It's no secret that the big class 1 railroads are doing very well with operating ratios at or below 80%. They are profitable, and I'm glad I'm a shareholder in some of them. But I really wonder why the taxpayer is still being asked to support passenger rail operations in both Canada and the United States..it doesn't seem fair with the railroads cherry picking the good stuff and leaving the rest for the taxpayer to support.
I appreciate that the railroads are in business to make a profit....but where does it state that passenger service cannot be profitable? Look at Southwest Air...an airline with one of the safest records, and they have similar high capitable investment requirements, and they're very profitable. With the right managment passenger rail can be very profitable.
The governments should get out of the pasenger rail business and instead perhaps offer rail carriers a tax incentive and maybe other incentives to take back and run the trains. An added benefit would be a return to variety in trains that reflect the regions they run through. The railroads would also be able to showcase their operations to shippers and the public at large.
I appreciate that rail and air services are different...I brought up Southwest only to show that passenger transportation can be profitable even when the mode involves high capital expediture.
Freight was also unprofitable 30 years ago...but the railroads remained in that market. Maybe high speed passenger rail service is the wrong approach. Surely the current infrastructure can handle speeds of 50 mph, and passengers save time with downtown to downtown service.
I wonder about market factors in the old days, specifically was part of the low profitability the result of many railroads having to compete and interact with each other. If, today, the several giant railroads operated passenger rail service, could they make a profit from the benefit of their huge systems?
I don't have any hard data handy, but I seem to recall reading once that passenger trains didn't make money back in the day -- rather that mail contracts subsidized passenger service. Is anyone else familiar with this notion?
Ulrich wrote: I appreciate that rail and air services are different...I brought up Southwest only to show that passenger transportation can be profitable even when the mode involves high capital expediture. Freight was also unprofitable 30 years ago...but the railroads remained in that market. Maybe high speed passenger rail service is the wrong approach. Surely the current infrastructure can handle speeds of 50 mph, and passengers save time with downtown to downtown service.
My dear man. Do you have any idea -- at all -- how much effective subsidy the airline industry has? Or haven't you really wondered just who pays for the airports and air traffic control? The airlines don't -- at best they lease them (often for peanuts, so the city can claim that they have airline service). Nor is the capital expenditure all that high -- very few airlines own their aircraft or engines; they are leased on a per-mile or per-hour basis.
Freight was never unprofitable for the majors, on the main lines. Which is why so many branch lines were abandoned -- there it was. Passenger service, on the other hand, to the best of my knowledge has never been profitable, either in this country or in the rest of the world, without some form of government subsidy. In the bad old days, that subsidy was the mail contracts -- and as soon as they went, so did the passenger service, almost literally overnight.
MILW205 wrote: I don't have any hard data handy, but I seem to recall reading once that passenger trains didn't make money back in the day -- rather that mail contracts subsidized passenger service. Is anyone else familiar with this notion?
"Ship and travel Santa Fe."
I like Southwest. Very much. Usually I snag a pre-board which is really helpful. However, after observing some of the Airline episodes and seeing some airports in person Im convinced that the "Big" freight haulers dont want to deal with the great unwashed, messy and demanding masses. Anything that slows that coal train down isnt welcome and neither is Amtrack.
If you want pax rail all over the USA, you are going to have to leave the Big class 1's with thier rusting and obselete mains and adopt European technology that allows dedicated and safe track for very fast (200+) mph trains.
The United States has always gotten something done with private money.
The last pax train I caught in the wild was a Union Pacific Executive train ripping thru my area at what must be above 75 mph behind a DD40x a few years ago hell bent for St. Louis and gone.
Ulrich wrote: Look at Southwest Air...an airline with one of the safest records, and they have similar high capitable investment requirements, and they're very profitable. With the right managment passenger rail can be very profitable.
