Amtrak: Overview and Options

Publication Date: January 2001

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Transportation

Type:

Abstract:

Amtrak was created in 1970, and began operation in 1971, to relieve railroad companies of their money-losing passenger operations while maintaining passenger rail service in the United States. Under Amtrak, passenger rail service has continued a money-losing record that began in the 1930s. Passenger rail service in other countries has a similar record.

A great deal of criticism is directed at Amtrak for its inability to make a profit. The implication is that profitability is the standard condition for passenger rail systems. Yet as consideration of Amtrak's predecessors and foreign counterparts shows, unprofitability is actually the norm for intercity passenger rail service. As specified in the Amtrak Reform and Accountability Act of 1997 (P.L. 105-134), Amtrak faces a congressional mandate to be able to cover all its operating expenses out of its own revenues by FY2003. Amtrak says it will be able to meet this requirement, although it has had some setbacks in its plans. But the central policy question about Amtrak remains: given that a national system of passenger rail service appears to be inherently unprofitable, as is the case for other public services, do we as a Nation wish to preserve our system or to liquidate it?

Intercity passenger rail service is unique among U.S. transportation modes in that its infrastructure (e.g., tracks) is privately owned, in contrast, for example, to public roads and airports. Thus, capital improvements are the responsibility of private entities. Amtrak has said it will release a capital improvements plan in January 2001. The Department of Transportation Inspector General has estimated that Amtrak's capital needs, simply to maintain the status quo, are between $500 million and $1 billion each year for the foreseeable future. Any expansion or improvement in Amtrak's services, such as implementation of high-speed rail in other parts of the United States outside the Northeast Corridor, would be in addition to this sum.

If intercity passenger rail is to be preserved, there are several possible options. Among these: passenger service could be privatized, as in some other countries, although a privatization effort in the United States would face issues not encountered in other countries, and even the privatized operations in other countries still receive government support. Competition could be encouraged, though Amtrak's statutory monopoly on passenger service was eliminated in 1997 and no competitor has yet emerged. Non-safety regulations could be reduced, although several such regulations were eliminated in 1997; it may take time for the impact of such changes to be seen. Amtrak could be encouraged to shed unprofitable routes, though almost all of its routes are unprofitable, shedding routes has little impact on fixed costs, and Amtrak is mandated to maintain a nationwide system. Funding for passenger rail service could be increased, to enable Amtrak or other potential providers to increase the level of service that is available, which might boost ridership and revenues. This could be accomplished through creating a dedicated trust fund for passenger rail, similar to those for highway, aviation, and transit; by giving states the flexibility to use some of their federal transportation funds for passenger rail; and by allowing Amtrak to issue tax-exempt bonds.