Sam1 The airlines pay a variety of fees for the airport facilities that they use. They pay landing fees, gate fees, fuel taxes, excise taxes, inventory taxes and property taxes. If they have maintenance facilities on the field, they usually lease them, which means that they pay rents for them. These are variable costs, for the most part, that are charged to current period operating expenses.
The airlines pay a variety of fees for the airport facilities that they use. They pay landing fees, gate fees, fuel taxes, excise taxes, inventory taxes and property taxes. If they have maintenance facilities on the field, they usually lease them, which means that they pay rents for them. These are variable costs, for the most part, that are charged to current period operating expenses.
That may be the major airports but many medium and small size airports have been hosed. Airline bankruptcies have left federal, state, and local governments building a facility that makes no money.
Prime examples are Raleigh Durham. Nashville, St. Petersburg, Chattanooga, Birmingham, Columbus Ga, and others. Federal money for new runways, extensions, navigation aids. State and local money for runways , taxiways, terminal buildings, roadways, etc. Several airports mentioned have an extra runway not needed. ( nice but not needed 0
RIDEWITHMEHENRY is the name for our almost monthly day of riding trains and transit in either the NYCity or Philadelphia areas including all commuter lines, Amtrak, subways, light rail and trolleys, bus and ferries when warranted. No fees, just let us know you want to join the ride and pay your fares. Ask to be on our email list or find us on FB as RIDEWITHMEHENRY (all caps) to get descriptions of each outing.
Regarding profitable passenger trains, I have understood that there are only four in the world and they are, the Newark City subway, Amtrak's auto train, the Amtrak line from Los Angeles to San Diego and the Heathrow express in London.
Essential services like commuter trains, sewage treatment plants, police and fire departments and streetlights are all part of the infrastructure, aren't they? Having all these are why we pay taxes, right?
schlimm Murphy Siding Didn't the airlines require a big infusion of federal money after 911 to keep them afloat? As I recall, yes. Several have dumped their pensions onto the federal agency. And several (AA, UA, Delta?) have gone through bankruptcy reorganizations to reduce debt.
Murphy Siding Didn't the airlines require a big infusion of federal money after 911 to keep them afloat?
Didn't the airlines require a big infusion of federal money after 911 to keep them afloat?
The airlines usually own the rights to their gates under a long term lease. Sometimes they can sublease them. The price of the gates is usually settled through a robust bidding process, i.e. witness the recent scramble for gates at Laguardia, Ronald Reagan, and Dallas Love Field.
The airlines don't pay any of the aforementioned fees and/or taxes. They are paid by the airline's passengers through a variety revenue collection mechanisms.
Whether airline passengers pay their fair share of the airport facilities, as well as the air traffic control facilities, that they use, is debatable. As noted the nation's airlines serve a very small percentage of the nation's airports and account for only 1/3 of air traffic control operations. So they don't consume anything like the total spend on the nation's airports and air traffic control systems.
Most airports in the United States are owned and operated by a government authority. They are expected to cover all of their costs from airport generated revenue sources. It is not just the landing or other fees mentioned above. Because they have been very successful, they generate revenues from all sorts of vendors, i.e. car parking, retail vendors, rental car agencies, taxi stands, etc.
The amount of the airport improvement funds that flow through to major airports, i.e. DFW, Love Field, etc. is unknown. However, not all of it goes to airports with commercial airline service.
In 2012 DFW received a small amount of airport improvement money to upgrade its air traffic navigation aids. If I remember correctly the amount was less than 1/2 of one per cent of the airport's budget. But the government could get the money back. How? Better navigation aids mean fewer delays, resulting in less fuel burn and lower expenses for the carriers, which could translate into higher net income and ultimately into higher corporate income taxes paid to the federal government. At least for those airlines that have not been in bankruptcy and therefore don't have a lot of tax loss carry backs and carry forwards!
The biggest advantage accruing to the nation's airline passengers lies in the tax free funding for most airports in the U.S. They were funded with municipal debt. The spread between the effective interest rates for the municipal bonds and the corresponding fully taxable bonds would be extremely difficult to determine, i.e. one would have to know the issue dates, yield to maturity, alternatives, etc. However, the spreads are not as wide as many people assume, but the savings was and/or is significant. Because the facilities were constructed with tax free financing, the construction costs were lower, and these lower costs could be passed on to a variety of users.
