Suppose that to talk about Amtrak deficit funding, we talked about the source of the funding, the Congress. Suppose we suggested Congress concentrate only on long-term policy for long-distance trains, and that such planning allow inclusion of sleeping accommodations, dining services, and checked baggage services.
Under such a plan and with plenty of advance notice, Amtrak would lose Congressional funding for regional trains, but could operate as many long-distance trains as it wished with as many frequencies as it wished, provided that the train routes each be over a certain length (presumably a minimum in the 500-750 miles range), and that Congress will fund the deficit, not to exceed a fixed amount per passenger mile or a fixed percentage of the annual loss on that train, whichever is less. The numbers would be intended to encourage long-term moderate growth of the system, but deliberately filter out over time the least financially viable routes.
I would take the deal.
South Texas <snip> and that Congress will fund the deficit, not to exceed ...or a fixed percentage of the annual loss on that train, whichever is less.
<snip> and that Congress will fund the deficit, not to exceed ...or a fixed percentage of the annual loss on that train, whichever is less.
If Congress picks up a portion of the loss on a route, who makes Amtrak whole on the rest of it? Are you assuming there are profits somewhere else in Amtrak that will cover it?
Also, there is dispute regarding Amtrak's methods of assigning costs to specific train routes as well as track charges for Amtrak owned track. Don Phillips, for one, recently wrote about this and the purported "profit" of the Northeast Corridor. I don't think any of us have enough information to make a judgment regarding it, but it is an area of potential gamesmanship should it become a factor in the federal level of funding.
Since money doesn't grow on trees and Amtrak should be allowed to lose money on its worst performing long distance route(s), the Congressional funding formula would definitely need to provide Amtrak, on average for long-distance trains, a moderate allowance for administrative overhead and losses on a small number of underperforming trains.
The 1959 ICC hearing on the Railroad Passenger Train Deficit did not draw any conclusions on the question of optimal rate policy but did state "… that the railroads are best suited to volume carriage and that in order to put passenger travel on a paying basis they must devise ways of encouraging volume travel."
One way to do so would be to tie the variable compensation to an equivalent automobile mile of passenger travel. Once you do so I would suggest that the financial performance improves as shown, even with reduced fares to generate the higher volume (green line).
V.PayneThe 1959 ICC hearing on the Railroad Passenger Train Deficit did not draw any conclusions on the question of optimal rate policy but did state "… that the railroads are best suited to volume carriage and that in order to put passenger travel on a paying basis they must devise ways of encouraging volume travel."
V.PayneThere also needs to be a multi-year program to invest capital in rolling stock to make this happen
You also have to run the train between places people want to travel at the time they want to travel. I'll say it again. Running the Crescent at the dead of night through the "target rich" Piedmont and then daylight through rural AL and MS does not "encourage volume travel"!
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
What daytime schedule would work between New York and Atlanta? One of the metro areas would be served late or early wouldn't it? A lot of people find traveling at night on a full service train makes better use of their time. The historical evidence of this route and population growth points toward the amount of volume, 12 revenue cars, on the current schedule.
The point is that you do need two schedules at a minimum, probably four, both paid at the variable rate that is found to be acceptable. So is the variable rate a good policy or not?
V.PayneSo is the variable rate a good policy or not?
Wouldn't that require knowledge of the demand curve for the product? Or, am I missing what you are trying to say...
V.PayneWhat daytime schedule would work between New York and Atlanta? One of the metro areas would be served late or early wouldn't it?
Yes. Like the Palmetto or Mapleleaf or Norfolk-Boston train. People in Atlanta and NY are not shy about early or late hours.
South Texas Suppose that to talk about Amtrak deficit funding, we talked about the source of the funding, the Congress. Suppose we suggested Congress concentrate only on long-term policy for long-distance trains, and that such planning allow inclusion of sleeping accommodations, dining services, and checked baggage services. Under such a plan and with plenty of advance notice, Amtrak would lose Congressional funding for regional trains, but could operate as many long-distance trains as it wished with as many frequencies as it wished, provided that the train routes each be over a certain length (presumably a minimum in the 500-750 miles range), and that Congress will fund the deficit, not to exceed a fixed amount per passenger mile or a fixed percentage of the annual loss on that train, whichever is less. The numbers would be intended to encourage long-term moderate growth of the system, but deliberately filter out over time the least financially viable routes. I would take the deal.
Not to be picky, but the Congress appropriates and authorizes funding. It uses the people's money to pay for whatever it deems appropriate.
The long distance trains are not viable financially under any reasonable scenario.
I track the numbers for the three Amtrak trains that serve Texas. From 2009 to 2012 the Eagle saw an 11.9 per cent increase in its loss per passenger mile, and the Heartland Flyer saw an increase of 63.4 per cent in its loss per passenger mile. The Sunset Limited saw an 8.1 per cent decrease in its loss per passenger mile. However, its loss (49.9 cents per passenger mile) in FY12 helped it retain its status as the worst performing train in the long distance stable.
