Kill the beast – Amtrak – A National Hazard At Any Speed | Zero Hedge
On top of its massively bloated and featherbedded payroll, Amtrak also generates another $1.3 billion of expense for fuel, power, utilities, supplies, repair parts and operational and management overheads. Accordingly, its total operating budget at $3.3 billion amounts to about 40 cents of expense per passenger mile. That is, its operating costs are 3-4X the ticket price of its air and bus competitors!
The economic arithmetic is thus insuperable. On a system-wide basis, Amtrak’s combined capital and operating expense would amount to about 65 cents per passenger mile if it were honestly reckoned. That is, in the absence of Federal and state subsidies and the implicit subsidies that private railroad companies transfer to Amtrak via deeply below-market fees for utilization of their tracks and facilities. Indeed, 95% of Amtrak’s route-miles and 70% of its passenger-miles are generated on lines leased from freight railroads, which—-owing to regulatory mandates—-Amtrak pays only a trivial 2 cents per passenger mile. This figure is not remotely reflective of the real economic costs.
By contrast, Amtrak’s ticket revenues amount to hardly 30 cents per passenger mile. So contrary to Amtrak’s claim that it has nearly reached break-even, its true economics reflect the very opposite. Namely, a giant political pork barrel in which system revenues cover less than 45% of its all-in economic costs to society.
The solution, kill be beast.
Whether this week’s disaster was human error or not, the larger certainty is that the system has been chronically starved of capital. But the solution is not for a bankrupt government in Washington to pour more money down the Amtrak rat hole in the name of “infrastructure investment”, as the big spenders are now braying in the wake of this week’s disaster in Philadelphia.
Instead, Amtrak should be put out of its misery once and for all. Otherwise its longstanding hazard to the taxpayers is likely to be compounded by even more public safety disasters like this week’s tragic event.