I may mis-remember, but I think the airlines were already begging for help before 911 happened.
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"A stranger's just a friend you ain't met yet." --- Dave Gardner
schlimm My thought is that for operations, one can use the profit or not-for-profit model. Both are efficient and can produce high quality service. But if you add in trying to cover infrastructure, you need the government.
My thought is that for operations, one can use the profit or not-for-profit model. Both are efficient and can produce high quality service. But if you add in trying to cover infrastructure, you need the government.
I worked for investor owned employers all of my working life. I spent eight years with a Wall Street Bank, four years with a Connecticut bank, and nearly 30 years with an investor owned electric utility. They were all tuned by the profit motive.
The banks were highly competitive. The electric utility was a regulated monopoly, with relatively little competition. It behaved a lot like a government agency prior to deregulation. it was effective but not very efficient. After deregulation, it changed dramatically, in large part because of competition, and it became much more efficient.
Profits and competition help drive efficiency and effectiveness. Without them executives and managers have little incentive to do things better, faster, cheaper. This is one of the reasons, I believe, why Amtrak is not managed very well. It does not have to be well managed to stay in business.
oltmannd ... The airlines pay out of their operating expenses for their share of airport facilities - a fixed asset usually owned by a government at some level. This is a sweet deal for the airlines for a couple reasons. One is that the ownership cost paid by the airlines is decoupled from actual costs. The "rent" may or may not be enough to service the bonds used to build the place. The owing government can decide whether losing money on their airport has offsetting benefits greater than the loss...
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Additionally, I believe the Federal Gov't helps with runway construction. However, I don't imagine many municipalities could afford to run much of a deficit on their airport. Do we have any figures on this?
C&NW, CA&E, MILW, CGW and IC fan
Thanks to Chris / CopCarSS for my avatar.
Sam1 As of June 30, 2014, the Trailing Twelve Months average returns for the nation's airlines have been impressive. The average return on sales was 7.75 per cent vs. 36.05 per cent on equity, 5.92 per cent on assets, and 11.78 per cent on total investment. The airline business is highly leveraged, and the margins are tight. So too are those for most if not all forms of hauling people for a fare. But the industry is doing pretty nice now, and many analysts believe the future is bright. Not every flight generates a positive return. But in the aggregate most of them do. Otherwise, the airlines would not be able to generate the returns that they have been turning in. Amtrak has never generated a positive return. It had accumulated losses of $30.5 billion at the end of FY13. Had it operated under the some constraints faced by the nation's airlines, it would have been shutdown many years ago. If the airlines cannot figure out how to compete in the market place, they go out of business, i.e. Eastern Airlines, People Air Express, Northeast Airlines, Pan American, Braniff, etc.
As of June 30, 2014, the Trailing Twelve Months average returns for the nation's airlines have been impressive. The average return on sales was 7.75 per cent vs. 36.05 per cent on equity, 5.92 per cent on assets, and 11.78 per cent on total investment.
The airline business is highly leveraged, and the margins are tight. So too are those for most if not all forms of hauling people for a fare. But the industry is doing pretty nice now, and many analysts believe the future is bright.
Not every flight generates a positive return. But in the aggregate most of them do. Otherwise, the airlines would not be able to generate the returns that they have been turning in.
Amtrak has never generated a positive return. It had accumulated losses of $30.5 billion at the end of FY13. Had it operated under the some constraints faced by the nation's airlines, it would have been shutdown many years ago. If the airlines cannot figure out how to compete in the market place, they go out of business, i.e. Eastern Airlines, People Air Express, Northeast Airlines, Pan American, Braniff, etc.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
Recent history (30-40 years) informs us that they usually cannot. But that doesn't mean we should conclude it is not worthwhile. If you serve many passengers, then it is a success.
You need the government to facilitate the construction of transport infrastructure, i.e. highways, waterways, railways, etc. The key question is whether the operators can generate sufficient funds to pay for the cost of the infrastructure.
Over the past 30 years approximately 85 to 88 per cent of the FAA's budget has been covered by fuel taxes, ticket taxes, license fees, aircraft registration fees, etc., all of which are paid for by passengers, business operators, private pilots, etc.
