This morning, Becky Quick tweeted:

Transportation Sec. LaHood points out Amtrak made money last year. But it’s needed $30b in subsidies over the last 3 decades. -@beckyquickcnbc

That is a fair observation — but it is rather incomplete, at least regarding air travel. We build massive airports, there is the entire FAA; We now have the TSA, and we bailed the airlines out after 9/11.

All of which raises the following query:

How much do we subsidize air travel?

Feel free to explain what transport subsidies are out there . . .

Category: Taxes and Policy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

46 Responses to “Rail vs Air: Which Gets More Government Subsidies?”

  1. foosion says:

    Car subsidies are massive. Roads are obvious, but consider the cost of mandated parking spaces (many zoning codes require the builders provide lots of parking spaces for stores, apartment buildings, etc.) and subsidized parking. For example, how many square feet of Manhattan are taken up by on street parking and how much would that land cost at current valuations?

  2. Thor says:

    But but – I thought deregulation was supposed to fixthe airline industry!!

  3. sabbadoo32 says:

    Although I like the idea of a de-regulation joke at the expense of the airlines, I must point out that the structure of building airports never changed. The hub & spoke not only required massive airports, delays, et al; it also never adjusted the structure to fund airports.

    That being said, I’d still rather have public airports over private. The facilities will always be needed, even though the current air travel model is grinding to extinction.

    What would be cool to see is passenger transportaton hubs built around existing airports. There’s plenty of rail going into any airport, it’s a matter of designating a few of them for high-speed rail; as well as some terminal area for passenger bus lines. All fed by existing public transportation and highways to get people to and from cities.

  4. The Window Washer says:

    I’d say that maintaining bridges and railroad crossing cost more that airports on a national level. You get revenue from airports, nothing from the railroads.

  5. “Amtrak CEO Joseph Boardman testifies about the company’s budget request for 2012 before a House Appropriations Subcommittee. The government-owned corporation continues to operate at a loss, with a 2008 Pew study showing the government subsidized about $32 of each on the $1.3 billion request for track improvements and plans to make trains traveling from Philadelphia to New York the fastest in the country.

    Amtrak is a government-owned corporation formed in 1971.”

    Updated: Thursday, April 7, 2011 at 1:07pm

    which, merely, leaves the Question .. “Who’s more ____ __ ____?” Becky Quick, or Ray LaHood?

  6. philipat says:

    Two of life’s great mysteries:

    1. If the US is providing massive subsidies to mail, why can’t the system be cheap, clean, modern and efficient like in Europe?
    2. Why can’t the US have ONE half decent airline which didn’t forget this is a service business? The Asian carriers, which are the best in the world, operate in very competitive markets and yet are profitable without Government subsidies. Examples: Cathay Pacific, Asiana, ANA (Singapore Air and Thai should be there too, but they are Government owned, generating profits nonetheless)

  7. philipat says:

    @Rail, not mail! AGree with earlier post, why still no edit function?

  8. MikeNYC says:

    Amtrak is managed to fail by Congress, which then loves to stand up and point out how screwed up it is.

    Perhaps Becky Quick would let us know which Congressman will allow the little used Amtrak stop in his district to be closed? Good luck with that one.

  9. redcharlie says:

    The solution to all our rail troubles is just to declare Amtrak a bank holding company, whereupon $30B over 30 years will become the best deal on the planet.

  10. gman says:

    The entire airliner production/developement program has massive subsidizes direct and indirect from defense spending for the past 60 years. Socialize the costs and privatize the profits works best. Banks, Healthcare and defense spending are prime examples

  11. Greg0658 says:

    to the exact question – don’t know – but more effort should be put towards the most efficient – and that is probably rail
    I saw the interview – was wondering – the time period cars will have to wait at crossings for 160 mile an hour trains to have safe right of way? more or less than now at 60somethings mph? and do they share tracks with slow trains with some kind of go around sidetrack? It doesn’t sound like a monorail system in the works.

  12. sabbadoo32 says:

    Maintaining bridges and crossings? Make that rebuilding a lot of them. That creates and supports engineering, architecture, construction and trades jobs. Not a bad thing.

