Why passenger trains are so expensive?

[CMStPnP]

So some of the figures like a $400,000 passenger car seem suspect to me but an interesting video nevertheless.

https://www.youtube.com/watch?v=fwjwePe-HmA

 

 

[BaltACD]

Bogus cost comparisons.

[zugmann]

Looks like a sophmore level general course presentation. That's when it isn't hawking videoblox or whatever it is.

[PJS1]

According to Wikipedia, Amtrak bought 492 Amfleet I cars in the 1970s for $192 million or an average of $390,244 per car.  The order included 54 Amcafes and 37 Amdinettes, which probably cost more than the average price, while the coaches probably cost less.    

 

Amtrak bought 150 Amfleet II cars in the early 80s.  The average price was $1 million.  These cars, which were designed for long-distance trains, had larger windows, foot rests, and larger restrooms. 

 

The average price of the Amfleet I & II cars was $532,710.  Presumably the video is referring to the cars used in the NEC, which for the most part, I believe, are Amfleet I cars.  So, $400,000 per car is not too far off the mark.

 

In FY17 salaries, wages, and benefits chewed up 59.4 percent of Amtrak’s operating expenses and 63 percent of its operating revenues.  

 

As the video notes, Amtrak’s employees appear to be paid well.  The average compensation package – wages, benefits, etc. - per Amtrak operating employee in FY17 was approximately $116,000.   Excluding benefits, the average wage would have been approximately $75,400, which is close to the number quoted in the video.  However, these figures include executive and management compensation packages.  So, the average compensation package for on-board employees, i.e. engineers, conductors, etc., probably would have been less.  But maybe not a great deal less.  

 

The video has some errors, i.e. commercial airlines pay for air traffic control services between airports, but all up I think the video is pretty good, at least at a very high level. 

[oltmannd]

PJS1

Amtrak bought 492 Amfleet I cars in the 1970s for $192 million or an average of $390,244 per car.

Using CPI calculation, that's $1.8M a copy now.

[oltmannd]

oltmannd

 

 

PJS1

Amtrak bought 492 Amfleet I cars in the 1970s for $192 million or an average of $390,244 per car.

 

 

Using CPI calculation, that's $1.8M a copy now.

 

I wonder what some new coaches from China would cost?

[CMStPnP]

I thought the 1 Amtrak employee per four passengers ratio was humorous.   All the effort those people must put into keeping a low profile and not being seen at train stations or on board trains........you have to wonder where exactly Amtrak warehouses all those employees?

That ratio has to be much higher than what the Queen Mary II staffs at when it sails..........and look at the service difference.

[CSSHEGEWISCH]

I'm sure that the figure includes employees in maintenance of way, shop personnel, front office, etc.

[oltmannd]

CSSHEGEWISCH

I'm sure that the figure includes employees in maintenance of way, shop personnel, front office, etc.

 

Politics aside, how many Amtrak employees HAVE to be Amtrak employees.  Could some things be contracted out?  Many, myself included, have suggested Amtrak might be better off contracting out the hopsitality work to hospitality workers.

The passenger ship business pivoted from transport to the cruise lines by realizing the transport business was dead and they were actually in the hospitality business. 

[oltmannd]

CMStPnP

I thought the 1 Amtrak employee per four passengers ratio was humorous.   All the effort those people must put into keeping a low profile and not being seen at train stations or on board trains........you have to wonder where exactly Amtrak warehouses all those employees?

That ratio has to be much higher than what the Queen Mary II staffs at when it sails..........and look at the service difference.

 

So, Amtrak has 30M passengers a year and 20,000 employees.  So, what's the ratio?  I think we need to put both on time basis.  If avg trip is 8 hours and avg employee works 240, 8 hour days (or equivalent), then ratio is about 6:1.

On a cruise ship, a panamax ship will carry 2-3000 passengers with a staff of 800-1000.  Ratio:  3:1

A typical LD train will have 8-12 employees on board and 100-300 passengers.  Ratio:  20:1

A typical NEC train will have 350 passengers and a crew of 6.  Ratio:  60:1

[matthewsaggie]

The Carolinian, with 348 seats (both classes) will generally turn nearly 600+ passengers on many trips between CLT and NYP. Crew of 6, Engineer, Conductor, Assist. Conductor, LSA, Business Class Attendent, and Coach Attendent covering 4 coaches. I'll let you figure the ratio.

NC specifies the BC Attendent as part of the contract. NC agreement still specifies pillows in BC, the only day train still with pillows. 

[BaltACD]

Everyone compares Amtrak fares against the airlines 'loss leader' fares.  They dont' compare them against the normal coach or normal first class air fares.

Back in the day, when I was frequently flying for business - at my boss's scheduling  - on Monday he'd say go to Chicago Wednesday and come back Friday afternoon.  No way to get the $99 super saver - the round trip cost was generally in the $600-800 range, of course it all went on the expense account.

