Can a LD Train NOT Lose Money?

I'm concerned about the way Mr. Boardman recently characterized the long distance trains as being the money losers. It has a tendency to help Congress line up its cross-hairs. So then I was wondering what could be done to get the long distance trains to break even. Take the Silver Star for instance. What if it was completely full - every seat and every bed - all the way from Miami to New York. Would the train at least break even? If not, in this scenario, it would indicate that the fares should be raised, thereby raising the revenues until the revenues peaked. At that point, would the train break even? If that won't work, then I'm apprehensive that the long distance trains will eventually stop, because any other measures, such as adding cars, would seemingly raise expenses.

Can anybody cite some credible analysis on this subject?

Thanks,

John Bobinyec

That's reason Amtrak exists. The freight railroads couldn't make any money on passenger trains. If they were money makers, the freight railroads would still be running them.

The problem is that when you raise fares, less people will take the train.

So, there becomes a balance point, a peak, where you can generate only so much revenue, and not a bit more. I suspect that this balance points for Amtrak's LD routes are less than the cost to run those trains.

Just let me clarify, I didn't say anything about MAKING money. The best, I think, that can be hoped for is for a train to break even - meaning to not lose money. Another way to put the question is, what's the best possible scenario, as far as net losses go, for a long distance train? And please cite a credible analysis/study.

Thanks,

JB

Cho Cho Charlie said:

The problem is that when you raise fares, less people will take the train.

So, there becomes a balance point, a peak, where you can generate only so much revenue, and not a bit more. I suspect that this balance points for Amtrak's LD routes are less than the cost to run those trains.

Click to expand...

Yes, that's conventional wisdom. But what studies have been done? Congress still has the idea that Amtrak's trains should be on a for-profit basis. That's wishful thinking, of course, but what credible analysis exists that would refute that?

Thanks,

JB

John Bobinyec said:

Yes, that's conventional wisdom. But what studies have been done? Congress still has the idea that Amtrak's trains should be on a for-profit basis. That's wishful thinking, of course, but what credible analysis exists that would refute that?

Click to expand...

Eww. "Conventional wisdom" and "Congress" can't be used together in the same thought. :giggle:

Amtrak, nor the USPS, can ever make money as long as Congress wants to tinker with managing them.

And all other forms of transportation require tax payer subsidies. No single bus or truck company could never afford to build, maintain, and supervise all the roads they use. Ships require capital funding by Port Authorities and supervision by the Coast Guard. Airlines require airports, flight controllers, etc.

I can see a few ways LD trains might break even.

1. Run only as over night trains between two major cities. Since that would most likely be under 700 miles most would not call this an LD train

2. Have all fixed costs (station upkeep and staff, RR fees, equipment maintenance)be funded by local and state authorities. In addition tack extra sleepers and build a new generation of slumber coaches while cutting on board staff and quality.

3. Give the private RR massive tax breaks to run the LD routes again.

It might happen some time in the future one or two of the eastern LD routes might break even. But in an area where flying is so relatively cheap the current model of Amtrak LD service will never cover its costs.

The only way to justify their existence (as many of us here do) is that LD service is a vital public transportation link for many small towns and the cost of running is worth it as a public good.

John Bobinyec said:

Just let me clarify, I didn't say anything about MAKING money. The best, I think, that can be hoped for is for a train to break even - meaning to not lose money. Another way to put the question is, what's the best possible scenario, as far as net losses go, for a long distance train? And please cite a credible analysis/study.

Click to expand...

I'm not aware of a single national passenger rail system that breaks even, at least not when the full cost of creation and maintenance is involved. Then again neither can US highways or US airlines break even when all costs are considered. In the end I don't think having the facts on your side helps you. An example of this is the TSA. Few folks seem to want a huge TSA agency irradiating and/or groping them and their families, both from the left and from the right, and yet nobody in the government can seem to do anything about them. Meanwhile the size of the agency just keeps growing while our level of privacy keeps shrinking with no end in sight.

It costs more to run long distance trains like the Silver Meteor & the Silver Star compared to the Palmetto or Carolinian due to larger crews for Sleepers and Dining Cars. The fares for Sleeping Cars are quite high. I am not sure high they could be raised to break even and still get people to travel. If you eliminate Sleepers and Dining Cars, people will not report travel by train.

I'mm not answering the question, but to me this statement says all I need to form my opinion:

>>And all other forms of transportation require tax payer subsidies. No single bus or truck company could never afford to build, maintain, and supervise all the roads they use. Ships require capital funding by Port Authorities and supervision by the Coast Guard. Airlines require airports, flight controllers, etc. <<

The opinion:

I WANT my government to pay for LD trains to run, and I am willing to have that be part of the taxes I pay.

