Richard Anderson, the former CEO of Delta Air Lines who now runs Amtrak, claims that:
- In fiscal year 2019 passenger revenue covered 99% of operating costs
- Amtrak will be profitable in 2020 (for the first time ever)
Both of those statements are false. In fact Amtrak lost over a billion dollars in 2019 but accomplishes their accounting chicanery in at least two primary ways.
- They count government subsidies from states as ‘passenger revenue’
- They do not count capital expenses or depreciation (wear and tear) as expenses, even though these represent about 20% of expenses
- As a result Amtrak’s 2019 losses are about 35 times greater than they claim
If you inflate Amtrak’s revenue and you ignore costs you can make Amtrak look like a financially responsible operation.
Amtrak reports that it has a $33 billion maintenance backlog, which are also excluded from their numbers (and “doesn’t count the backlog on parts of the Northeast Corridor use by but not owned by Amtrak”). And so is the need to replace older rail cars – approaching or past their expected life – at a cost of $4 billion.
Randal O’Toole writes that the purpose of these shenanigans is to make it appear that Amtrak has been turned around, in order to make its requests for increased federal subsidies more palatable. When Anderson ran an airline his job was to rail (see what I did there) against subsidies while getting the government to assume liability for his pensions and block competition at his hubs. Now that he runs Amtrak his primary job is to aggressively pursue greater subsidies.
To be fair Amtrak has made real progress controlling costs, such as their new forced arbitration clause that takes away your right to sue them in the event of a crash. And Anderson is right that losing nine figures on food service makes no sense, which is why Amtrak has cut its food service (not to ‘appeal to millennials’ as they claimed – millennials are in fact more likely to be foodies).