Amtrak Cuts Operating Losses to Lowest Level in Decades

[cpotisch]

But all this talk of restoring discontinued routes, if any materializes, would simply further dilute Amtrak's objective to provide modern and efficient rail passenger service in the markets that can support such.

How? Just think about just how many large American cities that could really use train travel are not served by Amtrak at all. Phoenix, Las Vegas, Columbus, Nashville, etc. The list goes on. There are so many huge gaps in the national network that could be filled if they restored some of those routes. Having such a skeletal national network is an obstacle that prevents Amtrak from providing modern and efficient rail service to the nation. It is not a benefit.

 

[cpotisch]

Edit: The discord/confusion comes from the fact that it is painfully obvious that the whole "Contemporary Food Service" mess was conceived of at least in part in the expectation of a starvation budget, leaving management very confused as to what to do with the massive slug of funding it got.

You sure? I mean they got the funding in February, yet "Fresh Choices" was announced mid April and was instated at the beginning of June, so I don't see why they would have had no choice but to go through with it. They could have just thrown some ViewDiners on the LSL, maybe bring back the food service it had pre-diner-lite, and kept the Capitol exactly the way it was. This is obviously not my area of expertise (if anything is), but it just seems like a pretty easy thing for management to decide on.

 

[jis]

They did not get any funding to subsidize food service and nor was the requirement to cut F&B losses removed. So in effect nothing changed as far as F&B goes.

 

[neroden]

To Amtrak's credit, in this announcement, they did outright blame host railroads for failure to run trains on time.  Blame where blame is due.

It's pretty clear to me what Amtrak ought to do with excess funding.  Buy tracks.  First priority is Chicago to Porter Indiana -- get the negotiations with NS and CSX done, buy the right-of-way for two tracks, and put in two tracks.  This unleashes reliable service to Michigan and vastly assists the Chicago-East Coast trains.  Second priority, IMNSHO, is to buy a right-of-way from Toledo to Dearborn, and redirect the Chicago-East Coast trains onto the Amtrak-owned route.  Next up, the Empire Corridor, or the Pittsburgh-Harrisburg corridor, take your pick. 

 

[lordsigma]

It all depends on what Congress decrees in the upcoming reauthorization of Amtrak.

https://www.railpassengers.org/happening-now/current-campaigns/reauthorization/

That's really what it all comes down to - that's the forum to have the debate. Like anything compromise is usually the best answer. If I was involved with this process one possible compromise I would propose to try to bring the community together on the long distance issue: continue to fund the current long distance trains, return the "3 times a week" trains to daily operation and make investments in the equipment to reduce technical failures and problems and modestly increase capacity on appropriate route segments to try to squeeze out some additional revenue to reduce the losses, but as a compromise and to direct the focus of the FUTURE onto state routes remove the "greater than 750 mile" exception for state support requirements for all new service going forward. Any new long distance routes or expanded long distance routes would require commitments from the states involved like corridors before they could be considered for implementation.

Realistically I don't think any new Amtrak service is going to fly without at least some state financial commitments these days regardless of how long the route is.

 

[lordsigma]

To Amtrak's credit, in this announcement, they did outright blame host railroads for failure to run trains on time.  Blame where blame is due.

It's pretty clear to me what Amtrak ought to do with excess funding.  Buy tracks.  First priority is Chicago to Porter Indiana -- get the negotiations with NS and CSX done, buy the right-of-way for two tracks, and put in two tracks.  This unleashes reliable service to Michigan and vastly assists the Chicago-East Coast trains.  Second priority, IMNSHO, is to buy a right-of-way from Toledo to Dearborn, and redirect the Chicago-East Coast trains onto the Amtrak-owned route.  Next up, the Empire Corridor, or the Pittsburgh-Harrisburg corridor, take your pick. 

They also acknowledged that a large number of canceled and truncated trains due to natural disasters, weather, and other emergencies this year contributed as well as the OTP for this year's Long distance numbers.

 

[Anderson]

I will grant, that with the "beat the retreat" being sounded regarding whacking the SW Chief, Amtrak has acknowledged they misread how Congress still wants their pet LD trains.

