You're right., Paul. The whole thing has gone on so long that you can say anything and actually be half right and half wrong depending on who hears the message. So all arguments thus become meaningless. What does have meaning is where do we go from here. I've got a 4 year old car with 58,000 miles on it, I live in a rural area, and use the car for visiting clients as well as for recreation. I am 68 yrs. old. If I had a reliable rail service to take me where I want to go and when I want to go, I might use it. But lets take a 21 year old starting out. If we provide him with a train service that he could use at a price that would eliminate his need to purchase as few as 5 and as many as 30 automobiles in his lifetime, saving purchase, licensing, parking, maintaining, and other user costs in that time, it might be in his best interest to have rail service. For me at my age new service vs my automobile doesn't make as much sense. So what we've got to do is draw a line and mark a spot from where we start planning and building a transportation system that serves.
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.
Sam1 ". Its a subsidy to the user in some instances. And it is a subsidy for the service provider in that the service would not otherwise be sustainable. The tax code is a political document. It enhances or restricts certain activities. The word subsidy does not appear in the code. It is a matter of substance over form. But when deductions are restricted, it is because politician have concluded that they are unfair and serve no societal purpose. Call them what you want, the ability to deduct premium transport fares, such as those charged by the Acela services, benefits the rider, who for the most part is passing the cost through to the end users, and it benefits Amtrak. If people don't like the term subsidy, try enabler. The tax benefits for home ownership in the U.S. benefit the owners. They also benefit builders and sellers in that they can build bigger, pricier houses, which tend to be more profitable than smaller, less featured houses. I used this illustration because it is an analogy that most people can relate to. It is also one that causes most people to get torqued up because it hits home. One man's subsidy is another man's vital investment. Being allowed to deduct the cost of an Acela fare (I never claimed otherwise) for expense account riders enables Amtrak to offer a premium service that otherwise it could not do. True, the rider benefits, but so too does Amtrak. In my mind it is a form of subsidy, although different in form than the direct subsidy Amtrak receives from the government. I am not arguing that ordinary and necessary expenses are not a legitimate business deduction. Tthis is the guiding principle of the IRS Tax Code. But if expenses are above and beyond ordinary and necessary, they are not deductable. Business class is deductable because it is classified as ordinary and necessary, although like many things in the tax code, I believe that is a stretch. Using all capital letters or bold letters in emails, forums, etc. is considered to be shouting. There are several guides for on-line etiquette that deal with the issue in great length.
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Its a subsidy to the user in some instances. And it is a subsidy for the service provider in that the service would not otherwise be sustainable.
The tax code is a political document. It enhances or restricts certain activities. The word subsidy does not appear in the code. It is a matter of substance over form. But when deductions are restricted, it is because politician have concluded that they are unfair and serve no societal purpose. Call them what you want, the ability to deduct premium transport fares, such as those charged by the Acela services, benefits the rider, who for the most part is passing the cost through to the end users, and it benefits Amtrak. If people don't like the term subsidy, try enabler.
The tax benefits for home ownership in the U.S. benefit the owners. They also benefit builders and sellers in that they can build bigger, pricier houses, which tend to be more profitable than smaller, less featured houses. I used this illustration because it is an analogy that most people can relate to. It is also one that causes most people to get torqued up because it hits home. One man's subsidy is another man's vital investment.
Being allowed to deduct the cost of an Acela fare (I never claimed otherwise) for expense account riders enables Amtrak to offer a premium service that otherwise it could not do. True, the rider benefits, but so too does Amtrak. In my mind it is a form of subsidy, although different in form than the direct subsidy Amtrak receives from the government.
I am not arguing that ordinary and necessary expenses are not a legitimate business deduction. Tthis is the guiding principle of the IRS Tax Code. But if expenses are above and beyond ordinary and necessary, they are not deductable. Business class is deductable because it is classified as ordinary and necessary, although like many things in the tax code, I believe that is a stretch.
Using all capital letters or bold letters in emails, forums, etc. is considered to be shouting. There are several guides for on-line etiquette that deal with the issue in great length.
