Financial Woes May Derail Amtrak

With gas prices rising and airlines experiencing more and more delays, train travel might seem a popular alternative.

But the nation’s passenger train carrier, Amtrak, is in trouble. The railroad lost $944 million in the previous fiscal year, and some observers believe it could be out of business in 18 months.

"Amtrak in its present state is pretty far gone, it's hopeless, I think we ought to give up on it," said Joe Vranich, a former spokesman for Amtrak. "I just don't know how it could continue the way it is."

Amtrak was created in 1971 to take over the nation’s failing passenger train network. But Amtrak’s recent history may not have been what the federal government had in mind three decades ago.

Trains are losing money from one end of the country to the other. Some are losing more than $100 per passenger, and on average, Amtrak loses $16 for every ticket sold.

"They were set up wrong form the beginning," said Tom Till, the Executive Director of the Amtrak Reform Council. "Their structure is flawed. And that's been that way for 30 years."

Congress has greased Amtrak’s rails with a total of almost $24 billion. But some in Congress are now saying that if the railroad isn’t self-supportive by December 2, 2002, the next stop will be reorganization or liquidation.

Kenneth Mead, Inspector General of the Department of Transportation, said at a House Appropriations Committee meeting in March that "I think they're in serious jeopardy. Amtrak's time is almost up."

Amtrak has placed a lot of promise in its new high-speed Acela train, connecting Washington, New York, and Boston and says it is already making a difference in its bottom line.

But critics say the Acela program faces its own limitations. The trains must run more slowly than designed along the crowded northeast corridor rail lines, and high prices are keeping away some customers.

In any case, Amtrak still says it needs another $30 billion in tax dollars over the next 20 years.

"We have worked very hard to discard much of the baggage associated with Amtrak," said George Warrington, president and CEO of Amtrak. "The only way we will continue that momentum is if we make a conscious national public policy decision to invest American capital in America's railroads."

Critics say the trouble with investing more is that even Amtrak’s fastest trains may not be fast enough and will never be able to compete with airlines. But Amtrak is determined to prove this is not the end of the line and that rail service can and will be popular and lucrative in the future.

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