Aug. 2 (Bloomberg) -- Amtrak lost $84.5 million selling food and beverages last year and $833.8 million over 10 years, House Transportation and Infrastructure Chairman John Mica said, calling for a “better way” to run those operations.
It costs taxpayers $3.40 for each can of soda the U.S. passenger railroad sells on its trains, and Amtrak charges $2.00, the Florida Republican said at a hearing today.
Taxpayers subsidized $68,477 in losses in 2011 for each Amtrak food-service employee, he said, citing Government Accountability Office estimates.
“At a time of running multitrillion-dollar deficits, we’ve got to look at every area of government,” Mica said. “Hardworking Americans are underwriting these losses. There has to be a better way.”
The hearing comes as Amtrak, which has lost money throughout its four-decade history, is laying out plans to build a high-speed rail network in the corridor between Washington and Boston.
Last month, Amtrak proposed a renovation of Washington’s Union Station that would cost at least $6.5 billion, and published a $151 billion plan for bringing 220-miles-per-hour service to its Northeast Corridor, the only route on which Amtrak gets enough revenue to cover operating costs.
Republican proposals to use more outside food-service contractors would eliminate Amtrak jobs with good wages and benefits, and replace them with low-wage positions, said Nick Rahall of West Virginia, the panel’s senior Democrat.
Food costs aren’t the major cause of Amtrak’s financial difficulties, and congressional micromanagement has made it impossible for Amtrak to make good decisions, Rahall said.
“This is a whopper of a bad idea if I have ever heard one: trading good-paying jobs with benefits for cheaper cheeseburgers,” he said.
Having food service on routes covering more than a few hours is a essential component of running trains, Amtrak Chief Executive Officer Joe Boardman said at the hearing. Reducing on-board service may cause people to stop riding and lead to higher losses, he said.
In 2006, the railroad recovered 49 percent of its costs on food. In 2011, the figure was 59 percent. The goal for 2015 is 70 percent, Boardman said.
Amtrak contracts out its commissary functions while using its own workers to serve food and beverages on trains. Legislation proposed last year by Representative Jean Schmidt, an Ohio Republican, would require the on-board operations to be contracted out to companies.
Maine loses about 37 cents per passenger using a contractor on trains the state runs in partnership with Amtrak, while Amtrak itself loses about $2.80 per passenger, said Representative Bill Shuster, a Pennsylvania Republican.
“I want Amtrak to succeed, but it can’t keep going on the path it’s been going on for 20 years,” Shuster said. “Monopolies shouldn’t lose money.”
About 88 percent of Amtrak’s food-service losses occur on its long-distance routes, said Ted Alves, the railroad’s inspector general. Employees who are on trains for three or four days at a time have more duties than a typical fast-food worker, Alves said.
“We have to recognize it is a very different animal,” Alves said.
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