Should AMTRAK's Highly Unprofitable Routes Be Discontinued?
CED-79-3: Published: Nov 27, 1978. Publicly Released: Nov 27, 1978.
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After operating for 4 years as a quasi-public, for-profit entity, the National Railroad Passenger Corporation (AMTRAK) could point to improvements in the following operations: reservations and ticketing, equipment reliability and availability, ontime performance, onboard services, and corporate planning and programing for the future. Nevertheless, the upward trend of its losses and the required federal operating subsidy greatly concerned AMTRAK, the Department of Transportation (DOT), and Congress. According to AMTRAK, increased operating deficits are due to increased services, ownership costs of new equipment, takeover of the Northeast corridor, and inflation.
In fiscal year 1977, no AMTRAK routes made a profit. A review of 11 routes showed that operating losses were high despite route improvements such as adding new equipment and changing schedules to improve ontime performance. Increased ridership alone would not eliminate these losses. More riders would improve fuel efficiency on some routes, but on others, ridership would have to triple or quadruple to make the trains more fuel-efficient than are automobiles. As long as AMTRAK continues to operate these routes, it cannot hope to improve its poor financial condition. A DOT study of AMTRAK's route structure preliminarily recommended discontinuing many of the routes that AMTRAK's criteria identified as highly unprofitable. Any restructuring of AMTRAK's route system should be accompanied by establishment of economic, social, and environmental standards representing Congress' views as to the public service value of rail passenger service. Otherwise, the annual funding uncertainties will recur.
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