June 1985, Trains Magazine, Page 10 - Item titled "Train vs. Plane"
"A comparison of the 1984 performance of one airline, Southwest, and Amtrak helps explain the problem. The contrast is skewed by the fact that the airline operates as single-class, high-frequency service in its namesake boom region, eschewing mail and interline passengers. Again, Amtrak serves 510 stations; Southwest 22 airports. And Southwest has no equivalent for the Amtrak employees assigned to right of way and terminal maintenance--or, for that matter, dining cars and sleepers. Nevertheless, the plan vs. train productivity is illuminated by these 1984 statistics:
Amtrak carried 19.9 million passengers; Southwest 10.6 million. But because the average rail journey was 223 miles vs. 436 miles on Southwest, the total passenger miles (1 passenger carried 1 mile) wer about equal: 4.2 million for Amtrak, 4.6 million for Southwest. Interestingly, average fare per mile is similar: 10.6 cents for Amtrak, 11.1 cents for Southwest. Amtrak required a fleet of 284 locomotives and cars; Southwest operated 54 aircraft. Amtrak employed 25,000 people; Southwest 3934. Amtrak grossed $758.7 million in operating revenues against operating expeneses of $1.4 billion; Southwest grossed $539.9 million against expenses of $467.4 million
Apples and oranges? Yes, in the sense of a superior airline contrasted with a rail system saddled with a Congressionally designed route structure, dependent upon on-and-off Corridor trade for half of its riders, and obligated to subcontractor freight railroads for the majority of its route miles. Still the productivity of a 122-seat, 515 mph aircraft (Boeing 737-200) flying 11 hours 20 minutes a day with a crew of 5 is awesome to contemplate...and compete with [emphasis added]. Just ask Greyhound. Or Trailways."
Written by D.P.M. (David P. Morgan, Editor - Trains)
The issues are mainly expense issues, not capital expenditures. Most airlines lease their planes -- I suppose railroads lease their engines, too. As taxpayers, we also subsidize trucking, ports and airlines (FAA, Air traffic control systems, public airports, road building for truck-bourne commerce) If airline gate leases were intended to fully cover terminal maintenance and air traffic control, I can't imagine how any airline could make a profit. Truckers pay heavy fuel taxes to each state that they drive through, but how much is still subsidized? I have no clue.
Have we discussed privitization of Amtrak before? In the UK, didn't they break up their national rail system? Is there a possible parallel here in the US?
Paul F.
Forget subsidies...the rails, truckers, and everyone else all gets a subsidy of some kind albeit often indirectly. A privatized passenger rail system would bring in competition and innovation...Make the trains worth taking and raise the fares to cover the cost...that's how business works. Competition works wonders...I'm in a competitive industry but I'm profitable to the extent that I outperform my competition. It keeps me on my toes and, I'm always looking for an angle that will save my customers money or improve service levels. That wouldn't be the case if I had no competitors.
Ulrich wrote: Competition works wonders...I'm in a competitive industry but I'm profitable to the extent that I outperform my competition. It keeps me on my toes and, I'm always looking for an angle that will save my customers money or improve service levels. That wouldn't be the case if I had no competitors.
Is competition on the same route = multiple carriers in the same modal type (ie. CSX and NS each offering NYC to Washington DC service) OR is it a choice between modal types on the same route (ie. owned car, rental car, bus, plane, train)?
If it's the first choice, where (outside NEC) would there be enough demand for multiple rail carriers to compete?
If it's the second, on shorter trips, cars beat trains,planes and buses for ease of use and overall economy (especially if the traveler has companions.) Case in point, business trip to plymouth, MA for a meeting, then to Hartford, CT for a convention...origin and end point is Newark, NJ. Flying is too expensive (cost of rental car or taxis included), rail requires transfers in Boston to commuter rail, and there seems to be no service between New Haven and Hartford on Thursdays. Can rent a car for 3-4 days, pay tolls and gas for less than the Amtrak fare (and you're suggesting that railroads run UP their fares to be profitable and competitive). My business partner and I will rent a car and drive instead of Amtrak or Airline.
For a long distance trip (say Newark to Chicago, or points further West), travel time of 20 hours or more is unreasonable - air is the only option. If airline prices go up, we'd do more web casts until prices go back down.
Personal travel? I get limited vacation days -- I love trains, but my family would rather spend time at the destination -- air trumps trains on long trips, car beats train on short trips for economy of family in one minivan vs. four fares on Amtrak.
Where is the business advantage if you're the railroad? How do you compete with cars for short trips, or planes for long ones? If you raise prices, planes become cheaper for short trips and new regional airports are opening up in formerly "rural" and "inaccessible" areas.