    When the current airline model implodes, you’ll still have people used to coming to the facilities for travel. Repurpose some of the rail that runs near all airports, build some spurs, and use some excess air terminal space for new high-speed rail terminal area. Downtown rail terminals could be the origination point, with a stop at the air/rail/bus port for passengers; then off to wherever.

    That’s how you can make revenue.

  13. Joe Jones says:

    The US airline industry owes its origins to enormous subsidies doled out in the 1930s for carrying air mail around the country. All of the big legacy airlines (American, United, Delta, etc.) started as ragtag flying circus operators and became serious scheduled carriers because of these air mail subsidies — at first they were basically losing money on passengers, so air mail was the only thing keeping them afloat.

    Besides that, you also have the “Fly American” law (government employees have to fly domestic carriers on government business), lots of chartering for the military, federal Essential Air Service grants (which enable small turboprop service to many isolated tiny cities around the country) and, perhaps most importantly, the armed forces training a huge number of airline personnel (most pilots and mechanics pick up their skills in the military, and the taxpayer pays for it).

    “Why can’t the US have ONE half decent airline…?” Entrenched labor unions with very complicated contracts that arbitrarily split up their job functions, flight attendants who don’t quit at 35 to get married (the normal practice in Asian countries), unusually intense domestic competition (no other country has so many big home-turf airlines; the US has at least five “majors” while other economic powers generally have no more than two).

  14. V says:


    Surely any 160mph+ trains will be run on tracks with a dedicated right of way? It’s how the rest of the world does it.

  15. lalaland says:

    Gems of Wikipedia, part 9,234

    “All of Amtrak’s preferred stock is owned by the U.S. federal government. The members of its board of directors are appointed by the President of the United States and are subject to confirmation by the United States Senate. Common stock was issued in 1971 to railroads that contributed capital and equipment; these shares convey almost no benefits[3] but their current holders[4] declined a 2002 buy-out offer by Amtrak.[5]

    Today, the burden of nascent railroad worker pensions, including those of freight railroad workers, are financed by Amtrak, regardless of whether such workers were ever employed by Amtrak or worked in passenger railroad service. In effect, Amtrak subsidizes the pensions of thousands of railroad workers who would otherwise not receive any pension.[25]

    Until 1966, most U.S. Postal Service mail was transported on passenger trains. By the 1960s, it was not uncommon for passenger trains to feature a dozen mail cars with only a few passenger cars. The mail contracts kept most passenger trains economically viable. In 1966, the U.S. Postal Service switched to trucks and airplanes, depriving many passenger trains of a major source of revenue.

    Amtrak inherited problems with train stations, most notably deferred maintenance, and redundant facilities resulting from competing companies that served the same areas


    Highways, airports, and air traffic control all require large government expenditures to build and operate, coming from the Highway Trust Fund and Aviation Trust Fund paid for by user fees, highway fuel and road taxes, and, in the case of the General Fund, by people who own cars and do not.[38]

    Only a government agency would ever pay the pensions of unrelated private industry worker, sheesh.

  16. Plangineer says:

    FY 2012 Department of Transportation Budget:
    Federal Highway Administration = $70.5B
    Federal Transit Administration = $22.4B
    Federal Railroad Administration = $8.3B
    Federal Aviation Administration = $18.7B

    Thus, Aviation is getting over twice as much as Railroad. It’s important to note that these “subsidies” are basically a distribution of our fuel taxes on everything from diesel and gasoline to jet fuel.

    Because this tax is not indexed to inflation and because we are driving much more fuel efficient vehicles, our infrastructure needs continue to grow while the US DOT has much less purchasing power and ability to maintain what we’ve already built. We desperately need to raise the gas tax (as unpopular as this is), index the fuel tax to inflation, or move toward a usage tax on vehicle miles traveled.

  17. Andy T says:

    “Thor Says:
    May 9th, 2011 at 8:20 pm
    But but – I thought deregulation was supposed to fixthe airline industry!!”

    Yeah man. We need to get to back to a few big airlines with the “hub and spoke” model….things were way better back in the 70′s….unless you wanted to fly to a ‘non hub’ city.

