Amtrak is officially known as the national passenger railroad company in the United States. Since it was founded in the year 1971, the company has grown to operate around 300 trains daily over 21,400 miles of track. However, the million-dollar question is: Is Amtrak Profitable 2024?
Let’s find out the truth about the profitability of Amtrak by reading this article. In this article, we’ve compiled every detail that will provide insight into whether Amtrak is profitable or not.
Amtrak is a state-owned enterprise which was founded in 1971. It is officially known as the National Railroad Passenger Corporation. Amtrak is a railroad provider that runs short-distance under 750 miles and long-distance trains between 500 destinations in 46 states and 3 Canadian provinces.
It was founded as a state-owned enterprise when the federal government was trying to save the American Rail Industry, which was pushed to the brink of vanishing.
What Are The Services Offered By Amtrak?
Here are the services offered by Amtrak:
1. Classes Of Services
Amtrak offers four classes of services, namely the First Class, Sleeper Service, Business Class, and Coach Class. The First Class service is offered on Aceela, and the seats of this service are larger than those of Business Class. The Sleeper Service includes private room accommodations on long-distance trains. This service also includes full hot meals on most of the routes.
On the other hand, the seats in Business Class and Coach Class recline and feature a fold-down tray table, footrest, individual reading light, and power outlet. Business Class seating is offered on Acela, whereas Coach Class is a standard service provided in all Amtrak except for Acela.
2. Baggage And Cargo Services
Amtrak also offers the services of baggage and cargo, which means that every passenger carry-on baggage on every route.
The Amtrak Cargo services provide small-package and less-than truck-load shipping between most Amtrak Stations. These cargo travel alongside the checked luggage in baggage cars. The Amtrak Express also offers the shipment of human remains to many cities from station-to-station.
Moreover, Amtrak is popular among bicycle enthusiasts due to the ease of riding a bike. Unlike airlines, which require riders to dismantle the bicycles and place them in a specialized bag, Amtrak trains have on-board bike racks in either checked baggage cars or the coaches.
3. Wi-Fi And Electronic Services
The first free Wi-Fi service that Amtrak offered was in 2008. By 2014, most Amtrak passengers had access to free Wi-Fi. However, this service developed a reputation for being unreliable and slow due to its cellular network connection. On some routes, the Wi-Fi is usually unusable, mostly freezing on the login page.
It also launched an e-ticketing system on the Dwneaster in November 2011; it then rolled it out nationwide on July 30, 2012.
Is Amtrak Profitable?
It’s a fact that no country in the world operates a passenger rail system without any public support. But Amtrak’s “for-profit” has been unfortunate. The company has never been profitable since its operation for 50 years. But, thanks to its subsidies it has been surviving in the market.
However, it is noteworthy that despite the heavy reliance on state subsidies and its inability to make a profit, it has initiated implementing big plans for the future.
To be more efficient and environmentally friendly, Americans have started to avoid using cars and airplanes. Therefore, to capitalize on this trend, Amtrak has progressed its efforts towards its primary goal to replace its aging fleets.
How Amtrak Makes Money?
In 2022, the customers of Amtraks took 22.9 million trips, which is about 62,800 trips per day and employed more than 190,000 people. According to the company’s annual report, the main source of Amtrak’s revenue is ticket sales from short-distance corridors.
1. Ticket Sales
The ticket sales contributed 76% of Amtrak’s operating costs in 2022. Another reason for Amtrak’s survival is the Northeast Corridor (NEC), which runs 457 miles from Washington, D.C. to Boston. In 2022, this line accounted for 9.2 million of Amtrak’s passengers.
On the other hand, all the long-distance lines of Amtrak are the least profitable.
To support all its short-distance lines, Amtrak receives funding from 20 state agencies and 17 states. In 2023, it received $200 million from the Federal Railroad Administration Consolidated Rail Infrastructure and Safety Improvements (CRISI) competitive grant program.
3. Recognizing Infrastructure Assets
The remaining revenue is derived from the assortment of business activities related to the infrastructure it owns. Amtrak operates and owns 363 route miles of 457 route miles of NEC main line.
Amtrak leverages these assets by charging freight trains and commuter train companies to use its tracks. It also charges for accessing its stations, platforms and parking lots.
Public Funding Of Amtrak
Amtrak receives annual appropriations from federal and state governments. Here is the table showing the total federal grant appropriations per year:
What Are The Challenges Of Amtrak?
As per the reports realized in 2022, safety is the key point of focus for Amtrak. But beyond safety, Amtrak should also focus on its fiscal responsibility. According to the reports the very first challenge of Amtrak is to demonstrate its fiscal responsibility. Many of the company’s systems support basic business practices that are outdated and don’t even provide timely and accurate information.
However, Amtrak has started to work on upgrading some of the systems. It should also focus on building internal controls to protect the funds from fraud, waste, and abuse.
Moreover, it should also focus on effective coordination with its stakeholders as the company’s expansion, operations, and finances depend on support from external and internal stakeholders.
Why Is 2024 A Big Year For Amtrak?
So, Is Amtrak Profitable 2024?
Well, it is partially true as the company has never been able to make a profit, but recently it has made big plans for the future. However, according to the experts, Amtrak is a failing company. The simple reason for this is that Amtrak is underfunded.
Many of the railroads it operates need maintenance, and to maintain them, it needs funding from the state legislatures, which are often underfunded.
Which is cheaper: Amtrak or Flights?
Amtrak’s tickets cost more than the cost of flying. However, it mainly applies to the tickets that come with cabins and meals. The Coach Class on Amtrak is usually cheaper than the coach class on an airplane.
Is Amtrak tax-payer funded?
Yes, Amtrak is tax-payer funded. The company receives subsidies to keep it operating.
What is the future of Amtrak?
Over the next 15 years, Amtrak envisions connecting over 160 communities across the United States.