Can a LD Train NOT Lose Money?

[brooks]

Best source of information on this:

http://subsidyscope.org/transportation/direct-expenditures/amtrak/analysis/

Down the page below the map allows you to select route. Good numbers on the annual cost of each route, with, and without, depreciation.

Under the current structure and cost allocation I can not see how many long routes could be profitable -- at least in the definition that a private business would use.

Given that huge amounts of funds are provided to small communities for economic development - subsidizing Amtrak service could qualify as easily as the subsidies for bus and air service. On that basis, a long route could be "profitable", in the public sector definition.

As an aside: I know of one community that was awarded a 10% match transportation grant for a new Amtrak station AFTER Amtrak said they would stop serving the community. They built it.

 

[Anderson]

Best source of information on this:

http://subsidyscope....mtrak/analysis/

Down the page below the map allows you to select route. Good numbers on the annual cost of each route, with, and without, depreciation.

Under the current structure and cost allocation I can not see how many long routes could be profitable -- at least in the definition that a private business would use.

Given that huge amounts of funds are provided to small communities for economic development - subsidizing Amtrak service could qualify as easily as the subsidies for bus and air service. On that basis, a long route could be "profitable", in the public sector definition.

As an aside: I know of one community that was awarded a 10% match transportation grant for a new Amtrak station AFTER Amtrak said they would stop serving the community. They built it.

Local governments tend to do dumb things while chasing matching funds. There was a bus like that in Newport News that basically ran back and forth over about five blocks called the "Jump Over Jeff" bus. It was intended as a link between two city-sponsored developments (Port Warwick and City Center), but it was almost completely empty most of the time. The story I heard was that they kept it going because the match was, in essence, too juicy to pass up.

Edit: Those Subsidyscope numbers are old numbers using the formulas Amtrak used until about 2008.

Ultimately, there are three questions that I think this thread raises:

1) Can an LD train run an operating profit? I believe the answer is "yes", at least with the Auto Train. It is possible that others could end up there if enough capacity was added and fares can continue to rise (particularly on the coach front).

2) Can an LD train run an overall profit (i.e. including depreciation)? I believe the answer here is "no": The federal government (or some other entity) is still going to need to kick in for equipment.

3) Can the Amtrak system run at an operating profit? I believe that the answer is "yes": The NEC (Acelas and Regionals combined), and potentially some other corridor operations, should be at least theoretically capable of running enough of a surplus on their operations at some point (at least, as long as fuel prices stay high) that an operating profit overall is achievable. Some corridors will be in the red, as will a lot of LD trains...but if you can get your LD trains as a whole up to covering 75-80% of costs, I think the system can get into the black.

 

[johnny.menhennet]

As an aside: I know of one community that was awarded a 10% match transportation grant for a new Amtrak station AFTER Amtrak said they would stop serving the community. They built it.

Just so I know, what city is this, by chance?

 

[TWA904]

So what if the SSL receives over $300 subsidy for each passenger. Great Lakes Airlines is paid well over $1000 per passenger from the Essential Air Service Program to maintain a route to Ely Nevada that usually flies empty.

 

[RailRide]

I think you are correct in that the taxpayers will eventually fund the losses.

As I understand, their primary loss is the contribution to the employees pension funds

that are presently required into a trust fund. They don't have the cash to make the

contribution. I heard from an operating basis, they are doing reasonably well, but still

at a loss.

Not only have they been mandated to pay $5 billion a year into the fund, but I'm hearing from sources both inside and outside the USPS that these payments are intended to fund pensions for 75 years out into the future. Which means they're being forced to pay for pensions for employees that haven't even been born yet.

---PCJ

 

[afigg]

So what if the SSL receives over $300 subsidy for each passenger. Great Lakes Airlines is paid well over $1000 per passenger from the Essential Air Service Program to maintain a route to Ely Nevada that usually flies empty.

Because the amount of the subsidy makes them big juicy political targets for cutting the service entirely. The Sunset Limited needs to reduce its operating losses per passenger by going to daily service, but Amtrak has apparently decided not to fight UP on the issue for the time being. One would hope that there is a strategy of waiting for UP to complete double tracking of more of the route between LA and El Paso so UP can't demand as much money for daily service and has a weaker argument that a single daily passenger train would interfere with freight traffic.

The EAS program is a clear target in Congress for cuts. In the longer run, however, I would not be surprised to see it expanded as sustained high fuel prices result in termination of commercial passenger service to a number of smaller and rural airports that currently have multiple daily commercial flights. The subsidized service to the really small communities such as Ely get dropped in favor of funding service to larger rural airport that don't currently don't see their air service as threatened. Sustained global oil prices of $100+ to $125 a barrel will have an considerable effect on the economics of airline travel for flights to anything but the high volume airports. Right now, the Brent Crude price, the better gauger of the global price for oil than West Texas Intermediate (WTI), is at $111/barrel and has been above $100/barrel for the past year.