A coach ticket on the Sunset Limited on August 28th or September 4th or September 11th from New Orleans to Los Angeles is $163. The subsidy would be $995.50 per passenger. This means the passenger pays only 14.1 per cent of the cost of carrying her from New Orleans to Los Angeles on the Sunset Limited.
So, to reduce deficits we better start seriously studying and experimenting with routes, frequencies, and fares before Congress pulls the plug.
South TexasSuppose that to talk about Amtrak deficit funding,
We might also talk about a larger issue, over all deficit funding of all transportation. The fact of there matter is that there is no kind of transportation that really pays for itself. All of it must be supported by some kind of government allocation of funds. Probably the largest single source of deficit funding is local and country roads all of which are supported by property taxes. But we are not about to abandon our local roads.
The real issue is what is a proper balance of funding for all of our transportation needs. When you consider of how little of our Federal funds for all transportation needs go for Amtrak I just cannot see how that funding stands out for any special consideration not given to other kinds of transportation.
John WR South TexasSuppose that to talk about Amtrak deficit funding, We might also talk about a larger issue, over all deficit funding of all transportation. The fact of there matter is that there is no kind of transportation that really pays for itself. All of it must be supported by some kind of government allocation of funds. Probably the largest single source of deficit funding is local and country roads all of which are supported by property taxes. But we are not about to abandon our local roads. The real issue is what is a proper balance of funding for all of our transportation needs. When you consider of how little of our Federal funds for all transportation needs go for Amtrak I just cannot see how that funding stands out for any special consideration not given to other kinds of transportation.
What is the proper balancing of funding for transportation that you are proposing? Yes, very little Federal funds go to Amtrak -- 1.5 billion out of about 10 times as much for aviation and 30 times as much for highways, but Amtrak does very little -- .1 percent of total passenger miles.
What increase in Amtrak funding do you think we should have, and what is your projection on the passenger miles this will support, in absolute amounts and in percentages of the national total?
If GM "killed the electric car", what am I doing standing next to an EV-1, a half a block from the WSOR tracks?
"The long distance trains are not financially viable... "
I believe the issue is what are you comparing them to. "Free" Interstates are almost always the competition. On a Direct Cost basis some of the Eastern Long Distance trains are operating at less of a loss than just the financial accident cost not covered by Interstate users, disregarding the capital cross-subsidy. Even adding in capital cross-subsidy for both, they are all better than "free" interstates, with the exception of the the Crescent if it just had more capacity to meet the market demand, the point of the top graph. Also note the amount of fixed cost in the Full Cost numbers. I can only conclude this is assigned cost.
The actual 2012 data is better than some of the PRIIA improvement projections for 2011.
The Crescent lost 26.1 cents per passenger mile in FY12 before depreciation, interest, and miscellaneous charges. The Lake Shore Limited lost 16.2 cent per passenger mile, and the Silver Star lost 20.9 cents per passenger mile.
I have glanced at all the PRIIA studies. And I read in-depth the studies for the Texas Eagle, Sunset Limited, Pennsylvania Service Studies, and the Capitol Limited. The PRIIA studies recommended improvements that might have reduced the losses associated with the long distance trains, but they did not eliminate them. And we are talking just about the operating losses.
If the Crescent, as an example, were able to cut is losses by 25 per cent, based on FY12 numbers, it would still have lost $31.7 million before capital charges. Here is a better, real life example. Between FY09 and FY12 the number of passengers on the Texas Eagle increased 29.8 per cent. Revenues were up 33.2 per cent. The change was due in part to the fact that the Eagle added a third coach south of St. Louis and opened up eight rooms in the transition sleeper for sale. Unfortunately, operating losses on the train increased by 35.2 per cent. They were $9 million more in FY12 than FY09. These are not theoretical numbers. They are audited numbers taken from Amtrak's records.
A service that losses $31.7 million a year before capital charges, whilst being operated by the railroad that pays no taxes, only nominal or no station rents in most locations, and only the marginal cost of carrying its trains by its host carriers ,does not strike me as being a financially viable result.
To the best of my knowledge, with the possible exception of some tweaking, no major changes have been implemented as a result of the PRIIA studies. If the teams had developed compelling recommendations, Amtrak probably would have been able to take them to Congress and have them blessed. Or it might have been able to convince private interests to invest in the additional equipment to increase the capacity on the long distance trains.
Amtrak can borrow money, and it can organize leases. It does not need Congressional approval for every equipment acquisition. However, if the marginal cost of the increased capacity is not covered by the marginal revenues, selling the notion of additional equipment to commercial lenders has a low probability of being successful. It does not appear that Amtrak has a compelling case for increasing the capacity on its long distance trains.