In FY12, the percentage of the FAA budget covered by these items fell to 74.6 per cent because of several Administrative initiatives aimed largely at the airport improvement program. The remainder is transferred from the general fund. Many of the monies spent on the airport improvement program are for airports that are not served by commercial airlines. This information can be found in the FAA's 2012 Performance Report.
In 2011 the United States had 19,782 airports, of which 13,450 were suitable for fixed wing operations. Of these only 547 or 4.1 per cent were served by commercial airlines.
NARP as well as others appear to believe that the nation's commercial airlines account for the majority of the FAA's air traffic control activities. This is not true. In FY11, the latest year for complete numbers, 34.2 per cent of the aircraft handled by the FAA's Air Route Traffic Control Centers was for air carriers, whilst 34.3 per cent of tower operations were for them. The others were for air taxis, civilian aircraft, and military aircraft operating in civilian airspace. This information can be found in the FAA's 2012 Fact Book.
What does this have to do with intercity passenger rail? Very little. The key question is where does passenger rail make sense, what should it look like, how should it be funded, and how should it be managed?
Managers of a for profit activity have to generate a positive return for their investors or go out of business in the long run. They have an incentive to make good business decisions, which means that they have to satisfy the needs of their key stakeholders..
If a public service is outsourced, i.e. public transport in Melbourne, Australia; sanitation services in Georgetown, TX, etc., the contractor has to generate a return for its stockholders whilst meeting the performance standards of the sponsoring agency, i.e. the Melbourne City Council. If he does not meet the performance standards, he will lose money on the contract and perhaps the contract and the business.
A government bureaucrat has little incentive to get it right. If the agency is managed poorly, the results are usually fobbed off on the taxpayers.
As of June 30, 2014, the Trailing Twelve Months average returns for the nation's airlines have been impressive. The return on sales was 7.75 per cent, 36.05 per cent on equity, 5.92 per cent on assets, and 11.78 per cent on total investment.
The airline business is highly leveraged, and the margins are tight. So too are those for most if not all forms of commercial passenger transport modes. The financial picture for the nation's airlines has improved dramatically. Many airline analysts believe the financial future for the airlines is bright, but as anyone who follows the industry knows, it can turn on a dime.
Not every flight generates a positive return. But in the aggregate most of them do. Otherwise, the airlines would not be able to generate the returns that they have been seeing.
Passenger rail transport at its best is like all other forms. It provides an essential public service to the economy and well-being of our society. Judging everything by profit is rather like one-size-fits-all clothing.
I've heard it said that no public transportation truly makes a profit.
Airlines rely on the federal government's air traffic control system (paid for by you-know-who). And they land at and take off from airports generally furnished by local municipalities.
Buses use public highways (ditto). If they had to pay for their own lane (as do the railroads), you wouldn't be able to afford a ticket.
Most local transit projects (light rail, et al) are considered a success not if they make a profit, but if they meet or exceed projected ridership.
Public transportation is usually considered an economic benefit for the communities it serves. Cities build transit centers (bus, train, airplane) not because they are money makers for the municipality, but because they create business for the community.
The NEC is successful chiefly because it is able to compete with the airlines for the short hops between the cities on the line.
Larry Resident Microferroequinologist (at least at my house) Everyone goes home; Safety begins with you My Opinion. Standard Disclaimers Apply. No Expiration Date Come ride the rails with me! There's one thing about humility - the moment you think you've got it, you've lost it...
wanswheel I guess that was 38 trains each way. They must've made a profit on some of them.
I guess that was 38 trains each way. They must've made a profit on some of them.
Wheel,
The question was as of 1971.
Mac
daveklepper The short line operating passenger service from Saratoga to North Creek, NY, will probably tell you they are making a profit on their passenger trains, and so will the operator of the service in Maine that connects (at times) with Amtrak's Downeasterner service at Bangor and runs to Rokcland. Acela makes a profit, in the general the NEC makes a profit considering operating costs, but including not interest on capital and depreciation charges.
The short line operating passenger service from Saratoga to North Creek, NY, will probably tell you they are making a profit on their passenger trains, and so will the operator of the service in Maine that connects (at times) with Amtrak's Downeasterner service at Bangor and runs to Rokcland. Acela makes a profit, in the general the NEC makes a profit considering operating costs, but including not interest on capital and depreciation charges.