What does that have to with LD trains? As airline service consolidates and dwindles, a number of rural communities that are many hours driving time from a major city airports, are going to look at either their current Amtrak service or restoration of Amtrak service as the lifeline connecting them to the rest of the US. But this won't happen overnight or soon.

 

[Anderson]

So what if the SSL receives over $300 subsidy for each passenger. Great Lakes Airlines is paid well over $1000 per passenger from the Essential Air Service Program to maintain a route to Ely Nevada that usually flies empty.

Because the amount of the subsidy makes them big juicy political targets for cutting the service entirely. The Sunset Limited needs to reduce its operating losses per passenger by going to daily service, but Amtrak has apparently decided not to fight UP on the issue for the time being. One would hope that there is a strategy of waiting for UP to complete double tracking of more of the route between LA and El Paso so UP can't demand as much money for daily service and has a weaker argument that a single daily passenger train would interfere with freight traffic.

The EAS program is a clear target in Congress for cuts. In the longer run, however, I would not be surprised to see it expanded as sustained high fuel prices result in termination of commercial passenger service to a number of smaller and rural airports that currently have multiple daily commercial flights. The subsidized service to the really small communities such as Ely get dropped in favor of funding service to larger rural airport that don't currently don't see their air service as threatened. Sustained global oil prices of $100+ to $125 a barrel will have an considerable effect on the economics of airline travel for flights to anything but the high volume airports. Right now, the Brent Crude price, the better gauger of the global price for oil than West Texas Intermediate (WTI), is at $111/barrel and has been above $100/barrel for the past year.

What does that have to with LD trains? As airline service consolidates and dwindles, a number of rural communities that are many hours driving time from a major city airports, are going to look at either their current Amtrak service or restoration of Amtrak service as the lifeline connecting them to the rest of the US. But this won't happen overnight or soon.

I tend to agree here. Having looked over some of the schedules from the 1950s, it seems entirely possible that privately-funded air service could "crash out" over large enough parts of (for example) Nebraska, Kansas, and Oklahoma in particular that maintaining EAS coverage for 5-6 cities along a route might get to be substantially more expensive than simply dropping a train in the region (particularly if DMUs could be put into service for the runs). Flyover country is the worst area for rail travel as a rule, but it is entirely possible that the airline picture in some areas (at least for year-round service) might just end up being far too expensive to maintain if oil prices not only stay high but also get pushed further up.

Likewise, some areas might be served simply by extending a train into a "stub end" area with state support. Comparatively speaking, extending a CHI-MSP day train to Fargo would fall under this category, but at least on paper that can be done without using any extra equipment. Extending the MORR to Topeka at least once daily doesn't seem like a stretch (even if you might need a cab car to do a push-pull), and with some schedule adjustments and/or an extra equipment set you could probably extend through service all the way to Salina. Likewise, extending a train that terminates in Omaha to Lincoln seems possible...and so on and so forth.

The other question that jumps up is this: While there are a lot of places that it simply doesn't pay to stop, are there cases where what was once a rural station could be pressed into service as a suburban station, and if a "local" was run on the route that a train might be at least partly used for commuter service (as is the case with the VRE and MARC)? When look at old schedules, I often find 2-3 stations on the way into/out of town on a route that are now part of a single conurbation (and 2-3 is sometimes low...I think there are close to ten former C&O stops between Toano and Newport News. Most of the station buildings are gone, but a lot of the RoW for them is still open).

 

[henryj]

but Amtrak has apparently decided not to fight UP on the issue for the time being. One would hope that there is a strategy of waiting for UP to complete double tracking of more of the route between LA and El Paso so UP can't demand as much money for daily service and has a weaker argument that a single daily passenger train would interfere with freight traffic.

The UP bid, though high, was the opening round in what everyone thought would be negotiations to start up daily service. But as Boardman has demonstrated, Amtrak really has no desire to run the SSL daily, all the reports not-with-standing. They are apparently just some nice colored slick paper documents with no meaning. Boardman stated Amtrak would not negotiate with nor submit to arbitration the proposal for daily SSL service. UP runs Amtrak trains on their tracks all over the west. So this is just another nail in the coffin of the LD train network put there by Boardman. That he is no friend of the LD train should be obvious now.

 

[Anderson]

Boardman not being a fan of the Sunset Limited (to say nothing of probably lacking room in the subsidy to run the train daily) doesn't mean he doesn't like the LD trains. After all, he ordered the first new LD equipment since the Viewliner Is (bag-dorms and sleepers) when he could probably have ordered a bunch of Viewliner coaches instead. If Boardman had it in for the LD trains, we'd probably have seen an order for about a hundred Viewliner coaches that could be converted to corridor service in a crunch and a batch of replacement diners just to get those off the roster.

With the Sunset, I don't think Boardman could find the money to afford to run it daily if his life depended on it. Even a daily Cardinal is far cheaper.

 

[cirdan]

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.

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.

However, I believe that some railcruises and such are profitable. That is because they charge significantly higher prices than Amtrak while running a much more sporadic service.

Could Amtrak do that too? Yes.

But is that the sort of passenger railroad we want? No.