Does Amtrak save money when trains cancelled?

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mj_2341

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Maybe a dumb question, but if Amtrak cancels trains (like the recent weather-related ones), are they saving money?
 
That depends, but I'd think in general the answer is no. Cancelling the NEC might be different, but in general I'd say that if its not a substantially long cancellation it doesn't save money- expendature decrease will be less than the decrease in revenue. Cancelling without alternative transportation is cheaper than doing it with alternative transportation, though, I'd guess.
 
They save the incremental costs of operating the train: fuel, staff, food/supplies, wear and tear on the trainset. However, they spend extra in reaccommodating passengers (hotels, alternate transportation, staff to handle it), repositioning equipment, and lose income on canceled fares and spending on diner/lounge purchases. So overall, I'd say it's a loss.
 
See, I was wondering if they DID end up saving money on the NEC. Because if the train DOES run, but people can't get to the station, they will cancel their tickets and get full refunds. Thus, amtrak ends up running empty trains with no pax and it becomes a loss situation. But I really have no idea, just speculating.
 
Perhaps on the NEC on a day like today and it's snowing heavily. They have cancelled a number of trains, but you could get another in an hour or 2 or 3. However, when the next train is in 24 hours, Amtrak would have to reaccommodate the passengers, pay for hotels, etc... - so it may not save money.
 
Although you forgo variable expenses such as fuel, track costs, food expenses, you also pass on all revenue. Fixed costs like equipment depreciation, maintenance, terminal costs, benefits, etc still remain. Additionally, you may have transactional costs for accommodation of stranded passengers, crews at away terminals, costs to reposition equipment potentially, extra maintenance expense potentially to thaw out equipment in yards, possible food waste in commissaries, as well as other expenses. All in all, I would think it hurts Amtrak not to be running trains.
 
I would say, however, reducing frequency on the Regionals does save them money. Which is probably why they are doing it- they are being cheap.
 
I'm not sure how the crews get paid, but at most airlines if there is a cancellation the crew still gets paid as if they did the trip. So do Amtrak crews have to get paid too whether or not they do their scheduled trip?
 
saxman said:
I'm not sure how the crews get paid, but at most airlines if there is a cancellation the crew still gets paid as if they did the trip. So do Amtrak crews have to get paid too whether or not they do their scheduled trip?
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If the home base for their crew is Chicago and the crew are in New York and the train is canceled on a return trip due to heavy snow, do Amtrak pays them for food and hotel?
 
Green Maned Lion said:
I would say, however, reducing frequency on the Regionals does save them money. Which is probably why they are doing it- they are being cheap.
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Now Lion....the crews are regularly assigned and get paid if their run is annulled. The bottom line is Amtrak loses revenue with every train it doesn't run. Now Lion how do you make money not running a train and paying a crew a day's pay??? <_<
 
gswager said:
saxman said:
I'm not sure how the crews get paid, but at most airlines if there is a cancellation the crew still gets paid as if they did the trip. So do Amtrak crews have to get paid too whether or not they do their scheduled trip?
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If the home base for their crew is Chicago and the crew are in New York and the train is canceled on a return trip due to heavy snow, do Amtrak pays them for food and hotel?
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Yes, and additionally they'll get paid 8 hours pay for each day held until service resumes or they fly them home if possible.
 
First, OBS and T&E crews are paid differently. Both have guaranteed minimum hours paid. T&E is weekly, OBS is monthly. I'm trying to remember this off the top my head without researching the union information. So if I get something wrong, I'll come back and correct it.

If Amtrak annuls trains for more than one day, generally the crew that would have worked that day will get paid. With 24 hours notice though, the crew no longer gets paid. Thus the 2nd day on, the crews aren't paid for the trips they would have taken. However, due to the guarantee, if the person then doesn't work more hours than guaranteed, they'll receive guarantee pay on like the first or second payday the following month. T&E extra-board has a guarantee and regular conductors and engineers can bump into the board in order to receive guarantee pay. OBS employees have a guarantee for both extra-board and regularly assigned employees.

