Subsidyscope

Analysis Shows Amtrak Lost $32 Per Passenger in 2008

October 27, 2009 -- Forty-one of Amtrak’s 44 routes lost money in 2008 with losses ranging from nearly $5 to $462 per passenger depending upon the line, according to analysis by Pew’s Subsidyscope.

The line with the highest per passenger subsidy—the Sunset Limited, which runs from New Orleans to Los Angeles—carried almost 72,000 passengers last year. The California Zephyr, which runs from Chicago to San Francisco, had the second-highest per passenger subsidy of $193 and carried nearly 353,000 passengers in 2008. Pew's analysis indicates that the average loss per passenger on all 44 of Amtrak’s lines was $32, about four times what the loss would be using Amtrak's figures: only $8 per passenger. (Amtrak uses a different method for calculating route performance).

The Northeast Corridor has the highest passenger volume of any Amtrak route, carrying nearly 10.9 million people in 2008. The corridor's high-speed Acela Express made a profit of about $41 per passenger. But the more heavily utilized Northeast Regional, with more than twice as many riders as the Acela, lost almost $5 per passenger.

Subsidyscope calculated profits and losses per passenger to ascertain which routes cost Amtrak the most to operate. Our analysis is based on a 2005 Government Accountability Office (GAO) critique of Amtrak’s accounting methods, which says the railroad should consider depreciation when calculating profitability. Other capital intensive industries, such as commercial airlines, include depreciation and overhead when looking at route performance. Subsidyscope’s methodology is explained here.

In October 2008, Congress passed legislation reauthorizing Amtrak for an average of $1.5 billion a year for five years. The Passenger Rail Investment and Improvement Act requires that the railroad provide metrics for measuring all long-distance routes and find ways to improve the financial performance of those routes. Amtrak officials say they are considering options to make the Sunset Limited less costly.

Amtrak lost $1.1 billion last year, but says that only $236 million of this should be attributed to its core business lines, such as the Northeast Corridor. The remainder, it asserts, should be associated with ancillary businesses, depreciation and other direct costs, such as fuel and power, locomotive maintenance and call centers. Amtrak’s ancillary businesses include contracted operator services to commuter trains around the country, such as the MARC in Maryland and Caltrain in California, many of which are buttressed through state and local funding sources. The ancillary businesses are actually a source of profit for Amtrak, bringing in $93.7 million in 2008.

Click here to see Amtrak’s Monthly Performance Report for September 2008.

Subsidyscope took Amtrak’s operating results as they appear in Amtrak management reports, which include depreciation and other overhead costs. The results were distributed evenly across all routes using 2008 ridership numbers; we divided Amtrak's overall operating loss by total ridership, arriving at $24.29 per passenger in additional losses. This figure is on top of Amtrak's reported profit or loss per route. See this page for details and our complete data set.

Subsidyscope also analyzed route performance based on passenger miles traveled. Using this approach—as opposed to a per passenger calculation—and including the same overhead and depreciation costs, we found that Amtrak routes lose an average of 11 cents per passenger mile more than the railroad reports. When examined this way, four, rather than three, Amtrak lines appear to make money. The Northeast Regional shows a loss of nearly $5 when examined on a per passenger basis but a profit of 2 cents on a per passenger mile basis. Still, the line showed a substantially lower profit than the 13-cent-per-mile contribution Amtrak reported. The methodology and complete results for both calculations are presented here.

The differences between the two calculations performed by Subsidyscope show that route performance can be measured in different ways. Amtrak argues that it is not fair to include depreciation in assessing a route’s financial performance. Due to a series of sale-leaseback transactions involving the company’s equipment in the 1990s, depreciation values have been distorted, the railroad says. An Amtrak official told Subsidyscope that ridership is the only factor that should be considered when calculating the profitability of any line.

The GAO, however, found that not including depreciation caused an understatement of reported expenses for core and ancillary business lines by 19 percent and 15 percent, respectively. The GAO said information about depreciation is critical to any financial assessment because Amtrak relies heavily on its rail cars and other capital.

In August 2009, the Congressional Budget Office considered the option of reducing Amtrak’s federal subsidy by about $200 million a year for five years. Amtrak officials and passenger rail advocates say this is impractical, noting that no passenger rail service in the world is profitable and arguing that Amtrak would cease to exist without the federal money.