Intercity Passenger Rail:

Financial Performance of Amtrak's Routes

RCED-98-151: Published: May 14, 1998. Publicly Released: May 14, 1998.

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Pursuant to a legislative requirement, GAO reviewed the financial: (1) performance of Amtrak's current routes; (2) implications for Amtrak of multiyear capital requirements and declining federal operating subsidies; and (3) effect on Amtrak of reforms contained in the Amtrak Reform and Accountability Act of 1997.

GAO noted that: (1) Amtrak spends almost $2 for every dollar of revenue it earns in providing intercity passenger service; (2) only the Metroliner's high-speed service between Washington, D.C., and New York City is profitable; all of Amtrak's other 39 routes operate at a loss; (3) financial performance measures highlight the problems that Amtrak routes generally are experiencing; (4) for example, 3 Amtrak routes spent more than $3 for every dollar of revenue, and 14 routes lost more than $100 per passenger in fiscal year (FY) 1997; (5) at the same time, Amtrak has improved the financial performance of several routes by negotiating support payments with affected states; (6) for example, California supplemented the revenues of two routes by about $16.5 million each in FY 1997 because these routes particularly benefited its residents; (7) any decisions about restructuring Amtrak's route system need to consider whether and how Amtrak will continue to provide national passenger service; (8) an analysis also needs to assess each route's customer demand and financial performance, the willingness of state and local governments to subsidize service, and the route's broader benefits; (9) these benefits could include providing connecting service to other routes, providing public transportation that links smaller communities with major cities, and helping to alleviate highway congestion and pollution; (10) Amtrak is in a very precarious financial position and remains heavily dependent on federal funding to pay its operating and capital expenses; (11) while Amtrak's goal is to eliminate the need for federal operating subsidies by 2002, its Board of Directors approved a revised strategic business plan in March 1998 that projected substantially higher net losses in FY 1998 and FY 1999 than were included in the previous plan; (12) to reduce these net losses, Amtrak's revised plan would use federal capital appropriations to pay for maintenance expenses that traditionally have been treated as operating expenses; (13) as a result, Amtrak would spend $800 million, or 15 percent, less for capital improvements over the next 5 years than previously planned; (14) as currently structured, Amtrak will continue to require federal capital and operating support in 2002 and well into the future; (15) the reforms included in the Amtrak Reform and Accountability Act of 1997 will have little, if any, immediate effect on Amtrak's financial performance, according to Amtrak and Federal Railroad Administration officials; and (16) the officials added that the longer-term benefits of these reforms are unclear.

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