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To what extent is the Intercity Marketplace skewed in the US

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Posted by cx500 on Friday, January 4, 2013 10:55 PM

Sam1

"......subsidizing wealthy commuters, as well as first class travelers on  Amtrak, strikes me as obscene."  The comment refers to the practice.  It does not refer to you or anyone else.  It is a comment on a government policy.  

Ah, now I see more debate.  I think we all accept that in general passenger rail transportation has a greater level of subsidy than personal vehicles (with the possible exception of heavily developed urban areas).  But I think it invalid to include taxes other than the fuel tax and tolls as directly paying for the roads.  Any other source is a subsidy.  And the fuel taxes alone are insufficient.  So, to avoid subsidizing the wealthy, before pulling up at the pumps should we punch in the type of vehicle or social security number to determine what level of fuel tax we will be charged?  Absurd, I know.

People love their cars, and will continue to do so.  That love affair is helped by the fact they have no appreciation of the true cost.  The portion of the road network costs paid for by income taxes, property taxes, etc. is completely invisible.   If your employer reimburses you for use of  your personal automobile you will see a remarkably high figure per mile.  But nobody considers anything more than the gas as a cost when they hop in their automobile for a pleasure trip or commuting.  But it is real.

The present skeletal long distance passenger rail network is bound to have terrible unit costs, and other statistics.  Most of the population can't use it because there is no service at all from their town or to their destination.  Shortage of equipment is sometimes limiting potential ridership.  Only one train in 24 hours (or 48 hours) can produce some very unfriendly station times at midpoints.  Unit costs can be reduced by spreading the fixed portion over a greater number.  The cost of a station, or a spare coach and engine at a terminal/junction, will not change much whether they are serving or protecting 1 train or 10 trains.  At the moment it is all too often just that single train.

 

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Posted by John WR on Saturday, January 5, 2013 2:40 PM

cx500
I think we all accept that in general passenger rail transportation has a greater level of subsidy than personal vehicles

If you go back and read V. Payne's posts you will see that it is not at all clear that rail transportation has a greater level o subsidy than personal vehicles.

Beyond that local and country roads are the greatest part of our road system.  They are maintained by property taxes.  A large part of our policing and judicial systems exists to patrol our roads and those costs are typically raised by property and sales tax.  We all pay motor fuel tax on all of our motor fuel but that provides only for Federal and state highways.  Yet we do not all use those highways equally and of course much of the damage to them is caused by large trucks.  Trucking companies do pay taxes, in fact heavy taxes, but their taxes still do not cover their use.  

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Posted by V.Payne on Saturday, January 5, 2013 3:55 PM

Yes to the last two posters, in a way. Currently, the total unit subsidy costs are higher, but due to the corner that Amtrak has been boxed into of reducing total subsidy costs while covering a lot of high fixed costs in the NEC. Up until the 1966 disorganized retreat the unit intercity passenger rail cross-subsidy (from freight) for those still trying was not too much, way less than the intercity (interstate) road cross-subsidy (from local roads paid for by non-user revenue). Go back a few pages for the value I calculated from the 1968 ICC report.

When looking to the present and future, we only recover 37% of government roadway capital and maintenance cost from incremental taxes, those that change with mileage. So from a purely financial standpoint increasing roadway capacity gets you deeper into the deficit hole in the current tax/costing model, this is why there is such a push for tolling on new roadways from the DOT's that have major rebuilding projects ahead. Unfortunately, they haven't been emphasizing this incremental revenue to cost mismatch, so they have to go back on their word so to speak, which confuses the interested public. This is another reason tolling is immensely unpopular. I have a whole other post I will upload in a few days on this.

In addition you also have the question of cost borne by other parts of the government, such as Social Security, Medicaid, and Medicare, and additions to the road system by private developers. The FHWA did a study in 2000 on the accidents cost outside the system and I have some total dollar guesses as to the building code required private investment. With the inclusion of the above items we are getting into incremental cost recovery in the low teens percentage wise, the 8-10:1 ratio. Some others have also guessed. These numbers have never been reflected in any FHWA or USDOT yearly reports, though they would acknowledge they exist if you corner the right person. The Amtrak-Investor Owned Railroad ROW is the closest thing to a closed financial loop in our road policy driven passenger transportation system.

Now, I am not saying that this setup has to or even can be changed as there are a lot of political problems, rather I just suggest that we recognize as policy the cross-subsidy on the intercity roadway side, set reasonable limits on it, and use it in planning roadway and intercity rail projects. Once you do this you have a really good financial case to add very substaintal freight and passenger rail capacity, and your unit costs will drop such that the average is back around the previous levels pre-Amtrak, way below the roadway intercity cross-subsidy. Other countries and some US states have done this with Pass-Through or Shadow tolls.

