Privatizing rail, avoiding the pitfalls

"The U.S. national passenger rail carrier, Amtrak, is in crisis once again. The failure of its much-vaunted Acela high-speed train service between Washington and Boston has demonstrated its ineptness in both asset management and strategic planning. Congress must look closely at ways to return the passenger rail service to the private sector to take advantage of private industry's skills of management, innovation, and foresight. Britain's experience with privatization provides valuable lessons in this respect. This Issue Analysis examines the history of British government involvement in the management of the rail industry, from earliest times through nationalization to privatization. It finds that the British rail industry was never truly privatized, because the coercive fragmentation of the industry that was chosen as the method of privatization allowed too much room for government interference. Over-mighty regulators chose to exercise their powers just as the industry was starting to find its feet and choked off any hope of the industry operating independent of government control. A better route is the American model of freight rail deregulation. An industry that is vertically int