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[quote user="schlimm"] Dave: Precisely!  This is a phony issue about Acela and subsidies by business travelers through tax deductions.  Rather than attack Acela, which as you point out, covers its own operating expenses and allows the entire NEC to operate with a profit, perhaps tax deductions for business travel should be eliminated, along with first class. [quote] The Acela covers its own operating costs because it gets premium fares from people who are traveling in many instances on some else's nickel.  My initial point is that the subsidy is the difference between a coach fare and the premium fares (first class and business class).  I am not arguing that normal and necessary business espenses are not deductable.  The IRS allows businesses to deduct business class fares.  The deductability of first class fares depends on the circumstances.  Business class and first class fares should not be passed through to customers, clients, taxpayers, etc., and they should not be deductable on a corporate or business tax return.  I worked in Australia for nearly five years.  And I traveled there on business for more than 10 years.  The first couple of trips were in business class, which was company policy.  Then, one day, I asked how much it cost to fly from Dallas to Melbourne, Australia in business class.  It was $8,500 compared to a coach fare of $1,600.  I switched to coach travel.  I could not then nor can I see the justification in sticking the rates payers, many of whom live below the poverty line or just above it, with a premium fare.  And it is the rate payers who ultimately picked-up the tab.  I am in the minority.  I know it.  Being in the majority, however, does not make it right.  In another post asertions are made that the creature comforts on the Acela justify the premium fares.    Difficult to substantiate! The Acela service covers its operating costs before interest and depreciation.  It does not cover the fully allocated capital costs.  The remaining trains on the NEC don't cover their operating costs, although they did in FY08.  However, they were only able to do so because Amtrak had a different cost accounting system.  Under the current cost accounting model, if they restated the results for 2008, the other NEC trains would have lost money. In FY10 Amtrak's annual depreciation was $593.1 million and interest expense was $135.5 million, bringing unallocated depreciation and interest to $728.6 million.  How much of this amount is worn by the NEC?  Amtrak does not tell us in its public financial statements.  However, it spent billions  upgrading of the NEC over the past 10 to 15 years and, therefore, the bulk of it is allocable to the NEC, i.e. equipment, infrastructure upgrade to accomodate higher speeds, extension of the wires to Boston, etc. A conservative estimate of the depreciation and interest allocable to the NEC is 75 per cent.  If one accepts this estimate, $546.5 million belongs to the NEC.  How much is attributable to the Acela?   Without being able to look at Amtrak's property accounting ledgers, it is difficult to say.  However, it is difficult to believe that the capital improvements that were made to the NEC, especially the electrification of the line from New Have to South Station, would have been made if it had not been for the Acela.  In FY10 the Acela generated approximately 50 per cent of the revenues on the NEC.  If we assign half of the interest and depreciation to the Acela, which had an operating profit of approximately $100.6 million in FY10 (latest audited numbers), it means the Acela lost $172.6 million on a fully allocated cost basis.  If we assign 75 per cent of the capital improvements to the Acela, the fully allocated loss would be $309.2 million, which is not far off from the figure that Fred Frailey offered up, although I don't know where he got his numbers.  And this is for a premium service. Amtrak pays no taxes, i.e. fuel taxes, real estate taxes, sales taxes, income taxes, excise taxes, etc.  If it had to pay taxes, the loss on the Acela would be even greater, as well as its system wide operations, would be even greater.
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