I will yield the floor for a while to allow a previous poster to postulate a resonable test metric for deployment of intercity passenger rail. For clarification, I would suggest it is a financial metric including the component parts as I have explained above. Previous attempts such as Volpe in 1971 and 1977 suggested viability only in congested corridors or high-speed routes when trip time can be saved but how can you equate financial and trip time savings when the financial loop is not closed on the roadway side? This has never been much of an issue in Western Europe as they get pretty close to financially closing the loop on roadways so we have to develope our own rationale.  

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Posted by John WR on Sunday, January 6, 2013 8:04 PM

cx500
People love their cars, and will continue to do so.

I'm not so sure about the second part of your statement.  Certainly traditionally it has been true that we Americans have had a love affair with our cars.  But perhaps after so many years we are coming to see our cars as a necessary burden that exist because we have built our society around them rather than in a better way.  I've always used transit especially to get to work.  However, to live in America without a car would be difficult at best in most of our country because there are so many places where, if you rely on transit, you just can't get there.  But my own sense is that increasing numbers of us want more transit and transit better suited to our needs than we did a generation ago.  I cannot prove this; I know of no "metric" I know of that shows it so perhaps you are right.  But I remain hopeful.  

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Posted by blue streak 1 on Sunday, January 6, 2013 9:05 PM

John WR

cx500
People love their cars, and will continue to do so.

I'm not so sure about the second part of your statement.  Certainly traditionally it has been true that we Americans have had a love affair with our cars. 

 

It is not that people love their cars in many places in the US.  Because of the lack of public transit while my kids were growing up we had to own 4 cars. 1 for me to and from work, 1 for the wife to and from work, 1 for the oldest to drive herself and younger ones to a school 3 miles away that had no school bus, and the necessary spare car so when the inevitible break down occurred on one of the three schedules could be met.  now we are down to 2.   1 to get around and a back up truck that got 500 miles last year.  Savings for other more worth wile items ~~ $10,000 per year. and if we had the public transit another $5000 savings.

 

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Posted by schlimm on Sunday, January 6, 2013 10:04 PM

Boy is that true!  Because of ~40 years of post-war urban housing growth patterns based on cheap gas and emphasizing the auto, we got suburban sprawl.  Now in the Chicago suburbs, there has been a boom of building townhouses and condos in the suburban business districts near Metra lines.

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Posted by John WR on Monday, January 7, 2013 7:31 PM

blue streak 1
Because of the lack of public transit while my kids were growing up we had to own 4 cars.

I guess I've been spoiled living in north Jersey.  We always got by with one car even when our kids were growing up. I walked to the station and took the train to work, leaving the car home for my wife.  When my wife worked she generally drove but it was because her work was outside of transit lines; still we just had one car.  

My kids grew up riding buses and trains.  After college my son spent a year teaching in Seoul, South Korea.  While he was there he spent some time riding with and showing fellow Americans how to ride the subway.  They didn't know how and some were afraid but my son had no difficulty figuring out where to go and getting there.  

But I know full well that we can't all do what I've been able to do.  The US just does not provide adequate public transit.  I think that is a mistake.  

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Posted by V.Payne on Tuesday, April 16, 2013 8:06 PM

SH-130 (Tolled Austin urban area bypass of I-35) – Project Specific Costing and Reactions

To demonstrate the marketplace reaction described in this thread, this post deals with the SH-130 toll road, a ninety some mile intercity bypass of I-35 to the East of Austin. Of course some of these news quotes smack of bubba’s “double taxation” or “already-built-and-paid-for” arguments, which I disagree with. So take the comments as proof that people really don’t like tolls even when used to pay for the road they are driving on before moving on to the financial aspect of the analysis.

Further, the key to passenger operations on a route with a minor percentage of the total train-miles is having good mainline infrastructure to lease on a pro-rata basis instead of being responsible for all expenses. This is the problem that is encountered when any expansion is requested over a busy mainline. In order to figure out how much the market could support for expanded rail infrastructure that benefits freight and passengers, you need to define the marketplace cross-subsidies in place for road freight. The new SH-130 toll rates are quite high per mile and are a corollary to how much the project specific cross-subsidy is on limited access projects.

  

http://tpr.org/post/sh-130-toll-road-debate-are-taxpayers-taking-too-much-risk

 

http://www.texashighwayman.com/sh130.shtml

 

http://www.austinpost.org/getting-around/sh-130-news-death-and-taxes

 

“The base toll rate for a light vehicle (such as a family car or pickup truck) will be 15 cents per mile or $6.17 to travel the entire 41-mile length of the new roadway.  The base toll rate for an 18-wheeler will be 60 cents per mile or $24.58 to travel the entire 41-mile length of the new roadway.” Those 41 miles would be for Segment 5 & 6 of Segments 1 to 6.

