Amtrak needs another bailout to stay afloat

Joe Biden is expected to embark on a campaign trip to eastern Ohio and western Pennsylvania on Wednesday. The Democratic presidential candidate has the nickname “Amtrak Joe”, so it’s no surprise that he makes the trip by train.

Earlier this month, Amtrak CEO William J. Flynn told Congress the railroad needed nearly $ 5 billion in federal aid to offset losses caused by the coronavirus pandemic . In the meantime, Amtrak plans to reduce many of its long distance routes including the Capitol Limited, California Zephyr, and Texas Eagle departing daily three times a week.

At least nominally, Amtrak is a for-profit company.

“But it’s really run more like a public service,” said John Macomber, senior lecturer at Harvard Business School. “Each year it receives a significant grant from the federal government equivalent to approximately one-third of its operating revenues. “

This material subsidy is approximately $ 2 billion.

Before the pandemic, Amtrak’s finances weren’t that bad. In fact, last November he announcement its smallest operating loss of $ 29.8 million.

“With COVID-19, ridership is down significantly,” said Baruch Feigenbaum, director general of transportation policy at the Reason Foundation.

Down 80% from a year ago. This is one of the reasons Amtrak plans to lay off nearly 10% of its workforce and cut some of those long-haul services.

“Amtrak’s long distance service is losing a lot of money, even at the best of times,” Feigenbaum said. “And now we’re talking about some really big losses that they just can’t take.”

Amtrak has already received $ 1 billion in COVID-19 relief funds, and Feigenbaum has said additional federal funding is not a good investment.

But Jim Mathews of the Rail Passengers Association said Amtrak’s service cuts could cost interior parts of the country billions of dollars.

“When that ridership decreases, everything that goes with that ridership falls with it: tourism expenses, food expenses, everything that benefits those passengers is cut,” he said.

Matthews thinks Congress should step up funding.

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