FY20 Financials

Horrifying:

https://www.amtrak.com/content/dam/proj ... FY2020.pdf

While I was always skeptical of the $100M non-GAAP (some kind of EBIDTA measurement) "deficit" touted for FY 19 , which when audited became $880M, the $1,724M Operating loss is simply "horrifying" after having made so much progress towards operating self-sufficiency. Through FY19, the $1.3B or thereabouts Annual Appropriation largely went to Corridor "additions and betterments" and supporting the what now is referred to as "National System". Now the much larger COVID-era "Emergency Appropriations" go simply for "buying gas to run 'em and paying people to drive 'em".

Things are not good. The NEC is requiring a substantial operating subsidy at the moment (if you look at the funding being proposed in the upcoming Covid relief more than half goes to the NEC - presumably to fund losses so they can continue with their current train frequencies) - the funds to restore daily LDT service are amazingly less than the extra money being allocated to the corridor - and this is all on top of the extensive capital costs the corridor costs. While I am an advocate the evisceration of business travel could damage the sustainability of lines like the northeast corridor as well as transit lines. Amtrak will need to focus on leisure travel - but Acela is going to have a hard time recovering without business travel as that was a substantial part of its ridership. Amtrak has some rough years ahead.

And long distance fans should not cheer the northeast corridor's woes. None of the trains are performing well and even though long distance may come back quicker with its higher percentage of leisure travelers, like it or not the NEC is Amtrak's most important service and if it becomes unsustainable it threatens the sustainability of passenger rail as a whole in the US.

If I can be devil's advocate, two points come to mind:
1. With ZOOM conferencing, there will be a fall off in business travel in most non-governmental cases. This hurts airlines as well as Acela. Government travel, especially dealing with national security, might continue to be in person.
2. Since much that remains is leisure related, public support becomes more tenuous. Why should the taxpayer subsidize something so that John Jones can joy ride the rails? Yes roads are publically supported, but per passenger subsidy is far lower than Amtrak since nearly everyone depends on auto travel to get around. Since the NEC is considered necessary by the states through which it passes, then let them support Amtrak who runs most of it. From the figures that I have seen, the only LD train anywhere close to break even is Auto Train. Spin this off to a private operator. You already have an operator in the form of the Rocky Mountaineer setting up shop in Denver to run to Utah. Let that and other potential services flourish.

I saw an internal document that showed some of Amtrak’s internal analysis on long distance lines from a few years back.
They had three measures if I remember the direct costs associated with the route, indirect costs associated with the route, and the final fully allocated costs assigned to the route (which is the number you see.) The auto train was the only LD route to cover both its direct and indirect costs in normal times - it only didn’t break even on its fully allocated costs. A couple other eastern long distance routes also barely covered their direct costs but not the second category.

Alex M wrote:Since much that remains is leisure related, public support becomes more tenuous. Why should the taxpayer subsidize something so that John Jones can joy ride the rails? Yes roads are publically supported, but per passenger subsidy is far lower than Amtrak since nearly everyone depends on auto travel to get around.

I'll say it again.

Federal support should be limited to one locomotive and three coaches, the bare "essentials" that provides a critical service. The American Taxpayer is not subsidizing Harvey Houses for Greyhound passengers, nor comfortable sleeping compartments for well-heeled jetset travellers. Even in the National Parks, while the federal government might own the physical structure, the lodges are contracted out, expected to cover all of their costs PLUS a return back to the government.

If we can't afford to put homeless people in shelters damned be any justification for the "necessity" for a sleeping car for a very few, select, wealthy Americans. The sleeping and dining cars can cover their costs PLUS help subsidize coach travel. Anyone who demands Amtrak gets a free ride can start explaining the equity issues of why Amtrak riders deserve much more than Greyhound (or any other intercity bus) passengers and do it with a straight face, while demanding Greyhound not just earn a profit but also pay its full share of local, state and federal taxes.