 

http://mysh130.com/newsnews-releases/news-releases/

 

For comparison, currently 5-Axle Class 8 trucks pay about $0.11 to $0.13/mile on “free” roads.  So TxDOT is saying that there is a substantial cross-subsidy for commercial vehicles on the rest of the “free” system atop gas taxes.

 

This is further proof of the idea that the interstates were leveraged off Federal fuel taxes collected on existing local roads, which are not paid for by users to any significant degree. The gas tax is a tax on land essentially, with fuel as a proxy; we could be taxing wardrobes and have a similar effect.

 

The big problem with the SH-130 road (WRT the public’s safety) is it is not attracting the large commercial trucks from the center of Austin I-35 alignment due to a toll rate that maximizes revenue.

 

http://www.bizjournals.com/austin/print-edition/2011/01/21/txdot-considering-reducing-sh-130-toll.html?page=all

 

But then in breaking news, TxDOT will give trucks the same toll rate as automobiles for a year to get trucks off the I-35 route through Austin, by paying $5 million back to the toll group for a year, or $120k a mile of operational subsidy for commercial vehicles, much more than Class 1 railroads spend to maintain their plant. With this move, TxDOT is saying that $0.45 or so a mile is an acceptable cross-subsidy for commercial vehicles on the new build toll parts of the system. I say this as I don’t think the toll reduction will be temporary.

 

http://www.txdot.gov/inside-txdot/media-room/news/statewide/012-2013.html

 

http://ftp.dot.state.tx.us/pub/txdot-info/adm/2013/documents/minute_orders/mar28/6b.pdf

 

But they can’t do that for too long as the short term liquidity for long term debt will dry up, which should force some interesting debates.

 

http://www.statesman.com/news/news/local/light-130-traffic-prompts-credit-review-of-toll-de/nW5B4/

 

http://www.star-telegram.com/2013/04/06/4754538/85-mph-toll-road-revenue-falls.html

 

Truckers also have an operational safety concern over the speed differences…

“A leading U.S. trucking association is calling on the Texas Transportation Commission to reverse its decision to allow motorists to drive 85 miles per hour along a stretch of State Highway 130.

American Trucking Associations President and CEO Bill Graves says there is a tremendous threat to safety from people driving that fast. The association advocates a maximum speed limit of 65 miles per hour for trucks and passenger vehicles.”

http://www.bizjournals.com/sanantonio/news/2012/09/11/trucking-group-opposing-85-mph-plan.html

 

So you ask, why not just slap a toll on trucks on the I-35 route through Austin and make SH-130 “free” and call it a day? Well, because it actually costs more to operate the longer distance on SH-130 and there is no political will.

 

Now here is the real kicker. The current advisory plan for I-35 around Austin says don’t do anything to the urban route through the city but find some way to make the tolled SH-130 bypass toll-free (buy them out) and resign that route as I-35. So there is talk of just buying out the toll operator for $2 or $3 Billion of general funds, doesn’t sound like much if you say it fast enough right? This is for a 90 mile new build road in scrublands… it is the marketplace expectation.

 

ftp://ftp.dot.state.tx.us/pub/txdot-info/my35/advisory_plan.pdf

 

All this to say that the alternative of incrementally expanding existing rail right of ways needs to be explored in the context of where we have been financially with the interstate road program, and where we can go from here. Past posts dealt with the past this one with the options ahead.

 

Further Reading Regarding TxDOT tolling and the Economic theory they apply:

 

http://www.palisade.com/downloads/pdf/papers/TollViability.pdf

 

“… Federal officials have described tolling as the “seven percent solution.”77 In 2007, TxDOT identified 87 'Candidate Toll Projects'. The agency first conducted an initial screening of all TxDOT Unified Transportation Program (UTP) projects for toll viability. Then, TxDOT narrowed this list to large, added-capacity projects with heavier traffic volumes; and solicited TxDOT District input on which of each District’s larger added-capacity projects could benefit from a potential CDA delivery process. Finally, the agency combined or phased the projects into initial segments of logical termini.78

 

With few exceptions, these 'Candidate Toll Projects' are concentrated in the state’s major metropolitan areas. Less populated regions simply do not have the requisite traffic volumes to support and economically justify tolling as a realistic option to pay for highway construction, nor are such projects able to generate sufficient revenues to support the projects. In addition, the Committee notes the following:

 

-The threshold floor for inclusion in the list was the ability of the project to generate sufficient revenue to pay for the cost of toll collection – not for the construction or operation of the road itself.

