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The retro-active wage settlement appears to have been charged to FY08 train operations.If the settlement consisted solely of a lump sum payment for past wages, it would be a one time labor charge for FY08.  If it is a retro-active adjustment of wages, the sum paid from the settlement date to FY08 would be a one off, but future labor costs would reflect the adjustment in the wages.  In this case Amtrak's future labor costs, as well as any benefits tied to wages, would increase by the amount of the settlement. Had Amtrak's costs not risen in line with the increase in riders and revenues, it would have realized improved financial performance.  It would have lost less money on train operations.  But its operating costs rose in parallel with the increase in revenues.  This suggests that Amtrak is challenged to hold its train operating costs in line.  The train operating costs, by the way, are before other charges, e.g. depreciation, interest, infrastructure management, etc.  It is these costs that turn some of the positive train operating results negative.  For example, NEC revenues cover its train operating expenses and make a contribution to the other charges.  Unfortunately, the other charges are so great that the NEC turns an operating profit into a NEC corridor loss.  The price of gasoline has dropped 24 per cent in August.  What impact this will have on Amtrak's riders is not clear.  It will depend on whether it is signaling a long term decline in the price of gasoline or whether it is a relatively short term price adjustment.  If it is a downward trend that is with us for awhile, some of Amtrak's new found riders are likely to head back to their cars.  A decrease in riders will result in a decrease in revenues unless Amtrak is able to offset it with a price increase.  This is unlikely given the relatively weak economy.  To compensate for any decrease in riders and revenues, Amtrak would have to decrease its cost in line with the decrease in revenues.  Unfortunately, Amtrak, given the nature of its operations, would have a tough time accomplishing this goal.    A significant portion of Amtrak's costs are fixed, e.g. equipment, infrastructure, labor, management, etc.  Normally, labor is a variable cost, but in Amtrak's case, because of labor contracts, it cannot shift its labor costs as quickly as a firm that is not bound by similar contracts.  Moreover, due to the nature of its operations, it cannot shift the costs of its product line as quickly as its competitors.    Southwest Airlines has 60 flights a day between Dallas and Houston.  If the economy goes south, it can reduce the number of flights to 40 or 50 and still have a viable operation.  It can park the excess airplanes, layoff the crews, and save on the other variable costs, e.g. fuel, maintenance, etc.  Outside of the NEC, Chicago, and California corridors, Amtrak would be hard pressed to reduce its schedules, since they tend to be thread bare.  Reducing the schedule of the Sunset Limited, for example, from three days a week to two days a week would be a challenge.  Three days a week is a barebones schedule; reducing it to two days a week would make it even more so.  On top of the economic and marketing considerations Amtrak would have to consider the political implications.  If it attempted to reduce the schedule of the Sunset to adjust its expenses, it would be beset by an army of angry federal and state politicians representing the interests of the states that it passes through.
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