Before their demise, many dot.com companies were ridiculed for their bizarre revenue structure — specifically, the more customers they signed up, the more money they lost. For awhile, anti-Amazon.Com folks joked that the way to put the company out of business was to buy as many books as possible, since the company lost money on every sale. But long before anyone heard of the Internet, the state-owned railroad company Amtrak made such absurdities a way of life.
Consider what happened to Amtrak after the 9/11 terrorist attacks. Given the temporary halt to all air traffic and the fear many people had of flying, you might think that Amtrak was swamped with customers and you’d be right. But that was an enormous problem.
Amtrak is structured in such a way that the more people rode the railroad, the more money it lost. In fact Amtrak representatives when to Congress complaining that they needed even more federal subsidies to deal with the “problem” of all those new customers.
Is it any wonder with this sort of attitude that even though it has received upward of $25 billion in subsidies over the last 30 years, Amtrak isn’t even close to becoming a viable, profitable enterprise.
Now the 11 member Amtrak Reform Council is busy drafting a plan to liquidate the railroad and turn it over to private hands. In an official statement, Amtrak tries to appeal to the post-9/11 sentiment saying, “Despite the current national emergency declared by President Bush and the heightened public service role that Amtrak assumed since September 11, there is no evidence that the Amtrak Reform council adequately considered this factor.”
Of course, this all but concedes the critics points that Amtrak is never going to be a viable private enterprise and Congress has already made it clear repeatedly that it is not interested in continuing to fund a state-run railroad system. Could this finally be the end of Amtrak? We can only hope.
Source:
Amtrak headed towards privatization?. Christine Hall, CNSNews.Com, November 12, 2001.