 

-Sources within TxDOT speaking not for attribution indicated that of the 87 projects, only about 30 were truly viable toll roads, and of this group, “only a handful” had the potential to earn back their full costs via toll revenues.

 

-Many toll projects require a combination of funding sources. When considering financing options for funding toll projects it is important to consider that: few projects are 100% toll viable.

 

It also bears mentioning that even if every road to be built were toll worthy, Texas would not necessarily follow this course, given the public's unwillingness to support such a system past a certain point. In addition, since most of the potentially revenue viable toll projects are located in the urban areas, there will come a point where local planners will need to balance the building of more roads versus investing in alternatives such as rail, especially if the criticality arises from air quality concerns versus congestion relief and/or general economic expansion.”

 

76. Source: TxDOT: Open for Business, Toll Feasibility Analysis, Summer 2007. TxDOT’s own terminology is somewhat confusing on this issue. TxDOT has separate definitions for “Toll Feasible” and “Toll Viable.” According to TxDOT:

Toll Feasible – “a candidate toll project that is able to generate enough revenue to pay for the cost of collecting tolls.”

Toll Viable – “net toll revenue after operations and maintenance costs is sufficient to sell bonds, and the portion of the project cost funded through bonds is sufficient to cover the portion of project development and construction costs not covered by public or other sources of funds.”

Further confusing the issue, TxDOT defines “Toll Feasibility Analysis” as “a screening analysis process used to determine whether a project, group of projects or corridor can generate net revenues after O&M costs have been covered and what portion of project cost can be covered by bonding the net revenues from tolls.”

77. Testimony of Jennifer Mayer, USDOT – San Antonio hearing 22 July 2008.

http://www.senate.state.tx.us/75r/senate/commit/c820/sb792report.pdf

http://www.window.state.tx.us/specialrpt/ctrma05/ctrma05.pdf

http://www.fhwa.dot.gov/policyinformation/statistics/2010/

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Posted by V.Payne on Wednesday, June 26, 2013 9:17 PM

Below is the link to the final version of the paper this thread was based on for those who are interested.

http://www.nationalcorridors.org/df3/df06242013c.pdf

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Posted by V.Payne on Friday, October 18, 2013 2:11 PM
Do users of the Interstate pay their way? A few posters have contended that the idea of cross-subsidy from General Funds to local roads to the Interstate is dubious, with a resulting affect on the discussion (Public-at-large and the Forum) about a relative financial metric for comparing the long-distance service. Below is a link from the Reason Foundation, no friend of Amtrak, examining the ability of the now established Interstate network to self-fund the capital for reconstruction and widening from tolls. I see their proposed values as low by a factor of two, mostly due to their urban reconstruction assumptions.


 “The assumed baseline toll rates—3.5¢/mile for light vehicles and 14.0¢/mile for trucks, both in 2010 dollars—were selected as potentially being in the right ballpark to pay for reconstruction only. Those rates are below the national average tolls of 4.9¢/mile for cars and 19.9¢/mile for trucks on long-distance toll roads. For a 45-year projection to 2054 (10 years’ construction from 2010 through 2019, followed by 35 years of tolling), both toll rates were adjusted annually by an assumed CPI increase averaging 2.5% per year.”
 
But, the proposed rural base rates are lower than the rates found to be required in any of the detailed tolling studies for existing interstates such as WI, MO, NC ($0.10/VM Auto), and FL. I figure about a $0.09/VM value for the history of the Interstate for just the capital cross-subsidy amount, not what would have to be a higher toll rate.



The higher rate the Reason Foundation proposed for urban areas (chart above) extends to a maximum of $0.10/VM for automobiles (well below existing managed lane rates) and $0.40/VM for trucks. Since the 10% amount dedicated to maintenance is much less than currently spent out of the gas tax this toll would have to be atop the gas tax. Of course the rates are much lower than new build interstate type roads and do not include the financial costs of accidents not borne by the user ($0.036/VM per FHWA).

So even the Reason Foundation's numbers, that seem low,  would indicate $0.035 + $0.036 = $0.07/VM as the base comparison to rural intercity rail, with more for city access. With longer train consists Amtrak could easily beat this number.
 
Interestingly, the study goes the opposite way in establishing costs, figuring out the total amount of money that can be raised in cities (greater) and rural areas (much less) instead of assigning costs to each. So this study would not purport to answer the question of how much it costs to keep the rural interstates open relative to what the marketplace is willing to pay.  
 
