# Amtrak Privatization



## CSXfoamer1997 (Jan 8, 2016)

Will Amtrak ever become a private company in the future? If not, why not?

Also, how would Amtrak have worked better in the first place? As a government-owned company, or a privately-owned company?


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## AmtrakBlue (Jan 8, 2016)

CSXfoamer1997 said:


> Will Amtrak ever become a private company in the future? If not, why not?
> 
> Also, how would Amtrak have worked better in the first place? As a government-owned company, or a privately-owned company?


Do you know how Amtrak came to be?


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## Devil's Advocate (Jan 8, 2016)

Whenever I see a question like this I think "Man, we should probably build a FAQ thread."


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## AmtrakBlue (Jan 8, 2016)

Devil's Advocate said:


> Whenever I see a question like this I think "Man, we should probably build a FAQ thread."


Yeah, but, new people won't bother looking for that before posting these types of questions. But it would be nice to have somewhere to point them to.


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## Acela150 (Jan 8, 2016)

Can airlines and the highways survive without a subsidy? No. Can CSX not go 6 months without blowing something up? Ask a serious question please.


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## Bob Dylan (Jan 8, 2016)

If Amtrak had been created as a Private Company in 1971 it would be History like so many of the Class I RRs that used to run the Passenger Trains in this Country! 

If it had been designed to prosper and last, instead of being created by the politicians as an entity designed to fail, we would probably now have a National Rail System that rivaled those in countries like India, Japan, China and in Europe.

As it is, we have what we have, a step child quasi-government agency that is hanging on by its fingernails despite the ever increasing ridership.


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## Caesar La Rock (Jan 8, 2016)

There is a reason why Amtrak was created in the first place. All I can say, it's surprising Amtrak is still around after all this time. It's kind of like the South Shore Line was, but on a much larger scale.


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## neroden (Jan 8, 2016)

There is no privately owned passenger transportation system in the world. It ranges from fully government owned and operated to various forms of "public private partnership". (Actually, there isn't any fully private freight transportation either, but that's another matter.)

Transportation is a basic government function; something the ancient Romans knew, but not everyone in the US seems to know. Every time it's left in private hands, a mess results.


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## Philly Amtrak Fan (Jan 9, 2016)

neroden said:


> There is no privately owned passenger transportation system in the world. It ranges from fully government owned and operated to various forms of "public private partnership". (Actually, there isn't any fully private freight transportation either, but that's another matter.)
> 
> Transportation is a basic government function; something the ancient Romans knew, but not everyone in the US seems to know. Every time it's left in private hands, a mess results.


The less government is involved, the better (and the less taxpayers have to pay). You can say that about a lot of things other than transportation too.


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## Ryan (Jan 9, 2016)

Objectively false, unless you like paying €MEGABUCKS to drive on toll roads and $EVENMOREMEGABUCKS for all of the goods delivered over those toll roads.


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## jis (Jan 9, 2016)

Philly Amtrak Fan said:


> neroden said:
> 
> 
> > There is no privately owned passenger transportation system in the world. It ranges from fully government owned and operated to various forms of "public private partnership". (Actually, there isn't any fully private freight transportation either, but that's another matter.)
> ...


Sounds more like a religious principle than anything based on a well thought out analysis to me. But I guess, whatever rocks ones boat


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## Bob Dylan (Jan 9, 2016)

Ask people who have Private, for profit Utility Companies, if they are glad that the evil Government doesn't own their Utilities!

And the tens of millions of Senior Citizens with Social Security and Medicare if they're ready to turn over their benefits to the Wall Street Sharks and Greedy Mega Banks!

And maybe we should make the Interstate Highway System Toll Roads so trucks can deliver our goods cheaper!

And do away with the minimum wage so we can compete with third world countries on the race to the bottom and while were at it repeal Obama Care so 30 Million more lose their Health care!That's what Emergency rooms are for as Mitt Romney said!