In short, the record funding received during FY18, and appears "on track" for FY19 as well, still must be used in part to support the LD system.

But all this talk of restoring discontinued routes, if any materializes, would simply further dilute Amtrak's objective to provide modern and efficient rail passenger service in the markets that can support such.

The issue is that in most of those markets (that is, outside the NEC), Amtrak is now potentially facing down a competitor backed with money.  Moreover, it's not like Amtrak has been fighting for improving those services...if anything, there's a pattern of over-charging (with the cost allocation formulas) and under-delivering.

More to the point, unlike the situation with Brightline/VTUS, outside of the NEC I have never heard of Amtrak initiating or trying to develop a stronger service model.  Some of this is due to constraints on Amtrak's end (e.g. lack of funding), but some of this is arguably due to a lack of initiative or incentive (after all, they have no competitors).

Edit:
So, let's say that I'm in Anderson's shoes and I'm working with his implied biases.  Other than being resigned to re-equipping the LD routes (at very loud Congressional insistence) and perhaps push for a daily Cardinal/Sunset (if only to streamline operations), what would I do with the "not for NEC use" money (of which I'll probably end up with a couple hundred million dollars "to spare" if these appropriation levels can be maintained and my operating picture continues to improve)?

I'd probably start a program of partnering with states: Provide a slug of money (either stand-alone or as part of a match) to improve/expand service in exchange for a long-term contract with the state (20-30 years).  Depending on how the money flow works, this could be used as a workaround for (as an example) SEHSR.

The main question at that point is whether I want to try and mend fences on the West Coast (where I'm likely under direct attack) or make a push in the Midwest or the extended NEC.  My gut would say the Midwest (particularly since if I act with some initiative I might be able to "lock in" Wisconsin and Minnesota to a significant service there), followed by VA/NC/PA.  There's a very good chance that Amtrak simply can't save the ship on the West Coast if Virgin comes in hard and fast, and I have very little doubt that they'll be able to produce an attractive package.

 

[TiBike]

The main question at that point is whether I want to try and mend fences on the West Coast (where I'm likely under direct attack) or make a push in the Midwest or the extended NEC.  My gut would say the Midwest (particularly since if I act with some initiative I might be able to "lock in" Wisconsin and Minnesota to a significant service there), followed by VA/NC/PA.  There's a very good chance that Amtrak simply can't save the ship on the West Coast if Virgin comes in hard and fast, and I have very little doubt that they'll be able to produce an attractive package.

Who's attacking Anderson on the "West Coast"? I'm not aware of anyone in California who matters – Caltrans, the JPAs that run the corridors, regional transit agencies (i.e. people with real money to spend) – who are particularly mad at Amtrak or Anderson. The conversations within that group are all about improving corridor service. No one seems to care much about long distance service – it's rarely, if ever, discussed. When the Starlight was truncated at Sacramento earlier this year, no one noticed.

The high speed rail authority has its own problems to worry about. Brightline/Virgin? Maybe they'll eventually build a line to Las Vegas, maybe not, but that has more potential to boost traffic, and incentivise service and route growth, on existing commuter and corridor lines than to hurt it.

Rail fans and private car owners? They have zero political or policy visibility here.

 

[GBNorman]

It's pretty clear to me what Amtrak ought to do with excess funding.  Buy tracks.  First priority is Chicago to Porter Indiana -- get the negotiations with NS and CSX done, buy the right-of-way for two tracks, and put in two tracks. 

On this point, I couldn't agree more; routes to the South and East of Chicago have pitiful access.  By contrast,  access on the Q and on the MILW are  "almost European"; meaning no meandering and dawdling approaching or departing a major city.

A direct connection between the IC and PRR at Grand X-ing could easily shave 20 minutes off accessing CUS as it would eliminate the back up moves. Further, the owners of the Air Line, the present access to CUS off the IC, consider it redundant and would like to abandon it.  I'm sure, as the South Loop becomes more "gentrified" would the City of Chicago.

