If a private Passenger Rail Corporation were consistently losing $32 dollars per customer transaction, every shareholder and business-savvy individual would tell its management to cut their losses and run. Yet, for the National Railroad Passenger Corporation, better known as Amtrak, these rules of governance do not apply. Despite its name, Amtrak is better described as a nationalized company, run largely by the government and Congress, which keeps funding it with your money.

According to the Pew Subsidyscope project, Amtrak looses approximately $32 dollars for every passenger it welcomes aboard. The company actually looses far more on average, and but for the Acela Northeast Corridor line which actually turns a small profit, the news would even be worse. If Amtrak were an airline, it would have gone bankrupt long ago. That hasn’t happened, thanks to Congress.

Despite the failing corporation, Amtrak continues to operate in the red under the protection and support of the federal government. Taxpayers cover the economic losses every year; in 2012, that amount was a staggering $1.3 billion.

According to Amtrak’s own website, in 2011, Amtrak earned approximately $2.71 billion in revenue and incurred approximately $3.95 billion in expenses.

The statistics for Amtrak are bleak. Only three of Amtrak’s 44 lines finished in the black in 2008, despite the fact 2008 was the railroad’s second-best year for ridership. In 2011 Amtrak celebrated its 40th Anniversary by setting an all-time high ridership record. In its 2011 annual report, which you can read here, the company also noted that its revenues were up 8.5%. Yet with increased passengers came increased costs in 2011 as the company explained that revenue “covered 85% of its operating costs.”

Would any other company in American be celebrating when announcing its annual operating costs were 15% in the red?

Defenders of Amtrak — and of high-speed rail — argue that most of the nation’s transportation industry is subsidized. Amtrak’s subsidy, however, is by far the most generous. According to a 2009 study by the Heritage Foundation, Amtrak subsidies totaled $237.53 per 1,000 passenger-miles.

America’s love of Rail is an important part of our national identity and history, but now it is time to turn the page and let Amtrak become a truly private company. If it is successful, it will flourish. If however it cannot compete for riders in the transportation world, then it will join other great innovative giants like Pan Am and TWA.

The growth of Amtrak ridership would be significant if those who use it were to pay its costs. But rail passenger services rarely cover their costs. Does that not indicate that they’ve outlived their usefulness?

Profit is the measure we use to indicate whether activities produce benefits in excess of their costs. It is not difficult to understand why rail passenger services do not produce such benefits:

First, rail trains are not supposed to leave their rails, and can therefore travel only from one “station” to another. But most journeys are not station-to-station, and therefore involve changes to other modes.

Second, it is difficult for steel wheels to stop quickly on steel rails. Therefore fast rail trains have to run with miles of empty space in front of them. This reduces their carrying capacity. Rubber-tired vehicles, on the other hand, can stop more easily, and thousands per hour can travel on a single lane at high speed.

Third, it is difficult for passenger trains to share their track with other vehicles, so all track costs have to be allocated to this public transport mode. Buses, on the other hand, can share travel lanes with other vehicles. One hundred buses an hour, carrying 5,000 passengers between them, can be accommodated on less than a tenth of the capacity of a single freeway lane, which can carry over 2,000 vehicles an hour. That is why, for example, a commercial bus fare from New York to Washington can be as low as $20 — less than a sixth of the cost of the lowest rail fare.

We all love to travel by train, and many exciting events took place on the Orient Express, and on trips from Chicago to New York. But the rail train has now been overtaken by the bus and the plane, and passengers are no longer willing to pay for this service.

Agreed that there is more to life than financial profit, but most travelers on inter-urban routes are in the upper financial quintile of the population. Why should the rest of us subsidize their travel?

In densely populated and urbanized regional corridors passenger rail can play a key role, in providing efficient and essential intercity transportation services. That fact has been demonstrated throughout the developed world, as it has in the United States, in such regions, as the Northeast Corridor (NEC). Specifically, between city-pairs located 250 to 500 miles apart in urbanized regions, there is clear evidence that there is sufficient market demand for regular, reliable, and frequent intercity passenger rail services and that passenger rail can compete successfully against air and automobile travel. In these circumstances, such rail services can be "profitable" (exclusive of amortization of capital assets) and commercially sustainable.

These facts have not been sufficiently recognized in national passenger rail policy in the United States over the last four decades. Amtrak is not truly a "national passenger rail system," but rather a combination into a single corporate framework of both viable and potentially commerically successful regional operations, such as those in NEC, parts of California, and the Pacific Northwest, and some heavily subsidized long-distance train services.