People that believe simplistic drivel like this make it possible for charlatans like Donald Trump, Rushbo,Sarah Palin, Ted Cruz, Hannity, Glenn Beck etc etc to get rich preaching crap!

You could look it up but why let facts confuse you!


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## Philly Amtrak Fan (Jan 9, 2016)

All I know is the airline system and the bus system have a much larger national network than the train system in this country. For LD travel, planes will always be the #1 choice. But for those who don't want to fly, trains should be somewhere competitive with buses. I would guess most Americans would find a train to be more comfortable than a bus, whether it's for two hours or two days/ No matter how bad people say the Amtrak food service is, at least they actually have service. All those cities I said don't have Amtrak in a previous post? I can guarantee most if not all of them have Greyhound or Megabus. And you wouldn't have to go all the way north to Chicago and then back south to travel between Texas and Florida on Greyhound. What are the buses doing the trains aren't (or can't)? I'm sure Greyhound doesn't have to deal with all this government red tape to start a route they think would be popular compared to what Amtrak has to go through.


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## CSXfoamer1997 (Jan 9, 2016)

AmtrakBlue:

Yeah. It was created by Congress in 1971, I know that. But I was really curious to know if it would become a privately-owned company rather than government-owned.


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## AmtrakBlue (Jan 9, 2016)

CSXfoamer1997 said:


> AmtrakBlue:
> 
> Yeah. It was created by Congress in 1971, I know that. But I was really curious to know if it would become a privately-owned company rather than government-owned.


And why was it created in 1971 by Congress?


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## jebr (Jan 9, 2016)

The bus companies have a very large road network to use that is essentially free to access (gas taxes only pay for a portion of the road cost, and a lot of vehicles share the road network to spread out costs as well.) If Amtrak wants to expand, it has to pay a fee to the railroad owners along with paying for any needed upgrades to ensure the timetable is competitive.


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## Ryan (Jan 9, 2016)

And the airlines benefits from several subsidies from the Federal Government as well.

If the "less government is better" crowd was right, Somalia would be a utopian paradise that people flock to for a nice idyllic lifestyle. I'm reasonably certain that isn't the case.


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## Philly Amtrak Fan (Jan 9, 2016)

Ryan said:


> And the airlines benefits from several subsidies from the Federal Government as well.
> 
> If the "less government is better" crowd was right, Somalia would be a utopian paradise that people flock to for a nice idyllic lifestyle. I'm reasonably certain that isn't the case.





jebr said:


> The bus companies have a very large road network to use that is essentially free to access (gas taxes only pay for a portion of the road cost, and a lot of vehicles share the road network to spread out costs as well.) If Amtrak wants to expand, it has to pay a fee to the railroad owners along with paying for any needed upgrades to ensure the timetable is competitive.


Yes, buses and planes still need federal subsidies. But are you going to tell me airline service is worse off because of American, United, Delta, and Southwest and bus service is worse off because of Greyhound and Megabus? Are you going to tell me if there was at least some private funding for trains that they wouldn't prosper? Not 100% but not 0% either. I don't know if Megabus is a serious bus company or a threat to Greyhound yet but certainly the competition can only help bus service cross country. What's wrong with some competition in train travel as well?

All I know is Amtrak has had almost 45 years and their service and national network in general has gotten worse since then. Look at the routes Amtrak has added since 1971 and the routes they cut. Do you think the routes added outweigh the ones cut? Why not give someone else a chance if they're interested?


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## jis (Jan 9, 2016)

That is a position that I would agree with and is a distinctly different one from "The lesser government is involved the better", which you stated earlier. Government does have a role and a huge one at that in enabling and fostering a capable transportation infrastructure and service. It cannot just walk away from that. Once the government does its job then private players can play on the infrastructure provided just as the buses and planes do. Due to historical reasons the way rail infrastructure is set up in the US is currently not as conducive to enabling universal passenger service of any kind, private or public, and that needs to be fixed pronto. But the fault really lies with the Class I railroads (private enterprise greed) than the government as far as that goes. If anything the fault of the government is in being too hands off as far as that goes. Not too much government, but too little.


