End of Amtrak chasing profitability?

Return to Reading Company Olney Sta wrote: ↑Fri Dec 06, 2019 1:39 pm RDG was one of the few railroads (along with Southern, D&RGW, a few others) that did not participate in formation of Amtrak. It maintained all its passenger service after A-Day; such service was for the most part all commuter service around Philadelphia, subsidized/supported under City/SEPTA auspices.

Technically PSIC from 1960 onward, I believe SEPTA began subsidy of regional rail by 1965?

R36 Combine Coach wrote: ↑Mon Dec 09, 2019 5:21 pm

Return to Reading Company Olney Sta wrote: ↑Fri Dec 06, 2019 1:39 pm RDG was one of the few railroads (along with Southern, D&RGW, a few others) that did not participate in formation of Amtrak. It maintained all its passenger service after A-Day; such service was for the most part all commuter service around Philadelphia, subsidized/supported under City/SEPTA auspices.

Technically PSIC from 1960 onward, I believe SEPTA began subsidy of regional rail by 1965?

SEPTA was created in 1963 and absorbed PSIC and SEPACT November 1965.

rcthompson04 wrote: ↑Mon Dec 09, 2019 10:28 am

Suburban Station wrote: ↑Mon Dec 09, 2019 8:33 am the for profit goal does not necessarily inhibit ridership growth. there are plenty of examples of commuter railroads who have no such stated goal that also do not focus on ridership growth. losses are often acceptable since the true benefit, for many in charge, is the awarding of contracts. for amtrak, whose business is not as unprofitable as commuter railroads, operating losses primarily stem from lack of capital investment (aka slow, unreliable trains). anything that does not fundamentally improve the product is window dressing (or worse). one language change that might result in real change is anything that allows growth of short distance corridors without state support.

What should be Amtrak's goal is the fundamental question. Nobody seems to be in agreement on what Amtrak is supposed to be doing. If it was up to me, I support maximizing ridership to reduce auto/aviation usage while obtaining profitability. That would mean gutting all but a few long distance trains and using the resources to build out corridors and improve the remaining long distance trains.

I like retaining profitability because it is a good check to the "advocacy group" nonsense that we see throughout the transportation sector who push for things that are good for their limited groups, but are a terrible use of resources. You see this nonsense with things like a lot of rural road spending and Essential Air Service.

I agree, the operating profit (they aren't chasing real profits which is why defazio is off base) is a good check on excess. A modest proposal would address major infrastructure needs like dc to richmond, long bridge, CREATE in chicago, more and faster trips in the nw as well as San Diego, and improved florida and texas operations. Ideally it would also include capital funding for more state routes as originally envisioned under priia. This should allow growth by fixing some fundamental problems. Projects like these might also be the necessary balance to get gateway done.

east point wrote: ↑Sat Dec 07, 2019 12:59 am One big subsidy is the US government's to airlines for the GPS system. Use of that system for airlines is "FREE" as it probably saves $6 - 10000 per trip for reduced fuel, time enroute, ATC, ADS-b out and soon in, Collision avoidance system, low visibility approaches and landings, and many other services. Now RR PTC needs GPS but not to the extent that airlines need.

Subsidy?... I think you need to look a little closer at taxation on air travel.

For those too lazy to do so, airlines are taxed at a Federal rate higher than alcohol. Hard to call it a subsidy when you're being taxed at 15-20%.

https://www.politifact.com/wisconsin/st ... -flight-a/

It might be a good idea to bring this back to very basic concepts. Why do accounting at all? To assign revenues and costs to activities in order to evaluate the viability of that enterprise and its discrete offerings, such as trains, baggage, cafe, etc...

It is a maxim of accounting to match costs with revenues over as discrete of an offering as possible. IE match ticket sales to trains, stations, and journey segments. Do the same with expenses.

When BNSF looks at a mixed freight train, they want to know where all the freight is going, how much per ton mile, and where the expenses are. The idea is to make sure the train runs in a way that makes the most money, and that the tracks, people, and computers are used in a way that makes the most money.

If an alteration can be made that increases profit, BNSF would likely do so. Why run a train Denver-Chicago if most of the freight runs Omaha-Chicago? Why carry low-profit freight to Grand Forks if it's not enough to pay for the line upkeep? Granted railroads play the long game because the assets are so expensive to build and once gone, they are totally gone usually. But the idea is to run it like a business.

