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<p>[quote user="dakotafred"]</p> <p> </p> <div class="quote-header"> </div> <blockquote class="quote"> <div class="quote-user">Sam1</div> <div class="quote-content"> <div class="quote-header"> The key question is whether the incremental revenue generated from adding additional capacity, i.e. more sleeper capacity (cars), would cover the incremental operating costs?  </div> <p> </p> </div> </blockquote> <div class="quote-footer"> </div> <p> </p> <p>This might be the 'key question' if Amtrak were a for-profit business, but it's not. The business of Amtrak is getting as many people aboard as possible -- 'serving' as many people as possible, if you like -- while covering as much of its operating cost out of the farebox as it can.</p> <p>Adding capacity to get more people aboard -- and to get them acquainted with Amtrak -- may add to costs in the short term. But a marketing department worth its salt will then adopt strategies to make sure any new capacity left over is filled.....[/quote]</p> <p>Amtrak is a capital stock corporation.  Its preferred stock is held by U.S. DOT.  The common stock is held by several private parties.  </p> <p>According to most of the sources that I have read, the initial financial objective for Amtrak was to turn a profit. When that proved to be unattainable, the objective was changed.  Amtrak was to be managed like a profitable business or words to that effect.</p> <p>Amtrak should be managed like a business.  It should use marginal pricing and costing models, which are commonly used by competitive companies, to determine the amount of capacity they need. Given its dismal 43 year financial track record, Amtrak cannot afford to run lose leaders.</p> <p>I don't know of a major business that does not rely on robust marketing models to determine when and where to add capacity. They don't just buy capacity and then hope to fill it. They use advanced mathematical concepts to project the probability that the additional capacity will be used and whether it can be priced to cover the incremental cost.</p>
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