
Amtrak Has Lost Money for Decades. A Former Airline CEO Thinks He Can Fix It - JumpCrisscross
https://www.wsj.com/articles/amtrak-has-lost-money-for-decades-a-former-airline-ceo-thinks-he-can-fix-it-11562385660?mod=rsswn
======
xiaolingxiao
One rare instance where I can contribute some inside information. I met the
director of all of Amtrak's development efforts a few week ago over a cookout.
And he laid down how the whole system works. Basically, Amtrak was created as
part of a government bailout effort to rescue the train companies, who were
making money from freight but losing money on commercial routes.

The train companies went to the US government and said "bail us out or we all
go out of business". So the senate created Amtrak as a private company, and
purchased all of the money losing assets (all passenger routes) from the train
companies. The US government owns all voting shares, and the train companies
owns all non-voting shares. So Amtrak is a quasi public-private utility
companies, where the cost is bore by public in tax money.

Here is the kicker, the special interest group that lobbied for the US
government to create Amtrak was ... the US airlines. They bet that passenger
trains would be obsolete in a few decades, so the tax payers would not be
holding the bag for too long.

50 years later, we are still holding the bag. According to my sources, they
will be break even across all routes in a couple of years. By the way, all
passenger trains in Europe , China and Japan lose money too.

~~~
brownbat
Fascinating. In the lead up to that, passenger trains used to be heavily
subsidized by the mail cars:

[https://en.wikipedia.org/wiki/Railway_post_office](https://en.wikipedia.org/wiki/Railway_post_office)

Postal employees would sort the mail while it traveled. Parallel processing!

Centralized automated sorting helped kill that model, along with the fact that
an air and truck system really squeezes the viability of rail.

I read once that there's a sweet spot for passenger rail at about 250 miles,
but it loses to air any farther and roads any shorter. Can't seem to find that
source though, and I might be off by 50 miles. TSA might be one of the best
things to happen to Amtrak, hard to say.

~~~
Terretta
> _TSA best thing to happen to Amtrack_

In both NYC and Boston, the track for boarding isn’t shown to the waiting area
until arriving passengers had a chance to leave the train. Once your track
number is shown you have only a couple minutes to board, and depart.

This means you can arrive at NYC’s Penn Station or Boston’s South Station 5
minutes before departure and walk right onto your train.

When I factor the terminal location and the boarding convenience at both ends
of my trip, I can get door to door from midtown NYC to downtown Boston faster
by Acela than by air.

Before TSA, the flights won. I could hit LGA curbside 15 minutes before gate
close and be in my plane seat. Now, the variability is much too high, and TSA
is too likely to be completely mismanaging surge situations, so typically 2
hours buffer is needed as a _guarantee_ instead of 15 mins.

~~~
gautamnarula
In that specific case, it's hard to justify taking Acela over a bus. Acela is
at best an hour faster and something like 4x the cost (or more) It is
certainly more comfortable, but unless we get true high speed rail that
shortens the travel time between Boston and NYC to < 2 hours I can't ever
justify personally paying for it. I've only ever taken Acela between Boston
and NYC when an organization I was working for was willing to foot the bill.

In Europe, I took trains that hit speeds of 195 MPH for long stretches. That
sort of speed would make rail a real viable third way between car/bus and air
for long distance travel.

~~~
ohyes
I’ve only taken the normal train between the two cities. For the regular train
when you plan 2 weeks out the prices were comparable. The slow train is only
1/2 hour slower than the accela. I found it much more comfortable than the bus
and easier than driving.

The main thing to me is the comfort level and that I can do other things than
concentrate on driving.

------
Erem
By what metric should we rate the value of infrastructure like Amtrak's?
Should it really be profitability? Maybe I'm not reading the right articles,
but I never see highway or interstate infrastructure judged by their ability
to turn a profit (with rare exception they never do). Rather, they are judged
by factors like how many more people can travel, how they decongest traffic,
or even the economic activity that they enable.

If we take into account the number of cars that are removed from the road, and
the economic activity enabled by fast eastern seaboard commutes to financial
and political centers, then where does the balance lie for this service?

To not sound wishywashy, I bet it looks more favorable.

------
nanomonkey
I wrote some software that was used by Amtrak, the people implementing the
software on the trains said that the food being sold on the trains was usually
not what was being loaded on and off the trains, but was instead supplied by
the employees, so that they could make extra cash. I'm not sure if that's
still the case, but with a captive audience, I'm surprised Amtrak does so
poorly.

Another issue is that cargo trains get precedence, so travel times are often
excessively long.

------
Miserlou57
There were a techy startup or two making overnight sleeper-bus service between
LA and SF over the last few years. Apparently the ride quality was rough, but
they had a solid business model. How Amtrak hasn’t seen this opportunity of a
far more comfortable, spacious travelling hotel (ie 9pm to 8am) between the
two cities (and similar routes) is mind-boggling to me.

~~~
xxpor
They don't own the train lines. Their schedule is at the whim of (guessing on
that route) BSNF

~~~
Miserlou57
I know this to be true; it just surprises me Amtrak, as large as it is,
doesn’t have more leverage / bargaining power here. I understand tying up a
line can be an issue and the rail network is a relatively complex thing, but
if it enables a service to make money and BNSF makes a cut, I’d think it would
be viable. I don’t think freight lines are exactly at capacity (generalizing
here), nor are they gushing with cash these days either. IIRC Union Pacific
just laid off 7000 jobs.