When we talk about Amtrak accounting, it's tough because (a) it will never make money as defined by GAAP; (2) they refuse to change much; (3) the highly political process of making changes, such as diners and ticket offices, makes it hard to change little stuff; (4) they basically will never have competition unless something big happens.

Given the 4 reasons above, management has had little reason to change over the last 20 years, and there's been little attempt to do heavy lifting with accounting.

Its' been interesting following the stakeholders in state corridor and commuter operations fighting over accounting as they all feel shorted, and operators like Keolis have sprung up for a reason.

One of the biggest fights is how to allocate NEC costs. How do you even measure the rates at which the capital costs are allocated? Ton-miles? Passenger miles? Train-miles? Axle-miles? Slots? Each measuring method presents advantageous and disadvantageous facets to various parties. And to further complicate it, they sold off half the NEC to commuter carriers.

TLDR this is a much bigger issue that just "does it make an operating profit".

Tadman makes a lot of sense in his last post. We never hear anyone talking about highway profitability. Just as we need I95 and the Jersey Turnpike (12 lanes in its northern section) we need railroad passenger transportation. The big Eastern cities would grind to a halt without rail transportation, and California and Texas are investing in it. Because of the FEC's unique situation, where it or its related companies own a lot of real estate suitable for development along the railroad, Florida is getting an entirely new private passenger railroad. (Will it make money? Who knows, but I suspect the investors see it as an aid to their real estate operations.)

So we just need to figure out where passenger rail makes sense, and spend public money to provide it there.

JoeG wrote: ↑Tue Dec 10, 2019 10:55 am We never hear anyone talking about highway profitability.

You're correct, we never talk about highway profitability. What we talk about instead with highways are economic losses to a particular area attributed to highway congestion. Some accounting is still being done.

If we are willing to take the bitter medicine of eliminating the goal of Amtrak becoming profitable, lets go all the way and make every ride free! Some transit agencies across America are looking at doing just that - with the costs to sell tickets and enforcing the fares becoming more expensive than the low fare, why continue to do so? Why not just give up on capitalism with Amtrak as well?

I wonder how much Amtrak's ridership would rise if they lower all the fares to zero?
Would Americans still pay to ride jetliners across America from the east to west coasts, or take the free trains?

Of course, it ultimately would not be free. The costs to run Amtrak and its trains will have to be subsidized by everyone who pays taxes, whether you ever ride the train or not. What is so wrong with the people riding the trains paying for them, the ultimate user tax?

quad50cal wrote: ↑Tue Dec 03, 2019 11:31 pm According to House T&I Chairman DeFazio, he intends to strip Amtrak's for profit mandate in the Surface Transportation re-authorization that will supersede the current 2015 FAST act due to expire in 2020.

While it's a safe assumption that some around here (and many at the various advocacy sites) are hoping that Rep. Peter DeFazio's (D-OR4) "re-authorization" resolution (lest we forget, such is not an Appropriation) will mean a restoration of full service dining on all LD trains, what to me is really "scary" is that Amtrak starts to convert the V-II Diners to some kind of Food Service Car open to all passengers, and the dictum to restore the full service comes down.

What a waste!!!!

Gilbert B Norman wrote: ↑Tue Dec 10, 2019 12:27 pm

quad50cal wrote: ↑Tue Dec 03, 2019 11:31 pm According to House T&I Chairman DeFazio, he intends to strip Amtrak's for profit mandate in the Surface Transportation re-authorization that will supersede the current 2015 FAST act due to expire in 2020.

DeFazio is just one member of the US House. Assuming he gets his wording onto the House bill, the bill reauthorizing the Surface Transportation will also have to be passed by the US Senate, and be signed by President Trump. Compromises will probably have to be made to reach a final passable legislation. Only the future knows what will happen.

JoeG wrote: ↑Tue Dec 10, 2019 10:55 am Tadman makes a lot of sense in his last post. We never hear anyone talking about highway profitability. Just as we need I95 and the Jersey Turnpike (12 lanes in its northern section) we need railroad passenger transportation.

Turnpikes are one of the few areas where highways can be profitable, usually under private management but sometimes publicly too.

