Amtrak's unprofitable Northeast Corridor.

Gossip, speculation, and scuttlebutt about politics.
July 8 2002 6:31 PM

Does Amtrak's Northeast Corridor Really Lose Money? Part 2

Yes, when you count the infrastructure.

Some time ago, Chatterbox promised to deliver, "tomorrow," an examination of Amtrak's argument that its Boston-to-Washington Northeast Corridor loses money due to infrastructure costs. (Chatterbox had already established that when you didn't count the cost of maintaining the Northeast Corridor's tracks, bridges, and tunnels, most of which Amtrak owns, Amtrak's Metroliner and Acela Express service earned an "above the rail" profit of $51.3 million in 2001, or $19.33 per customer.) The infrastructure argument is an important one because if Amtrak can establish that it's genuinely hopeless to expect even Amtrak's most heavily traveled rail route to make money, then passenger train travel is like opera—a social good that can't make it in the marketplace without a subsidy from government or private charity.

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As best Chatterbox can make out, the infrastructure argument is true. "We are in the process of doing a whole new budget system here, which will I think more clearly lay this out," Amtrak's acting Northeast Corridor senior vice president, Lynn Bowersox, told Chatterbox after we traded phone messages for close to a week. According to Bowersox, the Northeast Corridor will need about $1 billion annually over the next 20 years to meet capital costs on all tracks, tunnels, and bridges. Nearly all this money will be spent repairing iffy electrification and degraded rail bed along the route from New York to Washington. (Transportation Secretary Norman Mineta announced last week that the feds will give New York City $76.7 million to repair its Amtrak tunnels. This is separate from the $100 million loan Amtrak got the Bush administration to fork over on June 28, when it was threatening to shut down the Northeast Corridor.) The electrification is also bad along the brief stretch north of New York to New Rochelle, but this track is owned by the Metro North commuter rail, hence isn't Amtrak's (financial) problem. Going north from New Rochelle to Boston, the track is newly electrified (trains no longer idle in New Haven to switch from electric to diesel or vice versa), and in any case, tracks along the immediate approach to Boston are owned by the Massachusetts Bay Transportation Authority, not Amtrak. Bowersox's estimate that Amtrak will need $20 billion over the next two decades to maintain the Northeast Corridor infrastructure is essentially the same as that of the pro-privatization Amtrak Reform Council.

Bowersox's estimate is also more or less backed up by the Transportation Department's inspector general, Kenneth Mead. In a June appearance before the Senate appropriations subcommittee on transportation, Mead recommended that Congress budget $852 million in the current fiscal year for Amtrak's capital investment; this is actually more than the $840 million Amtrak itself requested. In a May 3 letter to Sen. John McCain, Mead said rehabilitating one Baltimore tunnel could cost $1 billion.

It's fairly obvious that $1 billion in annual infrastructure costs will wipe out any profit along the Northeast Corridor, even if that profit increases by a factor of 10 or 15. So squeezing down Amtrak's inflated labor costs won't get you there. Neither will the Amtrak Reform Council's proposed solution, which is to spin off the Northeast Corridor infrastructure into a "government owned and operated corporation" that's separate from a slimmed down, presumably profitable train operating company.

Timothy Noah is a former Slate staffer. His  book about income inequality is The Great Divergence.

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