Jump to content




Photo

Alex Kummant -- His Views on Funding & Profitability


  • Please log in to reply
6 replies to this topic

#1 Rover

Rover

    Lead Service Attendant

  • Members
  • PipPipPip
  • 119 posts
  • Gender:Male
  • Location:N. Texas

Posted 07 March 2017 - 01:30 AM

This is from a Reuters 2008 Q&A with Amtrak President Alex Kummant

 

 

Q: Is there a goal for Amtrak to be profitable, and should it be profitable?

 

A: "I think it is absolute mythology that there's any national system that is profitable. And I think the naysayers just have to get over it. There is no example. If you peel apart the British rail privatization, there were a tremendous numbers of problems with that. People say Oh look at these wonderful new trains running around here. It's all because of the miracle of the private market.' That's complete nonsense. There's a bunch of new trains running around there because they spent five times as much tax money today as they did in 1990. And actually if you look at the subsidy structures, we are awash in subsidies for all modes of transportation. There's a $10 billion a year cash transfer from the general fund to the Highway Trust Fund. FAA gets $2.7 billion. We pay all security at Amtrak and yet there is a $1.5 billion subsidy that goes beyond any user fees for security in air travel.

 

There's $8 billion that goes into security and life safety for cruise ships. There's four-plus billion dollars that goes to waterways. Let's not even get into airport construction which is a miasma of state, federal and local tax breaks and tax refinancing and God knows what. And then there's private aviation which gets huge subsidies in accelerated depreciation loss for small aircraft. So I always get a good chuckle, if I'm in a good mood, when people talk about subsidized Amtrak. It's always a lot of fun then to reel off every other mode that is subsidized. And one final point. If you actually look at the amount of public capital that flows into the rail network per passenger, it's like $40 a passenger for Amtrak and $500 to $700 per automobile out there through the highways.

 

One final point is that the network matters. So you can find some juicy little piece of railroad that has just the right density and say Wow we make money here'. But guess what? If you peel that out and privatize it, your costs for running the rest of the network just went up. And it's actually connectivity that matters. So it's an entire network that matters. And if you don't have an entire network, you end up with a ridiculous patchwork of short little lanes of things that make no sense from a national system."

 

http://www.reuters.c...B27628520080612


I think it is absolute mythology that there's any national system that is profitable. And I think the naysayers just have to get over it. ~ Amtrak President Alex Kummant ~ June 2008

 

I've ridden Amtrak on:
 
~ The Empire Builder 1981 ~ The Coast Starlight 1981 ~ The Texas Eagle ~ The Sunset Limited ~

Videos: HD Moods ~ Trains * Scenic National Parks ~ Great Train Rides * All Aboard ~ Great American Railroads 

Books: Time-Life - The Old West ~ The Railroaders * Rail Ventures - 4th Edition 


#2 Anderson

Anderson

    Engineer

  • Members
  • PipPipPipPipPipPip
  • 8,130 posts
  • Gender:Male
  • Location:Virginia

Posted 08 March 2017 - 01:48 AM

I'm probably most galled about the support for cruise ships.  Whereas you can make very solid cases for a transportation function for highways, trains, and airports, with cruise ships?  Not so much.  Granted, at least some of that is going to be costs which are related to maritime safety in general and which are just getting assigned to cruise ships in some proportion...but it still does strike me as a comparative waste (especially given that airline pax at least in theory pay for a good chunk of their security/safety bill).  Don't get me wrong, I don't want to see a mass casualty incident because the Coast Guard couldn't manage a rescue...but I also see very little value in an effective taxpayer subsidy for Caribbean vacations even compared to badly planned highway construction.

 

You can perhaps make a case for service between the US and Alaska/Hawaii (and possibly Puerto Rico/USVI as well), if only because it's possible to envision someone literally becoming trapped in paradise [1], but I also don't exactly see anyone really offering functional transportation between the Hawaiian Islands and Los Angeles or San Francisco (e.g. a ship starting in Honolulu, making relatively short stops in Maui and the Big Island, and then making direct for the mainland).  Yeah, some of that is down to the Jones Act (a bill which, at this point, probably needs to be strongly amended if not dumped entirely) and some silly complications such as "forced stops" in Vancouver and Mexico or some other island country in the Pacific en route.

 

IMHO accelerated depreciation is a sticky point: You're moving the timing of the related tax expense around on the calendar, but you're not actually changing the amount being expensed, just when the expensing happens.  Moreover, if you take a $100,000 plane and depreciate $75,000 on it (so you have a residual value of $25,000) and then sell it for $50,000?  You'll be liable for a capital gains tax bill of $25,000.

 

[1] This actually happened to my grandmother's younger brother the last time he was in Hawaii: He had a heart attack and he and my great-aunt were stuck in the islands for several months until he was healthy enough to fly home, and the time stuck there was an extreme expense which did a number on their finances for the rest of their lives.  It is quite possible to envision someone never reaching a point that they could safely fly home.