There's another quirk in there somehow also. Again I don't know the exact specifics of how this one works, but I'll try to explain. Say a LD train is canceled but that some part of it runs, for example, the EB is annulled but a stub train will run between CHI & MSP. Like I said, I'm not 100% sure how this works, but it's my understanding that if a part of a route is run then the crew that would have worked the entire route does get some pay. Pretty confusing stuff huh?
 
Green Maned Lion said:
I would say, however, reducing frequency on the Regionals does save them money. Which is probably why they are doing it- they are being cheap.
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Actually they are not being cheap, they are making wise decisions. As has been noted on other posts, there are very few people riding in the NEC. Most offices in DC have been closed all week, most companies have people telecommuting from home and so why run trains when there aren't any people to ride them. Any money saved against operating costs are off-set by money lost from no revenue.
 
Whenever a plane or train is cancelled, there is NO revenue. There will always be associated expenses (ie: getting crew & staff around, mechanics, etc), therefore I cannot fathom it ever being possible to not lose money when the trains sit.

Of course, this is Amtrak, so I wonder if the real question is are they losing more per passenger or less? Can't divide by zero...
 
I think the idea comes from "Amtrak loses $x per passenger", so the idea is that if they don't operate a train $x times the number of passengers is saved. However, as noted above, that amount includes overhead. That plus the extra expenses to deal with the weather means they aren't saving money.
 
alanh said:
I think the idea comes from "Amtrak loses $x per passenger", so the idea is that if they don't operate a train $x times the number of passengers is saved. However, as noted above, that amount includes overhead. That plus the extra expenses to deal with the weather means they aren't saving money.
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I once had a conversation with some nitwit who worked for Amtrak: "So lets take this to its logical conclusion: Amtrak runs no trains, they lose no money, and you can go home and take an early retirement without pension!"
 
I'd put it this way ---

Zero revenue + "fixed" expenses guarantees a loss. However, business is always a gamble. Zero revenue + "fixed" expenses + "variable" expenses guarantees disaster. Cancel a train? Amtrak can't possibly save money. Try it out. Figure out how to run a household with fixed expenses and variable expenses with zero income.
 
ThayerATM said:
I'd put it this way ---Zero revenue + "fixed" expenses guarantees a loss. However, business is always a gamble. Zero revenue + "fixed" expenses + "variable" expenses guarantees disaster. Cancel a train? Amtrak can't possibly save money. Try it out. Figure out how to run a household with fixed expenses and variable expenses with zero income.
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So, I guess Amtrak is screwed then, because they canceled a few trains this past week. You say that guarantees disaster.

It's all part of the cost of doing business. Sometimes you have to take the hit (cancel a train, even though you're still paying for it), to prevent greater troubles.

If you run a train and it gets stuck (like 29 did a week ago), or even derails, I guarantee you the additional expenses are going to far outweigh the revenue you got from that train.
 
The question wasn't whether Amtrak MAKES money not running trains, but whether it SAVES money. It's a fair question.

Zero income + some expenses is not necessarily worse than some income + fixed + variable expenses since there's no guarantee that the income covers the variable expenses. Amtrak loses money either way--that's pretty much a given--but it could very well save money if income isn't even enough to cover the variable expenses.

I'm guessing that no, it wouldn't save money by not running because the income is greater than the variable expenses, but that's far from certain.
 
volkris said:
The question wasn't whether Amtrak MAKES money not running trains, but whether it SAVES money. It's a fair question.
Zero income + some expenses is not necessarily worse than some income + fixed + variable expenses since there's no guarantee that the income covers the variable expenses. Amtrak loses money either way--that's pretty much a given--but it could very well save money if income isn't even enough to cover the variable expenses.

I'm guessing that no, it wouldn't save money by not running because the income is greater than the variable expenses, but that's far from certain.
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Thanks Volkris,

That's kind of what I was trying to say. :blink:

If Amtrak cancels a train, it could certainly save money by not having to pay extra "variable expense" if something went bad. But as you say, Amtrak usually loses money anyway. I took two years of economics in college, and I still can't explain the process. I might have better luck explaining derivitives. :lol:
 
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