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[quote]QUOTE: Originally posted by jeaton I guess in futuremodal's alternate universe idle assets have no cost. Could that mean they came free in the first place? Maybe someday a science will find a way to break through and we can get all that no cost stuff. [/quote] I know you better than that Jay. You know perfectly well the meaning of the hotel analogy. No hotel ever has 100% average occupancy, and yes those empty rooms do have a cost. But if you don't build for the max occupancy, you'll end up losing business in the long run. Say you want to build a 200 room hotel. Then you find out your average occupancy will only be 50% anually, or 200 x 50% x 365 = 36,500 nightly stays at say $100 a night = $3,650,000 net revenues. So you say "well, we'll just build a 100 unit hotel." What happens? Do you now get 100% occupancy? NO. You still get only 50% occupancy, and the potential clients who happen to get turned away on those nights you are maxed tend not to return to your hotel when occupancy is lower, so now you have 100 x 50% x 365 = 18,250 nightly stays x $100 per night = $1,825,000 net revenues. So now your net revenues are half what they would have been, while your fixed costs only dropped marginally (e.g. a hotel of 200 units does not cost twice as much to build as a hotel of 100 units). The cost of keeping rails in place is a fraction of what it costs to rebuild an abandoned line or build a whole new line. Keeping a line mothballed for 20 or 30 years is much less costly than having to rebuild that line after abandonment.
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