Study Caveats:
“If the HERS numbers do not reflect total reconstruction, this study’s reconstruction cost estimates will understate the true cost of replacing all Interstates over the next several decades.” I believe HERS does not reflect a true rebuilding so capitalizing it over the long term assumed is not correct. Further, the cost quoted in the study only reflect the actual rebuilding, only 10% for maintenance or cyclical repaving is assumed, which is less than the real value.
 
In regards to annual growth in vehicle miles traveled “For light vehicles they (rates) range from a low of 0.3% per year in Connecticut to a high of 2.2% in Arizona, while truck VMT growth ranges, from a low of 1.8% per year (Wisconsin) to a high of 3.4% (Arizona). If significantly lower VMT growth rates were used, traffic and revenue would be less, but so would widening needs and costs. The revenue projections depend critically on the toll rates being indexed to inflation.”
 
So in other words, the future growth was taken without considering the effect of tolling on demand in a marketplace, just a diversion was accounted for from the growth rates. Considering that the rise in inflation adjusted gasoline prices 2002..2012 roughly equated to $0.06/automobile mile and caused a large retraction in vehicle miles traveled, it would be incorrect to assume net vehicle mile growth would occur under a tolling scenario.
 
The 2011 chart above from the FHWA, show the drop in automobile mileage on the Interstates (Daily Traffic) with the rise in truck mileage and weight (Daily Load). In other words the means of funding the cross-subsidy is declining while damage rate is increasing.

For those that assume we can keep going along with no changes to the fuel tax scheme consider that the Congressional Research Service just released a report that predicts an average $14 billion shortfall per year in the Highway Trust Fund for the next 6-years. We have already been transferring less than $10 Billion a year from the general fund for a few years.
 
 
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Posted by schlimm on Friday, October 18, 2013 4:27 PM

LD trains don't come even close to covering above rail operating expenses, let alone fixed overhead or capital infrastructure.   Additionally, the routes lack traffic density and flexibility of routing.  You seem to think time doesn't matter to riders and burden the discussion with jargon.  1. Very few people will ride a train 40 hours when they can fly in 4.  And they don't now and haven't for 40+ years.   2. Nor will they pay what the charge should be to ride an LD train (or even what it is currently) versus the expense to them, out of pocket, to drive.

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Posted by V.Payne on Friday, October 18, 2013 8:18 PM

This is not just a metric for one type of operation, it could be applied to HSR or Long Distance routes.

"LD trains don't come even close to covering above rail operating expenses"

The combined Silver Service does.

"Very few people will ride a train 40 hours when they can fly in 4"

Very few people ride the whole length of the route, the average trip lengths are in the 500 mile range, before airfare gets really economical.

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Posted by schlimm on Friday, October 18, 2013 9:34 PM

V.Payne

"LD trains don't come even close to covering above rail operating expenses"

The combined Silver Service does.

"Very few people will ride a train 40 hours when they can fly in 4"

Very few people ride the whole length of the route, the average trip lengths are in the 500 mile range, before airfare gets really economical.

The Silver Star/Meteor is one of the poor performers, losing $77.5 mil. July 2013 YTD..

A 500 mile ride on the CZ (CHI-Omaha) takes 8 hrs, 55 minutes, getting in at 10:55 pm.  Return leaves at 5:14 am, gets back at  2:50 pm.  costs $72 to 142. one way.  So for a businessman, it will require 2 nights hotel for one day of business.  Add another $300 or more.   So now the cost is at least $444.

A flight is expensive, $228 one way, but only 1 hr, 20 min.    A businessman can do it in one day: $456.  

What businessman would take the train?  Very few.  So that limits customers to single travelers, visiting relatives where time doesn't matter and no hotel is needed.    Families will drive.

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Posted by V.Payne on Saturday, October 19, 2013 7:04 AM

So what is the Silver Service "above the rail" operating loss? That is the question that was asked, right? I believe a loss based on Total Cost was quoted, but those total costs included about $1.2 billion in system wide below the rail, station, and other non-operating costs. Total costs losses just allocate those expenses based on revenue not an actual requirement best I can tell. 

Seems like a bad schedule example for short trips was picked, why not one of the eastern routes? Some of t he corridor trips leave early, should they be cut?

But still the on-topic point of this thread is what is a reasonable financial cost comparison, not the solution once that amount is found.

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Posted by schlimm on Saturday, October 19, 2013 7:49 AM

Amtrak does not break out overhead from actual operating expenses, at least in public statements.  In any case, an airline includes some percentage of overhead on flights as does any endeavor.  