    “”The inflation adjusted 1982 constant dollar yield for airlines has fallen from 12.3 cents in 1978 to 7.9 cents in 1997. This means that airline ticket prices are almost 40% lower today than they were in 1978 when the airlines were deregulated.” This impressive trend was a catalyst for dramatic expansion in passenger miles flown, increasing from 250 million passenger miles in 1978 to 750 million passenger miles in 2005.”

    Yeah….who really wants to fly anyway?


  18. Plangineer says:

    The American Society of Civil Engineers does a great job evaluating our existing infrastructure and includes grades for Rail “C-” and Aviation “D”. Some of our biggest shortfalls are “Roads and Bridges” and “Drinking Water and Wastewater”.

    If you think $4 gas is bad, just consider what life would be like without access to clean drinking water. Many folks in flooded areas are experiencing this first hand right now.While our National Debt is a popular and important topic of discussion (particularly here), let’s not forget what makes this country great.

  19. Andy T says:

    The Question of the post is “Which gets more Subsidies?”

    Think the rhetorical question needs to get more specific: Which gets more subsidies Per Passenger-Mile Traveled?

    Let’s get ‘rigorous’ with the exercise while we’re at it….

  20. gman says:

    “Turn Amtrak into a Bank holding company!” At last some Tarp money to good use. Hey trains are a “troubled asset”

  21. Andy T says:

    It should also be pointed out that our most successful Airline, Southwest, was only able to blossom due to deregulation. In fact, the “powers that be” were so against what Southwest stood for that they created new rules (the “Wright Amendment”) to try and keep SW contained.

    It’s easy to “discount” the affects of deregulation when you’re sitting in a long line or getting delayed on a tarmac or when your prices fluctuate with the Energy prices, but that’s mostly because we can’t even remember a time when we couldn’t fly ‘wherever’ we wanted to “whenever” we wanted to.

  22. DL says:

    I don’t know how much federal money goes into the airlines directly. But I’m in favor of the FAA and NTSB being under federal control.

    In any case, if we ever get serious about cutting the budget, Amtrak would certainly be one of the items on my list of entities to get the ax.

  23. JasRas says:

    It would be hard at the moment to figure out how much the Airline industry is truly subsidized, not including the Airports, the FAA,….because other than SouthWest, the other participants have also benefited from multiple bankruptcys that let them either shed or re-org debt, put pension obligations onto the government, placed people out of work and onto unemployment, etc. These shadow dollars will take a while. But the airline industry without too much thought is far, far worse than Amtrak. Even without Congress’ help!

  24. doug says:

    I might assume that a lot of folks fly that read this blog. Very few taking on its costs. Why is that? Don’t want to admit you are not paying nearly what it truly cost to fly your butt around? Not even close….

  25. Andy T says:

    Here’s an interesting set of statistics. It shows that passenger-miles traveled among all classes of travel.

    It’s interesting to note that Amtrak Passenger miles have been fairly static over the last FIFTY years whereas Air Travel exploded post 1980.

    Passenger miles by Air is ~120X that of Amtrak Passenger miles.

  26. cognos says:

    Jet fuel (called “kerosene for aviation” by the IRS) is taxed at 21.9¢/gal for the 2007 tax year UNLESS it is used for commercial aviation (airlines such as American Airlines and US Airways and small commercial jets commonly chartered by entertainers, politicians, and business VIPs). Such commercial operations qualify them for a special tax loophole that allows them to pay only 4.4¢/gal.

    -from Wikipedia

    Can you believe that? Jet Fuel for private f-ing jets… virtually no tax.

    BR – Huffington is carrying a number of articles lately on how the richest people often pay v v little taxes. One former I-banker wrote an article titled, “How I paid 1% in income tax” and even included his returns! As a hedge fund guy, this is true. The carried interest loophole or “equity” loophole used in corp america is huge.

  27. KeithOK says:

    Or maybe we’re not saying anything because we, like you, don’t know the answer.

  28. cognos says:

    This whole — “anti govt”, “anti subsidy” thing… taken to the extreme like this is pretty silly.

    Its pretty silly when most here think Goldman Sachs was “bailed out” despite the Govt making a large profit and GS paying quite a bit in taxes over its lifetime (except for the loopholes).

    I mean… we are a society. Democracy and govt social rule and services (schools, police, roads, legal and reg) are a huge benefit to society and a huge part of capitalism. There is no sense to these dichotomies.