I don't agree with that premise. First I'm not going to go into the debate about whether the government should fund long distance passenger rail, this is just assuming that we have to run long distance rail by law. Running the long distance routes is a delicate dance between balancing the revenues and operating expenses to minimize the operating loss. Meaning if you just cut and cut and cut without any care to the product you can actually increase operating losses if your revenues drop greater than what you saved on expenses. Tri weekly operation is an example of that. Tri-weekly operation is working now as a money saver because COVID has caused such a dramatic decrease in demand that any reduction in revenues due to going to tri weekly has been well made up for by the lower operating costs involved with running the trains less frequently - however, as even the current management has noted, as demand begins to increase particularly in the peak summer period your operating losses can be worse if you do not increase frequencies back to daily to capture some of that revenue. You wind up with lots of sold out trains and turning lots of people away. Likewise if you dump all sleeping cars you may majorly decrease the revenue for the train more than the decreased costs associated with eliminating the sleeper service as you're going to eliminate a huge amount of your ridership and ticket revenue. With the high price that sleeping car accommodations cost (compared to the quite low coach and obviously subsidized fares on long distance trains) I cannot imagine that eliminating the sleeper class entirely would be revenue positive for any of the long distance routes.

The same thing will apply to onboard food and beverage. Amtrak tried and has gotten away with flexible dining in the east - it has saved money with it and is still managing to attract sleeping car passengers - hence the cut was worth it at least when it comes to dollars. It remains to be seen if they will attempt to make that a permanent change in the west (officially they are still saying they aren't.) The west is a different animal - its one thing to ride an overnight train from New York to Florida - its another thing to take a two night/three day train trip across the country. While yes not everyone goes the full route, not returning full dining car service could be more damaging to those trains revenue wise once more potential demand returns - people may be less willing to tolerate the watered down meals on such a long trip. Only time will tell what they do.

My point is if you are going to subsidize a product that is required by law, the right method isn't just to run it into the ground because its subsidized. You have to try to get the most amount of revenue you can for the least amount of expense and that is a delicate balance.

Mr. Lord, I'm not sure about "the law" requiring Amtrak to operate any route. They could give the 180 Day Notice under ARAA97 for any route and "see what happens".

The "Basic System" under RPSA70 has been whacked; mainly during '79 with the "Carter Cuts'. The Lone Star, Broadway Limited, Floridian, and National Limited were all part of that "System".

Now obviously such a move would likely be imprudent; the consequences from loss of funding, if attempted "in one fell swoop" could be too great to swallow. Further, if they attempted a "suspension" as with the Sunset East, that too might have "fallout".

A fair point and I forgot about those (I will confess I’m relatively new to passenger rail and those trains were well before my time.) I guess technically though I guess you could still say they are required to at least for now as congress has put conditions on their funding lately not allowing funding to be used to discontinue routes - but probably nothing as far as the policy and authorization preventing them from doing so.

lordsigma12345 wrote: ↑Fri Feb 26, 2021 4:27 pm The same thing will apply to onboard food and beverage. Amtrak tried and has gotten away with flexible dining in the east - it has saved money with it and is still managing to attract sleeping car passengers - hence the cut was worth it at least when it comes to dollars. It remains to be seen if they will attempt to make that a permanent change in the west (officially they are still saying they aren't.) The west is a different animal - its one thing to ride an overnight train from New York to Florida - its another thing to take a two night/three day train trip across the country. While yes not everyone goes the full route, not returning full dining car service could be more damaging to those trains revenue wise once more potential demand returns - people may be less willing to tolerate the watered down meals on such a long trip. Only time will tell what they do.

My point is if you are going to subsidize a product that is required by law, the right method isn't just to run it into the ground because its subsidized. You have to try to get the most amount of revenue you can for the least amount of expense and that is a delicate balance.

I completely disagree that there were no issues with flexible dining on the east coast trains. Cutting the costs of services is going to cut your loses, but it will not increase ridership much. Just look at these statistics between the Silver Meteor and the Silver Star. The Meteor kept traditional dining the longest, the Star being amongst the first to go to flexible dining.
http://media.amtrak.com/wp-content/uplo ... ership.pdf
Ridership FY19 (FY18(
Silver Star 389,995 (368,518) +5.8%
Silver Meteor 353,466 (337,023) +4.9%
Meteor specific stats:
https://www.railpassengers.org/site/ass ... 459/19.pdf
Coach (Sleeper) Total
Passengers 308,983 (40,442) 349,425
Average trip 509 miles (928 miles) 558 miles
Average fare $ 85.00 ($302.00) $110.00
Avg yld per mi 16.6¢ (32.5¢) 19.7¢
Top city pairs by ridership, 2019
1. New York, NY - Orlando, FL 1127 mi
2. New York, NY - Washington, DC 225 mi
3. Orlando, FL - Washington, DC 902 mi
4. Orlando, FL - West Palm Beach, FL 198 mi
5. New York, NY - Richmond, VA 333 mi
6. Miami, FL - Orlando, FL 262 mi
7. New York, NY - Philadelphia, PA 91 mi
8. Miami, FL - New York, NY 1389 mi
9. New York, NY - North Charleston, SC 726 mi
10. Jacksonville, FL - New York, NY 977 mi