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## Ryan (Jan 9, 2016)

Jishnu, as usual, nails it.


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## neroden (Jan 9, 2016)

For reference, the intercity bus network is anemic and has been shrinking. I have nothing against letting private entrerprise help out -- I'm a capitalist, I invest in utility companies -- but it can't even keep a bus from Ithaca to Syracuse running.


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## dlagrua (Jan 10, 2016)

In certain situations less government can be better while with others its involvement is necessary. Concerning passenger rail we would not have it if government had not stepped in. The freight railroads didn't want to be in the business so Amtrak was created to save the national rail passenger network. This system is a vital part of the US transportation network that carries over 30 million passengers per year.

If there was a desire by private industry to get back in the passenger rail business they can easily do it. On several routes private railroads do participate in passenger rail, namely the Burlington (BNSF) in the Chicago area and the Iowa Pacific on the Hoosier state route BUT they do it with government assistance.

I would enjoy seeing a privatized Amtrak but its not going to happen. Today only 6 main corporations control the entire US long distance rail system (except for the NEC). If they had interest in passenger rail they would enjoy a friendly audience in Washington.

Government is involved in all aspects of transportation whether it be the roads, airports, ports or passenger rail. They receive large subsidies, except for Amtrak that receives about 3% of the total transportation budget. There is no such thing as pure privatization of any form of transportation.


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## cirdan (Jan 11, 2016)

Bob Dylan said:


> Ask people who have Private, for profit Utility Companies, if they are glad that the evil Government doesn't own their Utilities!
> 
> And the tens of millions of Senior Citizens with Social Security and Medicare if they're ready to turn over their benefits to the Wall Street Sharks and Greedy Mega Banks!
> 
> ...



Just because a government doesn't do something doesn't mean greedy Wall Street has to do it.

There are for example mutual banks, owned by the members rather than greedy investors. There are housing associations. There are farming cooperatives. So there are plenty of constructs that work in the grey area between government, charity and big business and may incorporate elements of all three but are actually none of the these. I don't like the thinking that just because Wall Street doesn't handle something properly, the government should run it instead, or vice versa.

Free business thinking isn't all evil and neither is government. People need to break out of this bipolar way of thinking.


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## cirdan (Jan 11, 2016)

The OP actually asked about privatization of Amtrak. That's not at all the same as selling of Amtrak to the highest bidder and then forgetting about it.

I don't think anybody in the private sector would be crazy enough to buy Amtrak without there being a strong government commital to continue funding it.

But maybe a UK style franchsing system would work. The government seeks franchisees for all routes, setting performance targets and laying out a bonus / malus system for on time performance and building ridership and other goals in return for offering a guaranteed susbidy. In the UK an operator needs to renew its franchise something like every eight years. If a lot of investment is invloved the period is longer so the operator thus has more opportunity to recover benefits. Because the agreement once signed is set in stone for the duration and that subsidy cannot be taken away as long as the pre-agreed targets are met, this leads to stability. Amtrak on the other hand needs to fight for its budget every year with all the usual idiots threatening to zero out that budget, and this is detrimetal to long-term planning and investment.

In this respect, I propose that Amtrak would benefit from privatization.


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## west point (Jan 11, 2016)

The UK is a good example that government has to be involved. Government owns the track, ROW, and stations. Only some routes and lines have an above the rail operating profit. We can be sure some private company would like to operate above the rail costs only on the NEC


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## jis (Jan 11, 2016)

The other thing to note about the UK privatization experience is that when the TOCs and ROSCOEs were created together with the ill fated RailTrack, the amount of overall subsidy went up dramatically in initial investments to bring the system upto state of good repair. It is only after several years of this that things started to stabilize and the system was flooded with new equipment and refurbished equipment, which helped move things along. To apply anything of that experience in the US one should plan on a subsidy several times what is available now for a period of something like five years. These IP experiments are just fun and games. They will not eventually work in general, absent a much deeper commitment from the federal and state governments than what we see there.