Oh, c'mon. There was nothing in my response which was insulting or demeaning (and, if you've read my other posts, I never insult people). I've been writing business and personal E-Mails for decades. On occasion, I think it's useful to emphasize particular words when they are important to a concept. In the case of my response to your post, those words related to the issue who was being subsidized. My normal way of doing this is by italicization. But, that doesn't seem to work on this website (or, at least, I can't figure out how to make it work, given my level of computer skills), so I have to resort to capitalization. Perhaps I shouldn't have emphasized the word "nothing" so, if that offended you, I apologize.
Acela should not be a wipping boy for subsidies or for anything else.
If I am reimbursed for an Acela fare by my employer, it is because the employer and thus his customrer receive value in my improved productivity from the absence of hassel and the superior speed of the service Amtrak's Acela gives me.
On an incremental basis, out-of-pocket plus capital and maintenance costs, Acela makes a profit and requires no subsidy. What I mean by this is that if Acela were discontiniued, the subsidy for the rest of the services provided on the NEC would have to increase greatly or ticket prices would have to increase greatly or some combination of both. In a very real sense the Acela rider subsidizes the rider on regional and commuter trains. (The latter get the greatest subsidy, getting one from state and local governments as well as via Amtrak from the USA tax payer.)
The costs of improving the NEC were and are do to years of deferred maintenance and lack of capital expendituires. If you're going to spend money to replace 80-year-old catenary, having it equipped for 150mph instead of 125 in a drop in the bucket compared to the total cost. Much is the same for track structure and much else. In can be arued that a tilting train causes far less outside rail wear on curves than regular equipment.
The analogy with the Cadillac owner and the Chevy owner is a good one. And of course passenger intercity rail could be a private industry of highway transportion was not so heavily subsidized.
Dave: Precisely! This is a phony issue about Acela and subsidies by business travelers through tax deductions. Rather than attack Acela, which as you point out, covers its own operating expenses and allows the entire NEC to operate with a profit, perhaps tax deductions for business travel should be eliminated, along with first class.
C&NW, CA&E, MILW, CGW and IC fan
[quote user="schlimm"]
Dave: Precisely! This is a phony issue about Acela and subsidies by business travelers through tax deductions. Rather than attack Acela, which as you point out, covers its own operating expenses and allows the entire NEC to operate with a profit, perhaps tax deductions for business travel should be eliminated, along with first class. [quote]
The Acela covers its own operating costs because it gets premium fares from people who are traveling in many instances on some else's nickel. My initial point is that the subsidy is the difference between a coach fare and the premium fares (first class and business class). I am not arguing that normal and necessary business espenses are not deductable. The IRS allows businesses to deduct business class fares. The deductability of first class fares depends on the circumstances.
Business class and first class fares should not be passed through to customers, clients, taxpayers, etc., and they should not be deductable on a corporate or business tax return.
I worked in Australia for nearly five years. And I traveled there on business for more than 10 years. The first couple of trips were in business class, which was company policy. Then, one day, I asked how much it cost to fly from Dallas to Melbourne, Australia in business class. It was $8,500 compared to a coach fare of $1,600. I switched to coach travel. I could not then nor can I see the justification in sticking the rates payers, many of whom live below the poverty line or just above it, with a premium fare. And it is the rate payers who ultimately picked-up the tab. I am in the minority. I know it. Being in the majority, however, does not make it right.
In another post asertions are made that the creature comforts on the Acela justify the premium fares. Difficult to substantiate!
The Acela service covers its operating costs before interest and depreciation. It does not cover the fully allocated capital costs. The remaining trains on the NEC don't cover their operating costs, although they did in FY08. However, they were only able to do so because Amtrak had a different cost accounting system. Under the current cost accounting model, if they restated the results for 2008, the other NEC trains would have lost money.
In FY10 Amtrak's annual depreciation was $593.1 million and interest expense was $135.5 million, bringing unallocated depreciation and interest to $728.6 million. How much of this amount is worn by the NEC? Amtrak does not tell us in its public financial statements. However, it spent billions upgrading of the NEC over the past 10 to 15 years and, therefore, the bulk of it is allocable to the NEC, i.e. equipment, infrastructure upgrade to accomodate higher speeds, extension of the wires to Boston, etc.
A conservative estimate of the depreciation and interest allocable to the NEC is 75 per cent. If one accepts this estimate, $546.5 million belongs to the NEC. How much is attributable to the Acela? Without being able to look at Amtrak's property accounting ledgers, it is difficult to say. However, it is difficult to believe that the capital improvements that were made to the NEC, especially the electrification of the line from New Have to South Station, would have been made if it had not been for the Acela.