Actually, by some kind of weird finagling, the Jersey Turnpike claims to be losing money. That seems inconceivable to me, but maybe the turnpike money has been siphoned off for other uses. In my current home state of Pennsylvania, PA Turnpike revenues have been used to subsidize SEPTA. There were lawsuits but this diversion was allowed to stand. I think it expires soon and we will see what happens. SEPTA is always underfunded.
In New York the Thruway revenue supports one thing or another. In particular, the NY canal system (Erie, Champlain, Seneca & Cayuga) is now part of the Thruway Authority. These canals have long since lost commercial traffic (I think that ended in the 1980s). Pleasure boaters use them. There used to be modest tolls, but they have been waived for several years. Your toll dollars at work!

mtuandrew wrote: ↑Tue Dec 10, 2019 12:51 pm

JoeG wrote: ↑Tue Dec 10, 2019 10:55 am Tadman makes a lot of sense in his last post. We never hear anyone talking about highway profitability. Just as we need I95 and the Jersey Turnpike (12 lanes in its northern section) we need railroad passenger transportation.

Turnpikes are one of the few areas where highways can be profitable, usually under private management but sometimes publicly too.

Take a step back from the GAAP profitability mindset. Somehow highways are measured and the reinvestment, upgrade, and maintenance bill is adjusted. They obviously don't use the GAAP direct revenue, as that barely exists. Gas tax is hard to match with usage patterns, and becoming harder to collect with hybrid/electric cars. So somehow they measure the utility of the road and plan maintenance/expansion accordingly.

Some sort of "utility of the train" measurement might help determine the new face of the passenger railnetwork.

And the concept is not that far-fetched. For example, commuter rail usually recovers 20-50% of direct costs (far less than Amtrak) and no capital costs, but it's continually funded because one 10-car commuter train carries 1300 passengers. It's probably way cheaper than building a similar road.

I had planned to complain that Amtrak NEC fares were too high. Maybe they are, but I found a 1955 Pennsy fare list that said a one way coach ticket NYP-WAS was $10.65. Using an inflation adjuster, that would be $81 today. The cheapest NYP-WAS fare I found on the Amtrak website was $54, although you probably have to buy well in advance to get that rate. Amtrak fares off the corridor are cheaper. So, to my surprise, I find that Amtrak's NEC fares are more reasonable than I thought.

Still, in places where we have the track capacity, it would be interesting to see what reducing rail fares would do. That is, a full train is environmentally much more friendly than a highway lane of cars.
In New York, the TWU, the union that represents subway and bus workers, long held that public transit should be free.
In the Soviet Union, public transit fares were 5 kopeks, or .05 ruble. I don't know what they are now, or what a ruble is worth, but the idea is to encourage people to use public transit.

JoeG wrote: ↑Tue Dec 10, 2019 1:09 pm Actually, by some kind of weird finagling, the Jersey Turnpike claims to be losing money. That seems inconceivable to me, but maybe the turnpike money has been siphoned off for other uses. In my current home state of Pennsylvania, PA Turnpike revenues have been used to subsidize SEPTA. There were lawsuits but this diversion was allowed to stand. I think it expires soon and we will see what happens. SEPTA is always underfunded.
In New York the Thruway revenue supports one thing or another. In particular, the NY canal system (Erie, Champlain, Seneca & Cayuga) is now part of the Thruway Authority. These canals have long since lost commercial traffic (I think that ended in the 1980s). Pleasure boaters use them. There used to be modest tolls, but they have been waived for several years. Your toll dollars at work!

Slight correction. The NY Canal system has been transferred to the NY Power Authority (which is actually better fit).

electricron wrote: ↑Mon Dec 09, 2019 10:21 am
Webster on subsidy:
: a grant or gift of money: such as
a: a sum of money formerly granted by the British Parliament to the crown and raised by special taxation
b: money granted by one state to another
c: a grant by a government to a private person or company to assist an enterprise deemed advantageous to the public

Again I repeat, the lack of a tax does not mean there is a subsidy.

Oxford on SUBSIDIZE:

verb
support (an organization or activity) financially.
"it was beyond the power of a state to subsidize a business"

pay part of the cost of producing (something) to reduce prices for the buyer.
"the government subsidizes basic goods including sugar, petroleum, and wheat"

Does an entity other than the actual airlines pay for the air traffic controllers?

Yes, an entity other than the actual airlines pay for the air traffic controllers.

Does an airline assume the FULL costs of operating an airport or do they merely pay a fee or tax?

The airlines merely pay a fee. They typically do not pay direct costs for things like snow removal, maintenance, baggage handlers, etc.

At the end of the day, the airlines are subsidized by various entities that may levy taxes, fees or tolls to help provide for the airports....used by the airlines.