The rise and fall of Amtrak, which has been losing money since 1971

Wolfgang Kaehler/LightRocket via Getty Images
  • The US has long lagged behind other countries when it comes to passenger rail.
  • In 1971, Amtrak was formed from 20 other ailing passenger railroads.
  • The railroad has expanded to cover 21,000 miles on 33 routes – but has never escaped financial trouble.

150 years ago this month, the United States completed one of the most impressive engineering feats of the time (and to this day): a single railroad, connecting sea to shining sea.

In the decades following, American trains – carrying both freight and passengers – would flourish. Railroads shuttled passengers between thriving urban centres, and streetcars criss-crossed towns around the country. By 1916, 98% of all intercity travel took place on rail, according to US Census Bureau statistics.

But by the 1940s, American’s insatiable appetite for automobiles had begun to take shape.

Railroads’ share of the travel market began to shrink drastically as the government began to incentivise road building and airport investments. And by 1970, the last year that America’s rail network was privately controlled in its entirety, the total miles travelled on trains had fallen to less than 100,000.

That’s when the federal government stepped in to create what would become known as Amtrak. Here’s the history of America’s passenger railroad, which has managed to lose money in every single one of the 48 years since its inception.

The Congressional Rail Passenger Service Act of 1970 combined 20 of the country’s ailing passenger railroads into on privately-controlled, but government-owned, corporation.

“The Congress finds that modern, efficient intercity railroad passenger service is a necessary part of a balanced transportation system,” lawmakers of the 91st Congress wrote in the bill. The law established basic frameworks for the National Railroad Passenger Corporation and a 15-person board of directors.

President Nixon signed the bill into law on October 30, 1970.

Today that same company is known as Amtrak (a portmanteau of “America” and “track”).

Amtrak Archives

Here, U.S. Secretary of Transportation John Volpe (left), Amtrak President Roger Lewis (center) and Amtrak Board of Incorporation Chairman David W. Kendall (right) unveil the original Amtrak route map.

Amtrak’s first service began on May 1, 1971, with the first “Clocker” train travelling between Philadelphia and New York City.

Amtrak Archives

Patty Saunders was one of the first passenger service representatives hired by Amtrak. According to Amtrak’s archives, female passenger service representatives could chose from pieces such as hot pants and a floor length skirt that could be mixed with various tops and sweaters according to the season.

In total, the system serviced 43 states on 21 routes.

Amtrak News Archives

Here’s a look at the original plan for Amtrak routes, as envisioned in the railroad’s first employee newsletter (dated March 15, 1975.)

In 1972, Amtrak’s first international service was added.

Reg Innell / Toronto Star via Getty

Three years later, in 1975, the first Amfleet cars made their debut.

Amtrak Archives

Many of the cars are still in use today, and their iconic rounded shape has become synonymous with many of Amtrak’s routes.

Amtrak trains got their first sleeper coaches in 1978.

Amtrak Archives

Designed by Pullman Standard, the rail company ordered 70 sleeper cars with full bedrooms for long-haul journeys in America’s heartland. The cars are 85 feet long, 10 feet wide and 16 feet high.

But those same long-distance routes are the same reason Amtrak has been losing money for decades.

WikipediaThe Empire Builder line runs from Chicago to the West Coast.

The Empire Builder, for instance, which runs a 2,230 mile route in 46 scheduled hours from Chicago to Seattle. Despite averaging near 500,000 annual riders, that fare revenue of just over $US67 million covers only about 65% of the operating costs.

On most routes, Amtrak trains travel on tracks owned by private railroads, like BNSF or CSX.

Don Kelsen/Los Angeles Times via Getty Images)Accidents like these could be avoided by eliminating grade crossings.

That means slow-going, and lower priority than freight trains on the same tracks. In the rest of the developed world, passenger rail is given its own right-of-way without grade crossings, allowing it to run at higher speeds and be a viable alternative to air travel or highways.

The only place where Amtrak functions like a high-speed rail line is the Northeast Corridor, between Washington D.C., New York City, and Boston, where the Acela Express reaches speeds above 100 miles per hour

Library of CongressAmtrak’s first Acela trainsets were tested in Colorado before heading to the East Coast.

The Acela serves 14 stops in the corridor, and makes up about a quarter of Amtrak’s total revenue. It first made its debut in 2000, and trainsets capable of even faster speed are set to arrive in 2021.

By 2002, Amtrak was on the brink of bankruptcy.

Getty Images

At the time, Amtrak was losing $US347.45 per passenger on its Sunset Limited train from Florida to California. A last-minute loan agreement from the Department of Transportation provided a critical lifeline for the railroad, which ended that year with a record ridership.

Things are slowly improving — but Amtrak is still losing money

Since 2010, Amtrak’s revenue has consistently increased every year, as operating losses declined to $US852 million. Still, there are plenty of improvements needed for the US to catch up with other modern train systems throughout the world. The century-old tunnels under the Hudson River connecting New York and New Jersey are in bad need of repair, and local officials have called on the federal government to step in for assistance. That has yet to happen.

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Áine Cain/Hollis Johnson/Samantha Lee/Business Insider

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