by J.D.Wong via The Mises Institute,
Founded 54 years ago, Amtrak set out on a bold adventure to see if passenger trains could be profitable.
Fast forward to today, this experiment has been unsuccessful. Politicians have often crafted routes to win votes rather than attract riders.
As a result, Amtrak has been squandering taxpayer money since its start in 1971.
Take, for instance, the Infrastructure Investment and Jobs Act of 2021. It allocated a monumental $66 billion to bolster passenger rail. Yet, even with this backing, Amtrak’s losses soared from $1.12 billion in FY2019 to $2.12 billion in FY2024. This financial drain isn’t new; America’s passenger trains have lost money for 79 years.
Amtrak asserts that it is “on-track to reach operational profitability.”
Yet, this is a bald-faced lie.
While Amtrak reported a loss of $705.2 million for FY2024, it didn’t include:
$966.2 million in depreciation;
$447.3 million in “Project Related Expenses”;
$314.1 million in state subsidies, which it classified as “revenue”;
$26.9 million in Office of Inspector General funding
By omitting these costs, Amtrak paints an optimistic view of its financial health. In reality, Amtrak needs larger subsidies than ever before. In fact, Amtrak has been deceiving Congress with its “path to profitability” since 1990.
Although Amtrak touted a “ridership record” for FY2024, this figure is misleading too. Ridership numbers don’t reflect the average length of each passenger’s trip. A more insightful metric is passenger-miles, which measures how far people are traveling. In fact, Amtrak only transported 6.54 billion passenger-miles in FY2024. This is a decrease of 3.40 percent since FY2013.
Amtrak often attributes its financial struggles to its long-haul routes. Yet, the outlook is even bleaker for its short-haul, state-supported routes. Amtrak reported a $251.5 million loss for these routes in FY2024. Yet, with $314.1 million in state subsidies included, the true loss hits $565.6 million. This represents a shocking 94 percent increase from the $291.7 million lost in FY2019.
Amtrak’s advocates often cite highway “subsidies” to explain its financial debacles. But Amtrak guzzles about 39 times more subsidies per passenger-mile than highways do.
Amtrak asserts that freight trains “interfere” with its passenger services. However, Amtrak often makes questionable route choices despite having legal priority over freight. Between Chicago and Los Angeles, the Desert Wind lost less money than the Southwest Chief. Despite this, Amtrak favored the Southwest Chief, which passed through more congressional districts. It discontinued the Desert Wind in 1997, leaving Las Vegas with no train service.
Despite its competitor’s demise, the Southwest Chief still loses money. Its operating losses grew from $56.1 million in FY2019 to $83.3 million by FY2024. It also uses a lower-quality track than freight trains from Chicago to Los Angeles. Since 2014, taxpayers have spent over $45 million on track repairs for the Southwest Chief.
Figure 1. Chicago to Los Angeles preliminary route alternatives, 1970.
Source
Senators Jerry Moran (R-KS) and Martin Heinrich (D-NM) view Amtrak as an “essential service.”
But Amtrak accounts for a mere 0.001 percent of total passenger-miles traveled in the country. For every small town served by Amtrak, there are at least 40 others with no train service. In fact, Americans travel more miles by bicycle than they do via Amtrak.
If Amtrak were to vanish, travelers would still have many options. On many routes, it would cost less to give each passenger a free airline ticket than to subsidize Amtrak. To illustrate, the average airfare in 2024 was around $0.23 per passenger-mile. This is much lower than Amtrak’s subsidies of $0.91 per passenger-mile in FY2024.
It’s important to note that nothing restricts train riders to using unprofitable routes. Many might explore moving to states where train travel is more viable.
Amtrak’s website once touted the environmental advantages of train travel. The truth is Amtrak removed this webpage in January 2025. This action suggests that Amtrak exaggerated its claims about environmental benefits. Amtrak’s most popular routes—such as the Auto Train—could thrive without subsidies. Beyond them, cars, buses, or airplanes could be more efficient than Amtrak’s services.
Figure 2. Chicago to Los Angeles final route alternatives, 1971.
Source
Despite experiencing huge losses, Amtrak awarded $5 million in bonuses in FY2023. Fourteen of its top leaders received over $200,000 each.
Over the past 54 years, Congress has exhausted ways to limit the growth of Amtrak’s subsidies. None of its efforts at “reform” have yielded meaningful results:
Clinging to existing routes is a classic example of the sunk cost fallacy. Amtrak’s routes have lost money for 54 years and the cost of operating them will only rise.
Investing in “high-speed rail” will only exacerbate Amtrak’s financial woes. With teleconferencing, the need for short-haul, time-sensitive business travel has diminished. In fact, high-speed Acela ridership has decreased by 9.5 percent since FY2019.
Changing Amtrak’s leadership isn’t the answer, either. All that would do is create a scapegoat for the pork barrel spending that has plagued Amtrak for 54 years.
Outsourcing existing routes to private operators such as Keolis won’t fix Amtrak. Taxpayers would still foot the bill because of the lack of economic viability in Amtrak’s routes.
Splitting up long-haul routes is likely to drive away riders and lead to even greater losses. To illustrate, Amtrak’s short-haul, state-supported routes operate at a mere 38 percent load factor. This is much lower than the 57 percent load factor of Amtrak’s long-haul routes.
In 2002, the Amtrak Reform Council even voted to dissolve Amtrak altogether. Despite this, Congress chose not to act.
Figure 3. Potential train routes that could operate without either capital or operating subsidies.
The only way to stop politicians from playing favorites with train routes is to cut subsidies to $0. Political control over subsidies means that ending them would also end that control. With a loss of $2.12 billion in FY2024, Amtrak has become a bottomless money pit. In contrast, Australia’s Ghan and Indian Pacific operate without subsidies. With capital and operating subsidies ended, some American trains could be profitable too.
Eliminating subsidies would not spell the end for passenger trains. Brightline Florida—a privately-owned train service—began operations in 2023. Under a zero-subsidy model, it might consider buying Amtrak. For Brightline, this move could reduce overhead and enhance efficiency. For example, it could sell certain routes to Rocky Mountaineer or Union Pacific. There is also the possibility of auctioning off surplus assets to the public. In the end, Brightline would only preserve the most sustainable routes.
Since Congress can’t predict which routes will be profitable, it only needs to cut subsidies to $0. The President should also take a firm stand by vetoing any budget that subsidizes Amtrak. Finally, Congress should repeal the Infrastructure Investment and Jobs Act of 2021. This act squandered $66 billion in capital and operating subsidies for passenger rail.
https://www.zerohedge.com/political/why-elon-musk-right-case-against-subsidizing-amtrak
