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To what extent is the Intercity Marketplace skewed in the US
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<p>The operating losses racked up by the long distance trains, including the silver service, can be found on Page C-1 of the September 2012 Monthly Operating Report. These numbers include all the variable costs (direct and allocated). They do not include the fixed costs. These too must be considered in determining the viability of the enterprise and each of its product lines. A company that cannot cover all of its costs goes out of business in time. If Amtrak were not a ward of the state, it would have gone out of business shortly after it was created.</p> <p>Amtrak's public numbers are audited by the company's outside auditors. The direct (avoidable) costs referred to by Mr. Boardman contain no detail and, as far as can be determined, have not been audited by an outside auditor. Taking numbers off of a dog and pony slide show intended for politicians is suspect. </p> <p>If all of the long distance trains were discontinued, most of the costs associated with them, including all of equipment costs, which are fixed, could be avoided in time. Some allocated costs, i.e. indirect labor, call center costs, etc., would have to be reallocated, but many of these, depending on how scable they are, would also go away in time if management pursued doing so robustly. Not sure Amtrak's management is very robust when it comes to making hard choices!</p> <p>What is and what is not an avoidable cost is contentious. For example, direct labor makes up approximately 85 per cent of Amtrak's labor costs. If it discontinued the long distance trains, the direct labor cost (mostly operating) is avoidable almost immediately, but severance packages, if they are paid out over time, might not be considered avoidable until the payouts are complete. But ultimately they are avoidable. So, how did Boardman classify the direct labor costs, including any severance liabilities, associated with the long distance trains or any one of the long distance routes? </p> <p>Amtrak calculates the per passenger mile results by dividing the operating results by the passenger miles.</p>
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