I chose the CHI-Omaha CZ because it is 500 miles, exactly.  I could choose other trains that run slower.  My point is that few travelers will choose the train over air beyond a certain distance at the typical US rail speeds.  The time spent traveling is the key.  Increased speed (through HSR) and frequency in short corridors allows the competitive distances to be increased.  Very few folks will elect to spend eight hours on a train vs one to two flying, and if time does not matter and price does, a majority will choose auto or even bus for convenience and price.   Running LD trains as a program serves only a tiny niche market, not a sensible endeavor for the government.   Better to leave it for land nostalgia cruise operators.

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Posted by CJtrainguy on Saturday, October 19, 2013 12:18 PM

Schlimm, you picked a route I am well familiar with, both on rail and on road. Google says its 471 miles, all Interstate from Omaha to Chicago. They claim a person can drive that stretch in 6 hours 54 minutes (they assume you can average 67mph). But wait, in current traffic (Saturday at lunch time), they also say it will take 7:01 due to traffic. I-80 is rather notorious for being full of long-distance trucks that make the driving anything but fun.

Of course, should one want to eat something on this drive, there's another hour, unless one does fast food, eating while driving. 

So a realistic driving time is more like 8-8:30.

Amtrak takes 8:55 according to the CZ schedule. Too slow for some and they will indeed choose to fly. Really not so bad compared to driving, although I'd like to see the schedule tightened a bit. If Amtrak could average 60mph instead of 55 as they appear to do now, they could do it in 8:20. If they averaged 70mph, they could do it in 7:10. 

What I'm seeing is a corridor that could be attractive if the train schedule was speeded up just a little bit and there was more than one train per day in each direction. 

Looking to the future, Illinois is well under way to get passenger service to the Quad Cities. In Iowa, that line should be extended to Iowa City post haste (and would be except for opposition from the gov — the business community in Eastern Iowa wants passenger trains to Iowa City). Iowa DOT is already studying extending the line from Iowa City through Des Moines to Omaha. I predict it will happen eventually. I'd like to see it sooner than later.

I know that slid into corridor train rather than pure LD, but then a LD train doesn't serve just end to end customers, but primarily intermediate point customers, so maybe I'm not totally off base.

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Posted by Anonymous on Saturday, October 19, 2013 12:29 PM

V.Payne

So what is the Silver Service "above the rail" operating loss? That is the question that was asked, right? I believe a loss based on Total Cost was quoted, but those total costs included about $1.2 billion in system wide below the rail, station, and other non-operating costs. Total costs losses just allocate those expenses based on revenue not an actual requirement best I can tell. 

Seems like a bad schedule example for short trips was picked, why not one of the eastern routes? Some of t he corridor trips leave early, should they be cut?

But still the on-topic point of this thread is what is a reasonable financial cost comparison, not the solution once that amount is found.

In FY12 the Silver Star lost $45.9 million or 20.9 cents per passenger mile, and the Silver Meteor lost $38.7 million or 16.7 cents per passenger mile before depreciation, interest, and miscellaneous charges. These are the variable costs, i.e. those that occur because the trains operate. They are more descriptive than above-the rail costs. 

Embedded in the aforementioned costs are charges that on first blush might appear to be fixed costs, but in fact they are variable costs. One example is the insurance premium paid by Amtrak to indemnify the freight railroads that hoist it trains against certain risks arising from the operation of Amtrak's trains. If the long distance trains were discontinued, there would be no need for these premiums.

Unless you have access to Amtrak's cost accounting books, you don't know how Amtrak allocates its costs. Amtrak's books are audited annually by the external auditors. If the company were not allocating its revenues and costs reasonably, the external auditors would raise a red flag. They have not done so.

The discussion regarding variable and fixed costs misses a key point.  A viable business (commercial activity) has to recover all of its costs or it goes out of business. Amtrak is supposedly a commercial activity that is being operating like a business. It is not recovering all of its costs, even though it gets special exemptions, i.e. no fuel taxes, no property taxes, no inventory taxes, etc. 

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Posted by oltmannd on Saturday, October 19, 2013 12:35 PM

CJtrainguy

So a realistic driving time is more like 8-8:30.

Amtrak takes 8:55 according to the CZ schedule. Too slow for some and they will indeed choose to fly. Really not so bad compared to driving, although I'd like to see the schedule tightened a bit. If Amtrak could average 60mph instead of 55 as they appear to do now, they could do it in 8:20. If they averaged 70mph, they could do it in 7:10. 

Don't forget your first/last mile time for the rail journey.  It's door to door time that counts.  The quicker the rail portion, the wider the gathering radius around the stations.

I don't think the CZ would be reliable enough to serve time-sensitive travel from Omaha to the east.  However, if Omaha - Chicago became a corridor, the cost-sharing for fixed assets on the route would probably help the CZ's bottom line.