If the so-called Chi-Stl  "High Speed Rail" project is ever to become that, a "flyover" of the number of X-ings - one of which is "Stop and Proceed" for all traffic - would have to be considered.  On that project, why restoring the double trackage the GM&O removed during 1968 was not done escapes me.  At present, it sure looks like the UP got an additional route into Chicago - and at taxpayer expense.

Regarding to the East to Porter, the ROW is already there. There were once ten tracks (4ea NYC and PRR; 2 B&O) through there (that is where the "legend" of "races" between the Century and Broadway would have occurred), the bridges over the Calumet River all remain although not in working order.  While the ROW is now used for electric X-msn lines, there is still enough open space to lay two tracks for passenger train use.  Of course, throw in a flyover at Porter.

All told, "couldn't agree more".

 

[VentureForth]

So, these are operating loss improvements.  What did they spend the $2 BILLION from last year on - you know, that nearly $1B MORE than they asked for?

 

[Amtrakfflyer]

It all depends on what Congress decrees in the upcoming reauthorization of Amtrak.

https://www.railpassengers.org/happening-now/current-campaigns/reauthorization/

The wild card here is we’ve never has a management team that wants to sabotage the majority of the company. I’m sure their presentation to Congress will be less then forth coming if not completely false. 

 

[Anderson]

Who's attacking Anderson on the "West Coast"? I'm not aware of anyone in California who matters – Caltrans, the JPAs that run the corridors, regional transit agencies (i.e. people with real money to spend) – who are particularly mad at Amtrak or Anderson. The conversations within that group are all about improving corridor service. No one seems to care much about long distance service – it's rarely, if ever, discussed. When the Starlight was truncated at Sacramento earlier this year, no one noticed.

The high speed rail authority has its own problems to worry about. Brightline/Virgin? Maybe they'll eventually build a line to Las Vegas, maybe not, but that has more potential to boost traffic, and incentivise service and route growth, on existing commuter and corridor lines than to hurt it.

Rail fans and private car owners? They have zero political or policy visibility here.

My understanding, via folks out there, is that WA is quite displeased and has done exploratory work regarding "other vendors" for the Cascades.  I've also gathered that CA isn't thrilled with the billing situation (which Amtrak really made a soup sandwich of).

As to the Starlight truncation, truncations due to weather or derailments are nothing new (and not much that Amtrak can do about them anyway).

 

[TiBike]

It was truncations due to a tunnel incident, which lasted for weeks, and a fire, which lasted for a few days. My point is that losing service north of Sacramento did not get any attention in a state where transportation disruptions are always news. It's an example of where long distance train service ranks on the list of Californian transportation issues – at the bottom. No one I know who works in transportation service or policy, including specifically people in places served by the Starlight, are upset or even mildly concerned about what Amtrak might or might not do with long distance service. I'm sure there must be someone who cares, but I've yet to meet him or her.

If a course-of-business billing disagreement meets your criteria for being "under direct attack", well okay.

 

[Anderson]

I don't think it's a "course-of-business" item.  IIRC New York (for example) flat-out refused to pay the initial invoices given them because Amtrak tried to give them a one-line "services rendered" invoice (Illinois was able to wriggle out from under part of theirs due to Amtrak deciding it was a "bright idea" to send out the PRIIA 209 bills after the legislatures had gone into recess).  There is systematic exasperation from quite a few states.  There's also some frustration at how the whole situation surrounding the PPC has been handled over the last few years...but a lot of it centers around the sheer costs Amtrak has loaded onto the corridor trains.  That is a big threat for Amtrak because of the amount of overhead being carried by those trains.

My understanding, from folks up there, is that WA and OR would have already sacked Amtrak if it had been feasible to do so.  The insurance issue (which gave Indiana heartburn as well), among others, preempted that.

 

[Skyline]

It was truncations due to a tunnel incident, which lasted for weeks, and a fire, which lasted for a few days. My point is that losing service north of Sacramento did not get any attention in a state where transportation disruptions are always news. It's an example of where long distance train service ranks on the list of Californian transportation issues – at the bottom. No one I know who works in transportation service or policy, including specifically people in places served by the Starlight, are upset or even mildly concerned about what Amtrak might or might not do with long distance service. I'm sure there must be someone who cares, but I've yet to meet him or her.

