Thanks for the nice post...
Ok, you guys asked for this so here goes. Lets start with the Chicago to NY market. Amtrak is now down to just one train a day, the Lake Shore Limited. At one time the NYC and the Pennsylvania RR ran a dozen or more trains between these two cities, plus multiple trains to St Louis and along with the B&O between Washington DC and Chicago. Now you tell me Amtrak can only muster one **** ant train between two of the largest cities in America with fuel costs continuing to rise and airline hassles rising. I just don’t believe it. Do you think the Cardinal at three times a week really rates as transportation between these two cities? Boardman says LD trains are losers and blames Amtrak’s losses on them. Are they even trying? Lets look at another market. NY to Florida should be one of Amtrak’s premium markets. Yet by their own FY2011 reports, which I don’t believe, the Silver trains plus Auto Train lose 130 million dollars a year on revenues generated of 148 million.
Boardman said what Amtrak's CPAs have said for a while. The question is of course what makes Amtrak's CPAs say so.
And it is a legitimate question. But without having access to the raw numbers available to those CPAs we can only guess on some of those.
I think the SWC route could easily support a second train, say run via the Transcon through Amarillo. Lets look at this train which Amtrak claims loses 68 million dollars a year on revenues of 48 million. I am a CPA, bean counter, accountant, so I like playing with numbers. I can get close to their claim of 48 million in revenue like this. Three coaches on each train each way or 400 passengers a day at $156 for a one way coach ticket Chi to Lax equals something like $23 million. Sleeper class is something else. I don’t know the exact consists of the SWC, but lets assume three sleepers per train. There are 14 roomettes per car, three cars per train, two trains a day at $320 dollars a room equals around $9.8 million a year. There are 5 bedrooms, plus a family room and a handicap room for a total of 7 times three per train times two trains times $1070 per room or around $19.5 million per year. If the bedrooms average two people per room and the roomettes are split evenly between one person and two that is an average of 35 passengers per sleeper time three cars time two trains times the average fare of $156 or $12 million a year. Total sleeper revenue is then $41.2 million for this train and coach revenue 23 million for a total of $64 million at 100% occupancy(Amtrak claims sleeper revenue for FY2011 is $19.4 million). To get this down to Amtrak’s number of $48 million total revenue we have to assume a 75% occupancy rate which is still high, but the train is often sold out and of course passengers get on and off all along the route.
Methinks you may be overestimating what they actually get per room. But that's neither here nor there I suppose, since we can choose to believe Amtrak's number on this one.
Now look at their expenses which they say are $116.3 million a year. As far as I can see Amtrak does not detail out any of their operating expenses per train like fuel, labor, rent to the railroads, food costs, station costs, etc. The SWC has five train sets operating every day. Fuel costs for two trains running the whole route every day getting .5mpg per locomotive with two on each train gets something like $6.6 million at $4 per gal. Labor costs, 10 per train, 6 days pay @ $60,000 ea is $7.2 million a year.
Because of the way in which operating staff is allocated to trains, and the fact that there is only one train per day on that route, I suspect that labor cost is much higher than you compute, since it requires way more than 10 people to be kept on the payroll per day to operate the SWC in actuality, together with their current and retirement benefits. I just admit I don;t have precise numbers.
Diner costs. One train each way each day serves 11 meals for perhaps 150 passengers @$25 each or $15 million a year.
150 * 25 * 11 * 365 * 2 = $30,112,500 so call that $30 million a year instead of $15 million a year.
Now for the real tricky stuff. What are the maintenance costs for the 50 or so cars that it takes to run this train? I used a dollar a mile per car, but a car takes two days to make the trip so maybe $20million a year.
Both the actual cost of maintenance and the allocated cost of maintenance facilities and staff needs to be taken into account. I have no clue how to find them accurately.
Rent. Haha, the big secret. Perhaps our expert George Harris can chime in here I guess it’s $10/mile a day or $22,650 a train set or around $16.5 million a year.
Actually this is no secret. There is a published figure for the rolled up cost for rolled up passenger miles on an annualized basis for all of Amtrak. To get a ballpark mean figure, which may or may not be close to what is paid to BNSF, Amtrak in 2010 paid $136.9 million for 26 million train miles according to
Amtrak National Facts. That ballparks out to $5.27 per train mile. It should be noted though that any train that is not covered by current contracts, i.e. any new train, will most likely get a rate closer to what you surmise.