In FY10 the Acela generated approximately 50 per cent of the revenues on the NEC. If we assign half of the interest and depreciation to the Acela, which had an operating profit of approximately $100.6 million in FY10 (latest audited numbers), it means the Acela lost $172.6 million on a fully allocated cost basis. If we assign 75 per cent of the capital improvements to the Acela, the fully allocated loss would be $309.2 million, which is not far off from the figure that Fred Frailey offered up, although I don't know where he got his numbers. And this is for a premium service.
Amtrak pays no taxes, i.e. fuel taxes, real estate taxes, sales taxes, income taxes, excise taxes, etc. If it had to pay taxes, the loss on the Acela would be even greater, as well as its system wide operations, would be even greater.
Oh, c'mon is a put down. It is an insult. It adds no value.
Claiming that an issue is phoney implies that a contributor lacks the intellectual skills or knowledge to analyze data and formulate an issue.
Another put down is to say that a person does not understand the point, especially when the accuser does not offer any verifiable data to refute the person's point of view. If you disagree with a point of view, show your point of view with logic and verifiable data. Belittling a contributor adds not value.
Inflamatory words to put down or attempt to put down a point of view don't belong in these forums. Or in any other discussion for that matter.
daveklepper In a very real sense the Acela rider subsidizes the rider on regional and commuter trains. (The latter get the greatest subsidy, getting one from state and local governments as well as via Amtrak from the USA tax payer.) Good point. Thinking of NJ Transit and the NEC is a great example. NYP to Trenton upgrades will help travel times. The costs of improving the NEC were and are do to years of deferred maintenance and lack of capital expendituires. If you're going to spend money to replace 80-year-old catenary, having it equipped for 150mph instead of 125 in a drop in the bucket compared to the total cost. Much is the same for track structure and much else. The upgrade of the NEC will certainly reduce the cost of ongoing maintenance. Bet even the rolling stock maintenance will be reduced.
In a very real sense the Acela rider subsidizes the rider on regional and commuter trains. (The latter get the greatest subsidy, getting one from state and local governments as well as via Amtrak from the USA tax payer.)
Good point. Thinking of NJ Transit and the NEC is a great example. NYP to Trenton upgrades will help travel times.
The costs of improving the NEC were and are do to years of deferred maintenance and lack of capital expendituires. If you're going to spend money to replace 80-year-old catenary, having it equipped for 150mph instead of 125 in a drop in the bucket compared to the total cost. Much is the same for track structure and much else.
The upgrade of the NEC will certainly reduce the cost of ongoing maintenance. Bet even the rolling stock maintenance will be reduced.
If Amtrak gets the improvement funds grant request just announced the total number of passenger minutes saved will be a rather large number.
One factor that seems to be missing in the ability of Acela to attract a premium clientel is the scarcity, constrained supply, of premium service. Imagine 40-some trains out of Penn Station in the rush hour and only one Acela.
Acela seems to be a success because it is supplying that premium service you say is lacking. It must be a marketing success so one train during "rush hour" must be ok. But, too, what rush hour? Morning or afteroon/ Hour or hours? To where? To Boston, MNRR and CONDOT have more to say because of their ownership of the track. To D.C., NJT, SEPTA, and MARC have a lot to say, too. It may infact be imossible to get a 125 mph train woven through the traffic between 6AM and 9AM and again from 4PM to 7PM, so why bother trying. It has a good chance of being a failure, so why tarnish the image\?
Acelas, Regionals, and Keystones run hourly through the rush hours (8a-10a, 5p-7p); and longer-distance trains using the NEC to New York, Washington, or Boston generally arrive and depart outside the rush hours.
It's a good thing Acela is profitable; because otherwise it's a waste of space for just 300 passengers compared to over 1,000 each for NJT and LIRR out of Penn Station in the peaks. It's understandable that, given the comparatively smaller loads on Amtrak, only 3 of 42 peak hour slots are allotted to Amtrak. NEC services are limited by suburban services in six areas.
Carrying three times the passengers, a commuter train should be close to profitable to operate at a third of the fare.
