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Could Only Some of the LD Trains Be Cut Instead of All of Them?


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#21 Philly Amtrak Fan

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Posted 20 March 2017 - 09:02 AM

May I suggest some of you look up the word "budget" in the dictionary?

 

I'm not against Amtrak expansion, I'm really not. If Amtrak restarts the Broadway they can have as many new and current trains as you want as long as our taxes don't significantly increase. I don't disagree "the best cure for Amtrak is more Amtrak" or that cuts are bad for Amtrak. You don't have to convince me to expand Amtrak, you have to convince Congress and/or the general public, many of which have no nearby Amtrak service.  Just because we like to travel coast to coast on trains doesn't mean most people do (and a lot of people in this country can't now if they wanted to). My stance has always been the Broadway Limited was a "better" train than some of those that exist today and shouldn't have been cut while others were spared and all adds/cuts I propose are dependent on budget. Get more money you can add as much as you want without sacrificing any current train. But you have to consider the possibility Amtrak's budget gets cut and if you don't push another train under the bus (no pun intended) it could be your train(s) that gets cut. I have no problem with proposals to add service (I've done my share) but there are other threads that exist for that purpose (or start a new thread).


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All I want for Amtrak is a direct train from Philly to Chicago in less than 24 hours 
 
 


#22 A Voice

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Posted 20 March 2017 - 10:30 AM

If Amtrak restarts the Broadway they can have as many new and current trains as you want as long as our taxes don't significantly increase. I don't disagree "the best cure for Amtrak is more Amtrak" or that cuts are bad for Amtrak. 

 

So, you'll only support Amtrak - particularly the long-distance services - if they restore your chosen train?  Again, that's an untenable position.  You want to know how to make virtually certain the Broadway Limited never returns?  Don't support other potential new trains for other markets and regions of the country, even when it is a route or train you'll likely never use (but your taxes pay for).  On the other hand, the single most effective way to get a New York/Philadelphia to Chicago train back in the future, even if not at first, involves getting Amtrak into an even marginal growth strategy which benefits everyone. Neither of the new long-distance routes currently in the offing is the Broadway Limited, but extension of a train west of Pittsburgh isn't really a major expansion.  Once the car supply loosens up a bit, through service to Chicago becomes more practical (note that the Capitol and Broadway Limited's initially ran combined west of Pittsburgh anyway).  

 

But as has been said here (many, many times) before, the strategy of "trains for me but none for thee" doesn't work for a national railroad passenger system.  The idea of taking your toys and going home if you don't get your way is absurd.  Should I work to oppose the City of New Orleans extension if Amtrak doesn't first restore some train to east Tennessee?  That's exactly what you're suggesting.  


Edited by A Voice, 20 March 2017 - 10:32 AM.


#23 dlagrua

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Posted 20 March 2017 - 12:42 PM

Congress controls the budget and allocates funds accordingly.  The president tries to set policy, guide the process and put forth recommendations. The Trump budget does not agree with his campaign promise to push for the rebuilding of our transportation infrastructure. If Amtrak is to be saved from the chopping block Wick Mooreman needs to immediately get on the phone, make an appointment at the White House, present the case for long distance rail and invite the president and transportation secretary on a train trip. Wick must be quick!



#24 CCC1007

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Posted 20 March 2017 - 12:44 PM

Congress controls the budget and allocates funds accordingly.  The president tries to set policy, guide the process and put forth recommendations. The Trump budget does not agree with his campaign promise to push for the rebuilding of our transportation infrastructure. If Amtrak is to be saved from the chopping block Wick Mooreman needs to immediately get on the phone, make an appointment at the White House, present the case for long distance rail and invite the president and transportation secretary on a train trip. Wick must be quick!

I'm not sure why this hasn't happened already or at any time when a budget has been proposed with nearly or 0 money for Amtrak.

#25 Devil's Advocate

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Posted 20 March 2017 - 01:23 PM

Amtrak is not Solomon's baby. 

 


I'd rather be a glass half empty than a glass half fool.


#26 keelhauled

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Posted 20 March 2017 - 02:41 PM

Congress controls the budget and allocates funds accordingly.  The president tries to set policy, guide the process and put forth recommendations. The Trump budget does not agree with his campaign promise to push for the rebuilding of our transportation infrastructure. If Amtrak is to be saved from the chopping block Wick Mooreman needs to immediately get on the phone, make an appointment at the White House, present the case for long distance rail and invite the president and transportation secretary on a train trip. Wick must be quick!

