https://www.amtrak.com/content/dam/projects/dotcom/english/public/documents/corporate/position-papers/white-paper-amtrak-long-distance-financial-performance.pdf
The Report is easier to read and understand than I feared. It is certainly sobering if not dismaying in its presentation of the facts. Yet as an advocate of LD trains, I recognize an additional set of facts:
1. These trains will require similar if not larger subsidies to continue being of service; 2. These trains have been dependent on subsidies for 50 years; and 3. The public, through its Congressional representatives, has for half a century shown they want and will support these trains.
To be honest, any long-distance service 'randomly' patronized is likely to require socially-based subsidy if it is to run regularly, let alone frequently or to satisfy demand for 'daylight' access to many city pairs. The situation is more observable with transit, outside of areas where the whole demand can be satisfied with only a few hours' completely schedulable service per day.
In addition, even the provision of less-frequent 'boutique' LD trains, or even services appended to scheduled LD trains, has not been long-term successful -- and that, I think, is true independent of opportunity cost for the capital used on those ventures. It might be interesting to see what 'social subsidy' claims could be advanced for private ventures approximating some of Amtrak's national coverage, or filling 'obvious' gaps in that coverage not suitable for some reason to fill with "local political support".
In very few cases would I expect nonsubsidized ventures to come anywhere near the cost of purchasing and then maintaining new equipment. Heaven knows Ed Ellis had relatively low costs in those areas -- and still wound up as he did.
Overmod To be honest, any long-distance service 'randomly' patronized is likely to require socially-based subsidy if it is to run regularly, let alone frequently or to satisfy demand for 'daylight' access to many city pairs. The situation is more observable with transit, outside of areas where the whole demand can be satisfied with only a few hours' completely schedulable service per day. In addition, even the provision of less-frequent 'boutique' LD trains, or even services appended to scheduled LD trains, has not been long-term successful -- and that, I think, is true independent of opportunity cost for the capital used on those ventures. It might be interesting to see what 'social subsidy' claims could be advanced for private ventures approximating some of Amtrak's national coverage, or filling 'obvious' gaps in that coverage not suitable for some reason to fill with "local political support". In very few cases would I expect nonsubsidized ventures to come anywhere near the cost of purchasing and then maintaining new equipment. Heaven knows Ed Ellis had relatively low costs in those areas -- and still wound up as he did.
It is sobering. If only 18% of LD train ridership is from small towns and rural areas between end points and larger intermediate cities, that percentage is even less of total Amtrak ridership. Although Amtrak has been around 50 years, any justification for continuing that legacy service has expired with time, other than as an inducement (bribe) to small population Western state senators to pass Amtrak subsidy budgets.
My impression of Ed Ellis was that he was more of carnival barker than rail operator.
OvermodHeaven knows Ed Ellis had relatively low costs in those areas -- and still wound up as he did.
Yeaaaahhhh, not sure I would rate Ed in the business man category. Railfan or Rail Enthusiast probably. The fact that his venture had no staying power.....at least he tried but I am more taken aback by some of the shortcuts he took vs good business decisions. I think he got emotionally invested in his business and would have done anything to keep the fantasy going instead of having an exit plan and responsibly walking away from it when he should have.
The report only lists loss per passenger. I would also like to see loss / net per passenger mile of each category.
CMStPnP... to keep the fantasy going instead of having an exit plan and responsibly walking away from it when he should have.
Even in the existence of nominal above-the-rail gross profitability, there would need to be enough short-term 'prequaled' subsidy or loan guarantee to preserve nominal service -- "business interruption" whether insured properly for it or not being no option. I'd need something much better than N-alkylated 4-N-propanoylanilinopiperidine before I'd be expecting that for LD operators ... perhaps Amtrak included.
blue streak 1 The report only lists loss per passenger. I would also like to see loss / net per passenger mile of each category.
blue streak 1 I would also like to see loss / net per passenger mile of each category.
Overmod And I would like to see further breakdown by ROUTE-mile or between specific origin-destination pairs -- things easily derived from the primary data Amtrak can collect.
JPS1As far as I know the information is not available in any public documents. You could submit a request for the information to the CFO of Amtrak. Or you could file a Freedom of Information request. Good luck with that!
... in the main the long-distance trains are a losing money pit no matter how one spins the numbers or claims that Amtrak is distorting the long-distance financials.
