Mica says NEC ok to remain in Amtrak ?

AP article says this is true.  Mica states he compromised because other congressmen balked at privatization so he compromised in order "to get something done."

Found an article that quotes AP.

http://www.thebostonchannel.com/news/29721125/detail.html

Wonder if this is just the first of Mica's blinks ??  Fred Frailey what is your take ??  I am still skeptical that Mica will try something else.  Congressional pressure from other non NEC states will be interesting.  And of course there is still the super committee and its lack of compromiser  ???.

Now Romney has weiged in on Amtrak funding saying he wants it eliminated.  Is this his father's Packard- Nash- AMC- Rambler speaking or pressure from this stablemates?

What a great idea.  Our economy can use an additional 20,000 unemployed people.

blue streak 1

Found an article that quotes AP.

http://www.thebostonchannel.com/news/29721125/detail.html

Wonder if this is just the first of Mica's blinks ??  Fred Frailey what is your take ??  I am still skeptical that Mica will try something else.  Congressional pressure from other non NEC states will be interesting.  And of course there is still the super committee and its lack of compromiser  ???.

My take is that Mica is a "true believer" in the utility and necessity of the NEC.  He also seems to believe that Amtrak is not the best choice for a service provider for the NEC, but he seems to be saying an NEC run by Amtrak is preferable to no NEC at all - which is his interpretation of the facts on the ground.

henry6

Now Romney has weiged in on Amtrak funding saying he wants it eliminated.  Is this his father's Packard- Nash- AMC- Rambler speaking or pressure from this stablemates?

A good question.  His dad was a liberal "Rockefeller" Republican, but he just seems to be uber-pragmatic.  Whatever seems right for the current time and place and space, he's for.  There is no ideological underpinning.   Wouldn't surprise me to see him run away from this position a bit once (if?) he gets nominated.

henry6

Now Romney has weiged in on Amtrak funding saying he wants it eliminated.  Is this his father's Packard- Nash- AMC- Rambler speaking or pressure from this stablemates?  

If the federal government stopped subsidizing Amtrak, it is not clear that it would go away. Oh, the long distance trains would be toast, as indeed they should be inasmuch as they serve only a minuscule portion of the population.  Also, most of the state supported short distance corridor trains would disappear unless the states continued to subsidize them.  

If Amtrak continued its exemption from federal and state taxes, as is now the case, and it could improve the productivity of its labor force, it probably could break even on some of its high density routes within the NEC, California, and Illinois corridors.  To be sure, ticket prices would have to be raised, but the raises, which could be phased in over five years as subsidies are phased out, could be market competitive.  

I have calculated how much the fares would have to be increased on the New York to Philadelphia segment of the NEC for Amtrak to break even.  My numbers showed an average 10 per cent increase would probably do the trick, although I did not have the figures for the New York and Philadelphia stations, which are owned by Amtrak subsidiaries, to factor into the numbers.

Whilst I was in Washington last week I observed the Bolt, Megabus, and NY2DC bus operations near Union Station.  They don't get any government subsidies for their operations.  Which continues to raise a question in my mind?  Why should we subsidize intercity passenger rail and not do the same for intercity bus companies? Or the airlines?  Most financial analysts believe American Airlines is about to go bust?  Shouldn't the government bail them out.  After all, what is more iconic than American Airlines?   

Sam1

Whilst I was in Washington last week I observed the Bolt, Megabus, and NY2DC bus operations near Union Station.  They don't get any government subsidies for their operations.  Which continues to raise a question in my mind?  Why should we subsidize intercity passenger rail and not do the same for intercity bus companies? Or the airlines?  Most financial analysts believe American Airlines is about to go bust?  Shouldn't the government bail them out.  After all, what is more iconic than American Airlines?   

Sam1 knows the answers to her questions very well.

1) American Airlines could go out of business with no inconvenience to the traveling public. Other carriers would take up the slack (and also many of American's former employees).

2) The bus companies are there because there was a buck to be made before they ever started. What would be the excuse for stuffing their pockets with taxpayer money?

3) The pre-1971 freight railroads, on the other hand, operated passenger trains largely under federal compulsion after First Class mail was withdrawn in 1967 and were in danger of having the whole enterprise sunk by them. At the same time, the public and politicians decided we could not do without passenger trains altogether, a feeling they mostly share to this day. Hence, Amtrak.

