The Rail Passenger Service Act of 1970 created Amtrak to operate and revitalize intercity passenger rail service. Amtrak is required to operate a national passenger rail system that ties together existing and emerging regional passenger rail service and other intermodal passenger services. Amtrak currently provides passenger service along 40 routes that cover about 22,800 miles in 44 states and Washington, D.C. (See fig. 1 and app. I.) Like all major national intercity rail services in the world, Amtrak receives substantial government support. The administration’s fiscal year 1999 budget proposal would provide Amtrak with $621.5 million for capital expenses and no separate funding for operating expenses. At the direction of the administration, Amtrak established the goal in December 1994 of eliminating its need for federal operating subsidies by fiscal year 2002, except for federal contributions to retirement payments for railroad employees, and established a “glidepath” of decreasing federal operating subsidies for each intervening year. To implement this goal, Amtrak’s strategic business plans have targeted opportunities for reducing expenses by closing some routes and reducing the frequency of service on others. These plans have had varying degrees of success. In addition, Amtrak projects substantial revenue growth from the introduction of high-speed rail service between Washington, D.C., and Boston, Massachusetts, in fiscal year 2000 and from the expansion of mail service and express service for transporting higher-value, time-sensitive merchandise. The Surface Transportation Board currently is considering the terms and conditions under which the Union Pacific Railroad and other freight railroads must make their track and facilities available to Amtrak for its express merchandise service. The Taxpayer Relief Act of 1997, enacted in August 1997, makes a total of $2.2 billion available to Amtrak in fiscal years 1998 and 1999 to acquire capital improvements and to pay certain equipment maintenance expenses, among other things. Enacted in December 1997, the Amtrak Reform and Accountability Act of 1997 authorized federal funding for Amtrak’s capital and operating expenses through fiscal year 2002 and repealed several provisions of federal law that limited Amtrak’s ability to manage costs and maximize revenues. Among other things, the act also established an Amtrak Reform Council to evaluate Amtrak’s performance and make recommendations to Amtrak for financial reforms and further cost containment and productivity improvements. In passing the act, the Congress found that intercity passenger rail service is an essential component of a national intermodal passenger transportation system. As shown in table 1, Amtrak’s expenses were at least 2 times greater than its revenues for 28 of its 40 routes in fiscal year 1997. In addition, 14 routes lost more than $100 per passenger carried. Amtrak’s financial system allocates all expenses of operating intercity passenger trains to routes, including the depreciation of its equipment and infrastructure, interest, and corporate and strategic business unit (SBU) overhead costs. Because the measures of financial performance used in this report follow Amtrak’s fully allocated cost approach, they do not represent potential cost savings to Amtrak if it discontinued a route: Depreciation (a noncash expense) and overhead and other shared expenses would not be eliminated by closing a route. If Amtrak’s financial performance data excluded depreciation, losses per passenger would be reduced by at most $10 on 16 routes and by at least $30 on 8 other routes. (See table II.1 in app. II for a comparison of losses per passenger when depreciation is excluded.) Since 1994, Amtrak has completed two extensive assessments of its routes that identified options for closing routes, truncating routes by discontinuing service on segments of the routes, or adjusting the frequency of service on routes in an effort to reduce Amtrak’s financial losses by cutting costs while minimizing revenue losses. In response to its first assessment, Amtrak closed 4 routes, truncated 6 routes, and reduced the frequency of service on 11 routes, typically from daily to three or four times per week. Amtrak achieved $54 million in cost savings in fiscal year 1995; however, it subsequently restored much of this service because the ridership and financial performance of routes with less than daily service were worse than anticipated. While Amtrak currently has no plans to close additional routes, it recently initiated a market-based analysis of its route system to clarify the policy for and direction of its national route system. This analysis will shape Amtrak’s long-term investment and development program for passenger rail service. Amtrak’s primary financial performance measure is the operating ratio of each route’s expenses divided by