A better definition of successful national passenger rail policy would be capital support for the six or eight regional systems, for which there is demonstrable market demand, and competition for the provision of intercity passenger rail services without public subsidies between potential private and public providers (like Amtrak and other state and metropolitan entities) under long-term concessions.

It would be better policy for those never-to-be-profitable long-distance passsenger rail services to be broken out of this single corporate entity, called Amtrak. Decisions about whether any of these long-distance passenger rail services are to be subsidized by the federal and/or state governments should be based on the policy or political merits of each. The model for such treatment would be the Essential Air Service program, and the decisions about whether to subsidize the losses of any or all of these routes would be acknowledged to be a political or social policy-driven determinations, rather than ones based on market or commercial considerations.

In a time of scarce public investment resources, a national policy based on these principles would not only be more economically responsible, but it would be one for which public support would be more sustainable.

The Brookings Institute is correct that more emphasis should be placed on the long-distance passenger routes, although it is unrealistic to expect much if any state support because of the difficulty of coordinating so many states. Part of the reason is financial, the other political: were the long-distance routes to be dropped, so many states would lose all Amtrak service that it would become more difficult to maintain Congressional support for Amtrak.

But there is another reason for supporting long-distance trains. Many of them in effect are also corridor trains that serve a series of overlapping corridors. A good example is the Chicago-NewYork/Boston Lake Shore Limited. It serves not only its end points but corridors that include Chicago-Cleveland, Toledo-Buffalo, Buffalo-Albany, Syracuse-NYC and Albany-Boston. A coach seat may be sold several times over for different segments of the same run.

An easy and relatively cheap way to bolster the corridor-train service of long-distance trains would be to run a second daily train over the same route, timed about twelve hours earlier or later than the current service. This would permit out-and-back trips in one day on many corridor pairs. Because the infrastructure for passenger service is already in place, adding a second train on an existing rote costs less than adding a new route to the Amtrak network. The improvement in service can more than double ridership, enabling the route to cover a higher percentage of its costs from fares.

As with all transportation, “profitability” is a misleading goal. All modes are subsidized, highways more than Amtrak. Highways currently cover 51% of their cost from all user fees, including the gas tax, while Amtrak covers 67% of its operating costs. After 9/11, Congress gave the airlines $15 billion, an amount that would have funded Amtrak for at least twenty years of its existence.

The main constraint on improving Amtrak’s cost recovery ratio is lack of equipment. The demand for service is there, but Amtrak cannot run more trains because it lacks the cars and locomotives.

A truly conservative approach to intercity rail passenger service would:

1) Provide adequate capital funding for sufficient equipment to meet (steadily increasing) demand, growing the business the same way any private enterprise would;

2) Face Amtrak with competition by allowing the private railroads once again to run their own passenger trains, bidding for an appropriate share of Amtrak’s equipment and operating subsidy. While the private railroads will bitterly resist any third party to run trains over their tracks, fearing broader “open access” rules as in the European Union, some have quietly indicated they might be interested in running their own passenger trains again if they could compete for part of Amtrak’s subsidy.

3) Remember that conservatism is about preserving and, where necessary, restoring good things from the past. The train is still the most enjoyable way to travel on land. What could be more conservative than allowing more Americans the old-fashioned pleasure of traveling by rail?

For more than 20 years, Amtrak has been a partisan football and target in the debate by the federal government to support public transportation. But statistics on steadily increasing Amtrak ridership are free of party politics--the fact is investment in rail aids in solving our capacity issues. Moreover, these statistics give us a chance to evaluate the success of passenger rail and consider its future course.

The facts clearly support the growth of our passenger rail system to create a more robust, integrated and sustainable rail transportation system necessary to serve our growing, highly mobile society. For example, in the northeast corridor and several other corridors in the U.S., Amtrak is proving to be a competitive, attractive, convenient and safe alternative to air travel and highways. A record-number of riders have chosen Amtrak for travel and Amtrak is covering more of its costs through passenger fares.

Certainly, we still need to debate the best and most efficient role for the federal government to support public transportation--and yes there are several models that should be considered that range from public subsidies to public-private partnerships--but let’s start with the fact that the demand for passenger rail service is growing.

With a renewed interest in rail due to rising gas prices, concern over the environment, and congested freeways and airports, these solid performance numbers demonstrate passenger rail in America has a mandate for growth and Amtrak is poised to meet that demand.