If a course-of-business billing disagreement meets your criteria for being "under direct attack", well okay.

Apparently you never met stranded passengers, operators of lodging venues whose registered guests were no-shows, or the employees of Amtrak and its vendors, or myriad others who cancelled plans to travel on the CS during this period. They are among many other "someones who care."

There's not much that could be done about this truncation, so it was the kind of story you'd only read or hear about on a very slow news day. Haven't had a lot of those lately. 

With the right will, LD and corridor pax service can both thrive! They can even feed one another. Most of the other civilized (and a few less civilized) nations on Earth have figured out how to make trains of all types a larger part of their transportation priorities. Their citizens benefited! They did so by acknowledging the support of public transportation (including robust rail) is an important function of government, and is seldom going to make a profit any more than highways, bridges, waterways, the FDA, or the military does. 

 

[TiBike]

I don't think it's a "course-of-business" item.  IIRC New York (for example) flat-out refused to pay the initial invoices given them because Amtrak tried to give them a one-line "services rendered" invoice (Illinois was able to wriggle out from under part of theirs due to Amtrak deciding it was a "bright idea" to send out the PRIIA 209 bills after the legislatures had gone into recess).  There is systematic exasperation from quite a few states.  There's also some frustration at how the whole situation surrounding the PPC has been handled over the last few years...but a lot of it centers around the sheer costs Amtrak has loaded onto the corridor trains.  That is a big threat for Amtrak because of the amount of overhead being carried by those trains.

My understanding, from folks up there, is that WA and OR would have already sacked Amtrak if it had been feasible to do so.  The insurance issue (which gave Indiana heartburn as well), among others, preempted that.

Arm wrestling over billing, particularly for megabuck projects, is course of business for state agencies – Caltrans has platoons of people dedicated to it. "Exasperation" is SOP. It's a fact of life for public sector contracts; it's not particular to Amtrak. It would be surprising if they weren't wrangling about overhead, it's what they do.

BTW, overhead has to be allocated to something – by definition, it doesn't pay for itself. Should more of it be loaded onto long distance services?

I don't know what's happening in Oregon or Washington, or who you're talking to, but if by "PPC" you mean the Pacific Parlour cars, it sounds like you're talking to rail fans, not people at state agencies with actual responsibility for managing the contracts and service. The PPCs were completely irrelevant to specific state services or general transportation policy.

If rail fans didn't grab at random scraps of conversation and inflate them into major crises and direct attacks, we wouldn't have these chat boards.

 

[frequentflyer]

Anyone remember the video earlier in the year of Anderson in California? The one that had everyone up in arms because he didn't embrace LD trains with open arms. On that same video he stated he was hording cash, saving it for some reason, I believe it was for equipment purchases. So I imagine some of the excess funding will go to the upcoming equipment announcement.

 

[Ziv]

It seems like PTC is a bigger issue than PPC at this point. Maybe it was a typo.

 

[Anderson]

It seems like PTC is a bigger issue than PPC at this point. Maybe it was a typo.

No, it wasn't.  It isn't the withdrawal of the PPCs that caused the heartburn in question, it's the fact that (for example) Amtrak mucked about with the wine and cheese tastings (which were rather a promotional item for the states in question) without reaching out.  To be fair, though, both incidents (alongside the whole station agent mess) are pretty good cases of Amtrak handling things clumsily.