 

[JL Chicago]

Some interesting comparisons of median employee comp including benefits to other railroads and airlines. Southwest Airlines $81,000, Delta $93,000, American $62,000, United $83,000, Union Pacific RR $83,000, Norfolk Southern $92,000, CSX $99,000. So yes I'd say Amtrak employees at $116,000 are very well compensated relative to their peers.   And yes that American number seems low but that's what they reported in their 2018 SEC proxy filing.   BNSF numbers not available as they are privately held by Berkshire Hathaway, so they did not report employee comp at the BNSF level.  For all Berkshire Hathaway employees it's $54,000.

[zugmann]

A lot of Amtrak employees are based in major cities.  You aren't going to get decent people if the wages are crap.

[CMStPnP]

JL Chicago

Some interesting comparisons of median employee comp including benefits to other railroads and airlines. Southwest Airlines $81,000, Delta $93,000, American $62,000, United $83,000, Union Pacific RR $83,000, Norfolk Southern $92,000, CSX $99,000. So yes I'd say Amtrak employees at $116,000 are very well compensated relative to their peers.   And yes that American number seems low but that's what they reported in their 2018 SEC proxy filing.   BNSF numbers not available as they are privately held by Berkshire Hathaway, so they did not report employee comp at the BNSF level.  For all Berkshire Hathaway employees it's $54,000.

On the Berkshire Hathaway employees..........would love to be one of them and in their stock plan with the stock appreciating what 30-40% per year?    

Interesting that non-Union Southwest Airlines has a much higher compensation rate than Union American.    Of course a huge part of that is US Air merged with non-Union America West without later equalizing pay as well as US Air and American's strategy to use non-Union Regional Jet carrier subsidiaries.    Delta does that too but apparently not as much.   United was under bankruptcy for a while and before that had labor issues for not paying competitive salaries.

The problem with the Airline to Amtrak comparison is Amtrak employees beyond the office employee comparison is the different operating environments.     I only have one reaction to the $116k average salary figure though........Jeeeessssuussss, thats where most of the subsidy is going no doubt.

[charlie hebdo]

zugmann

A lot of Amtrak employees are based in major cities.  You aren't going to get decent people if the wages are crap.

 

True, but alot of airline employees are also based near large cities, too: UAL Chicago; AA Dallas; Delta Atlanta.

[BaltACD]

charlie hebdo

 

zugmann

A lot of Amtrak employees are based in major cities.  You aren't going to get decent people if the wages are crap. 

True, but alot of airline employees are also based near large cities, too: UAL Chicago; AA Dallas; Delta Atlanta.

Personal observation - a number of airline employees have decided to live in rural areas - with the available airline system - they can use other carriers to 'deadhead' to and from their on duty point for their round trip.  Then when getting home have much more than a single day off before the next trip.

[CandOforprogress2]

Because they have to pay for there own tracks and roads and be taxed on top of that.

[n012944]

CMStPnP

 

Interesting that non-Union Southwest Airlines has a much higher compensation rate than Union American.    

Non union??

Southwest's pilot union

https://www.swapa.org

Southwest's Flight Attendant's union

https://twu556.org

Southwest's mechanic's union

http://www.amfanational.org/index.cfm?zone=/unionactive/view_page.cfm&page=Southwest20Airlines

Southwest's customer service agents union.

http://www.iamdl142.org/southwest/

[PJS1]

CandOforprogress2

Because they have to pay for there own tracks and roads and be taxed on top of that. 

Amtrak owns 79 percent of the NEC spine.  It also owns the 60-mile New Haven to Springfield line, the 104.2-mile Keystone Corridor, and a 95.6-mile segment of the Michigan line.  It leases, dispatches, and maintains 94 miles of the Hudson Line between Poughkeepsie and Hoffmans.  None of these lines generate sufficient revenues to cover their fully allocated costs, although the NEC spine is getting close.  Taxpayers subsidies are required to cover the fully allocated cost of maintaining these lines.

 

Amtrak does not pay any taxes, i.e. property taxes, inventory taxes, fuel taxes, sales and use taxes, etc., although at least one state has attempted to tax the fuel Amtrak buys within its borders.  In fact, the host railroads that account for approximately 70 percent of Amtrak’s mileage are not allowed to pass any property or other taxes through to Amtrak in the rents that they charge the Company to host its trains.   

 

At the end of FY17 Amtrak had a net deferred tax liability of $53 million.  It arises from a supposed expiration of the Company’s net operating loss carry forwards.  However, as noted by the Company’s external auditors, under its current structure, Amtrak is unlikely to ever realize a profit, so the deferred tax liabilities will be reversed, and the amounts charged to net income will become a credit in future years.