I have thoughts on how LD trains can get a lot closer to breaking even in the future as part of a larger program of expansion and revival of corridor train services. I also think that oil prices and availability in the next 10-15 years are going to have a significant effect on how people in the US travel, but that is a whole other topic. However don't have time to write a long post now, so I'll try to post tomorrow.

The fixed costs of running a long distance train are great and not being fully utilized. How many stations have to be physically maintained and a subset staffed on the long distance routes? One train a day in each direction is not going to do wonders for recovering those costs. Adding additional trains on the same routing will not always be a net gain either, as there will be bleed from the original frequency or just not enough demand.

Excluding states with other rail service and where costs can be split with other routes, the Builder has $8.6M in wages* for 97 employees. I doubt these employees are commuting to SEA/PDX/CHI for work so this is just station staff and operating employees. If the Baby Builder, MSP-CHI service, comes about that will spread out the fixed costs. Similarly something could be done MOT-MSP, Both of these additional trains would lead to more efficent use of operating crews/station staff.

Demand for travel is also very seasonal, nothing is going to get the Builder to even during winter months.

*from the FY11 MN/ND/MT/ID state fact sheets. I am guessing like other federal agencies "wages" means gross pay plus health and retirement benefits. So no dirty looks to your station agent as they are not actually making $85,000.

Cho Cho Charlie said:

John Bobinyec said:

Yes, that's conventional wisdom. But what studies have been done? Congress still has the idea that Amtrak's trains should be on a for-profit basis. That's wishful thinking, of course, but what credible analysis exists that would refute that?

Click to expand...

Eww. "Conventional wisdom" and "Congress" can't be used together in the same thought. :giggle:

Amtrak, nor the USPS, can ever make money as long as Congress wants to tinker with managing them.

And all other forms of transportation require tax payer subsidies. No single bus or truck company could never afford to build, maintain, and supervise all the roads they use. Ships require capital funding by Port Authorities and supervision by the Coast Guard. Airlines require airports, flight controllers, etc.

Click to expand...

In Europe airports are privately owned and operated. And for the most part private ownerships pay for whatever upgrades the airport gets.

Hi,

A problem with any equation arises when one has incomplete informtion.

Do we know what Amtrak pays to run over the freight railroads? What is the government "subsidy" used for? How much income do ticket sales generate on each route? Who are the passengers, why do they use the train?

Let's keep all the long distance trains running at any cost... when gas is $20 or $30 a gallon, those trains will be sorely missed!

Ed

The math is brutal when you compare against planes for carrying passengers. Trains are very efficient when carrying weight per mile against planes but very inefficient when carrying people per mile. In the time it takes a single long distance train to go Seattle to Chicago, a single commercial jet plane can make multiple trips during the same time easily moving more total passengers at a lower total cost per passenger mile. Planes require fewer crew and overall reliability is higher and on time performance is much better. But when the weight of the cargo goes up,the math changes. There is an upper limit on the total weight a commercial plane can carry in one trip that is far lower than what a single train can carry. That makes trains a very expensive way to haul people long distance and planes a very expensive way to haul something like coal long distance. Side arguments around federal funding for aviation and the highway system are distractions from the core math that a single plane can deliver overall more people faster long distance than a train.

I like train travel but there is no way a train can ever be as economically viable as a plane with current technology for moving people long distance. And as long as a lower cost option exists, there will be limit to what can be charged for people to travel by trains. So I do not believe trains can ever be profitable with existing technology and fuel costs.

Regards,

Jeff

LoneStarJeffe said:

The math is brutal when you compare against planes for carrying passengers. Trains are very efficient when carrying weight per mile against planes but very inefficient when carrying people per mile. In the time it takes a single long distance train to go Seattle to Chicago, a single commercial jet plane can make multiple trips during the same time easily moving more total passengers at a lower total cost per passenger mile. Planes require fewer crew and overall reliability is higher and on time performance is much better. But when the weight of the cargo goes up,the math changes. There is an upper limit on the total weight a commercial plane can carry in one trip that is far lower than what a single train can carry. That makes trains a very expensive way to haul people long distance and planes a very expensive way to haul something like coal long distance. Side arguments around federal funding for aviation and the highway system are distractions from the core math that a single plane can deliver overall more people faster long distance than a train.

I like train travel but there is no way a train can ever be as economically viable as a plane with current technology for moving people long distance. And as long as a lower cost option exists, there will be limit to what can be charged for people to travel by trains. So I do not believe trains can ever be profitable with existing technology and fuel costs.

Regards,

Jeff

Click to expand...

How much would it cost for a plane to fly between Seattle, Wenatchee, Spokane, Whitefish, Shelby, Havre, Minot, Grand Forks, Minneapolis, La Crosse, Wisconsin Dells, Milwaukee and Chicago?