Knowing precisely what the actual demand for 'interstate' services between locally-subsidized corridors is resolves one of the frustrating ambiguities that have been timeless topics here and elsewhere. Likewise, knowing precisely which sections of a route contribute the least, or cost the most in excess of revenue, will be a much better basis for developing and maintaining a 'national' network, or for directing inprovements or cost-cutting more appropriately to a Federal government and perhaps any 'fair' organization on a Keynesian basis.
Whether or not I actually see the basis information published is immaterial, and in fact I can see some very good reasons why it should not be. But in the rhetorical sense it would be sound to analyze things that way rather than via excessively averaged statistics that say little if anything of practical planning policy use.
The freight trains on my winter layout are operating at a loss. All of the cars are empty, and the train is running incessently in an oval.
Shock ControlThe freight trains on my winter layout are operating at a loss. All of the cars are empty, and the train is running incessently in an oval.
OvermodShock Control The freight trains on my winter layout are operating at a loss. All of the cars are empty, and the train is running incessently in an oval.
Are you getting any offers for a leveraged buyout?
The one-word answer is poorly.
OvermodBut right there are the weasel words -- if LD trains are considered at all a 'service' there can be no 'walking away' at the slow times, or bad times, or after catastrophe. And the perceived ROI and risks evaluated on that (much scarier!) basis.
I think you misunderstood. The majority of Ed Ellis assets and money were invested in shortline railroads in which he was using to subsidize the Pullman Company as a startup. Once the shortlines ran into trouble and/or Ed learned he could not flip the shortlines to someone else after recieving Federal rehab funds, the Pullman company retrenched. Now do I have proof all that took place (nope). However the chronological timeline is very, very suspicious. Also, the bankruptcy proceedings are also revealing where a large chunk of the equipment used by the Pullman company was either leased from someone else or purchased by one of his shortline railroads. He could do that legally as I believe everything was under the SLRG Parent Corporation it seems as the overall holding company, judging from the reporting marks on everything. Can you say the Pullman Company model was ever self-sustaining? I am not so sure with what appears to me to be a tangled web of finance and financial shell games to get there.
Additionally, I can't quite get my hands around or understand the whole story on the wheel fractures being found on his 40+ year old passenger equipment by a third party after they had been running in revenue service. Why he did not pay to have that equipment more comprehensively checked before he put paying passengers on it. That whole story scares me on how it got past railroad inspection initially.
Also, how much of all this money was under Ed's name. For example did he take a second mortgage out on his home or did he personally kick in any personal funds or was this all someone elses money? I suspect the latter but again just a suspicion I have based on what I read into the stories and comments by others.
CMStPnPCan you say the Pullman Company model was ever self-sustaining?
I do know fairly intimately how much George Pins spent on Pennsylvania 120, and costs and difficulty of owning such equipment have only mushroomed since then. It is difficult for me to imagine that operation surviving the 2008 recession, the Amtrak cancellation of private haulage even if regularly scheduled, and the current pandemic.
I do give him credit for determining one of the best practicable operational models for the service: regularly appending a relatively small number of private cars to an existing Amtrak train. I can't think of a model like, say, the AOE or Rocky Mountaineer that could reliably be expanded even into a mere once-a-week transportation option instead of a fancy and even reasonably frequently 'sailing' cruise-train. For Ed not to be able to work his minimal model is not, to me, to indicate that less convoluted finance or less wheeling and dealing would make it succeed under different ownership. But I would peripherally point out that with a large amount of disposable capital running around in the hands of European oligarchs, and a known amount of demand tor throwaway over-the-top high-end luxury experiences, no one here has proposed doing operations of the kind Ed did, even at no more than luxury-coach scale. Coupled with what I know of service and hospitality costs and staffing, that makes the absolute prospects for high-end regularly-scheduled transportation look grim now ... without subsidy or at least guaranteed lines of cheap credit comparable to what Amtrak now receives.
The trains Jan 2021 issue has an extreme example of Amtrak's fake accounting on LD trains. Look at page 23 right hand column 3rd full paragraph down. The Coast Starlight was being charged $3M for depreciation on Superliner-2 cars. That compared with $800,000 if it had used Superliner -1 cars . There was not that much difference in ages. 32 cars for 4 train sets = about $25,000 for -1s and about $93,750 for -2s each. What was going on ?