Capitol Limited (7), CA Zephyr (4) Lake Shore Limited (1), Acela (2), NE Regional (2), Sliver Meteor (4)

Upcoming: Silver Meteor (1), Lake Shore Limited (1), SW Chief (2), MO River Runner (1), Texas Eagle (1)

Possibly Upcoming: Either Texas Eagle (1), Capitol Limited (1), Silver Meteor (2) or Texas Eagle (1), Capitol Limited (1), Silver Meteor (1)

#3 Just-Thinking-51

Just-Thinking-51

    Engineer

  • Members
  • PipPipPipPipPipPip
  • 1,230 posts
  • Gender:Not Telling
  • Location:USA

Posted 08 March 2017 - 01:44 PM

I'm probably most galled about the support for cruise ships.


I would like to know we're Mr. Kummant came up with the figure. General the Coast Guard is always ready. So it's a fixed cost. There required to do certain task ever month. If the rescue swimmer jumps in on a rescue, or jumps in on a training flight. They are required to do it (twice*) a month.


Yeah, some of that is down to the Jones Act (a bill which, at this point, probably needs to be strongly amended if not dumped entirely) and some silly complications such as "forced stops" in Vancouver and Mexico or some other island country in the Pacific enroute.



If your ship meets the Jones Act then you don't need to stop anywhere, and could go straight from US port to US port. Only if your flying a convenience flag, with a foreign crew, do you need to stop at a foreign port, before return to a US port.

The one and only US Flag Large Cruise ship was built here, but outfitted overseas and is allow to operate under a waiver from the Jones Act. The crew is US (75% or more.) and yes they have great difficulty keeping it crewed.

[1] This actually happened to my grandmother's younger brother the last time he was in Hawaii: He had a heart attack and he and my great-aunt were stuck in the islands for several months until he was healthy enough to fly home, and the time stuck there was an extreme expense which did a number on their finances for the rest of their lives.  It is quite possible to envision someone never reaching a point that they could safely fly home.


Medical evacuation flight. Transport out on a freighter. Sorry but there little reason to stay. It costly both ways but getting out can be done. You might have to staff a mini hospital with MD and Nurse, but you can transport out on a regularly scheduled freighter.


*Twice a month is what I have heard, and is a example, and should not be taken as a fact.

Edited by Just-Thinking-51, 08 March 2017 - 07:16 PM.


#4 MikefromCrete

MikefromCrete

    Engineer

  • Members
  • PipPipPipPipPipPip
  • 2,079 posts
  • Gender:Male
  • Location:Crete, IL

Posted 08 March 2017 - 02:09 PM

What's relevant about comments made nine years ago by a guy who was Amtrak's president for about  30 seconds? 



#5 Ryan

Ryan

    Engineer

  • Members
  • PipPipPipPipPipPip
  • 15,217 posts
  • Gender:Male
  • Location:OTN
  • Interests:a fact checker combined with a ferret

Posted 08 March 2017 - 06:15 PM

Which of the facts do you think have changed over the last nine years?
Posted Image

Disclaimer: Any images or links you see in my post may in fact be invasive advertising or even fraudulent phishing attacks silently injected into my post by our spam based hosting service. If anything looks suspicious or inappropriate or you have any doubt whatsoever then do not click any links (particularly those appearing in green and/or with a double underline) or interact with the spam in any way. You may also want to consider using ad-blocking plugins such as Adblock Plus and/or Ghostery)to help reduce the number and severity of advertising scams directed at you.

#6 Rover

Rover

    Lead Service Attendant

  • Members
  • PipPipPip
  • 119 posts
  • Gender:Male
  • Location:N. Texas

Posted 16 March 2017 - 06:22 PM

What's relevant about comments made nine years ago by a guy who was Amtrak's president for about  30 seconds? 

 A better question 9 years down the road, would be "What's irrelevant about the comments made?"


Edited by Rover, 16 March 2017 - 06:23 PM.

I think it is absolute mythology that there's any national system that is profitable. And I think the naysayers just have to get over it. ~ Amtrak President Alex Kummant ~ June 2008

 

I've ridden Amtrak on:
 
~ The Empire Builder 1981 ~ The Coast Starlight 1981 ~ The Texas Eagle ~ The Sunset Limited ~

Videos: HD Moods ~ Trains * Scenic National Parks ~ Great Train Rides * All Aboard ~ Great American Railroads 

Books: Time-Life - The Old West ~ The Railroaders * Rail Ventures - 4th Edition 


#7 Ryan

Ryan

    Engineer

  • Members
  • PipPipPipPipPipPip
  • 15,217 posts
  • Gender:Male
  • Location:OTN
  • Interests:a fact checker combined with a ferret

Posted 16 March 2017 - 07:55 PM

Based on Mike's excellent response, I guess he's having a little bit of trouble backing up his bluster.
Posted Image

Disclaimer: Any images or links you see in my post may in fact be invasive advertising or even fraudulent phishing attacks silently injected into my post by our spam based hosting service. If anything looks suspicious or inappropriate or you have any doubt whatsoever then do not click any links (particularly those appearing in green and/or with a double underline) or interact with the spam in any way. You may also want to consider using ad-blocking plugins such as Adblock Plus and/or Ghostery)to help reduce the number and severity of advertising scams directed at you.




0 user(s) are reading this topic

0 members, 0 guests, 0 anonymous users