On overhead: You have two-and-a-half issues there.  The first is that there's rather a decent case that the NEC should be carrying more of the overhead, with the half-issue being an argument that a chunk of the overhead should be getting billed to the federal government as part of Amtrak's appropriation and handled as an explicitly non-allocated cost.  Bear in mind that, for example, the presence (or absence) of Sunnyside or Ivy City has close to zero impact on California.  The fact that the switch from "avoidable costs" to "fully allocated costs" in the 1990s  led to a one-year 65% jump in expenses is a pretty good sign, in my mind, that Amtrak probably got a little too aggressive here (though indeed, some of this may have also been a result of Amtrak losing the Pioneer/Desert Wind).  It doesn't help that in many respects, Amtrak allocates a lot of expenses as "overhead" when a good portion of those expenses could (and probably should) be handled as directly billed items.  A good example here is advertising (which is billed to a given state even if Amtrak doesn't spend anything on advertising in that state and the state's DOT does their own advertising work).

The second, and probably bigger, issue is that a loss of overhead control (or perhaps a lack of it to begin with, if only due to the origins of Amtrak) is a very good way to end up losing contracts.  NB Amtrak didn't get the Hartford Line contract for reasons related to this (and then, I'm told, tried to strongarm CT over access to the line only to be reminded that CDOT/MNRR owns New Haven to New Rochelle).

And I think there's a clear difference between fighting over details on a major infrastructure project and continuing issues with the status of a contract.  The sense I've gotten, and numerous incidents have reinforced this, is that Amtrak is happy to take quite a bit for granted.

Edit: To be clear, I think what you're ultimately seeing with various states is a "death by a thousand cuts" in terms of what Amtrak is doing to itself.  It isn't one big, gigantic frak-up...it's an extended pattern of behaviour that makes it apparent to the states that Amtrak doesn't really care about their business becuse hey, who can they turn to?  And in many cases, this behavior has been going on for a long, long time.

 

[neroden]

The big problem is that Amtrak will not do its accounting properly.  It's not possible to get control of overhead costs if you don't actually know where the costs are.  The RPA white paper condemning Amtrak accouting is perhaps the most important wake-up call for Amtrak's board and management in its entire history, but there's no sign they've understood it.

 

[NSC1109]

The big problem is that Amtrak will not do its accounting properly.  It's not possible to get control of overhead costs if you don't actually know where the costs are.  The RPA white paper condemning Amtrak accouting is perhaps the most important wake-up call for Amtrak's board and management in its entire history, but there's no sign they've understood it.

I've never understood why Amtrak doesn't use GAAP. I mean, I know they're not a public company, but wouldn't it make more sense to the rest of the world? Or is that exactly why they don't want to use it? 

 

[neroden]

GAAP doesn't really help with the problem at issue, which is figuring out which individual parts of the business are costing more money than they should / making less revenue than they should, etc.  This just requires basic, proper business bookkeeping.  Which Amtrak does not have.  What they need is something like SAP.

They've finally started to track usage of parts and labor time at the maintenance shops by car and type of car so that they can actually figure out how much each car is costing in maintanence, but that was very recent.  For example.

Amtrak really has no idea where the money is going.  This is how they ended up paying for utilities on buildings they didn't own or use, for decades (this was uncovered by the Inspector General, I believe).  This is just no way to manage an organization.  I assume there's history behind it -- Penn Central accounting was a mess already, and Amtrak inherited most of it -- but it needs to end.

 

[Trogdor]

I've never understood why Amtrak doesn't use GAAP. I mean, I know they're not a public company, but wouldn't it make more sense to the rest of the world? Or is that exactly why they don't want to use it? 

https://www.amtrak.com/content/dam/projects/dotcom/english/public/documents/corporate/financial/Amtrak-Audited-Consolidated-Financial-Statements-FY2017.pdf

Page 2 of the auditor's report:

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of National Railroad Passenger Corporation and subsidiaries at September 30, 2017 and 2016, and the consolidated results of their operations and their cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

 

[jis]

This business about Amtrak not using GAAP is yet another enduring myth popular among some rail fans apparently [emoji57]

 

[neroden]

GAAP specifies a lot less than people think it does.  You can hide elephants in GAAP accounting.  Enron complied with GAAP; so did Worldcom.

I read financial statements professionally as an investor.  They all comply with GAAP.  Some of them are providing useful, meaningful financial metrics on which you can make business analyses and business decisions.

Others.... aren't.  I think you can guess which category Amtrak is in.