However, with few exceptions, most of Amtrak's routes are money-losers.

An examination of Amtrak's latest fiscal results underscores the problem.  Amtrak actually turned a $496.7 million operating profit from its routes in the Northeast Corridor, which stretches from Washington, D.C. to Boston.  The profit eclipsed the previous year's net of $390.1 million.

However, Amtrak's long-distance routes outside the Northeast Corridor dug a deep financial hole for the railroad.  Operating losses hit $507.5 million.  Ridership on long-distance trains has barely inched up over the years, while the Northeast Corridor has enjoyed a 7.5 million bump in passengers.

As a first step, Amtrak executives need to lop off unprofitable routes, much like the airlines have done.  In the past, there has been little political will to reduce services, particularly in rural areas.  That must change if Amtrak is ever to become a self-sustaining operation that doesn't need a government handout.

Once that is achieved, Amtrak should re-price its remaining routes.  The railroad's rates for service need to more closely mirror its costs. Instead, what Amtrak has done is to continue to raise ticket prices on its profitable routes to subsidize the money losers.  As rates continue to increase, ridership will suffer.

Amtrak, like the U.S. Postal System, also has a lousy reputation for service.  Just over three-fourths of its trains ran on schedule in 2014. Instead of improving each year, its on-time performance is slipping.  By focusing on service, Amtrak could attract more passengers.

In terms of its costs, Amtrak has a long way to go. The railroad's labor costs are out of line with its revenues, accounting for 50 percent of its expenses.  Overly generous benefits need to be pared and Amtrak must reduce its personnel to achieve cost savings that will allow it stop the hemorrhaging.

Even with these changes, Amtrak still faces financial hurdles.  For example, massive infusions of cash are required to update the aging tracks that Amtrak owns.  Without upgrades, Amtrak will never be able to offer high-speed rail service that could build ridership and revenues.

Instead of trying to turn the latest rail disaster into a political advantage, Democrats need to join hands with Republicans to produce a plan to privatize Amtrak and to open passenger rail service to increased competition.  That's the only way to snip Amtrak's dependence on taxpayers.

Yeah, that likely won't happen either.