    Who gets more subsidies the rich (police, nat defense, infrastructure, stock market regs) or the poor (welfare, food stamps, schools)? Its kinda a stupid question. The real question is — where is the waste, fraud and mismanagement?

  29. KeithOK says:

    Note: my previous comment was meant to apply to doug’s comment, 3 above mine. Sorry for any confusion.

  30. econimonium says:

    Please, read any arguments about rail for what it is: “Those Eastern States don’t need no rail subsidies” which is what these people think. Up here on the upper eastern seaboard, we have heavy rail use all the way from Maine to DC, especially in the NYC corridor. So this is just thinly veiled “Blue State” opposition. Why else would Florida, surely a state that would benefit from high speed rail to bring in tourists to the Orlando area cheaply, be against these projects?

    It’s another case of “Tea Party” crazies singling out pet things to complain about (I don’t get no government handouts, but I own this shiny new scooter paid for by Medicare) while not knowing what the hell they are talking about in term of where money really goes in the Federal budget.

    Now talking to my latest “Southern” friends, they’re all speculating how OBL really isn’t dead and how this is all just a ploy to prop up Obama’s presidential standing in front of the election cycle. I kid you not. I listened to people who ought to know better tell me this yesterday in regards to a conversation about Newt G. So understand what’s going on here and call it what it is. Pandering to crazies. And the media ought to be the ones to bring the reality in but hey, reality doesn’t sell newspapers and magazines any more does it? One might ask which demographic is still watching the evening news, reading the paper and getting media in the traditional way and you might have your answer as to why the media sucks now.

  31. Scruffy says:

    Look north – Canada dealt with this over ten years ago to get air travel off the general revenue dime. Infrastructure-related surcharges on a Toronto-Vancouver roundtrip from

    NavCan (air traffic control, etc.): $40
    Security: $14.25
    Airport Improvement Fees: $40 ($25 Toronto, $15 Vancouver – each sets their own)

    In addition, each landing attracts a landing fee for the airline, and Toronto has one of the highest in the world. Note that only LGA shows up on the list for the US (and when was the last time a 747 landed there).

    All-in, these account for a ~$100 differential on a ~2000mi RT within each country.

  32. JasRas says:

    There is no doubt that passengers haven’t been paying the full cost of flying–airlines have been going bankrupt ever since de-regulation allowed for cut-throat pricing and excess competition… But I think one might see a dramatic reduction in the 120x airline passenger growth vs rail if the prices became realistic and self-sustaining.

    All transportation means are supported by the government in some way, shape or form. We pay taxes for that, and so that we have public roadways, not private roadways. There are simply some things a government can accomplish that private entities can’t. Like imminent domain…

  33. BigT says:

    The “loophole” on the FET on Jet-A is replaced by a tax (7.5%) on the amount paid for transportation of persons by air. This may change with the new FAA reauthorization bill.

  34. Greg0658 says:

    AndyT thanks for the transportation graph link .. on that “Amtrak Passenger miles have been fairly static over ” .. I noticed and want to point out the number of subdivisions in Rail that need to +add up as opposed to Air’s lump sum

    and on this “Who gets more subsidies the rich .. or the poor” .. I say this – guess who gets those cash subsidies back from the poor ? you know – they spend it .. on beeer (and snort)

  35. cognos says:

    I think the fire department is just 1 big insurance subsidy.

  36. Warminghut says:

    Amtrack only cost 30B over the last 30 years? What a bargain! A recent road update called “unweave the weave” in Vadnais Heights, MN cost almost a billion and a half for about three miles of road. And the only thing the “unweave” accomplished was to move the traffic snarl down the road about 5 miles. Traffic is virtually unchanged. And that was for just one highway interchange.

    I had no idea Amtrack was such a bargain by comparison. Not to mention the lesser polution per passenger…

  37. JimRino says:

    Amtrak used as a Liability SHIELD by other Railroads, allowing them to skimp on track maintenance:

    It is no mystery why, one spring day two years ago, an Amtrak passenger train jumped the tracks near Crescent City, Fla., and skidded to a stop on its side, killing 4 people and injuring 142.