Since as you say Congress has final say in spending I'm not entirely sure why Moorman should be appealing to the President, especially as Trump has already played his role in the process...he would be better served lobbying Congress.  Which in fact he did last month when he testified before the Senate transportation subcommittee.


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#27 jis

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Posted 20 March 2017 - 02:51 PM

Moorman has been on record saying that there is considerable support for Amtrak in the Congress. So we'll see, won't we.

 

Some of us will get a better sense of where things stand after we participate in NARP's Day on the Hill in April.



#28 Seaboard92

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Posted 20 March 2017 - 05:23 PM

Here is the thing why should my taxes in South Carolina or a better example West Virginians support a train that runs from New York to Chicago via Philadelphia and Pittsburgh? From what I understand you saying that if the train doesn't benefit the state it's in then it shouldn't be charged to the taxes of that state.

And we should all be supporting system increases regardless of where they are as eventually the increases we want to see will happen after those. The Sunset East doesn't effect me at all but yet I'm still a staunch supporter of it. I even put twenty four hours in one day in the car to support the inspection train.

And the New York Texas train doesn't really effect me because I don't do business in Texas but I'm a major supporter of it when it eventually starts running.

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#29 neroden

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Posted 20 March 2017 - 06:25 PM

Amtrak is in a very different situation from the situation during the 1970s or 1980s cuts.  In particular, the trains are mostly profitable, and those which aren't are running very small losses.  This wasn't true in the 1970s or 1980s.

 

I think it's important to point out the following:

-- It's bonkers, insane, lunatic to cut any train service which is profitable (or breakeven) before overhead.  Doing so would cost Congress more money and would just be shuffling overhead around.  If I'm correct the Auto Train, Palmetto, Silver Star, Silver Meteor, Lake Shore Limited, and Crescent are all profitable before overhead.  And I know I'm correct.   Therefore these trains should be guaranteed-operation no-questions-asked

 

(Though Moorman could get those numbers for sure, I'm pretty sure I'm *underestimating* overhead because I assumed that it didn't increase from 2014 to 2016, and the result is that my calculations assume that more costs are variable costs than reality, and therefore my calculations make the trains look *less* profitable than they really are.  Overhead went up by 19% from 2012 to 2014; it probably went up from 2014 to 2016 as well.)

 

-- It's unacceptable to cut any state services.  The states pay for these, including a large percentage of allocated overhead, and the feds can damn well chip in 2% for overhead.  The states would be furious if these were cut -- truly furious.

 

-- Given that the overhead costs will remain regardless of how many train services are cut -- short of cutting the NEC and shutting down Amtrak entirely -- it should be made very clear that only the variable costs would be saved by cutting any given train.

 

Literally the most which could be possibly saved by cutting long-distance train services (by cutting the ones which are loss-making before overhead only) is $59.2 million per year.  Hardly seems worth it, does it?

 

In actual fact, the supposed "zeroing out of the national network" would simply result in a charge to the NEC to the same amount; there's no other alternative, because it's mostly overhead which would just get reallocated.

 

I'll go further and go into detail on the *avoidable* losses of the short list of long-distance trains which aren't profitable before overhead.  And remember that because of the way my overhead estimation works, it's quite likely that these trains are more profitable than I think.

-- Coast Starlight -- $1.8 million per year loss (possibly profitable).  And connects Los Angeles to the Bay Area and to Washington and Oregon.  Obviously worth it, probably profitable next year.

-- Cardinal -- $3.2 million per year.  Would be profitable if it were daily.  If you cut this, you tick off southern Ohio.  They've been trying to get a new station.

-- Empire Builder -- $3.5 million per year.  With huge political support from every state along the route except Idaho. 

-- CONO -- $4.1 million per year.  Illinois likes having the third frequency on the Illini/Saluki route, and it has serious support in Mississippi now, as well as New Orleans.

-- Capitol Limited -- $4.7 million per year, which is probably covered by the value of connecting traffic to the Southern trains.

-- Texas Eagle -- $8.7 million per year.  Illinois and Missouri like the extra frequency on the Lincoln Service; Texas has actually stepped up and funded this when it was threatened in the past.

-- Southwest Chief -- $10.2 million per year.  Even a proposed reroute which would have improved service was rejected by massive political support.  I don't think this can be cancelled.

-- California Zephyr -- $10.4 million per year.  You want to tick off Colorado?  I don't think so.  Amtrak wouldn't be able to run the Ski Train without the Zephyr service base, too.  Nevada likes having service to Reno.