All bus comanies and trucking companies are subsidized.   But the subisidies are hidden.   And on a per passenger or per passenger mile basis, I assure you they are woppingly greater than the subisidies of Amtrak.   Interstate Highways don't pay real estate taxes.  The highway trust frund is not adquate for support and maintenance of highways and the shortfall has been goverened by the general Federal kitty.   Then there are the costs for Stat ehighway Patroles.   Motor Vehicle Beaureas.   Costs of mideast wars to assure fuel supply.   (The spread of Islamic Fundamentalism was possible because of oil revenues.)

The figures I've read are about $1.25-$1,38 per year for each citizen for all Amtrak subsidies and federal contribution to capital costs.   Since hte corridors are necessary, do you suppose that if it came to a referendum, the average US citizen would say "Scrap the long distance trains and give me back my dollar and quarter?   I think not.   Probably on a yearly basis, as more people may use the long distance trains than use the national parks.   I hope I never have to use a hospital again.   But I sure do want to support them in case I need one.

I don't know about Republican primaries, but I think Romney has done himself more harm than good by this statement.

This Megabus concept has me sort of baffled...$10 ticket in advance. That's it.  Where's the profit or even break even point on a 200 or 300 mile ticket?  Something's fishey in the fare and it could be government subsidies pay the fare differential.  I don't think it covers the gas for what would be a deadhead run....

...again I reiterate: redo the entire transportation system from scratch.  Pretend nothing exists and start from there or pretend what does exist is a free gift and build from there.  All forms, all modes, all places, all over again from zero.

henry6

This Megabus concept has me sort of baffled...$10 ticket in advance. That's it.  Where's the profit or even break even point on a 200 or 300 mile ticket?  Something's fishey in the fare and it could be government subsidies pay the fare differential.  I don't think it covers the gas for what would be a deadhead run....

...again I reiterate: redo the entire transportation system from scratch.  Pretend nothing exists and start from there or pretend what does exist is a free gift and build from there.  All forms, all modes, all places, all over again from zero.

 

An MCI D4500 without a rest room seats 55 people.  It costs $300-400K  for a new one.  The bus gets about 4 mpg (about 2 cents a seat mile).  The driver probably makes a couple hundred for the round trip for a 500 mile round trip each day.  No stations - they pick up curbside.  Really thin back office.  A simple e-commerce web site.  Figure $2.00 to $4.00 per mile for everything.  That's 3.5 to 7 cents per seat mile. If they can average a 70% load factor, for a 200 mile trip, that's $10-20 in cost.  

They use yield pricing like the airlines, so they only need to average somewhere north of $20 and they're in the money.

Are there business practices here Amtrak could/should emulate?

I enjoy riding trains.   So do most people.   Most people ride buses because they have to do so.   Buses, even low cost buses, did not take passengers off the trains.   Private cars did, and driving can be fun.   But not if you  are stuck in traffic.   And not spending a day on a boring interstate.   Then airlines also did because of speed.   But lots of people today find that they want traveling to be pleasure.   That is why some of Amtrak's  long distance trains now are selling out.   I think that long distance trains should be preserved.   I think they could compete if no transportation was subsidized and every form paid its own way.   It would not be the dense network of the 1920's, but something like the Amtrak network of today with a few stratigic additions.

Meanwhile, as long as the other modes continue to be subsidized, I want Amtrak to be subsidized also.   Including long distance.

Have to agree with your last posting, especially the last sentance, wholeheartedly, Dave!  One of the problems though is that teachers, lawyers, bankers, and bottom line CPA's do not understand marketing and advertising.  "A widget is a widget is a widget and that's what it costs, period.  Next please."   A train arriving or departing at 2 in the morning isn't good marketing.  One train every other day is not marketing.  And even one or two trains a day may not be marketing and sure isn't a service!  If riding over night, you want a place to sleep not take away sleeping cars; if you're riding at six or seven in the morning, you want breakfast, at noon you want lunch, in the evening you want dinner and not have a train without dining cars.  Build a service, market the service, advertise the service, grow the service.  Teachers, lawyers, bankers, and CPA'S make up 95% or more of our Congreess.  What hope is there if they don't enough to support the guy the put in charge of Amtrak who knows how to run a passenger train and a passenger railroad?  

