Amtrak Vs. Airlines: Air travel wins even at $1,000/Barrel
With additional spending for Amtrak gaining the political momentum equivalent of a speeding fright train, the question seems obvious: Can Amtrak ever offer a more affordable transportation solution than commercial air travel? In short, Amtrak will never beat air travel, even with jet fuel in excess of one thousand dollars a barrel.
Fortunately, all major airlines in the US are public companies and Amtrak makes their financial reports available via their website. This makes a short order of comparing the two transportation methods.
One of the common metrics of transportation performance is Cost Per Available Seat Mile (CASM) which divides total costs by the total seat-miles traveled. For 2008, the cost per seat mile:
| Company | Cost Per Available Seat Mile (2008) |
| Amtrak | $0.3120 |
| Airtran Airways | $0.1102 |
| American Airlines | $0.1387 |
| Continental Airlines | $0.1244 |
| Delta Airlines | $0.1872 |
| Jetblue Airways | $0.1011 |
| Southwest Airlines | $0.1044 |
| United Airlines | $0.1574 |
| USAirways | $0.1466 |
(Source: Annual Reports for 2008)
Whoa! Amtrak manages to have costs over 300% higher than Low cost carriers JetBlue and Southwest. With all of this comes the gambler’s dilemma–Will increasing the spending in Amtrak result in lower operating costs?
Impact of fuel costs
But what about the impact of higher fuel prices? If Oil goes to $200 a barrel, Amtrak will be able to be competitive then, right? No.
Taking into account the fuel used per ASM, air travel cost remain lower than Amtrak’s up to approximately $1,000 per barrel of jet fuel/diesel*. In fact, at $1,500 a barrel for fuel, Amtrak’s cost per seat mile are still within a cent of JetBlue’s.
(*I just used $/Barrel of refined product, as I did’nt feel like messing with crack spread.)
Impact of fuel prices on CASM
Love Rail? Fire Amtrak Employees!
The take away is simple. I hold this simple challenger to those who favor high speed rail: Show me that Amtrak can work first. I’m not even interested in profits, just costs. Show me a 50% reduction in costs before talking about high speed rail. Otherwise, we will be committing billions of dollars of our money to an endeavor where no reasonable assurance can be gained that the end result will be economically viable beyond paper studies by proponents who will feel no recourse if their conclusions are proven wrong. Amtrak is structurally deficient to the point where $20 a gallon fuel will still fail to change the fact that air travel has managed to beat their paints off.
If you support high speed rail, your first goal should be to to get KPMG to remove the following from the audit report on Amtrak:
“The Company has a history of substantial operating losses and is dependent upon substantial Federal government subsidies to sustain its operations…Without such subsidies,Amtrak will not be able to continue to operate in its current form and significant operating changes, restructuring or bankruptcy may occur…”