-- Sunset Limited -- $13.2 million per year (because it's three-a-week, doesn't stop in Phoenix, etc.) Honestly, this is the only train in the *entire* Amtrak system which is both unprofitable and lacks a powerful political lobby.

 

The correct "compromise" is to offer to zero the Federal Highway System budget along with the Amtrak budget.  Amtrak would survive; the unprofitable highways would not.

If the demand from the Congressional negotiators is "you must cut something!!!!", then the Sunset Limited is the only possible choice.


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#30 neroden

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Posted 20 March 2017 - 06:33 PM

Moorman has been on record saying that there is considerable support for Amtrak in the Congress. So we'll see, won't we.

 

Some of us will get a better sense of where things stand after we participate in NARP's Day on the Hill in April.

I wish I could go but my medical problems with my digestion are still making travel extremely impractical -- currently hoping they'll be better by September. (And, to boot, I have medical appointments and business appointments during late April, and my car is in the shop during April too.) 

Those of you who go -- I really hope you hammer on the fact that running each train makes money, and cutting any train would just cost Congress *more* money.  Congress is really only paying for the fixed overhead of having a system at all; overhead which is needed to run even one NY-DC train.  (The cost of having Beech Grove is a large part of it, as is the cost of operating the reservations system.)  Also, running a train daily instead of three-a-week means more profit, and running 2 trains per day instead of one means *more profit*, and having a connecting train means *more profit* (so, for example, the Zephyr feeds passengers into all those state-sponsored trains leading out of Chicago, and vice versa).

 

This concept -- the economies of scale -- is *not* properly understood by most members of Congress; many still think that cutting a train would save money.  Which is simply not true.  This has be hammered home.


Edited by neroden, 20 March 2017 - 06:34 PM.

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#31 CraigDK

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Posted 20 March 2017 - 07:22 PM

...

 

(Though Moorman could get those numbers for sure, I'm pretty sure I'm *underestimating* overhead because I assumed that it didn't increase from 2014 to 2016, and the result is that my calculations assume that more costs are variable costs than reality, and therefore my calculations make the trains look *less* profitable than they really are.  Overhead went up by 19% from 2012 to 2014; it probably went up from 2014 to 2016 as well.)

 

...

 

-- Given that the overhead costs will remain regardless of how many train services are cut -- short of cutting the NEC and shutting down Amtrak entirely -- it should be made very clear that only the variable costs would be saved by cutting any given train.

 

Literally the most which could be possibly saved by cutting long-distance train services (by cutting the ones which are loss-making before overhead only) is $59.2 million per year.  Hardly seems worth it, does it?

 

....

 

How are the overhead cost split? Does each train get "charged" the same? Does the NEC  and state corridors (that run multiple trains) get charged proportionately more because there are more trains?

 

Is there a good breakdown of what is included in the total overhead charge? The 19% increase in a two year period seems high, have they changed (added) what is included in overhead? Are there cost savings that can be found there, versus cutting service?

 

If the above the rail or direct cost is only $59.2 million that really isn't that bad. And if you want to spread it over (I know that probably won't happen) the total number of passengers per year it really is fairly insignificant.



#32 neroden

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Posted 20 March 2017 - 07:39 PM

How are the overhead cost split?

Advocates, and indeed *state transportation departments*, have been trying to get that information out of Amtrak for literally DECADES. Without success. It's not clear Amtrak even knows what its computer system is doing.

It's got some loose relationship with train-miles, but it's not strictly proportional.
 

Is there a good breakdown of what is included in the total overhead charge?

Last time I was able to figure it out was from the 2014 Annual Report; since then, Amtrak has not given sufficiently detailed accounting breakdowns.

Are there cost savings that can be found there, versus cutting service?

Quite possibly. One cost savings comes from switching to E-ticketing, which should eventually eliminate an entire office (in, where was it, El Paso?)
of a large number of people handling the back-end accounting for paper-value tickets.

Unfortunately you have to spend money to save money: the process of switching to E-ticketing involves very high IT costs for several years, and much of it is considered operating costs rather than capital costs....

IT programs, such the one to replace Amtrak's 1970s mainframe-assembly-language systems with modern programs are a significant piece of operating cost, which if it ever gets *finished* should be able to go down. Another IT program involves computerizing the inventory tracking for parts. And so on.

In another area, it turned out Amtrak had been accidentally paying utility bills for a building it didn't own. Whoops. There's an overhead cost. Some care with the utility contracts could help...