-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/

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Posted by CJtrainguy on Saturday, October 19, 2013 1:41 PM

Sam1

Embedded in the aforementioned costs are charges that on first blush might appear to be fixed costs, but in fact they are variable costs. One example is the insurance premium paid by Amtrak to indemnify the freight railroads that hoist it trains against certain risks arising from the operation of Amtrak's trains. If the long distance trains were discontinued, there would be no need for these premiums.

I must be missing something here, although I'm not an insurance expert so then again maybe I'm not missing anything.

If Amtrak drops LD trains, you say it won't need any indemnity insurance. So are you saying that in addition to dropping LD trains, all state-supported services that don't run 100% on Amtrak owned trackage should be dropped too? Because most of those run over freight railroad tracks.

And isn't some kind of indemnity insurance needed on tracks like the NEC, even though it's owned by Amtrak? After all, there are other players on those tracks as well, who might be impacted by a train incident.

So maybe a more fair statement would be that if LD trains were dropped, some indemnity insurance might not be needed. Except, what would that do to being able to ferry equipment for service from say California to Chicago over freight railroad tracks? And any drop in cost might not be as big as we might think. Insurers are funny when it comes to pricing.

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Posted by schlimm on Saturday, October 19, 2013 2:47 PM

The CZ route on the BNSF is longer, 500 rail miles.  The towns outside metro Chicago include Princeton, Galesburg, Burlington, IA, Mt. Pleasant, Osceola, Ottumwa, and Creston.  I am sure the folks who live in and around are happy there, but other than Galesburg are too small.   The Iowa towns had boardings and alightings of ~52,000 in all of 2012.  Galesburg served 106,000 and Princeton, IL 54,000, but both are served by three other trains each direction daily.  There was talk of rerouting the CZ on other ROWs serving larger cities and college towns (the old CNW or RI routes) such as Des Moines, Quad Cities, Iowa City, Dekalb and Ames, but this change was rejected.  I do not know why.  Maybe change is too hard?

If Amtrak merely eliminated some of those stops, the time could be cut by an hour.

I am no speed demon, but driving from western suburbs to Omaha in 6 hours is not hard.

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Posted by CJtrainguy on Saturday, October 19, 2013 3:19 PM

There's been talk of rerouting CZ over the CNW/UP mainline since at least the 80s when I lived in Ames. Always fell on something. I got the feeling CNW wasn't that interested.

Looking forward, I think the best bet is the IAIS mainline across Iowa. It catches Iowa City (Cedar Rapids) and Des Moines. That's also what's being studied for a corridor Omaha-Chicago, but in the talk of that, Iowa DOT always points out that passenger service on that route doesn't mean an automatic reroute of CZ. Burlington, Mt Pleasant, Osceola and Ottumwa would all put up a fight if their train is threatened.

When it comes to station stops, I can't for the life of me understand why Amtrak has to stop for so long in each town. A station stop should be 2 minutes and no more. But then passengers can't open doors for themselves and those little step stools have to be put out and so on…

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Posted by Anonymous on Saturday, October 19, 2013 6:26 PM

CJtrainguy

Sam1

Embedded in the aforementioned costs are charges that on first blush might appear to be fixed costs, but in fact they are variable costs. One example is the insurance premium paid by Amtrak to indemnify the freight railroads that hoist it trains against certain risks arising from the operation of Amtrak's trains. If the long distance trains were discontinued, there would be no need for these premiums.

I must be missing something here, although I'm not an insurance expert so then again maybe I'm not missing anything.

If Amtrak drops LD trains, you say it won't need any indemnity insurance. So are you saying that in addition to dropping LD trains, all state-supported services that don't run 100% on Amtrak owned trackage should be dropped too? Because most of those run over freight railroad tracks.

And isn't some kind of indemnity insurance needed on tracks like the NEC, even though it's owned by Amtrak? After all, there are other players on those tracks as well, who might be impacted by a train incident.

So maybe a more fair statement would be that if LD trains were dropped, some indemnity insurance might not be needed. Except, what would that do to being able to ferry equipment for service from say California to Chicago over freight railroad tracks? And any drop in cost might not be as big as we might think. Insurers are funny when it comes to pricing.

I should have said related to hoisting the long distance trains.  A significant majority of Amtrak's miles are run on foreign carrier track where the long distance trains are the only passenger trains carried.  The UP from New Orleans to LA is one example. 

How much would Amtrak save in insurance premiums if the long distance trains were eliminated. No one outside of Amtrak would know. And, yes, Amtrak would continue to incur insurance costs. But that was not my main point.  It was that many costs that appear to be fixed in fact are variable.  In fact, in the long run, for a real business, all the costs are variable.