Why can't the big class 1s take ownership? Why would they want to? It is a losing proposition, isn't it?
paulsafety wrote: Ulrich wrote: Competition works wonders...I'm in a competitive industry but I'm profitable to the extent that I outperform my competition. It keeps me on my toes and, I'm always looking for an angle that will save my customers money or improve service levels. That wouldn't be the case if I had no competitors. Is competition on the same route = multiple carriers in the same modal type (ie. CSX and NS each offering NYC to Washington DC service) OR is it a choice between modal types on the same route (ie. owned car, rental car, bus, plane, train)?If it's the first choice, where (outside NEC) would there be enough demand for multiple rail carriers to compete?If it's the second, on shorter trips, cars beat trains,planes and buses for ease of use and overall economy (especially if the traveler has companions.) Case in point, business trip to plymouth, MA for a meeting, then to Hartford, CT for a convention...origin and end point is Newark, NJ. Flying is too expensive (cost of rental car or taxis included), rail requires transfers in Boston to commuter rail, and there seems to be no service between New Haven and Hartford on Thursdays. Can rent a car for 3-4 days, pay tolls and gas for less than the Amtrak fare (and you're suggesting that railroads run UP their fares to be profitable and competitive). My business partner and I will rent a car and drive instead of Amtrak or Airline.For a long distance trip (say Newark to Chicago, or points further West), travel time of 20 hours or more is unreasonable - air is the only option. If airline prices go up, we'd do more web casts until prices go back down. Personal travel? I get limited vacation days -- I love trains, but my family would rather spend time at the destination -- air trumps trains on long trips, car beats train on short trips for economy of family in one minivan vs. four fares on Amtrak.Where is the business advantage if you're the railroad? How do you compete with cars for short trips, or planes for long ones? If you raise prices, planes become cheaper for short trips and new regional airports are opening up in formerly "rural" and "inaccessible" areas.Why can't the big class 1s take ownership? Why would they want to? It is a losing proposition, isn't it?
like i said.... a hurry-it-up world has no place for profitable intercity rail service....and since its always been mankinds desire to get there quicker...well....nuff said
Air Travel is cheaper and faster and easier to endure from... Little Rock to Baltimore. But take Amtrack for almost twice the money (and two days) with a train change in chicago on a iffy schedule? No thanks.
TGV or Bullet trains in NEC style traffic at 250-300 mph will most certainly compete with the Air. Especially when storms arrive and screw up the eastern airports. If you equipt these trains with a common area, social area, food, wireless or other internet network etc and take care of the people while they travel.. there should be an increase in passenger work.
Then again, I think we are 100 years or more from such fast rail service as a alternative to interstate or air travel.
Maybe Im dazzled by the new A380's recent entry into service.
In all of the preceding posts I notice one glaring omission.
AMTRAK has a Congressionally-mandated monopoly on intercity/long distance rail service. The privately-owned, commercially-oriented railroads ARE NOT ALLOWED to put in anything that might compete with AMTRAK - even on routes where AMTRAK has no service and doesn't plan to start any.
Doubtless, the PD&Q or XY&Z could figure out how to operate profitably from Alpha to Omega. The Feds won't let them. Only the State-funded and operated regional passenger carriers seem to have found some gap in that politically-mandated armor. I'll bet it's not available to anything not under the direct control of politicians.
Chuck
I can understand the idea of wanting a profit motive oriented organization to replace Amtrak, but here are a few of my thoughts on the matter.
An operating ratio of 80% is almost good enough for the RRs to stay in business long term. There is little fat to pay for extra goodies. There's just enough profit to service the debt necessary to keep the RR in track and equipment. And forcing private, for profit, companies to take on a public welfare role is really just a fancy way of stealing!
The current class one track structure and traffic patterns are designed for freight. In many places, the more optimal passenger routings are long gone. In some instances, new routes for Amtrak trains have been cobbled together from multiple roads. Putting passenger train operation back onto the frt RRs would be a little bit like unscrambling an egg.
The frt RRs no longer have any passenger expertise on their staff. There are very, very few still in RR mgt who were around in 1971 (or even 1980, in the case of NS and UP)
The basic economics and technology of passenger rail that failed in the 1950s are still in place. If you want different results, you have to change the game. Tax incentives are too small to really change the game.
Once upon a time, state and local gov't tried exactly what you suggest to keep the frt RRs in the commuter business. They bought some new equipment for the RRs and subsidized the direct operation of the trains. The result was some of the worst customer service in the history of railroading - and the RRs wanted out of that arrangement. Passenger service, at best, was a distraction to them at that point.