Stations, there are 31 outside of Chicago and LAX. Maintenance maybe $10,000 per station per year or $310,000. Station agents @$50,000 ea times maybe 20 is only 1 million a year. Most stations are unmanned. Total operating expenses $67.4 million a year. So I get an annual operating loss of something like $19.4 million.
Calling everything else other than the error in computed food cost a wash make that $19.4 million + $15 million = $34 million and change. I suspect that the labor cost will throw in a significant additional amount while trackage charges will halve, though for a new train will probably stay the same, but my suspicion is labor cost increase will be larger than the trackage cost decrease. Just a guess. But a ballpark overall figure of some $35 to 40 million from the items considered makes sense. If you are doing financial as opposed to cash accounting then we also need to take into consideration depreciation. Even in cash accounting we need to take into account equipment leaseback charge for those pieces of equipment that were sold and are currently leased back. I have no idea what the relevant figures are. Just pointing out that there are other factors to be taken into consideration. There is also the issue of rentals other than trackage charges paid for various facilities that are allocated to SWC wholly or partially. Similarly how service charges for consolidated services like CNOC are allocated to a single train etc. I also do not know how to find those numbers.
Greyhound charges fares ranging from $139 to $229 for a one way trip between Chicago and Lax with two transfers. No sight seer lounge car, no diner, cramped seating on a bus. Think maybe Amtrak’s fares are too low? What if the coach base fare was $250? Now Amtrak only loses $3.7million a year on this train. In other words it breaks even on operating costs. So now you ‘smart guys’ can chew on this for a while.
Well, first we need to get a more complete accounting, which we still don't have, before running off making pronouncements.
Of course Amtrak fares are too low to cover all costs specially for LD trains. However, how much you can raise fares depends on the cost elasticity curve. That is what yield management is all about. Of course I don;t know how good a job Amtrak is doing there, and I bet no one else here does either.
Southwest shows one way fares, nonstop, from $138 advance internet purchase to over $500. But that is no frills, knees in your face, no meals, type flying.
But that is only for a few hours instead of days.
Amtrak was asked to make several studies on things like restoring service on the Pioneer route, the Desert Wind, the Sunset east, etc and they just came up with outlandish exorbitant costs. In other words they just don’t want to do it. Well what the ‘H’ do they want to do?
Could you state why you believe those numbers to be outlandish? Were some of the alleged outlandish numbers that Amtrak came up with? Or was it host railroad jaw-boning, seeing an opportunity to make a few bucks?
Whether the costs are exorbitant or not and to what extent it is Amtrak's doing needs to be analyzed. Would you consider the bill presented by UP to Amtrak an Amtrak exaggeration? That would be so easy to prove if it were so that even the stupidest schemer at Amtrak couldn't come up with that one IMHO.
Amtrak has been told by their paymasters that they are not allowed to start any new LD train without express permission of their paymasters. They have also been told that they have to justify the subsidy for each existing train on a train by train basis to get access to appropriate funds for running those trains. What the 'H' do you exactly expect them to do under those circumstances? Try to save the current network or make pie in the sky plans first?
My main beef with Amtrak is the fact that under the pretext of converting accounting systems they have stopped delivering breakdown of costs. Frankly this has got to be one of the longest accounting system changes in the history of mankind. Basically they do not want to publish those numbers so they are using a random excuse IMHO. It is hard to figure out how a transport company is doing if they refuse to publish even their rolled up RASM and CASM, leaving aside the details for the time being.
How do you get money from Congress? First you have to have a plan. Amtrak has no plan. Congress appropriates money for all kinds of stuff, nonsensical to practical. Amtrak can get the money it needs, but first they have to have some kind of a plan. They have none other than preserving the status quo and their jobs.
I am not sure that the last paragraph enhances your credibility after the excellent analysis presented earlier in the article. I don't see how the last two paragraphs follow from the rest. If one is so convinced that Amtrak can get the money it needs it is time to get at least the legislature in ones state to come up as a starter with a single pro-Amtrak resolution in support of such.
As far as Plans go, it seems to me that the PRIIA Service Improvement plans are pretty reasonable plans for maintaining and improving current service. They do not have a published LD development plan, but then again they would probably pulled up for spending money on inappropriate things if they spent significant money on such at present. They do have rather detailed plans for corridor development both developed by them and in conjunction with State DoTs involved. So to make a blanket statement that Amtrak does not Plans flies in the face of observed reality unfortunately.
But on the whole, excellent stuff with meat that can form the basis of creating a more complete accounting. Unfortunately I am afraid there are significant cost items for which we cannot get accurate numbers as far as I can tell, without Amtrak providing those numbers.