------
rayiner
We need to fire the romantics and rail fans and have leadership that actually
serves travelers. Approximately nobody actually relies on the long distance
routes. Shut down the long distance routes, and spend that money improving
service in routes where you actually have a hope of stealing significant
market share from air and road travel.

We were having a similar problem with WMATA. People wanted to keep money
losing late night service to help the “night life” (and invoking late shift
workers as a fig leaf). New WMATA GM said it’d be cheaper to just provide Uber
rides for the late shift workers and stood fast against extending hours. Maybe
not the hero we want, but the hero we need.

~~~
entee
So wait, we should have late shift workers depend on companies that subsidizes
its rates relying on a "greater fool" theory of access to capital (VC, now
Wall Street), exploits its labor force (drivers) and uses far less energy
efficient vehicles (cars)?

Oh and btw most of these shift workers can't afford to ride Uber/Lyft much
less if the fare is surging. A $7 ride is what, half an hour of minimum wage
work? That's pretty steep. Maybe we have WMATA reimburse the worker, but who
hasn't had a large gap between filing a receipt and getting reimbursed? Now
add being potentially financially precarious, doesn't seem ideal.

If only we had a service that could transport large numbers of people using
electricity to pre-defined locations so that they could have a far cheaper
final leg of their trip. Oh wait...

~~~
rayiner
It costs metro $45 per ride to stay open late. It’d be much cheaper to just
have WMATA subsidize an Uber.

~~~
entee
I'd guess that late at night an Uber ride from downtown DC to Shady Grove will
run you close to that. It definitely will cost more after say, a late night
game at Nationals Park. Uber isn't public transit, it serves a different
purpose and shouldn't be seen in the same way as public infrastructure.

When I lived in DC, I loved taking the metro but I couldn't rely on it when it
got late. If I were king for a day, I'd force the creation of a new ring-type
line and make the system run late with far more trains. This would cost money,
it would be subsidized. It will make life better for all DC area residents and
reduce the terrible traffic in the area. It would also may help mitigate
downtown housing prices and slightly increase housing prices out in the
suburbs. An enormous number of lives would be improved for a relatively small
$35-$40 subsidy per ride.

~~~
rayiner
Public infrastructure should still be subject to cost-benefit analysis, just
like everything else. That doesn’t mean it can’t be subsidized, but it must
still achieve the necessary results at the lowest cost.

A $40 Uber is what it costs to get me all the way to Annapolis late at night.
That’s not a “small” subsidy, its an insane waste of money that could be put
to better use. If the concern is really low-income late night workers, it’d be
cheaper to just lease those people an EV.

A ring-type line in DC would also be a terrible idea and would do nothing to
reduce traffic. Any ring would run through mostly low-density areas where
neither the starting point nor end point would be walkable to the train
station. (The possibility has been studied.)

~~~
entee
There's zero reason to say that a ring line _must_ through low density areas.
You can place the ring (or partial ring) underground at a variety of locations
that would be higher density, you could have it be further out from downtown
as a mix of above and below ground, it's just about what we are willing to
pay. Obviously, an all-above-ground follows-the-beltway route would be pretty
low density.

As you know, the DC Metro has several U shaped lines. It takes a ridiculously
long time to get from say, College Park to Dupont Circle. Or from the stadium
to Silver Spring. A few linker lines would make the downtown system far
quicker internally and also accelerate those kinds of trips, even if it
doesn't create a full ring. The goal should be much like the NY system: I can
get anywhere in DC relatively easily using only the Metro.

I think the way you've phrased the cost-benefit is exceedingly narrow.
Operating a train is a fixed cost, if it's highly utilized the cost goes down.
As such, making the service more useful can shift the cost-benefit. Also,
there are benefits (for example fewer cars on the road) which don't seem to be
taken into account.

Finally a key assumption here is that Uber's price is real. I personally don't
think Uber's current prices are sustainable. They are either 1.) subsidized by
investor capital or 2.) dependent on paying drivers essentially minimum wage
(maybe even less) or 3.) both. If you didn't have Uber around would your
analysis shift? (genuine question) In the past I doubt we'd have said, "Taxis
are a replacement for public transit." We should be careful of making a
similar argument today.

Re. low wage workers, it's a concern. You make some good points, but I'm not
sure I buy that the answer is Uber or leasing EVs. How many have access to a
charger for that EV? How many can get a driver's license? The poor often live
precariously, they may not be able to park that car a month or two from now,
or who knows what other problems might come up.

In short, I think focusing on top line cost-per-ride is a very incomplete way
to look at infrastructure.

p.s. $40 from downtown DC to Annapolis, wow Uber is cheaper out there than
here in the bay area.

------
bane
Anybody who's interesting in doing something cool on a train should seriously
consider the Synchrony demoparty.

[https://synchrony.nyc/](https://synchrony.nyc/)

------
jononomo
I have used Amtrak a great over the past 13 years that I have lived in NYC.
Back around 2006 a 10-hour trip from NYC to Pittsburgh cost me $60. Now it is
much more expensive.

I still love Amtrak, though. Their iPhone app is pretty good, their customer
service has always been excellent, and I really enjoy traveling by train -- it
is so much more comfortable and efficient than any other mode of transport,
and it is a great environment for getting work done.

