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[quote user="Maglev"] Two more points on subsidies:  express freight can add significant revenue to rail service.  By shipping US mail on airplanes, the government is subsidizing airlines and denying Amtrak revenue. Also, retail outlets in train stations can provide important funding for improvements and expansion.  I recall that "Duty Free Shoppers" was a major source of revenue for Honolulu International Airport.  Of course, there are limited benefits from passenger traffic if a station sees one train every other day -- but get that frequency up to several trains a day, and see how much interest there is in renting retail space.  [/quote] The U.S. Postal Service, which is a quasi-governmental business, selects the best alternative for shipping mail.  Most mail in the United States goes via surface.  Only that going relatively long distances goes via air.  For example, all first class mail between Dallas and Houston goes on trucks. In the early days of commercial aviation, prior to 1960, the U.S. Postal Office wrote air mail contracts that covered more than the actual cost of transporting air mail.  They were in part a subsidy for the commercial airlines.  But this is no longer the case.  The contracts are competitive and reflect the actual cost plus a return on equity to transport the mail.  They are not a subsidy; they simply reflect what airplanes do best, which is to transport people and high margin goods (mail) over long distances.
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