You'll notice that Amtrak has been removing staff from smaller stations by attrition as they retire; that's an example of eliminating overhead.

In another "spend money to save money" example, a number of Amtrak's bigger stations (notably Chicago) had antiquated, inefficient heating and cooling systems. Replacing them cuts the heating/cooling costs substantially, but they had to put in a lot of money to do that.

Moving Amtrak offices out of leased space into the otherwise-vacant rooms at Chicago Union Station also saves Amtrak money... but they had to renovate those rooms first.

And it goes on and on like that.

Amtrak has been absolutely pinching pennies on lease agreements for stations owned by cities, which are also fixed costs (not proportional to number of trains). Amtrak is attempting to displace as much as possible of those fixed costs for just *having* a station on the cities, which makes sense given that the city does benefit greatly from the station.

There's also weird stuff like old pension liabilities for railroad workers who used to work for the passenger departments of private railroads. The formulas used by the Railroad Retirement Board seriously soaked Amtrak for decades. This is finally being corrected as those retirees *die of old age*.

Amtrak also killed its non-union-employee defined-benefit pension plan (no new credits will be earned for future work and those with existing credits are being offered cash buyouts) and is attempting to dismantle its non-union-employee post-retirement-medical-benefits plan. So there's some more fixed costs they're working on.

If the above the rail or direct cost is only $59.2 million that really isn't that bad. And if you want to spread it over (I know that probably won't happen) the total number of passengers per year it really is fairly insignificant.


I think a lot of people have trouble getting their heads around the incredibly large importance of large fixed costs in railroading. It's really a "you gotta go big" buisness.
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#33 CraigDK

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Posted 20 March 2017 - 08:20 PM

Thanks for the reply!

 

 

Advocates, and indeed *state transportation departments*, have been trying to get that information out of Amtrak for literally DECADES. Without success. It's not clear Amtrak even knows what its computer system is doing.

It's got some loose relationship with train-miles, but it's not strictly proportional.

 

Certainly something that I think advocates, the states, and congress-critters all should continue push to find out.

 

 

Quite possibly. One cost savings comes from switching to E-ticketing, which should eventually eliminate an entire office (in, where was it, El Paso?)
of a large number of people handling the back-end accounting for paper-value tickets.

 

Sounds reasonable. I would assume e-ticketing still allows for someone (or even an agent) to print a paper copy of the ticket and that paper value tickets are different animal.

 

 

Unfortunately you have to spend money to save money: the process of switching to E-ticketing involves very high IT costs for several years, and much of it is considered operating costs rather than capital costs....

IT programs, such the one to replace Amtrak's 1970s mainframe-assembly-language systems with modern programs are a significant piece of operating cost, which if it ever gets *finished* should be able to go down. Another IT program involves computerizing the inventory tracking for parts. And so on.

 

Again, I hope it is happening and hopefully they do separate out those cost that are capital.

 

 

In another area, it turned out Amtrak had been accidentally paying utility bills for a building it didn't own. Whoops. There's an overhead cost. Some care with the utility contracts could help...

 

I recall seeing that story. Certainly not unreasonable for care to be taken on such issues, nor for those with an interest to call for.

 

 

In another "spend money to save money" example, a number of Amtrak's bigger stations (notably Chicago) had antiquated, inefficient heating and cooling systems. Replacing them cuts the heating/cooling costs substantially, but they had to put in a lot of money to do that.

Moving Amtrak offices out of leased space into the otherwise-vacant rooms at Chicago Union Station also saves Amtrak money... but they had to renovate those rooms first.

 

I am not an accountant, but I would assume that most of those cost for renovation would be capital cost.

 

 

There's also weird stuff like old pension liabilities for railroad workers who used to work for the passenger departments of private railroads. The formulas used by the Railroad Retirement Board seriously soaked Amtrak for decades. This is finally being corrected as those retirees *die of old age*.

 

While they maybe nearing the end of that issue, that certainly is something that should be clearly denoted. It certainly needs to be viewed as something unrelated to the cost of the current system.

 

 

I think a lot of people have trouble getting their heads around the incredibly large importance of large fixed costs in railroading. It's really a "you gotta go big" business.

 

While I cannot directly verify that concept, I think you are correct with that statement. It certainly is something that should be stressed to those who might not realize that.  It certainly helps to make a case for expanding the system (and thus spreading out the cost over more services).  It also suggest the need to say if we invest $X in improving things like those you mentioned, that $Y can be saved (assuming that over a certain time it does pay off).



