Headed Down the Wrong Trak

By D. Dowd Muska
  • Thursday, October 15, 1998

In 1997, Amtrak discontinued the Desert Wind, its route between Los Angeles and Salt Lake City. This decision meant rail service between Las Vegas and Los Angeles was no longer available. But that will soon change, with a new route which directly links the two cities. Funded in part by Southern Nevada casinos, it will shuttle passengers between Las Vegas and L.A. in Spanish-built Talgo trains. Many casino executives and politicians have high hopes that the new rail route will alleviate traffic congestion on I-15. However, reality flies in the face of this assumption. Trains now carry a minuscule portion of American travelers, and despite the shorter trips Talgo trains provide, they are unlikely to lure Vegas-bound gamblers away from their cars. Furthermore, America’s nationalized passenger rail service is a fiscal disaster. Rather than seeking for ways to prop up Amtrak with "public-private partnerships" such as the one currently at work in Southern Nevada, Congress should privatize the service completely, or defund it altogether.

The Numbers Don’t Lie

More people bike and walk to work than use Amtrak’s commuter trains. The data isn’t much better for intercity travel—only 0.05 percent of these trips are made on Amtrak. Since its creation in 1971, Amtrak has received $30 billion in federal subsidies, but it has yet to turn a profit. This year the service’s losses are estimated to be $1.8 billion. Next year, the figure could be as high as $2.2 billion. When it comes to losing money, writes Reason editor Nick Gillespie, Amtrak is "on time, all the time." The General Accounting Office recently found that Amtrak loses about $47 per passenger—it is losing money on every route except those in its northeast corridor, where it just about breaks even. Many of the worst-performing routes, supporters of the L.A.-Las Vegas link should note, depart or arrive in Tinseltown. The Sunset Limited (L.A. to Orlando) loses $284 per passenger. The Texas Eagle (Chicago to San Antonio or L.A.) loses $201 per passenger. The Southwest Chief (Chicago to L.A.) loses $180 per passenger. As Thomas J. Dolan of Baron’s noted in June, "bankruptcy is too kind a word for [Amtrak’s] financial condition." But Congress has an answer to this: more federal funding. It has agreed to pour another $7 billion into Amtrak over the next few years. "That a federal program of such marginal significance can obtain substantial federal subsidies," writes the Heritage Foundation’s Ronald D. Utt, " … is a tribute to the political influence of train buffs, acrophobes, and unions, as well as upper-income travelers who account for a larger share of Amtrak passengers than any other form of transportation, including commercial airlines." Utt’s last charge sounds unbelievable, but it is valid—three out of four Amtrak riders have incomes above the national average, and 20 percent make more than $100,000 a year.

The Path to Privatization

While Amtrak has made some recent progress in getting its fiscal house in order, this has come about through reduced routes and poorer service. That’s ironic, since Amtrak was begun as an effort to improve the quality of passenger rail service in America. "The decision to cut services while accepting greater government subsidies," writes Mackinac Center for Public Policy analyst Genevieve Piche, "is a hallmark of a bureaucracy trying to survive and not a for-profit, private business seeking out and serving customers." In recent years a growing number of private corporations have contacted the U.S. Department of Transportation, asking to buy all or a portion of Amtrak. For example, Guilford Rail System, which operates a number of small railroads, offered to take over Amtrak’s operations in the Northeast. These inquires have fallen on deaf ears, reports Utt: "To date, the government has not responded to these requests, and it continues to ignore the opportunity [they] provide." Perhaps federal transportation bureaucrats are unaware of the large number of nations that have already privatized their government-run rail services. The success of privatization efforts in Argentina, Great Britain, Japan and New Zealand have inspired Australia, German, Sweden and Taiwan to pursue the same path. But one needn’t look abroad for evidence that privatizing railroads works. In 1987, the Reagan administration successfully privatized Conrail, the freight rail system which serves states in the East.

Gambling in the Desert

The public-private partnership in Southern Nevada calls for Amtrak—or more accurately, American taxpayers—to fund an upgrade of the tracks between L.A. and Las Vegas. This modification is needed to accommodate a new type of rail transport. The Talgo train, built in Spain, moves faster then existing tracks allow. The Talgo also offers wider seats, audio systems and video monitors. To the L.A.-Las Vegas route’s believers, reduced travel time and additional comforts will spur Southern Californians—who comprise 30 percent of Southern Nevada’s visitors—to leave their cars at home. This rosy scenario is questionable at best. Writing in the Las Vegas Review-Journal, William K. Sharpe noted, "It would cost a family of four at least $360 to travel on the Talgo train, in contrast to two tanks of gas for the swifter auto trip. As soon as the novelty wore off, daylight Talgo train service would fail miserably." Sharpe’s analysis isn’t stopping some in the casino community from fulfilling the private portion of the partnership. Rio Hotel & Casino and Primadonna Resorts have verbally committed to purchasing blocks of tickets on the Talgo trains. An announcement about the status of their agreement with Amtrak is expected soon.

All hope is not lost, though. Political and economic leaders in Southern Nevada do appear receptive to proven methods designed to keep transportation conduits open for Vegas-bound tourists. Expansion of McCarran International Airport—and attracting more air carriers to it—is one goal, as is the widening of I-15. Since 97.6 percent of all intercity travel is by automobiles and commercial airlines, these approaches are far more desirable than renewed rail service.


"Twenty-five years after I set out to save the American passenger train," admits Anthony Haswell, the father of Amtrak, "I feel personally embarrassed over what I helped create." Haswell’s comment should serve as a warning to those involved in the L.A.-Las Vegas Talgo project, as should Americans’ continuing—and undeniable—preference for cars over trains. To some extent, Southern Nevada casinos should be praised for their financial commitment to the new rail route. But if the Talgo trains do not carry enough passengers and casinos eventually pull out of the venture, taxpayers in Nevada and throughout the nation will be left with the bill. "The golden age of the passenger train has faded from view," writes Piche. "Automobiles and airplanes now offer speed and flexibility that is unmatched by any train service, subsidized or not." This point seems lost on transportation bureaucrats and car-hating environmentalists. It also seems lost on politicians and at least some casino executives in Southern Nevada.

D. Dowd Muska, a non-smoker, is a contributing editor for Nevada Journal, the Nevada Policy Research Institute’s monthly magazine. He can be contacted at ddm@npri.org.

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