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## cirdan (Feb 2, 2016)

jis said:


> The other thing to note about the UK privatization experience is that when the TOCs and ROSCOEs were created together with the ill fated RailTrack, the amount of overall subsidy went up dramatically in initial investments to bring the system upto state of good repair


Although you need to bear in mind that this was on the back of a prolonged period of austerity and underinvestment.

In the 1980s under Thatcher, the railways were at best tolerated and budgets were regularly cut back to the bone. BR operated with a heap of Modernisation Plan equipemnt from the 1960s, much of which was sub-par even when built and hadn't exactly impoved over time. For many years BR was paying for essential repairs by selling off real estate. Many of the new trains bought in this period such as the infamous Pacer railbuses were engineered to be as cheap as possible and had little positive to be said in their favor.

Then came the 1990s and John Major with this already crippled and weakened BR being prepared for privatization, which menat further drastic cut backs to make the different parts appear profitable at least on paper.

So the early years of the privatization period were aboutv trying to recover from 20 years if not more of under investemnt and unwise investment.

Major projects that are fnally going ahead now such as the GWML electrification were first planned in the 1960s and should really have been done then..


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## jis (Feb 2, 2016)

The prolonged period of austerity and under-investment applies equally to Amtrak. So one should expect to need a significant bump in subsidy for any attempts at privatization of Amtrak to succeed. In case of Amtrak it would be ti make up for 45 years of under-investment in Amtrak and before that lord knows how many years of under-investment by the private sector. So the amount as proportion should be significantly larger that what was thrwon at the British Rail system to support privatization. Is that going to happen? Unlikely for both the additional investment and privatization. People are just blowing smoke. The only two choices at present are shut it down or continue with the current setup substantially.


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## Hytec (Feb 23, 2016)

Comparing Amtrak with airlines and LD buses is an apple/orange situation. Airlines fly in airspace controlled by government employees using government owned equipment, between government owned and maintained terminals. Buses operate on government owned and maintained roads, between government owned terminals. Whereas Amtrak pays to operate on privately owned track, serving Amtrak owned stations between jointly owned and maintained terminals. If American culture accepted and supported rail transportation as a public service, then the track and facilities would be government owned on which freight and passenger companies would be allowed to operate for a fee. Freight and passenger trains would be expected to serve both profitable and non-profitable routes, with the government subsidizing the non-profitable routes as needed to provide a public service. Unfortunately this would require a complete reversal of how this country has historically viewed the railroad companies. This view was caused by the rail Robber Barons raping and pillaging the federal money trough throughout the latter half of the nineteenth century. Until Congress' and the public's views change, we are stuck with the Amtrak mess that Congress has created.


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## MARC Rider (Feb 23, 2016)

Philly Amtrak Fan said:


> neroden said:
> 
> 
> > There is no privately owned passenger transportation system in the world. It ranges from fully government owned and operated to various forms of "public private partnership". (Actually, there isn't any fully private freight transportation either, but that's another matter.)
> ...


 

I guess then we should abolish the US Army and Navy and outsource our military service to mercenaries. That worked really great during the 30 years war! Come to think of it, those private contractors really worked well in Iraq, didn't they?


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## cirdan (Feb 24, 2016)

jis said:


> The prolonged period of austerity and under-investment applies equally to Amtrak. So one should expect to need a significant bump in subsidy for any attempts at privatization of Amtrak to succeed. In case of Amtrak it would be ti make up for 45 years of under-investment in Amtrak and before that lord knows how many years of under-investment by the private sector. So the amount as proportion should be significantly larger that what was thrwon at the British Rail system to support privatization. Is that going to happen? Unlikely for both the additional investment and privatization. People are just blowing smoke. The only two choices at present are shut it down or continue with the current setup substantially.


