The $22.86 Amtrak “Profit” That Was Never Available to Fund Rural Trains
Wendover Productions makes a compelling case that profitable passenger trains help sustain America's rural rail network. But its central financial claim has a serious problem: the video calls $22.86 left over from an average Washington–New York ticket “pure profit” and presents that money as funding services to small communities. Amtrak's own accounting, federal legislation and government audits tell a considerably different story.
The problem is not that the Northeast Corridor cannot generate an operating surplus. It can. The problem is treating an operating contribution as money freely available for other routes, while leaving major capital obligations and the actual funding arrangements out of the explanation.
The accounting does not support the word “profit”
Amtrak's own figures confirm that the Northeast Corridor generated substantial operating contributions. Its September 2016 performance report recorded $292.9 million for Acela and $187.1 million for Northeast Regional after allocated overhead. But the same report explicitly states that its route-performance results exclude depreciation and interest. These are operating contributions, not fully calculated net profits.
Amtrak
That distinction matters because depreciation represents the cost of using up assets that eventually need replacement. A locomotive does not last forever. Neither do railway bridges, tunnels, signals or passenger cars.
Wendover assigns $9.67 per ticket to the train itself and $3.66 to track infrastructure. But the presentation does not explain the useful-life assumptions or depreciation methodology behind those allocations. The Government Accountability Office subsequently confirmed that Amtrak did not allocate depreciation to individual service lines in its financial reports. Amtrak cited the difficulty of assigning shared assets, including railcars, to particular services.
U.S. GAO
The problem is not merely theoretical. The Northeast Corridor Infrastructure and Operations Advisory Commission had developed a $17.7 billion capital plan for 2016–2020. The GAO found that 60% of the plan's costs lacked funding, requiring approximately $2.1 billion annually from Amtrak, states, commuter railroads or the federal government.
U.S. GAO
A profitable train can still operate on infrastructure that its fares cannot adequately maintain. Calling its remaining operating contribution pure profit ignores the financial obligations that keep the service running.
Amtrak's September 2016 financial report recorded a companywide net loss of approximately $1.066 billion, alongside an adjusted loss of $181.5 million. These figures do not disprove the profitability of individual routes; they demonstrate why a positive route contribution cannot be confused with the financial health of the entire railroad.
Amtrak
The Amtrak Inspector General provided further context in January 2017. Since 1971, Amtrak had received $46 billion in federal assistance because passenger revenue and other funding sources did not cover its costs. In FY2016 alone, Congress provided approximately $930 million for capital maintenance and improvements and almost $300 million to cover the company's net operating loss.
AMTRAK Office Of Inspector General
That is the real financial picture: operating surpluses, substantial infrastructure obligations and continuing public funding.
Congress had already changed the cross-subsidy arrangement
The video was published on April 7, 2017. By then, Amtrak was operating under a significantly different federal funding structure.
YouTube
The FAST Act of 2015 required separate accounts for the Northeast Corridor and the National Network. The new arrangement was established in 2016 and took effect with FY2017 funding.
FRA
Amtrak's own FY2017–2021 service-line plan explains the consequence:
Net Northeast Corridor revenues were to be retained for reinvestment in the Northeast Corridor rather than used to cover operating losses on National Network trains.
The National Network included both state-supported and long-distance services. This was a deliberate change from the previous funding arrangement.
Amtrak
The actual FY2017 appropriations illustrate the separation:
- Northeast Corridor: $328 million
- National Network: $1.167 billion
- Combined: $1.495 billion
The Congressional Research Service confirms that the new structure was intended to eliminate cross-subsidization between the two networks.
Every CRS Report
There is an important timing qualification: Congress retained the old grant structure for FY2016 while Amtrak updated its internal accounting. The new separation applied from FY2017. That means the video's underlying historical figures and its description of the funding arrangement need to be distinguished.
The video does neither.
It presents the Northeast Regional's $22.86 as though it were freely available to finance long-distance services, without explaining that the funding structure had changed before publication.
This is not a minor accounting technicality. It changes the identity of the people and institutions actually financing rural rail.
The National Network receives its own passenger revenue, state contributions and federal appropriations. The money supporting those services is not simply a transfer of the Northeast Regional's operating surplus.