I cannot recall if the -2s were bought or leased but the whole capital cost allocations for Amtrak needs review.
Amtrak is now buying Acela-2s with a capital grant that is to be paid for by revenues. So should Amtrak charge depreciation for them ? Acela-1s are leased so no depreciation but probably lease payments ?
blue streak 1 The trains Jan 2021 issue has an extreme example of Amtrak's fake accounting on LD trains. Look at page 23 right hand column 3rd full paragraph down. The Coast Starlight was being charged $3M for depreciation on Superliner-2 cars. That compared with $800,000 if it had used Superliner -1 cars .
The amount of depreciation expense chargeable to an activity is a function of the purchase price of the asset plus transportation in, training costs, capitalized interest, and set-up costs, less the estimated salvage value of the asset. Asset classes are usually not comparable, i.e., Superliner I vs. Superliner II because of innumerable cost and salvage differences.
Unless the author of the article has access to Amtrak's books, specifically the property accounting records, he/she is speculating. This is true of every article in Trains or elsewhere that has been written by someone who professes to know about Amtrak’s cost accounting methods. They don’t have access to the company’s books; they simply don’t know what they are talking about.
How did the author of the article come up with the depreciation expense chargeable to the Coast Starlight? I have never found it in any public records.
For FY20 the Coast Starlight had an operating loss of $55.2 million. An operating loss does not include depreciation, interest, or miscellaneous capitalized items. This information is public. But it was not as bad as the operating loss of $74.5 million for the Empire Builder and $72 million for the Southwest Chief.
OvermodI do give him credit for determining one of the best practicable operational models for the service: regularly appending a relatively small number of private cars to an existing Amtrak train
I think that model was established by AAPRCO, myself as well as other groups such as Friends of 261 that offer such trips to private individuals or corporations regularly and hope to do so in the future as a means to raise funds using idle equipment. Carl Sandberg of the 261 group maintains Amtrak compatible equipment for the sole purpose of leasing or chartering it out and he does have a client base it seems outside of the railfan community. He seems to have plans to convert cars post pandemic to Amtrak compatible so I do not think the business or demand is dead......just yet. Other groups as well have expressed an interest to convert some of their cars to Amtrak compatibility in the future at some point but the plans are tabled right now as they are in wait and see mode (IRM for example......which has a large stock of passenger cars from the streamline era parked in Union).
BTW, heard a rumor Friends of 261 was actively looking for a decent Dining Car, preferably of Milwaukee Road lineage for both private charters and fan trips. Just a rumor via third party.
Overmod no one here has proposed doing operations of the kind Ed did, even at no more than luxury-coach scale.
So the problem here is exactly what Brightline is facing with financing for it's Florida and expansion models. So far there is no financially sustainable example in this market place in the United States. I often wonder that if the Rocky Mountaineer makes it here in at least one market if that would encourage others to try. RMR has been successful in Canada but without slamming Canadian business people too hard. They tend not to do so well in the United States and I have not been able to pin down why exactly. I think a big reason is in Canada the government and government regulation agencies are a LOT smaller and easier to deal with in the area of flexibility than the United States but that doesn't seem to be all of it (some of it might be how foriegn firms are treated more at arms length in the United States). So we'll see how RMR does in Colorado.
I think the first Brightline franchise that breaks even or sustains profitability, you will have other entrants into the cooridor short distance field.......in fact would not be surprised if some of the commuter train contractors ventured there as a way to expand their business (like HERZOG).
Long Distance Cruise Train, has a high threshold to meet. RMR is successful because of the pool of CN and CP passenger cars it started with. Not a lot of those cars left in Canada or the United States which means a new entrant would probably need to buy new LD cars, which raises the cost of entry and the risk a lot higher.
blue streak 1 The trains Jan 2021 issue has an extreme example of Amtrak's fake accounting on LD trains. Look at page 23 right hand column 3rd full paragraph down. The Coast Starlight was being charged $3M for depreciation on Superliner-2 cars. That compared with $800,000 if it had used Superliner -1 cars . There was not that much difference in ages. 32 cars for 4 train sets = about $25,000 for -1s and about $93,750 for -2s each. What was going on ? I cannot recall if the -2s were bought or leased but the whole capital cost allocations for Amtrak needs review. Amtrak is now buying Acela-2s with a capital grant that is to be paid for by revenues. So should Amtrak charge depreciation for them ? Acela-1s are leased so no depreciation but probably lease payments ?