    Investigators concluded that the track, owned by the big freight railroad CSX, had not been properly stabilized and that management’s oversight of maintenance had been lax. But when millions of dollars in damage claims arose from the crash, it was not CSX, a multibillion-dollar corporation, that paid them. It was Amtrak, the perennial money loser that survives only with regular infusions of cash from American taxpayers.

    Four people were killed in this crash of an Amtrak train two years ago because of defective tracks (Doug Engle/The Ocala Star-Banner)
    Three months later, it happened again. Poor track maintenance by CSX caused an Amtrak train to derail in Maryland, investigators said, injuring nearly 100 people. Again, Amtrak covered claims against CSX.
    In accident after accident, in derailments and grade-crossing collisions, CSX and other major freight railroads have used Amtrak to shield themselves from tens of millions of dollars in liability, an examination by The New York Times has found.

    For three decades, Amtrak has been paying these liability claims, regardless of fault, as a condition for using the freight lines’ tracks. Not only do these payments shift the burden of paying for negligence from profitable corporations to taxpayers, they remove an incentive for railroads to keep their tracks safe.

  38. JimRino says:

    There’s your answer to why Amtrak Never Dies and Never Makes Money.
    That’s the Design.

  39. troutbum says:

    I doubt if there’s a passenger rail system anywhere in the world that’s profitable. Most are subsidized and we should too. Of course, maybe you’d rather keep sending oil money overseas to people who’d rather kill us.
    In 1975, I rode the Bullet Train in Japan – 3 hours at 180 mph! Amtrak would be an embarrassment even in Bulgaria.
    Enjoy your air travel now, someday, it will go back to being a very exclusive club for the wealthy. Peak Oil, you know.

  40. Marc P says:

    I laugh when I read references to the supposed deregulation of the airlines. It’s the lack of deregulation that is the problem. The airlines have their own set of laws that warps economics and incentives. For example:

    What non-regulated industry may legally lock customers inside stores for hours at a time and refuse to let them leave?

    What non-regulated industry may legally make a contract to deliver but then at the last minute say “so sorry, we’re not going to make good on our contract” — and have no liability?

    What non-regulated industry may legally print false advertising about pricing?

    What non-regulated industry may legally bribe corporate customers (personal benefits — free personal flights — for corporate purchases)?

    What non-regulated industry may legally cry to daddy for subsidies when it cannot make payroll, or pension payments, or whatever?

    The problem with the airlines is that they are so protected by special laws that the normal forces of economic darwinism cannot act. We are left with inefficient dodo birds taking up gates.

  41. formerlawyer says:

    Information can be found at:

    It would appear from Table 3-35 that the most recent year statistics were complied (2007) government expenditures, both State and Federal, for Air Transportation totalled: $45 B versus $122B for highways and $1.5 B for railway. Interestingly transit, an urban preoccupation attracted more than air transportation at approx $46B.

  42. JasRas says:

    I’m not sure what the issue is with subsidizing any of the transport methods. I understand that people are in an anti-government mode right now, but the impracticalities of not have a centralized organization to help coordinate the various modes of transport are not being very well thought out here… Can you imagine if all highway systems were developed and controlled by state rather than federal? A state highway might be highly improved and drop to an unimproved county road upon crossing the state line! What if all airports were private and there was no FAA to have a unified air traffic control (insert jokes here: when they’re awake, using their Fortran controlled systems…). Shoot, all you have to be is a light historian to know that in the 1800′s the nations rail system was a hodgepodge of multiple gauges; wide, narrow, etc. The wasted time in off-loading cargo to a competing line to get the cargo to its destination was maddening. The government (and the Vanderbilts) had a heavy hand in unifying the rails for the sake of consistency and improved transit of people and cargo…

    It is ridiculous to conceive of the U.S.A being as big, successful, and powerful as it is today without centralized standards and guidance in mass transportation.

    A friend who was one of the founders of inter-modal truck transportation told me that one of the best things to come out of the EU was the standardization of size and width of lorries (trucks) within the participating countries. A lot of time and labor was saved.

