US Government Report Finds
High Speed Rail to Require Heavy Subsidies
"Commercial Feasibility" Terminology Could Mislead

A study by the Federal Railroad Administration (FRA) similarly found that commercial revenues would fall far short of costs in all studied corridors over the period from 2020 to 2040 (see Table 4).(1) The most favorable performance was projected in the Washington-New York-Boston corridor at 55.3 percent, which would require a public subsidy of 44.7 percent.

High-Speed Rail Corridors
FRA Feasibility Study: 2020
Corridor Commercial Revenues Subsidies
Chicago-Detroit 21.6% 78.4%
Chicago-Milwaukee-Detroit-St. Louis 22.8% 77.2%
Chicago-St. Louis 13.6% 86.4%
Eugene-Portland-Seattle-Vancouver 17.0% 83.0%
Houston-Dallas-Austin-San Antonio 42.7% 57.3%
Los Angeles-San Diego 15.6% 84.4%
Miami-Orlando-Tampa 37.7% 62.3%
San Francisco-Los Angeles-San Diego 31.8% 68.2%
Washington-New York-Boston 55.3% 44.7%
Average: High-Speed Rail 28.7% 71.3%
Exhibit: Amtrak 1994 43.6% 56.4%

FRA found ridership would be even lower where discount airlines operated, noting that an air fare reduction of 30 percent would reduce high-speed rail ridership by 30 percent.(33)

Potentially Misleading Conclusion

Despite these findings, the FRA report concludes that high speed rail would be commercially feasible in a number of the corridors above. This is accomplished by FRA's adoption of what could be chararcterized as a rather "loose" definition of "commercial feasilibity."

Section 1036 of the 1991 Intermodal Surface Transportation Act of 1991 required the U.S. Department of Transportation to conduct a study on the commercial feasibility of high speed rail. The report appears to have violated the Congressional mandate, by evaluating high speed rail on a non-commercial basis. USDOT counted non-user benefits and consumer surplus as commercial revenues. Consumer surplus is the difference between the price paid by a purchaser and the price that the purchaser would be willing to pay for the good or service. No amount of rationalization can convert non-user benefits and consumer surplus into commercial revenues -- they are simply not real money. If they were, the rates of non-user benefit and consumer surplus used by USDOT could be used by Congress and the President to balance the federal budget this year and forever, pay off the national debt in three years and cancel state and local taxation in perpetuity.

1.. Overview Report: High Speed Ground Transportation for America (Washington, D.C.: Federal Railroad Administration, United States Department of Transportation, August 1996).

Evaluation of the Proposed Miami-Orlando-Tampa High Speed Rail Proposal

The Public Purpose
Demographic Briefs
Government Cost Review
Gov't Employment Fact Book
Highway & Motorway Fact Book
Intercity Transport Fact Book
Labor Market Reporter
School Transport Fact Book
Transport Fact Book
Urban Policy
Urban Transport Fact Book
Competitive Tendering Website
Intl Comp. & Ownership Conference

Contact by E-Mail
Subscribe (Free)
Corrections Policy & Rights

The Public Purpose
P. O. Box 841 - Belleville, IL 62269 USA
Telephone: +1.618.632.8507 - Facsimile: +1.618.632.8538
Demographics, Development Impacts,
Market Research & Urban Policy