I was reading this morning about Richard Anderson’s efforts to stem Amtrak’s operating losses, and the controversies surrounding those moves. Richard Anderson became President and CEO of Amtrak in 2017. Before that he was the CEO of Delta Air Lines.
One of the things that Anderson is trying to do to improve profitability is shrink or eliminate some of the company’s long-distance train routes and instead focus on the more frequent (and profitable) short haul routes. Here is a map from the WSJ that I thought was really interesting:
The only profitable corridor in the network (black line above) is the one running from Boston down to Washington D.C. The long-distance routes running west from Chicago (1, 2 and 3 above) are the lines with the biggest operating losses (thick red lines above).
All of this makes sense. The northeast corridor works because it has the population density and because the trips are short enough that rail is an appropriate substitute for air travel. The northeast is one giant megalopolis.
The controversy is that, despite being unprofitable, there’s a segment of the market that still uses and likes many of these long-distance passenger routes. So politically, it’s a challenge to eliminate them. But there are also pressures from Congress to have Amtrak cover its operating costs.
We should also not forget that Amtrak was formed in 1971 precisely because all of the private companies that had been previously operating these lines were bleeding money. Highways and airlines had taken the passengers. And so this was a way of preserving passenger rail in the US.
I am curious what all of you think about this. To what extent should these unprofitable lines be propped up by the government? Let me know in the comment section below.