its revenues. The overall operating ratio for Amtrak’s core intercity passenger services was 1.86 in fiscal year 1997. This ratio indicates that expenses were almost twice as great as revenues for Amtrak’s core intercity passenger services, which include mail and express merchandise services but exclude revenues and expenses from Amtrak’s commuter operations, other reimbursable activities, and commercial development. (See table II.2 in app. II for each route’s operating ratio for fiscal years 1994 through 1997.) Figure 2 shows the three routes that had operating ratios greater than 3.0, indicating that expenses were more than 3 times greater than revenues. Eight routes had operating ratios between 2.5 and 3.0 in fiscal year 1997. A related performance measure is the total operating profit or loss of each route. (See table II.3 in app. II for each route’s operating profit or loss for fiscal years 1994 through 1997.) While the Metroliners route was Amtrak’s only profitable route, 7 routes each lost at least $40 million and 10 additional routes each lost between $20 million and $40 million in fiscal year 1997. The Northeast Direct route between Washington, D.C., and Boston had the largest loss—$160 million—because it loses $29 per passenger, while it transports 28 percent of all Amtrak passengers. However, its operating ratio of 1.65 was among the best of Amtrak’s routes. The other routes that lost the most money during fiscal year 1997 were primarily long-distance routes. Only five Amtrak routes had revenues that exceeded their train expenses, which include the train crew’s wages, fuel, and the depreciation of the train’s locomotive and cars, in fiscal year 1997. (See table II.4 in app. II for each route’s train, route, and system expenses in fiscal year 1997.) Ridership is another key performance measure. During fiscal year 1997, five Amtrak routes each carried more than 1 million passengers, accounting for nearly 60 percent of the railroad’s ridership. In contrast, 17 Amtrak routes carried only about 10 percent of Amtrak’s total ridership—9 routes each carried fewer than 100,000 passengers, and 8 routes each carried between 100,000 and 200,000 passengers. (See table II.5 in app. II for each route’s ridership for fiscal years 1994 through 1997.) Many of these routes connected a small city with Chicago, New York City, or Philadelphia. In addition, while Amtrak routes generally provided at least daily service, three routes—the Cardinal, Sunset Limited, and Texas Eagle—provided service only three times per week during fiscal year 1997. Overall, Amtrak lost $47 per passenger during fiscal year 1997. (See table II.6 in app. II for each route’s profit or loss per passenger for fiscal years 1994 through 1997.) As shown in figure 3, 14 of Amtrak’s current routes lost more than $100 per passenger during fiscal year 1997. The Sunset Limited route (between Los Angeles and Orlando) lost $284 per passenger, the most among Amtrak’s routes, followed by the Texas Eagle route (between Chicago and San Antonio), which lost $201 per passenger, and the Southwest Chief route (between Chicago and Los Angeles), which lost $180 per passenger. Amtrak anticipates that each of these three routes could earn substantial new revenues if the Surface Transportation Board permits Amtrak to expand its express merchandise service for transporting higher-value, time-sensitive goods. Amtrak’s loss per passenger would have been greater in fiscal year 1997 if 12 states had not provided a total of $70.1 million to subsidize service on 17 routes that particularly benefited their residents. (See table II.7 in app. II.) For example, California’s contribution of $16.8 million for the San Joaquins route, which carried 688,000 passengers between Oakland and Bakersfield, reduced this route’s loss from $35 to only $11 per passenger in fiscal year 1997 and improved its financial performance to second best among the 40 routes (behind the profitable Metroliners). Similarly, North Carolina’s payment of $3.2 million for the Piedmont route, which carried 43,000 passengers between Raleigh and Charlotte, reduced this route’s loss from $116 per passenger to $42 per passenger. Amtrak has sought state support primarily for shorter routes whose service benefits residents in one or two states. Amtrak uses a load factor to assess each route’s efficiency in providing service. (See table II.8 in app. II.) Amtrak’s overall load factor of 46.6 percent during fiscal year 1997 means that, on average, 46.6 percent of Amtrak’s seats were filled. Amtrak’s long-distance trains generally had higher load factors than its short-distance trains. The International route (between Chicago and Toronto, Canada), the Pennsylvanian route (between New York City and Pittsburgh), and the New York-Harrisburg route had load factors under 30 percent. Twelve additional routes had load factors between 30 and 40 percent.