The mobility research does not establish the case for Amtrak
The video also invokes research on economic mobility to justify maintaining rural rail services.
The underlying research is substantial. Harvard economists Raj Chetty and Nathaniel Hendren studied more than five million families who moved between counties, examining how childhood environments affected adult economic outcomes.
Opportunity Insights
Their research identified a strong relationship between local commuting patterns and upward mobility. In particular, a greater share of workers with commutes shorter than 15 minutes was associated with better outcomes for children from lower-income families.
But the researchers made an important qualification: these relationships were unlikely to represent the direct effect of being closer to jobs. They suggested that other characteristics associated with commuting times, particularly segregation and urban sprawl, were driving the observed patterns.
Opportunity Insights
The measure was the proportion of local workers commuting less than 15 minutes, using 2000 Census data. It was not a measurement of access to Amtrak, intercity railway coverage or the economic effect of rural passenger trains.
The distinction is substantial.
Research demonstrating that neighbourhoods and access to employment opportunities affect children's economic prospects does not establish that maintaining a particular long-distance railway service produces those benefits.
The video moves from evidence about local commuting patterns to a conclusion about rural intercity rail without demonstrating the connection.
That conclusion might be true for particular communities. But this research does not prove it.
The closing argument rests on the wrong financial story
There is a legitimate public-policy argument for maintaining rail connections to communities that commercial transportation providers might otherwise neglect.
A rural railway service need not generate a profit to provide economic and social value. Its passengers may have limited alternatives, and the costs of providing transportation cannot always be recovered through ticket sales.
But that argument should be made honestly.
Wendover presents three different things as though they were one:
- A positive operating contribution from busy Northeast Corridor trains.
- The wider financial obligations and capital requirements of Amtrak.
- The public funding used to maintain the National Network.
They are related, but they are not interchangeable.
The $22.86 is not a demonstrated pool of net profit that can simply be transferred to a passenger travelling from Havre to Chicago. Amtrak's route accounting excludes important costs, and its FY2017 funding arrangements directed Northeast Corridor revenues back into the corridor.
My verdict: Wendover explains why trains are expensive reasonably well, but its most memorable financial conclusion is misleading. It turns a complicated system of public appropriations, state contributions, operating surpluses and enormous infrastructure obligations into a reassuring story about one passenger paying for another passenger's journey.
Rural rail may deserve public funding. But taxpayers and policymakers deserve to know that they are funding it. A public-service obligation does not become a private commercial profit simply because that makes a better ending to a video.
References
1. Why Trains are so Expensive — Wendover Productions, April 7, 2017. The original video and its claims about ticket profitability and rural cross-subsidization.
2. Monthly Performance Report — September 2016, Final Audited — Amtrak, March 31, 2017. Documents positive Northeast Corridor route contributions while explicitly excluding depreciation and interest from route-performance results.
3. Amtrak: Better Reporting, Planning, and Improved Financial Information Could Enhance Decision Making — U.S. Government Accountability Office, January 6, 2016. Establishes the Northeast Corridor's infrastructure funding gap and documents deficiencies in Amtrak's financial reporting and depreciation allocation.
4. Governance: Addressing Remaining Shortcomings Would Lead to a Budget Development Process More Fully Aligned with Leading Practices — Amtrak Office of Inspector General, January 17, 2017. Documents Amtrak's $46 billion history of federal assistance and FY2016 capital and operating grants.
5. Amtrak Five Year Service Line Plans, FY2017–2021 — Amtrak, FY2017. Explicitly states that net Northeast Corridor revenues were to be reinvested in the corridor rather than used to cover National Network operating losses.
6. Issues in the Reauthorization of Amtrak — Congressional Research Service, January 5, 2021. Explains the FAST Act's funding separation and provides the actual FY2017 appropriations for the two accounts.
7. The Impacts of Neighborhoods on Intergenerational Mobility: Childhood Exposure Effects and County-Level Estimates — Raj Chetty and Nathaniel Hendren, May 2015. Provides the original economic-mobility research and explains why short commuting times should not be interpreted as a direct causal effect of transportation access.