If the goal it to get some profit motive into the game, you don't have to throw the baby out with the bathwater. A gov't owned, national network of passenger service is not necessarily evil by definition. In fact, there is a lot to be said about the advantages of having a coordinated national network.
You CAN change the game so that Amtrak's mgt has an incentive to increase revenue and cut costs. You can set up the same sort of bonus structure that rewards all employees for good financial and operational results. That would promote good stewardship of capital funds and focus efforts on how to improve revenue and reduce costs.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
Ulrich wrote: But I really wonder why the taxpayer is still being asked to support passenger rail operations in both Canada and the United States..
But I really wonder why the taxpayer is still being asked to support passenger rail operations in both Canada and the United States..
Becasue the taxpayers HAVE to pay for it in order for it exist..
If the taxpayers didnt fund it, it would not exist..Amtrak has never made a profit..ever. It has always taken in more money than it has generated.
Simply because passenger rail is not profitable anymore..which is why the railroads gave it up, which is why the taxpayers must fund it if its going to exist at all.
Plenty of railroads made money on passenger service in the 19th century. many made more money on passengers than on freight.
but..no good roads, no automobiles, no planes..rail travel was the ONLY reasonable way to get anywhere back then..very different world back then.
Scot
Ulrich wrote:So why not get rid of the passenger train then? It's unprofitable...uncompetitve with other modes...so why keep it around?
Probably for a lot of the same reasons that people feel that family farms need to be preserved, even as those same people shop at the Wal-Mart at the edge of town instead of the mom-and-pop general store that they used to patronize.
Because for now, The govt still thinks the US needs a national rail passenger network.
For the economy, so people can still travel who might not be able to otherwise..for the same reason the govt funds highways..its a necessary expense for the "good of the nation."
For ther same reason the Govt created Conrail..for the same reason the Govt bailed out the airlines after 9/11.
Of course, in theory, the govt is "us"..the people..so boiling it down..we still have passenger service simply because we still want it..and are still willing to pay for it.
that can always change though..Amtrak might not last forever. If "we" decide its no longer necessary, or if we dont want to pay for it anymore, it can go away.
Probably 99% of Americans could live without it...so im not really sure why it still exists...lobbyists probably.
Good answers...
Personally I love taking the train. But like someone else mentioned train travel really doesn't fit in with today's rush rush lifestyle. Maybe someday quality of life will become more important than bouncing around the world at high speed..there's alot of merit and satisfaction in taking the slow train...the ambience...the social interaction with other travelers..the towns rolling by..and for railfans like me the locomotives and rolling stock.
My fondest memories from my college days are about the train trips to and from home. I don't hardly rmember the many long car trips I've done or the many flights I've taken. The train offers something the others don't..a rich transportation EXPERIENCE.
Ulrich wrote: Maybe someday quality of life will become more important than bouncing around the world at high speed..there's alot of merit and satisfaction in taking the slow train...the ambience...the social interaction with other travelers..the towns rolling by..and for railfans like me the locomotives and rolling stock.
Everyone's opinion is different. I respect that you value taking the slow train and enjoying the scenery, and I'm not criticizing your choice, but let's equally not assume that families who prefer to maximize their time at their destination suffer from a lower quality of life (ie. those who prefer bouncing around the world at high speed)
Without air travel, a visit from the East coast to South Dakota (to visit Mount Rushmore) or to Arizona (to visit the Grand Canyon) would take three days and two nights of sleeping in coach, sharing a common bathroom with 40 other travelers, no showers, and paying for 'Amburgers in the Amdinette at $4.95 each (no combo meals there).
My family, who are not railfans, would probably look at it as torture, not assuring their quality of life. Of course, we could book viewliners (two rooms, two accomodation fees) to Chicago and then a family bedroom to the final destination, but it would much more than double the equivalent cost of air tickets limiting our family budget for activities at the destination. This would be roughly the equivalent of a rail "cruise" with food included -- the object of the trip becomes the ride, not the destination. A nice option, but our objective was to visit a national park, not ride a train (except for the Grand Canyon RR !!!!)
I think they'd rather spend the time saved by flying (we'd have saved four extra days assuming we lose one full day at each airport) enjoying the object of our trip.