Commuter fares, for most of the passengers (who ride on monthly tickets), are more like one tenth of the fare on a mileage basis as compared with the average Acela fare. Check it out!
300 passengers for a non commuter train is average....probably from the beginning of time, too. Not all mainline or inter city trains carried much more than that. So, there is no problem there....a Regional on the same route probably has capacity for 500 but carries up to 700 different passengers enroute. And comparing commuter trains and services to long distance and inter city services in terms of consits, equipment, and fares is the proverbial apples and oranges. The equipment is different, the scheduled spacing is different, the travel distances are different, the whole service philosophy is different.
daveklepper Commuter fares, for most of the passengers (who ride on monthly tickets), are more like one tenth of the fare on a mileage basis as compared with the average Acela fare. Check it out!
NJT montly pass on NEC ~20 cents per mile
Acela NYP-WAS ~90 cents per mile
Amtrak Regional NYP-WAS ~50 cents per mile
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
Apples to oranges comparison on service, though...Acela is orange, Regional is tangerine, NJT is apple.
A random look at Amtrak for two weeks out, April 25, shows quite a range of fares: NE Regional as cheap as 22 cents per mile; Acela as cheap as 62 cents per mile. It all depends on time of day, day of the week and how far in advance.
Yes. Amtrak works on a market driven fare plan...the earlier you book the cheaper it is; the closer to train time, the less space available, the higher the fare. But there are time of day differences and day of week differences built into the system, too.
oltmannd daveklepper: Commuter fares, for most of the passengers (who ride on monthly tickets), are more like one tenth of the fare on a mileage basis as compared with the average Acela fare. Check it out! NJT montly pass on NEC ~20 cents per mile Acela NYP-WAS ~90 cents per mile Amtrak Regional NYP-WAS ~50 cents per mile
daveklepper: Commuter fares, for most of the passengers (who ride on monthly tickets), are more like one tenth of the fare on a mileage basis as compared with the average Acela fare. Check it out!
I tried. Had to sign up for a program, got to complicated, and messed up my e-mail uninstalling.
Glad to see oltmannd came up with the info - not too far from my 3x shot in the dark.
Sam1 Oh, c'mon is a put down. It is an insult. It adds no value. Claiming that an issue is phoney implies that a contributor lacks the intellectual skills or knowledge to analyze data and formulate an issue. Another put down is to say that a person does not understand the point, especially when the accuser does not offer any verifiable data to refute the person's point of view. If you disagree with a point of view, show your point of view with logic and verifiable data. Belittling a contributor adds not value. Inflamatory words to put down or attempt to put down a point of view don't belong in these forums. Or in any other discussion for that matter.
I think that your latest post far transcends anything you have accused me of doing. I also note, in reviewing this thread, that I'm not the only one who disagreed with your point of view that you've accused of forum misconduct. But it doesn't matter. I don't intend to post anything else on this topic.
Oltmannd: Which Acela fare, lowest or highest? Regular or business/1st class?
The Acela fares from Oltmannd and myself depend on day and time of day. The ones I sampled were for April 25 and were coach.
schlimm The Acela fares from Oltmannd and myself depend on day and time of day. The ones I sampled were for April 25 and were coach.
Details. Some food for thought:
The question is whether, for roughly the same revenue, it is better to carry more passengers on NJT or accommodate the privileged on Acela with the limited capacity?
If the revenue per train comes in about the same, wouldn't NJT almost be profitable as well?
'Round and 'round we go, and...
These subsidy debates can go on forever. Let's agree that we all subsidize each other every day, both through government action and our own business choices. Those without children or who send their children to private school subsidize those who send them to public school. City property owners who do not own cars have a large part of their property taxes go to streets and traffic control. "Free" parking is subsidized by non-drivers who shop at businesses with "free" parking. Any product purchased that's made in USA was probably made in a factory that half a century or so ago moved outside of town and purchased enough land to build and maintain parking facilities. Those who use the drive-thru window at fast food places are subsidizing those who eat inside: the owner has the expense of utilities, clean-up and trash collection and disposal. The 100-lb woman on an airline flight pays the same fare as the 250-lb man. We can go on forever.