In the USA, the tracks are largely owned by freight companies that are on the whole profitable.

In the UK freight is not as lucrative as in the US. For many years under BR, freight required a subsidy and despite severe pruning of the freight network (there are very many lines in the UK that have passenger trains but no freight at all today) and multiple reorganisations and price hikes, this didn't seem to improve. Many people predicted that freight by rail was in terminal decline and would sooner or later terminate altogether. Money was pretty much being haemmoraged no matter where you looked. In the run-up to privatisation the freight business was split into into several sectors which were sold off individually. The fast intermodal business serving the major seaports was bought out by a management consortium and formed Freightliner. It is doing quite well today (and has been sold on several times), but to be totally honest it has received quite a bit of government support in the form of improvements to terminals. The other freight sectors were all taken over by EWS, a company owned at that time by Wisconsin Central but since taken over by DB and rebranded as DB Schenker. They brought in some innovative practices and invested heavily in new equiupment and actually managed to grow back some of the traffic lost in previous years. However rail freight in the Uk is not inherently profitable as you just don't get the same sort of distances as in the US. Furthermore, the newtork is largely built up for passenger trains and freights often have to weave in and out as capacity allows which does not allow for competitive scheduling.

Since then some third party freight operators have also started running, often by cherry picking the most lucrative contracts without providing a coherent system. Freight growth has also been helped somewhat by the worsening of road congestion due to fewer funds being provided for highway building compared to the past, meaning that delivery times by road and also the reliability of road haulage has taken a hit giving the railroads some upthrust. For example a lot of supermarket supplies go by rail these days, as supermarkets cannot afford emtpy shelves and are prepared to pay the extra cost. This sector that was virtually non existent under BR and supermarked managers at the time evn laughed at the concept of putting stuff on a train. Even the major road transporation company, Eddie Stobart, is sending stuff by train these days.

But even so, all this is growth on the back of the passenger system and using infrastructure built for passengers. If these companies had to own and maintain the tracks by themselves, they probably couldn't survive. So maybe on paper the freight sector is paying its way while passenger trains are living off tax money, but in reality that is something of a distortion. There probably wouldn't be much of a rail system in the Uk at all without the government putting money in.

So what i wanted to say was that this isn't really the same as Amtrak. Amtrak uses freight railroad tracks and can continue to do so. Maybe the government would need to shell out money to raise the speed a bit here and add a station track there but that's no way the same order of magnituide as jumping in and taking over the entire system.


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## jis (Feb 24, 2016)

To get an effective passenger system with appropriate priorities for passenger trains, in effect the government will have to pretty much either build a separate infrastructure for passenger trains or take over significant parts of the freight network. We have had this discussion over and over and over again, and no one has figured out how you get a private company to do something that they do not need without having the additional stuff entirely paid for by someone else. And that happens to be a lot of money, like an order of magnitude more than what is typically budgeted for Amtrak.


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## neroden (Feb 24, 2016)

In practice the tracks are being bought piecemeal from the "freight" railroads (they're only "freight" railroads due to management bad-attitude, as Florida East Coast just demonstrated) by governments, for passenger service.

I'm OK with this. The only bit that really ticks me off is that we already owned Conrail, it was wholly government-owned, and it was sold off at fire-sale prices -- socialize the losses, privatize the profits. That is unacceptable.


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## Devil's Advocate (Feb 24, 2016)

neroden said:


> The only bit that really ticks me off is that we already owned Conrail, it was wholly government-owned, and it was sold off at fire-sale prices -- socialize the losses, privatize the profits. That is unacceptable.


A Trump presidency is likely to take these lopsided giveaways to whole new level. Quite possibly to the point that we're competing with and even rivaling the Italian Mafia and Russian Oligarchy.


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