Stardate 20020628.1908

(On Screen): Amtrak gets a reprieve. It will get "loaned" $100 million by the government to permit it to keep operating, said loan to be "paid back" next November (in the next fiscal year). But if the money is going to go to pay for operating expenses for a money-losing business, then just where is Amtrak going to get money to pay the "loan" back?

Out of next year's subsidy payment from the government, of course. Effectively, the government is letting Amtrak dip into future subsidies for current operations. It's a joke.

The claim is that as part of this deal that Amtrak is implementing cost-cutting measures which will make things all better. But the problems Amtrak faces are not ones which ordinary fiscal discipline can affect. The only way Amtrak can be made solvent is to permit it to drop unprofitable rail lines.

I'm on record that the right solution is to give up and close the whole system down. Each individual piece can be put up for auction, and the pieces which are financially viable (i.e. the Boston-DC corridor) will continue to operate in private hands while the ones which were always ridiculous (i.e. Chicago-Seattle) will go bye-bye.

Railroads and airlines have different financial issues regarding capital expenses. Airports are fantastically expensive, but the air between them costs nothing. Rail terminals cost much less than airports, but the cost of the rails between the stations is a function of distance, with a multiplier for terrain issues. And the rails require constant maintenance and upgrade; it's an ongoing expense. But like all upkeep, it's something that you can postpone for short periods if you need to jigger the books. It will catch up with you in the long run, of course, but hopefully by then you'll have retired and it will be someone else's difficulty. (This, of course, is a problem for all capital-intense businesses.)

That's why rail only makes sense in places where the population density is high. On the other hand, long hops for air travel are even more cost effective than short ones. Nostalgia for the great days of rail travel not withstanding, passenger rail will never be financially viable for the whole US. It's time to realize that and stop shoveling money down a rat hole.