#34 WoodyinNYC

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Posted 20 March 2017 - 08:37 PM

... we should all be supporting system increases regardless of where they are ... eventually the increases we want to see will happen after those.

 

The Sunset East doesn't effect me at all but yet I'm still a staunch supporter of it. I even put twenty four hours in one day in the car to support the inspection train.

Thank you, and thanks to others on the board who made the effort to show support for the proposed train, in person when and where it counted.



#35 Seaboard92

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Posted 20 March 2017 - 11:14 PM

... we should all be supporting system increases regardless of where they are ... eventually the increases we want to see will happen after those.
 
The Sunset East doesn't effect me at all but yet I'm still a staunch supporter of it. I even put twenty four hours in one day in the car to support the inspection train.

Thank you, and thanks to others on the board who made the effort to show support for the proposed train, in person when and where it counted.
Your quite welcome. And I can assure you when the next inspection train runs I'll be involved somehow. Be it filming it for the press or showing support somehow. But I think I have an in on the planning for the next one so I'll probably be on board.

View my pictures at http://trainboy1.rrpicturearchives.net

Amtrak Routes I've riden: Silver Star(NYP-ORL), Silver Meteor(KIS-NYP),Carolinian(CLT-NWK), Palmetto (FLO-NYP), Acela(WAS-NYP), NE Regional(WBG-RVR), Pacific Surfliner(SAN-OSD), Piedmont(CLT-SAL), Crescent(NYP-CLT), Cardinal (WAS-CHI), Capitol Limited (CHI-WAS), Cascade (PDX-SEA)

Steam Engines I've worked behind

Norfolk & Western No. 611

Nickel Plate Road No. 765

Southern Pacific No. 4449

 


#36 neroden

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Posted 21 March 2017 - 01:22 AM

I am not an accountant, but I would assume that most of those cost for renovation would be capital cost.

The point there is that Amtrak has to spend money on capital in order to reduce operations costs. :-P They were spending operations costs to lease an entire office building because the one they owned wasn't in good enough shape to use. Once they spend the capital on fixing up the one they already own, they can stop spending the operations costs leasing the other building.

Amtrak is doing the equivalent of driving a 40-year-old car and spending a fortune on maintenance every year, instead of buying a new car, because nobody has given Amtrak enough cash to buy the new car. (Though they're *finally* becoming able to afford some of it in the last decade.) There's a disturbing amount of stuff like this in the Amtrak budget; high operational costs caused by not having enough money to replace stuff which should have been replaced, often, decades before Amtrak was formed.

Actually, every case where an Amtrak train is running very slowly on deteriorated track (or other ROW damage) is like this. If the track were fixed up, the train would run faster, reducing operating costs and increasing revenue simultaneously. But it's been very hard to get the money to fix things up; it took years even to get funding to fix up the part of the Empire Connection in Manhattan with the rockslides.

Edited by neroden, 21 March 2017 - 01:26 AM.

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#37 cirdan

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Posted 21 March 2017 - 04:01 AM

Actually, every case where an Amtrak train is running very slowly on deteriorated track (or other ROW damage) is like this. If the track were fixed up, the train would run faster, reducing operating costs and increasing revenue simultaneously. But it's been very hard to get the money to fix things up; it took years even to get funding to fix up the part of the Empire Connection in Manhattan with the rockslides.


That's not just Amtrak. That's railroads as a whole. If the freight railroads would spend more on ROW, they could run faster trains. But obviously that's not their thinking (aside from some major corridors). And the reason is the accounting. Shareholders expect a balance sheet that looks good and hence repairs get deferred as long as humanely possible.

Bad ROW also causes equipment to deteriorate more quickly. Maybe the freight lines don't mind about their own equipment so much, but there's little that Amtrak can do to make them take better care of theirs.

Edited by cirdan, 21 March 2017 - 04:01 AM.


#38 RSG

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Posted 21 March 2017 - 07:48 AM

I think a lot of people have trouble getting their heads around the incredibly large importance of large fixed costs in railroading. It's really a "you gotta go big" buisness.

This highlights the learning curve with regard to rail issues. It's an industry that's been around forever, few people in the general populace think about (aside from a derailment or a crossing which makes them late for wherever), and one that obviously much of Congress doesn't understand either. Most don't realize railroads are one of the few industries exempt from Social Security and the only one that has its own comparable shadow system. Without any reading of history, that alone should give any thinking person an idea of not only the power of the rail industry but the complexity as well. It's not something that can be easily dismantled and as noted, often costs more to dismantle than to keep operating.






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