Responses to AEI’s “Debunking Amtrak Myths”, July 15, 2005

American Enterprise Institute Press Advisory, “Debunking Amtrak Myths,” July 14, 2005. Full release available on AEI’s website.

“Amtrak ridership is insignificant.

  • Amtrak ridership in 2002 totaled 23.4 million passengers, but only 3.6 million of these (16%) rode the 17 long-distance trains.
  • In 2000, the 17 long-distance trains carried four million passengers, but only 18% traveled the full length of the route, while 34% only rode the shorter “corridor” portion. In other words, in some cases it may make sense to save the most intensely used portions of the longer routes to make the trains more market-relevant.”

Amtrak ridership cannot be accurately measured by passenger count alone. Meaningful analysis takes into account distance traveled and revenue impact. For example, in 2004, 66 percent of passengers on Amtrak’s long-distance trains traveled a distance of 400 miles or greater. That group of passengers accounted for 85 percent of those routes’ revenues. Short-distance corridors do not necessarily have lower operating costs or greater operating revenues. In fact, only the long-distance trains can command the premium fares of first class sleeping car accommodations. First-class passengers accounted for only 15 percent of 2004 long-distance ridership, yet supplied 39 percent of revenue.

That 18% of long-distance passengers traveled the full length of the route in 2000 highlights the breadth of utility that long-distance trains serve. The vast majority of passengers travel between small towns or from small towns to larger cities, often connecting to other Amtrak long-distance or short-distance corridor services (and helping those routes’ bottom lines in the process). Therein lies the folly of the Bush Administration’s assertion that it would be cheaper to purchase tickets on low-cost air carriers for Amtrak’s long-distance passengers. Not only do low-cost carriers not serve the majority of markets Amtrak does, Amtrak serves countless towns that have absolutely no air service. For those that do, tickets to anywhere may cost hundreds or thousands of dollars more than Amtrak tickets. Amtrak also serves dozens of towns that have lost Greyhound service during recent and ongoing rounds of service cuts. Many of these communities also lack interstate highways; indeed, Greyhound has eliminated many stops specifically because they were inaccessible from major highways. Yet, Amtrak continues to provide an essential public service in these areas.

Amtrak’s long-distance ridership in general is limited by the skeletal network Amtrak operates and the limited capacity its trains have. Long-distance trains frequently sell out, often months in advance. Demand very much outstrips supply, and Amtrak’s operational efficiency and ability to meet public travel demand can only be aided by increased investment in all aspects of the national passenger rail network. All across America, Amtrak has clearly proven itself to be “market-relevant.”

“A modern airline system has made Amtrak obsolete.

  • In 2001, Amtrak had 512 stations, while there were 636 U.S.-certified airports and thousands of smaller ones.
  • One airport alone, Hartsfield-Jackson Atlanta International, serves 209,112 passengers per day, more than three times the 65,753 passengers who use Amtrak nationwide. The other top three airports each serve twice as many passengers as Amtrak.”

One cannot extrapolate that 636 US communities have access to affordable, regularly scheduled air service. The Essential Air Service Program has suffered cutbacks in recent years, and many towns that once had air service now have none, even if the airports remain. Remaining regularly scheduled flights from and between such towns is often prohibitively expensive. Combined with the significant Greyhound cuts, the air transport situation has Amtrak has been made all the more vital to many of these communities’ mobility and economic needs.

The success of Hartsfield-Jackson Atlanta International Airport and other airports is a result of strong federal leadership in creating public-private partnerships that involve all levels of government in planning, but do not burden local communities with the majority of the costs. The bountiful Federal Aviation Trust Fund provides 80 cents for every 20 cents offered by local and other sources. The Federal Highway and Transit Trust Funds do the same. No such trust fund currently exists for intercity passenger rail, which explains the tremendous market distortions that have favored other modes of transportation.

California alone has invested $1 billion in its Amtrak passenger rail system; the taxpayers of that state could’ve enjoyed a $9 billion investment had the federal government provided a match. California currently has a high-speed rail proposal that will cost tens of billions of dollars to build, but is essential to state (and national) environmental and economic health. Yet, the prospects of the project coming to fruition are hurt by a complete lack of federal leadership in financing and implementing intercity passenger rail improvements.

You get what you pay for. Amtrak’s ridership reflects an attitude of policymakers expecting something for nothing, while continually pouring hundreds of billions of taxpayer dollars into other modes of transportation. Those monies aren’t necessarily wasted, but the playing field must be leveled if Amtrak is to ever be expected to operate in a free market that in reality does not exist.

“September 11 did not increase Amtrak ridership.

  • According to the Amtrak Reform Council, Amtrak’s ridership was 6.4 percent lower in September 2001 than in September 2000, and 16.3 percent less than what Amtrak had projected.”

Amtrak ridership was extremely strong relative to the rest of the travel market in the aftermath of September 11 and the economic downturn. In the days after September 11, Amtrak was the only provider of intercity transportation in many markets as commercial airlines remained grounded. A 6.4 percent drop in ridership for the month of September in 2001 was far less bad than it could have been (and was for other transport providers). Despite that decrease, Amtrak ridership quickly recovered. Amtrak’s fiscal year 2001 (which ended with September 2001) ridership was 23.5 million passengers, an all-time record. FY2002 ridership was 23.4 million, essentially flat and far better than the dismal performance of airlines. Amtrak ridership records were smashed again in FY2003 (24 million riders) and FY2004 (25 million riders). These remarkable numbers are made all the more significant in the face of diminished seat availability due to deferred capital maintenance that is just now being addressed, and reduced route offerings. Both of those conditions stemmed from chronic underfunding of Amtrak by the federal government through an unstable annual appropriations process.

Amtrak does serve an important national security purpose. This should not be a politicized issue; the consensus of transport security experts is that redundancy in transportation options is key to the continued flow of people and goods if one mode is disabled. Trains also provide an extremely efficient way to rapidly evacuate large amounts of people from cities.

“Amtrak discounted fares deeply after adding extra cars for an expected boost in ridership that never came. An Amtrak passenger could travel from Philadelphia to Chicago for $16 (Greyhound charged $72.90).”

Amtrak added extra cars after September 11 where it could, and they were indeed well-utilized. In general, demand for Amtrak’s services is higher than the supply of seats Amtrak is able to offer. Like any financially responsible business, Amtrak engages in limited, targeted discounting to fill seats that would otherwise go empty. This practice of “yield management” is standard for airlines and has served Amtrak well, often attracting first-time riders who will pay full fares in the future.

Speculation: If Amtrak did not offer innovative, targeted discounts of this nature, it would be—and has been in the past—criticized for lack of entrepreneurial initiative.

-Matt Melzer
NARP Transportation Associate
July 15, 2005