    These are things that need to be contemplated with going off bashing government subsidies of transportation. Our nations interstate system wouldn’t have occurred if not for the Cold War and Eisenhower. (Early demands of the design was to have stretches of highway every so many miles that could be used as airstrips for landing planes, jets, etc. in case of military air bases being compromised…)

  43. Scruffy says:

    JasRas et al – it’s not an all-or-nothing proposition. No one is suggesting the government shouldn’t be involved in setting standards in areas like maintenance. The question that needs answering is where should the money that funds the activities come from.

    To me, for a mature industry like passenger air travel, having the users of the service pay for the ATC services and terminal maintenance directly, strikes me as something that should be attractive to all. And there’s an obvious direct benefit to an individual taking a trip, as opposed to a police department, which protects all.

    Cynically, the left can sell it as letting the fat cats pay their way for their luxury vacations, and the right can sell it as shrinking government. ;)

  44. philipat says:

    But isn’t there space in the market, that HUGE, US market for a Train service like Eurostar between Boston, New York and DC on a private basis? And isn’t there a Market for a decent First Class air service between New York and LA? First Class in the US is a joke. It’s like Economy in Asia. I can fly between Singapore and Hong Kong, a 3.5 hour flight (Like West Coast to East) on 747 in Business with a fully reclined seat and GREAT service.

    I’m so glad I live in this part of the world where service still means service. As opposed to the “Service economy”.

  45. 4thgenrrder says:

    Amtrak wouldn’t exist without federal mandate and subsidy. Period. The freight railroads don’t want to deal with it, but have to by gov’t. requirement under the facade of Amtrak being a ‘strategic asset’. But government and facades are another discussion completely… Don’t get me wrong, I’m generally pro-Amtrak as an option, but let’s call it what it is and why it exists. There are probably worse things to spend $30B on.

    With the growth of air travel and the interstate highway system since the 1950s, passenger rail in the U.S. declined to the point where it was deemed necessary for the government to step in and offer something. It’s a market shift I refer to modal choice – what is the most efficient/effective choice for the traveler. If I can drive/fly quicker and at less or comparable cost and in comparable or less time, I’m going to make that choice. With oil prices increasing, take a look at intracity passenger rail and bus ridership… it’s up big time.

    Keep in mind, prior to this growth, freight railroads ran very successful passenger operations: timetables, service, lodging, food and the experience was generally good if not better. And all while hauling 80% of the intercity freight traffic in the U.S. Point is here that as ridership declined with the growth of air and car travel, the freights abandoned the service due to lack of profitability and the freights don’t make much for Amtrak to run its rails today.

    I’m not sure how you’d calculate the gross subsidy differences between air and rail. Where does it begin and end? One thing you can take to the bank is that the freight railroads pay 99%+ of their own maintenance costs and roadbed improvements – the only place where local, state or gov’t money comes in is at highway crossings where maintenance costs are shared. This probably can’t be said for air and definitely can’t be said for car/truck.

    Where I see subsidy issues for rail are in the realm of High Speed Rail. I get asked regularly why we don’t have a HSR system in the US like Europe or Japan. A couple reasons to start with: 1) our land mass in the U.S. is huge comparatively, 2) governments in those areas paid billions of dollars for those dedicated rail systems – you’ll note that there can’t be freight traffic on those lines due to train speed and conversely those HSR networks don’t share existing freight lines in those countries, 3) and at estimates I’ve seen that range in the neighborhood of $10M to $16M per MILE (seen a couple higher ones) the funding requirements are staggering.

    HSR works currently in the Northeast Corridor (an Amtrak operation by the way) but it’s not speeds of 180 mph – more like 100 mph. I’m all for regional HSR where it makes sense – even if we have to build new, but given the current state of our economic situation, I think we need to take care of our current infrastructure and other pressing problems the government has its head in the sand about (I don’t care which party you’re from – they’re both equally culpable in my book) like our national debt, education and out of control military spending.

    The $60B the government has funded for HSR development over the next 5 years is misguided – that money should go to the $45B in bridge inventory that’s crumbling under our tires. Remember Minneapolis and I-90 over the Mississippi River – it’s a miracle it hasn’t happened again.

    I could rant on… but hope these insights have been helpful from someone in the rail industry

  46. hr says:

    We are spending two billion per WEEK in Afghanistan.

    That would buy a lot of (insert transportation mode here)