In FY10 the federal operating subsidy for Amtrak averaged 21.13 cents per passenger mile. It was greatest for the long distance train passengers; it was considerably less for the relatively short, high density corridors.

The comparable subsidy for the nation's commercial airlines averaged 99 basis points per passenger mile whilst the subsidy for motor vehicles averaged 49 basis points per vehicle mile travelled.  These numbers can be found in or derived from the annual reports for Amtrak, FAA, DOT, and Homeland Security.  

Deriving the federal subsidy per passenger mile requires allocation.  For example, in FY10 ticket taxes and fees covered 69.9% of the FAA's expenses; 30.1% came from a general fund transfer or other sources. But not all of the transfer goes to the airlines.  Most of it, in fact, benefits general aviation and military flights operating in FAA controlled airspace.  How much of it is attributable to the airlines? The FAA does not break it out.  I concluded that a fair allocation would be 30.6%, since this is the percentage of control operations attributable to the commercial airlines.

The federal subsidy for the federal highway program is a bit difficult to fathom.  The federal fuel tax is 18.4 cents per gallon of gasoline and 24.4 cents per gallon of diesel.  However, two cents of the tax goes to the Mass Transit Administration and 4.3 cents goes to the Treasury Department for general deficit reduction. Accordingly, one could say that motorists are subsidizing mass transit users and helping to relieve the deficit.  

From its inception in 1956 until 2000 the Highway Trust Fund (HTF) not only collected enough money from motorists to pay for the federal highways, it run a surplus.  The surplus in 2005 was more than $10 billion, although it began shrinking after 2000 or thereabouts because the Congress refused to raise the fuel taxes to pay for building and maintaining the federal highway system.  Beginning in 2007 or 2008 the federal government had to transfer monies from the general fund to cover the shortfall in the HTF.  In FY10 the transfer was $14.7 billion.  Ironically, if one adds back the mass transit and deficit transfers, they nearly equal the FY10 transfer from the general fund to the HTF.

In most instances state fuel taxes, licensing fees, and motor vehicle fees pay for the state highways.  They also pay for the operations of the Motor Vehicle Bureau, at least in Texas.  As is the case at the federal level, motorists not only pay for the highways and byways that they use, in Texas 25% of the fuel tax goes to fund education.   

Local streets and county roads are usually paid for out of local property taxes, which are paid directly or indirectly by nearly every motorist irrespective of whether he or she is a property owner or renter.  However, because higher income people tend to live in fancier digs than lower income people, one can argue that upper income motorists are subsidizing lower income motorists.

Motorists and airline passengers benefit from having the oil sea lanes policed by the United States Navy.  So too do Amtrak passengers.  The last time I checked Amtrak burns a considerable amount of diesel fuel.  

It is true that highways do not pay taxes.  It would not make any sense for the government to tax itself since it owns and maintains the highways.  It pays for them with user fees as per above.  The commercial users, e.g. truck companies, intercity bus companies, etc. pay user fees to support the highways and roadways.  They also pay federal and state income taxes, property taxes, etc.  So too do the airlines.  In both cases they must earn a positive return or go out of business.  Amtrak, on the other hand, does not pay any taxes.  It does not even pay federal and state fuel taxes.  And it certainly does not cover its costs.

If the real cost of each mode of transport was passed through at the price point, i.e. ticket counter, pump, etc., people would see the true cost of driving for example.  They might be more inclined to use public transport, including intercity passenger rail for relatively short distance travel in high density corridors where driving is cost prohibitive.  But they will not give up their cars without a fight.  

I too believe that short distance passenger rail could at least break even if all modes of transport were priced transparently. But there is no way that the long distance trains could compete, unless someone has a miracle solution for the cost model. 

henry6,

   Am I correct that you think "Teachers" make up, along with lawyers and bankers, 95% of Congress?  Are you kidding me?

   In the first place, the number of Teachers (I assume you mean former full-time teachers) in Congress must be very small, indeed.  

   In the second place, your assumption that Teachers couldn't possibly understand anything outside of their limited fields, let alone something as complicated and sophisticated as marketing passenger train service, is insulting, to say the least.

