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Amtrak Profitability: An Analysis of Congressional Expectations at Amtrak's Creation

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Publication Date: June 2002

Publisher(s): Library of Congress. Congressional Research Service

Series: RL31473

Topic: Transportation (Railroads and trains)

Abstract:

Most discussions of Amtrak refer to Amtrak's status as a for-profit company, and have noted that Amtrak was intended by Congress to be a profit-making enterprise. Despite these references, Amtrak is not now a for-profit company; it was originally created as such, but that status was changed by the Amtrak Improvement Act of 1978 (P.L. 95-421); the Conference report noted that the bill removed Amtrak's for-profit status but required that the corporation be "operated and managed as" a for-profit corporation (H.C.R. 95-1478).

Amtrak was created by the Rail Passenger Service Act of 1970 (P.L. 91-518), which was implemented by the Department of Transportation. John Volpe, thenSecretary of Transportation, asserted during Amtrak's creation that it could eventually be profitable; on some occasions, he said it could achieve profitability after three years.1 However, in these statements he attached two conditions to that prediction: that the Federal government provide significant capital funding to produce high-speed trains in short-haul corridors where profitability was possible, as well as providing other improvements in service; and that the size of the passenger network would be cut back to the point that the profits from the successful corridors would be sufficient to subsidize the remaining routes.

Intercity passenger rail service was running a deficit before Amtrak was created, and there were doubts expressed in Congress (and elsewhere) that Amtrak would ever be profitable. The Rail Passenger Service Act of 1970 created Amtrak as a forprofit corporation, but in Section 101, the Congressional Findings and Statement of Purpose, it found "... that Federal financial assistance as well as investment capital from the private sector of the economy is needed [to provide modern, efficient intercity rail passenger service] ...". In their floor statements about this legislation, several Members of Congress either expressed skepticism that Amtrak would ever be profitable, or echoed Volpe's conditions: that Amtrak would have to provide highspeed trains, or cut back its route mileage significantly, to achieve profitability. Otherwise, one Member, all Congress would have accomplished by creating Amtrak would be to change the name on the annual debt incurred by providing passenger rail service (and make the federal government responsible for it).

Amtrak's fastest train in 2002, the Acela, averages 85 mph between Washington, D.C. and New York City, compared to the Metroliner which averaged 80 mph over the same route before Amtrak was created. Amtrak's route mileage in 2000 was 23,000 miles; its route mileage in 1971 was 23,000 miles. Thus, neither of the two conditions specified by those who initially predicted profitability for Amtrak has been achieved.