Unless things have changed, my information is that the county owns the rails that the S&NG operates on , and Iowa Pacific is the designated operator. Also, sadly, they have cut-back their schedule more than half. Maybe their Rio Grand Scenic is profitable. It's on track that Iowa Pacific owns.
Firelock76 Not nesse-celery. My brother, Captain Huey, has quite a few contacts in the airline industry, and from what he's told me if First Class on any flight is full, then all othe revenues from that flight are the profit. Take it for what it's worth.
Not nesse-celery. My brother, Captain Huey, has quite a few contacts in the airline industry, and from what he's told me if First Class on any flight is full, then all othe revenues from that flight are the profit.
Take it for what it's worth.
More like just the opposite, at least according to the WSJ in 2012.
http://online.wsj.com/news/articles/SB10001424052702303296604577450581396602106
CMStPnP Interesting thread but most Commercial Air Flights are not profitable and some only marginally so. That the Airline Industry makes a profit at all is based on frequency of flights on the same route plus addition of cargo and mail contracts. In most cases........just one plane a day each way with just passengers on board will lose money for an airline. I can't see why Amtrak should be held to a higher standard than it's competition.
Interesting thread but most Commercial Air Flights are not profitable and some only marginally so. That the Airline Industry makes a profit at all is based on frequency of flights on the same route plus addition of cargo and mail contracts. In most cases........just one plane a day each way with just passengers on board will lose money for an airline.
I can't see why Amtrak should be held to a higher standard than it's competition.
And were passenger trains ever profitable? It depends. It depends on where they were, when they were, what they were, and who you ask. From what I've read the long distance passenger runs made money, not scads of it mind you, while the commuter runs were always money-losers.
Needless to say, not everyone will agree.
KBCpresident Can someone explain what is going on with Iowa Pacific's Eastern Star?
Can someone explain what is going on with Iowa Pacific's Eastern Star?
Eastern Star? or Eastern 'Flyer' in Oklahoma...
https://easternflyer.com/
http://publicradiotulsa.org/post/board-approves-sooner-sub-sale-passenger-friendly-company
http://www.youtube.com/watch?v=NgvE-nsWgzI
PNWRMNM You are welcome to your opinions, but not to your own facts. Mac McCulloch
You are welcome to your opinions, but not to your own facts.
Mac McCulloch
Ditto. And next time,try reading more carefully,rather than hauling out your knee-jerk, anti-government memes.
The key modifiers: "If many" Other than the GN, the other western lines benefited greatly from land grants and/or government bonds (which eventually - 30 years -were repaid). The IC was built on land grants. Other lines' construction was aided by states.
The U. S. Mail and Railway Express were important revenue streams for the private "passenger train." Crime doesn't pay. Passengers alone the same.
schlimm Using the same logic:If many of our railroads had not been given their ROW's and government-secured, low interest bonding rights, plus enormous plots of land to sell and develop -- all from the federal government (especially for most western routes), they would have never been constructed.
Using the same logic:If many of our railroads had not been given their ROW's and government-secured, low interest bonding rights, plus enormous plots of land to sell and develop -- all from the federal government (especially for most western routes), they would have never been constructed.
Schlimm,
Your statement is about 99% untrue. First, only a minority of railroad corporations received land grants, and only a minority or railroad mileage was built with land grants. Second, Federally Guaranteed bonds were not particularly low interest and not all "Land Grant" railroads got them, the Northern Pacific to name one.
As to "never" constructed, that too is false. I would agree that they might not have been constructed as early as they were. Look at the IC/Gulf and Ohio, a pre civil war pair. My sense is that land grants speeded them up by 2-5 years. Meanwhile the Mississippi Central and New Orleans and Great Northern were completed between the Ohio River and New Orleans before the outbreak of the Civil War without land grants.
The Union Pacific/Central Pacific was built after the Civil War over the central route. Absent the land grants and government bonds it almost certainly been built about where it wasbuilt in fact. It would have started later and been funded differently, but it would have been built.
The final case that proves the falsity of your statement is the Northern Pacific chartered in 1862 and completed in 1883. In 1893 the privately financed Great Northern was completed to Puget Sound largely parallel with the NP.
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