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Joe Vranich is on a crusade to promote TGV-style high-speed trains in America, no matter the cost, and to get there he is willing to distort the actual economic performance of Amtrak’s current trains beyond the breaking point. Mr. Vranich especially disparages the interregional long distance trains as empty anachronisms, awash in red ink, kept in operation only to appease venal senators in flyover states. This assessment is dead wrong.
Here is some data that Mr. Vranich either doesn’t know, or perhaps doesn’t want you to know. The long distance trains produce by far the greatest share of Amtrak’s entire system output of transportation. Output is measured by revenue passenger miles, not “ridership,” which is only a measure of transaction volume. The long distance trains produce nearly half of system output, the vaunted Northeast Corridor a little over a third of total output, and the other regional corridors the balance.
The NEC (like our other short regional corridors) boasts load factors of under 40%, showing that we are already overinvested in these short distance services. Long distance trains enjoy load factors generally of 55 to 65%, in markets where a load factor of 67% is functionally “sold out” due to the many boardings and alightings that occur all along a transcontinental route. The seat that is empty now has already been sold to someone boarding down the line. So, the few long hauls we have are in fact heavily used, and highly productive.
But at what cost, Vranich asks? Don’t these trains suck up all the federal subsidy? Well, actually, no, they don’t. A recent Federal Railroad Administration study showed that all of the long distance trains together consumed less than $100 million a year, out of a $1.2 billion federal subsidy. Amtrak says the cost is closer to $200 million in cash, and maybe $300 million, fully-allocated. But the higher figure is still less than one-quarter of the annual federal subsidy. Where does all the rest of that cash go? Mr. Vranich doesn’t like to talk about it, but more than half the annual subsidy is consumed in his model market, the NEC, home of our best approximation of the TGV high speed service he dreams about.
Today, half the annual subsidy produces just a third of the output, in the high speed, short-haul, market in the NEC, while less than a quarter of the subsidy generates half the total output, in the long distance markets. Thus, each federal dollar invested in the long distance markets produces several times more revenue and transportation output per dollar invested than any dollar sunk into the short corridor markets and especially the high speed corridors.p>In the one clear example we have of Mr. Vranich’s high speed, short distance, interurban corridor scheme, the financial return on investment from the three billion federal dollars spent to create the Acela high speed program has been a negative number, because the Acela program, according to the US DOT, has accompanied an increased annual operating loss for Amtrak as compared to pre-Acela. And everyone seems to agree that the NEC still needs billions in additional, new federal subsidies, out over the next decade at a minimum, just to sustain what is already there, not drive growth in output. We have, therefore, already tested the Vranich hypothesis, and it has failed totally, at a federal cost of billions of taxpayer subsidy dollars. br> This is not a good model to guide future federal investment in intercity rail programs. /p> p>Secretary of Transportation Mineta, like Mr. Vranich, has his priorities exactly backwards — if we seek better financial results from our intercity rail programs, we must redirect a much larger share of available federal investment capital towards the markets that have sold out trains and a much higher capital leverage ratio, the long distance markets. The short corridors perhaps warrant investment from a social benefit perspective, to the extent that they provide consumer choice and possibly some mitigation of urban congestion, but they are voraciously capital intensive, and financially hopeless.
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