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Posted by dakotafred on Saturday, October 19, 2013 6:47 PM

CJtrainguy

 

Looking forward, I think the best bet is the IAIS mainline across Iowa. It catches Iowa City (Cedar Rapids) and Des Moines. That's also what's being studied for a corridor Omaha-Chicago ...


 
CJ, this is a 40-mph (tops) route that would take untold millions to bring up to just 79-mph running. I say untold because, as far as I know, the Omaha consultant -- employer of former TRAINS editor Mark Hemphill -- that has recommended this route has never attached a price tag to its rehabilitation for modern passenger service.
 
I chuckle to think of what Hemphill would say about this idea if he were still getting his paycheck from Kalmbach instead of from his current employer.
 
Previous discussions on this forum have revealed, moreover, that Megabus has ground transportation on this route flat COVERED.
 
I'm all for passenger rail, but not in this born-to-lose situation.
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Posted by schlimm on Sunday, October 20, 2013 3:22 PM

CJtrainguy
Amtrak takes 8:55 according to the CZ schedule. Too slow for some and they will indeed choose to fly. Really not so bad compared to driving, although I'd like to see the schedule tightened a bit. If Amtrak could average 60mph instead of 55 as they appear to do now, they could do it in 8:20. If they averaged 70mph, they could do it in 7:10. 

In 1955, the Cities trains (running on C&NW) managed 7:40 to 7:45 Chicago to Omaha.  60 years later, takes an hour longer.  This is typical on many lines.  Instead of improving timing to 6-7 hours, we regress.  

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Posted by CJtrainguy on Sunday, October 20, 2013 5:06 PM

Absolutely right. But back in the 50's, trains like the Cities or the 20th Century Limited or Broadway Limited were also allowed to rule the line. They didn't  go into a siding because there was a 10000' unit train coming the other way.

I think 7 hours Chicago - Omaha over the BNSF route is by and large doable on the current lines, if the passenger train receives priority at all times and station dwell is minimized. But given reality, Amtrak has to build padding into the schedules to the point that if all goes well, a train like CZ can arrive an hour early at its end point. It seems to me that response to passenger trains being late, tends to be to build more padding into the schedule, not tighten performance out on the line. And then we get these rather leisurely point to point times.

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Posted by dakotafred on Sunday, October 20, 2013 5:19 PM

CJtrainguy

It seems to me that response to passenger trains being late, tends to be to build more padding into the schedule, not tighten performance out on the line. And then we get these rather leisurely point to point times.

 
Oh, definitely. The CZ I rode into Chicago on 9/27 made up at least 30 minutes between Naperville and Union Station, 28 miles. Altho it didn't seem we were burning up the rails, that definitely would have qualified for Donald Steffee's old speed survey in Trains!
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Posted by CJtrainguy on Sunday, October 20, 2013 5:46 PM

On a whim I looked at Megabus and learned that they want to take 8:40 to 8:50 to get one from Crossroads Mall (seriously people?) in Omaha to somewhere near Union Station in Chicago.

One could make the inference from that timing that trains that do even a little better than that and have more than one departure a day could capture some ridership on that route.

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Posted by Anonymous on Sunday, October 20, 2013 6:34 PM

This thread is the longest that I have seen since I began participating in the Trains forums.  Moreover, it has strayed significantly from the presenting topic.  The moderator should lock it, and the participants should open some new threads to discuss whatever is important to them.

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Posted by schlimm on Sunday, October 20, 2013 6:35 PM

CJtrainguy
Absolutely right. But back in the 50's, trains like the Cities or the 20th Century Limited or Broadway Limited were also allowed to rule the line. They didn't  go into a siding because there was a 10000' unit train coming the other way.

Yet another reason why passenger rail service has problems: unlike in other nations, passenger rail outside the NEC and the MI line is low priority with the freight hosts.

C&NW, CA&E, MILW, CGW and IC fan

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Posted by dakotafred on Sunday, October 20, 2013 6:53 PM

CJtrainguy

On a whim I looked at Megabus and learned that they want to take 8:40 to 8:50 to get one from Crossroads Mall (seriously people?) in Omaha to somewhere near Union Station in Chicago.

One could make the inference from that timing that trains that do even a little better than that and have more than one departure a day could capture some ridership on that route.

 
The thing is, Megabus does some serious cherry picking enroute -- for instance, Iowa City-Chicago (up to 4 schedules each way on weekends, most in 4:10) -- that would hollow out any rail service. Megabus doesn't bother with the kind of smaller stops that, on the CZ route, accounted for only 50K passengers in Iowa last year. Leaving a new rail service on the IAIS to pick up the West Liberty, Grinnell and Atlantic leavings -- Greyhound fare, in the old days. 

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