Our approach to travel is not better or worse than yours, just different, so please don't generalize that familes who prefer to fly have a disregard for or a lower, poorer quality of life.
So, why not get rid of ________, it's unprofitable (except for a government subsidy)
You could fill in the blank with:
otton, dairy, local roads, forestry, airlines, mass transit, Greyhound, interstate trucking, et. al.
The devil is in the how and why of the subsidy....
I would also argue that Amtrak is not uncompetitive in the markets it serves. Amtrak only tries to compete with airlines in the NEC, and does so very well. Elsewhere, it competes primarily with driving - and does particularly well connecting small cities to big ones. Lynchburg and Charlottesville to Wash DC is a good example of a market where, despite lack of frequency and spotty on time performance, Amtrak does pretty good business.
The problem isn't the fares and the routes so much as the level of subsidy to make it go. And, since Amtrak doesn't get the sublte and less obvious direct and indirect subsidies of government owned infrastructure, their subsidy is much more out in the open and painful to behold.
That leaves two options. Kill it or fix it. I believe it's fixable. I believe investments in frequency and moderate speed improvments would yield a network of corridors, particularly in the east with the potential to cover the lion's share of their operating costs and the LD trains overlaid on this network could cover their short term avoidable costs.
Passenger rail is the cheapest, simplest and most effective way to improve intercity travel capacity, so let's get on with it.
But, it will take wise investments and some real incentives for Amtrak to improve their productivity.
Paul I wasn't making any generalizations about families who travel as no family that I know of could be characterized as bouncing around the world at high speed. Most families take one vacation every year and maybe one or two mini vacations of a few days in duration. The bouncers I was referring to are the business people who travel often...I used to be one of those, and I can tell you that since I nolonger feel compelled to meet customers and suppliers in person my own quality of life has improved substantially, and now I do have time for that slow train becuase I'm LESS busy but far more productive now.
Okay...I'm going to prempt that next comment which I'm sure will be ..i.e. I NEED to travel on business"..Well if that's the case then so be it. All I can tell you for sure is that alot of work related travel is frivolous and can be replaced with a phone call..not ALL of it...but some of it.
Ulrich wrote: Paul I wasn't making any generalizations about families who travel as no family that I know of could be characterized as bouncing around the world at high speed. Most families take one vacation every year and maybe one or two mini vacations of a few days in duration. The bouncers I was referring to are the business people who travel often...I used to be one of those, and I can tell you that since I nolonger feel compelled to meet customers and suppliers in person my own quality of life has improved substantially, and now I do have time for that slow train becuase I'm LESS busy but far more productive now. Okay...I'm going to prempt that next comment which I'm sure will be ..i.e. I NEED to travel on business"..Well if that's the case then so be it. All I can tell you for sure is that alot of work related travel is frivolous and can be replaced with a phone call..not ALL of it...but some of it.
Thank you for clearing my conscience: I thought that when I chose Amtrak's Acela to go to Baltimore instead of driving, I WAS being frivolous with company money (I could have driven for a lot less $). Now I know I was being social (by meeting my clients, and meeting people on the train) and improving my quality of life by seeing America at "See Level" -- very cool!
My boss summarized his opinion of web casts and teleconferences as a way of developing lasting relationships with clients by asking a simple question -- did you propose to your wife by telephone, or in person? If it's really important, face to face is a sincere, respectful way to conduct business. Of course, when its just an update, send a memo.
I certainly wouldn't propose to a women over the phone (unless I wanted to get rid of her), but then again business dealings are one thing and personal dealings quite another. I'm no big fan of web casts and teleconferencing either...I prefer the plain old telephone and one on one direct communication. I guess its whatever you like..some folks feel business travel is necessary...as for me, I run a successful business with clients and suppliers across the US and Canada and I've only met one of my customers in person. I've never met any of my suppliers in person. I don't know if meeting people in person would do much for me as I'm not a long legged blonde. But then again it depends on what biz you're in...selling locomotives over the phone would be a bit of a stretch, but most of us aren't selling locomotives.
In Railway Age magazine there was a short article where the author was proposing that by the time you count all the costs associated with passenger service, that he doubted that any passenger service made money.
The interesting thing was that the article was in their "100 Years Ago" column and was an excerpt from a Railway Age article originally published in 1905.
Dave H.
Dave H. Painted side goes up. My website : wnbranch.com
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