Silver Star specific stats
https://www.railpassengers.org/site/ass ... 458/16.pdf
Coach (Sleeper) Total
Passengers 349,868 (35,140) 385,008
Average trip 404 miles (779 miles) 438 miles
Average fare $ 70.00 ($214.00) $ 83.00
Avg yld per mi 17.3¢ (27.4¢) 19.0¢
Top city pairs by ridership, 2019
1. Tampa, FL - West Palm Beach, FL 192 mi
2. New York, NY - Washington, DC 225 mi
3. Orlando, FL - Tampa, FL 56 mi
4. Miami, FL - Tampa, FL 257 mi
5. Raleigh, NC - Washington, DC 306 mi
6. New York, NY - Richmond, VA 334 mi
7. Fort Lauderdale, FL - Tampa, FL 235 mi
8. Richmond, VA - Washington, DC 109 mi
9. Kissimmee, FL - Tampa, FL 38 mi
10. Deerfield Beach, FL - Tampa, FL 221 mi

Off hand, it does appear the Star does as well as the Meteor. But check out the longer distances passengers are willing to ride the Meteor vs the Star. The route is mostly the same, the rolling stock is mostly the same, the speeds of the trains are mostly the same, yet the average passengers are willing to ride the Meteor 100 miles further, almost an additional 2-3 more hours assuming an average speed between 40-50 mph. Also take note of the 10 top city pairs on the Star, with the maximum distance being 334 miles, while the 10 top city pairs of the Meteor include 6 with a distance of 333 miles or more. Why are passengers more willing to ride the Meteor longer distances than on the Star? Why? Could the reason be the type and quality of the food service being provided? I believe it most certainly is.
I will admit that much of the ridership on the Star is ridership within Florida itself. How many regional Florida passengers can the Star maintain once Brightline starts running newer and faster trains between central and southern Florida?

I didn’t say no issue or no effect whatsoever I said they got away with it without a dramatic loss. The meteor is also a more direct route and takes a bit less time. Additionally the star was operating with NO meals - you had to buy stuff. I’m not saying the food service doesn’t matter at all - but I don’t think it affected the ridership as much as it potentially could out west - I think there’s a far larger proportion of “experiential riders” on western trains. Northeast to Florida is a big enough travel market that Amtrak is more likely to be able to replace longer time riders where the food was a bigger factor in their travel decisions with newer riders that may not like to fly or are looking to try something new and aren’t aware of what they are missing. I am certainly probably in the minority on this board, but to be honest I don’t think flex dining is as bad as it’s made out to be - I found my most recent meal “good enough” perfectly acceptable for travel food - but I admit I also don’t have food sensitivities and am ok with salt. I am a relatively new rider and while I liked traditional dining I never thought the food quality was spectacular even before the switch to flex dining. I also still managed to have a very enjoyable time sitting in the diner socializing with some other passengers who also took their flex dining meals in the diner.

Additionally while the Meteor has been “downgraded” to flex dining, the star has gained it. I have heard some railfans complain that they’d prefer the star cafe car only approach but in my opinion I’ll take flex dining over cafe car only.

Interesting, in 2019 labor/benefits was 2/3 of revenue, in 2020 revenue didn't even cover labor/benefits costs. But that is what you would expect with Covid. I'm going to total wild-guess it and say it will take 5 years to return to pre-covid passenger volume.

Amtrak needs the certainty of knowing what subsidy will be available for the year, before the year starts. And they need multi-year certainty for capital plans. Certainty they are not going to get from this congress, so zombie-mode will continue.

In 2021 gasoline costs have increased 30% in one month! If that kind of increase continues it will cause a recession. Remember stagflation? Better break out our W.I.N. buttons...

Try not to kick them when they are down.

Passengers in sleeping cars subsidize passengers in coach, not the other way around.

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Alphaboi wrote: ↑Mon Mar 01, 2021 9:52 pmPassengers in sleeping cars subsidize passengers in coach, not the other way around.

I'd like to know what kind of Common Core math is used to describe how a sleeping car passenger can subsidize a coach passenger when the December 2020 YTD results for the long distance trains show Amtrak only earning $54.5 million in revenue on $169.7 million in expenses.