You can't compare a long-distance train to an airplane without also considering the intermediate stops.

My July 1956 issue of Railway Progress, published by the Federation for Railway Progress, contains an interview with ICC Chairman Anthony Arpaia. He discusses the losses by railroads with their passenger service. In 1955, railroads lost $ 636 million on passenger service, a number that continued in that range since 1948. He mentioned the 10 percent passenger fare tax that was in-place at the time. The ICC was planning to hold hearings on the problem. Remember, these are 1950s dollars!

Maine Rider said:

I'mm not answering the question, but to me this statement says all I need to form my opinion:

>>And all other forms of transportation require tax payer subsidies. No single bus or truck company could never afford to build, maintain, and supervise all the roads they use. Ships require capital funding by Port Authorities and supervision by the Coast Guard. Airlines require airports, flight controllers, etc. <<

The opinion:

I WANT my government to pay for LD trains to run, and I am willing to have that be part of the taxes I pay.

Click to expand...

Exactly.

Long distance trains will never make money in this country with the current technology. We need to move towards high speed rail. For example Baltimore, MD to Charlotte, NC is probably about 600 miles, takes 9 hours which if you were able to drive would take you the same amount of time. If that was high speed and you can reduce the trip to half the time it would be alot better to travels. Even a direct flight between those points would be that much shorter considering other factors then taking the train.

Also, frequency of many trains makes people think twice. Some trains only operate once a day, and some only three times a week. People today want things now and don't want to wait. I think that is why the NEC does OK because people know that another train isn't too long of a wait. Then there are some towns that only have a passing train in the middle of the night. Not very conveniant to travels that may be unfamiliar with the place they are visiting. You may need to get a hotel for a night that you get in at 4:00 AM or when you need to leave at 1:00AM. I think every city should have at least one train stop in the hours between 8:00AM and 11:00PM.

Going with these previous thoughts. Once you get to the station, how do you get to where you need to go? Hardly any train stations have rental cars. Maybe a taxi will be there. Maybe you can take public transportation. It is a big hassle to find transportation where you need to go next at many stations. By chance, maybe you can walk to where you are going but is it safe?

These are issues/concerns that I have had when taking the train and probably the biggest issues of why rail transportation is not more popular.

Auto Train makes money doesnt it?

Shawn Ryu said:

Auto Train makes money doesnt it?

Click to expand...

It may break even on a cash flow basis in the heavy season,

but on an annual, fully loaded cost basis, it does not make

a profit (revenue, less all costs & proper allocations).

Shawn Ryu said:

Auto Train makes money doesnt it?

Click to expand...

No

benjibear said:

Long distance trains will never make money in this country with the current technology. We need to move towards high speed rail. For example Baltimore, MD to Charlotte, NC is probably about 600 miles, takes 9 hours which if you were able to drive would take you the same amount of time. If that was high speed and you can reduce the trip to half the time it would be alot better to travels. Even a direct flight between those points would be that much shorter considering other factors then taking the train.

Click to expand...

An often overlooked factor is that fast trains not only get more passengers, but they are also cheaper to operate. A twice as fast train will have somewhat higher fuel costs, but taking half the time, staff costs, which are far the heaviest post on the budget, will be half and equipment costs will be almost half (you can run two runs with the same set, but have to take the wear and tear of double mileage into account).

So with the generally slow american trains, even the ones that do sell out are very hard to get profitable because it takes a lot of staff hours to get people to their destinations. The economic success of some of the European HSR's is due to large volume/many passengers as well as lower staff costs per passenger mile.

:help: Are there ANY politicians running for any political office (any party, incumbant included) who are pro-Amtrak? Not that I'm gonna base my entire vote on that, but it might help. Any clues on a worse case scenario as to how soon LD trains could pass into history? I have a bunch of Amtrak points and I WILL NOT fly. I'm not afraid of flying, I'm afraid of TSA.

I would much rather see private industry running the railroads but this is not going to happen.

On the other point,I have no idea why this money loss thing always centers about Amtrak. Do the nations highways make money? Do the airports themselves make money? Does the post office make money? All are heavily subsidized with our tax money and if you want to shift the conversation to subsidies we must consider the farm subsidy, the oil industry subsidy, the corn subsidy, small business subsidies and 100 other government subsidies.

Then what about the bailouts of the banks where the politicans gave our tax money to their criminal friends on Wall Street? Then there is GM, Chrysler and all of the green energy money that is given out and we worry about tiny Amtrak? Amtrak exists to serve the public interest and as long as I pay taxes, I want the railroad to continue doing so. We should all insist that our tax money is used for the good of the American people, not for the benefit of the corportions, banks, or foreign interests.