As for what subsidies are justified, that's easy. If it benefits me, it's a worthy investment; if it benefits you, it's a boondoggle,
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"A stranger's just a friend you ain't met yet." --- Dave Gardner
HarveyK400 Some food for thought: The question is whether, for roughly the same revenue, it is better to carry more passengers on NJT or accommodate the privileged on Acela with the limited capacity? If the revenue per train comes in about the same, wouldn't NJT almost be profitable as well?
Some food for thought:
Not so sure if revenue per train is actually close to equal (and to determine those numbers is beyond me). Remember, riders on NJT are paying about the same per mile, while on Acela there is a wide range. On the 25th, a rider on the 7:00 am Acela using first class pays a whopping $314.00 one way ($1.39 per mile). But folks are willing to pay.
Anyway, if the new configuration at Penn allows for more capacity at rush hour (more tracks or at least a quicker turnaround?), maybe both can coexist, even at peak times in the morning and afternoon?
daveklepper Oltmannd: Which Acela fare, lowest or highest? Regular or business/1st class?
Typical same day peak fare. If you want to compare commuter with Acela, rush hour fares apply. Acela fare was bus. class. Regional was coach. NJT was monthly pass and 20 RT a month.
Oltman...if you are doing single ride fares for Acela and Regional, then you must compare to single ride fares on NJT, too. But. I don't understand the point here anymore. So what if one service subsidizes another? In retailing it is done all the time..Supermarkets. They.sell lots of bolongna at a cheap price and sell the bread at full price; sell potato chips and pretzels with lots of salt so you can buy high fructose drinks; if you sell speghetti, you better sell speghettii sauce, too. And you sell 89 cent per pound speghetti and 89 cent sauces plus 2 buck a pound speghetti and 4 bucks a jar sauce for the gourmands. Whats the problem here?. Business should be in business to make money by giving service or goods at a price people are willing to pay.
henry: I agree, this thread is getting silly. If some folks care to pay for more deluxe and faster service, what of it? BTW, who owns the tracks in Penn Station and on down the line to Washington? Amtrak?
Amtrak, yes. Commuter agencies from D.C. to Boston use the tracks.
So why should Amtrak get pushed off their own tracks during the prime times for Acela use? Anyway, I was under the impression that Metro North, NJT and ConnDOT trains mostly used different tracks than the Amtrak trains.
1. In comparing fares for the purposes of looking at the subsidy question one looks at the fares that most riders use for each service. Thus it is entirely appropriate to compare single Acela fares with monthly pass commuter fares.
2. Amtrak owns the Hudson River tunnels and the line to Washington also used by NJTransit. The East River tunnels are half Amtrak and half LIRR, but they are dispatched for the best flow of traffic regardless of ownership, although most traffic does use the owned tunnels because of the platform arrangements at Penn Station.
3. Metro North owns the lines from Grand Central Terminal to both Poughkeepsie and to the NY-Connecticut State Line. Connecticut DOT from the State Line to east of New Haven Station. Amtrak is a tenant from Spuyten Dyvel (sp?) to Poughkeepsie and from New Rochelle to New Haven.
henry6 Oltman...if you are doing single ride fares for Acela and Regional, then you must compare to single ride fares on NJT, too. But. I don't understand the point here anymore. So what if one service subsidizes another? In retailing it is done all the time..Supermarkets. They.sell lots of bolongna at a cheap price and sell the bread at full price; sell potato chips and pretzels with lots of salt so you can buy high fructose drinks; if you sell speghetti, you better sell speghettii sauce, too. And you sell 89 cent per pound speghetti and 89 cent sauces plus 2 buck a pound speghetti and 4 bucks a jar sauce for the gourmands. Whats the problem here?. Business should be in business to make money by giving service or goods at a price people are willing to pay.
I'm trying to get at something beyond the business aspect of setting fares, namely the best use for the public of a piece of critical infrastructure. Irrespective of private or public ownership the Hudson tunnels and Penn Station are infrastructure critical to the public. What would be the best use, Amtrak or all-NJT in the peaks, if push comes to shove, especially without the new tunnels and assuming a growing demand and desire for access to Manhattan from New Jersey? For instance, if one NJT train in the Acela slot would shuttle all Amtrak riders to connect with trains at Newark, the Regional and Keystone slots could be turned over to NJT for an additional 2,500-plus commuters equivalent to another highway tunnel lane.
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