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A possible new direction for Amtrak Long Distance

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According to the DOT Inspector General’s Report on Analysis of Cost Savings on Amtrak’s Long-Distance Services dated July 22, 2005, elimination of sleeping cars, dinning cars, and lounge cars would reduce but not eliminate the losses associated with the long distance trains. The DOT analysis was focused on reducing the losses associated with the long distance trains. It assumed that the 2004 routes would be retained. It did not propose eliminating them altogether. If the aforementioned services were dropped from the long distance trains, leaving coach only services with minimum on-board food options, i.e. box lunches, carts, etc., Amtrak could save approximately $75 to $158 million annually. It would also save an estimated $79 million per year in planned capital expenditures. These estimates are in 2004 dollars. When adjusted for inflation using the Bureau of Labor Statistics CPI calculator, which is a rough estimate, the amounts would be $89.3 to $188.1 and $94.1 million in 2011 dollars. In FY11 the long distance trains had an operating loss of $615.4 million before allocation of depreciation, interest, and miscellaneous charges. If the maximum savings were realized, Amtrak would still have had an operating loss of $437.3 million on its long distances trains. Elimination of the capital spend for new sleepers, dinning cars, and lounge cars would reduce the depreciation charges in future years and, therefore, could result in a further reduction of the operating loss. If the lounge car was retained, the savings as per above would be reduced by $52.4 to $$39.3 million in 2011 dollars. With numbers like these, even when adjusted for the fact that they are getting a bit long in the tooth, it is difficult to see how Amtrak could break even on any of its long distance services without a significant change in its business model, i.e. drop the sleepers and dinning cars as well as institute other significant cost saving strategies, i.e. elimination of checked baggage, etc.  It might be able to get there, but not with the current mind  set. The IG also found that the federal subsidy for sleeping car passengers was approximately 208.9 per cent of the subsidy for coach passengers. When adjusted for inflation, the average sleeping car subsidy in 2011 dollars was $395.62, bringing the average cost of the service to $632.59. To generate a reasonable return on its sleeping car service, which includes meals in the dinning car, a private operator probably would have to raise the room charges significantly or find a way to drastically cut the costs or some combination thereof. I doubt that there is enough demand to support such charges.
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