   I have often agreed with your posts here, but this egregious, condescending insult to Teachers is simply beyond the pale.

NKP guy and henry:  I find it hard hard to believe that henry actually believes teachers, etc. are incapable of having any understanding of passenger service.  This thread has the usual responses heard over and over from the usual culprits (perhaps they just copy and paste them in new threads on passenger trains?), but henry's comment was uncharacteristically dismissive.  I will await his response.

In my 40 odd years in broadcasting and advertising I have found those people I mentioned have had the least understanding of marketing and advertising...good teachers, good lawyers, good bankers, good CPA's even!  But how to market and advertise have not been in their wheelhouse of expertise.  Thus more of their business ventures have failed or remained static (static, not stagnent).  Real marketing and advertising has to be applied to any endeavor to grow, even sometimes to exist.  I am sorry, I am not trying to offent anyone but am passing along my experience of dealing with those professions...oh,yea, teachers I am referring to are those who go into business full or part time in a field other than teaching.  Professionals, like lawyers and doctors, are mixed in their approach to advertising (controversial within the profession except where some form groups and partnerships to and do marketing and advertising); CPA's and bankers have to have a firm grip on return on investment and putting money up in order to hopefully attract people is not a risk they feel they should take...and I'm talking about local banks and bankers who miss what the big guys accomplish with advertising.  Congress has proven it knows little about running anything but campaigns to get reelected.  Running Amtrak has been on the verge of disaster because they have not allowed it to do what a business has to do in terms of capital, long term investment (even mental long term investment), and marketing. 

I fell that the wrong question is being asked. The question is not whether passenger rail can be profitable.

Passenger rail loses money, not just here but any place else on Earth. Passenger trains lose money even in the Northeast since Amtrak maintains its own infrastructure. The question should be do these trains have

a positive societal impact  in easing congestion on highways and lessening the chance, however slightly, of

traffic deaths and injuries, as well as limiting the need to take taxable land off the tax books for more roads.

Anything can be profitable, even passenger rail service if you can define your market, designe for your market, charge for your market, and define your profit margin--one that you would be comfortable with or feel you need to feel or be successful.  There are those who will pay for a product they want or need and will pay depending on how they value the product being purchased.  Since Americans, for instance, have had subsidized products from farmers, regulated prices from utilities, public building and ownership of roads, government operation of air and waterways, we really don't know what can be done in pricing things that a public would buy wthout all that! 

A. McIntosh

I fell that the wrong question is being asked. The question is not whether passenger rail can be profitable.

Passenger rail loses money, not just here but any place else on Earth. Passenger trains lose money even in the Northeast since Amtrak maintains its own infrastructure. The question should be do these trains have

a positive societal impact  in easing congestion on highways and lessening the chance, however slightly, of

traffic deaths and injuries, as well as limiting the need to take taxable land off the tax books for more roads.

Yes.  Cost/benefit analysis is how to do it.  Profit/loss is just a localized subset of that.

But, Amtrak is in trouble even when you crank in all the soft benefits.  The LD trains, they just don't do enough good in places where it has value (e.g. reducing urban highway congestion, or improving air quality).  What is it worth to take a few cars of I-94 in the middle of ND?  Or, improve the already excellent air quality of Toccoa, GA  a smidgen?

You can do better with short haul corridors were the monetized soft benefits amount to something.

But Oltmannd...you have defined long distance in only one dimension, as Amtrak is foreced to operate it.  What if you were to operate a long distance train just for vacationers.  Do it like cruise ships with levels of accomodation, restrictions on purchase of passage, and some segregation of "levels" while aboard and restrict operation to once or twice a month only...then advertise and promote loudly and consistantly.  Yeah, there have been several groups that have done that here but mostly with high end pricing so it has not been that successful.  Perhaps two or three full room sleeping cars with domes and high end dinning accomodations; maybe several lesser sleeping cars with or without domes and with lesser dinning accomodations.  You've got a two price, maybe even three tiered pricing.  And you only operate as a "cruise" accomodation train.  Or you could find a way to be a public accomodation train with several levels of accomodation, operate in a fashion that serves all levels of people, and priced to make you money...but you, of course, have to market, advertise, and promote.   There are ways of doing things in certain places if one really has a head for it.