I don't have the article. As JPS1 has stated clearly in the past, the authors do not cite internal documents so whatever numbers they claim are guesses.
You have no way of knowing the cost basis.
blue streak 1 The trains Jan 2021 issue has an extreme example of Amtrak's fake accounting on LD trains.
Is Bob Johnston the author of the article? I don't have the mag; I only buy it for my Nook when it has at least two articles that interest me. I buy four or five editions a year.
blue streak 1 I cannot recall if the -2s were bought or leased but the whole capital cost allocations for Amtrak needs review.
blue streak 1 Amtrak is now buying Acela-2s with a capital grant that is to be paid for by revenues. So should Amtrak charge depreciation for them ? Acela-1s are leased so no depreciation but probably lease payments ?
The depreciation figures came from Coast Starlight product-line manager Brian Rosenwald from the hoaspitality industry circa 1995. ( page 23 right column 1st full paragraph. Article did not say when he left Amtrakbut speculation would be after product management was moved back to DC?
How profitable would the airlines be if they had to pay for building and operating airports, and running air traffic control?
And do the trucking and auto industries build and maintain roads?
Those modes, if looked at honestly, are also heavily subsidized.
Lithonia Operator How profitable would the airlines be if they had to pay for building and operating airports, and running air traffic control? And do the trucking and auto industries build and maintain roads? Those modes, if looked at honestly, are also heavily subsidized.
The questions have nothing to do with the financial performance of Amtrak's long-distance trains.
Through a variety of direct and indirect taxes, commercial airline passengers pay a proportional share of the airways and airports used by the airlines. The same is true for the buyers of goods shipped by trucks.
Contrary to popular belief, general aviation and military aircraft operating in civilian airspace account for more than two thirds of FAA and airport operations. The airlines account for the remainder. By the same token, of the 5,080 public airports in the United States as of 2019, approximately 500 are served by commercial passenger flights.
Commercial flights and truckers have the advantage of sharing a common infrastructure with non-commercial users. Amtrak does likewise to a lesser extent. Whether they pay their proportional share of the infrastructure is a legitimate question.
JPS1 Lithonia Operator How profitable would the airlines be if they had to pay for building and operating airports, and running air traffic control? And do the trucking and auto industries build and maintain roads? Those modes, if looked at honestly, are also heavily subsidized. The questions have nothing to do with the financial performance of Amtrak's long-distance trains. Through a variety of direct and indirect taxes, commercial airline passengers pay a proportional share of the airways and airports used by the airlines. The same is true for the buyers of goods shipped by trucks. Contrary to popular believe, general aviation and military aircraft operating in civilian airspace account for more than two thirds of FAA and airport operations. The airlines account for the remainder. By the same token, of the 5,080 public airports in the United States as of 2019, approximately 500 are served by commercial passenger flights. Commercial flights and truckers have the advantage of sharing a common infrastructure with non-commercial users. Amtrak does likewise to a lesser extent. Whether they pay their proportional share of the infrastructure is a legitimate question.
Contrary to popular believe, general aviation and military aircraft operating in civilian airspace account for more than two thirds of FAA and airport operations. The airlines account for the remainder. By the same token, of the 5,080 public airports in the United States as of 2019, approximately 500 are served by commercial passenger flights.
Although Lithonia (near Redan road?) generally makes excellent post in my opinion, he falls into the "Whaddaboutism" which is usually irrelevant to the issue.
JPS: Your valued contribution here is to show us the relative successes or failured of the three Amtrak lines and to point out how the dubious attempts at showing Amtrak accounting methods as invalid are not to be trusted by the readers.
charlie hebdo Although Lithonia (near Readan road?) generally makes excellent post in my opinion, he falls into the "Whaddaboutism" which is usually irrelevant to the issue. JPS: Your valued contribution here is to show us the relative successes or failured of the three Amtrak lines and to point out how the dubious attempts at showing Amtrak accounting methods as invalid are not to be trusted by the readers.
Thanks!
Our community is FREE to join. To participate you must either login or register for an account.