With respect the PRIIA studies that I reviewed, I did not seen an in-depth discussion of the methodologies (market studies, regression analyses, etc.) that were used by the teams for their projections. In addition, I did not see where the processes and outcomes had been audited and stress tested by an independent, objective third party. In the large organizations that I worked for that was and is standard procedure for capacity expansions.
You are talking about Full Cost, which tries to allocate $800 million in fixed costs for the NEC and shared stations by formula. I gave Direct Cost plus equipment depreciation and 3% administration. If you cut the route that is all that would go away, the long run variable costs.
V.Payne You are talking about Full Cost, which tries to allocate $800 million in fixed costs for the NEC and shared stations by formula. I gave Direct Cost plus equipment depreciation and 3% administration. If you cut the route that is all that would go away, the long run variable costs.
Um, if you cut a route, would not that free up equipment and staff to operate a different route or increase service on an existing route, with potentially less loss, arguably a better social return on the subsidy investment, or maybe serving more Amtrak customers to garner more support for Amtrak?
Sam1I have glanced at all the PRIIA studies. And I read in-depth the studies for the Texas Eagle, Sunset Limited, Pennsylvania Service Studies, and the Capitol Limited. The PRIIA studies recommended improvements that might have reduced the losses associated with the long distance trains, but they did not eliminate them. And we are talking just about the operating losses.
What strikes me, Sam, is that the significant change that came out of PRIIA is that the Federal Government will no longer provide funds for intercity trains within the same state except in Pennsylvania. I can understand the logic that a state should pay for transportation within its own borders. However, that same logic is not applied to interstate highways within the border of a single state.
As you point out, no changes have been made in long distance trains despite recommendations.
John
John WR Sam1I have glanced at all the PRIIA studies. And I read in-depth the studies for the Texas Eagle, Sunset Limited, Pennsylvania Service Studies, and the Capitol Limited. The PRIIA studies recommended improvements that might have reduced the losses associated with the long distance trains, but they did not eliminate them. And we are talking just about the operating losses. What strikes me, Sam, is that the significant change that came out of PRIIA is that the Federal Government will no longer provide funds for intercity trains within the same state except in Pennsylvania. I can understand the logic that a state should pay for transportation within its own borders. However, that same logic is not applied to interstate highways within the border of a single state. As you point out, no changes have been made in long distance trains despite recommendations. John
At the beginning, if I remember correctly, the states paid 20 per cent of the cost of building the interstate highways in their state. Subsequently, the formula was changed to 10 per cent.
The Interstate Highway System is a true national system. So too is the airways system. Accordingly, it makes sense to have the federal government contribute the lion's share of the cost, although irrespective of who funds it, the money comes from the users and taxpayers.
Outside of the long distance trains, most of the State Supported and Other Short Corridor trains serve only a state or region. They are not national systems. Requiring the states to fund them makes sense. People in Illinois should not be required to fund intrastate trains in Texas any more than Texans should be required to fund trains that only serve Florida.
Some argue that the long distance trains are part of a national passenger rail system and, therefore, they should be funded by the federal government. They are! Big time! At a substantial loss! For one train a day in most locations, many of which are called on in the middle of the night. Arguing that the long distance trains constitute a true national rail passenger system is a stretch.
"Um, if you cut a route, would not that free up equipment and staff to operate a different route or increase service on an existing route, with potentially less loss, arguably a better social return on the subsidy investment, or maybe serving more Amtrak customers to garner more support for Amtrak?"
The existing Long Distance routes are probably as good a performer as any. If you redeployed the equipment to create longer trains your argument would be true in the isolation of a route, but I believe most of the talk is just about eliminating the entire Long Distance system, and once you take away one route why not the others? Once you let any other routes go the political support would evaporate for the entire mode, NEC included. Additionally, I can't see how a sparser network would have a Transportation benefit as connections drop off. The Long Distance route miles probably need to be about 2 times what they are to fit travel patterns, N, S, E, W out of major metro areas. This was a huge critique of the Volpe plan in the 1970's. We don't do things like cull the least used roads in the network.
But why not look at it the other way? Invest in the equipment to add capacity to the existing routes at the very least, as most of the operating costs are already paid for when you run any size train. The social gain is in a financially efficient mode of transportation that is also a lot safer than automobiles. If you shrink the network and break connections further it will not function, that was shown in the 3 days a week frequency experiment.
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Sam1Some argue that the long distance trains are part of a national passenger rail system and, therefore, they should be funded by the federal government. They are! Big time! At a substantial loss. For one train a day in most locations, many of which are called on in the middle of the night. Arguing that the long distance trains constitute a true national rail passenger system is a stretch.
The reason long distance passenger rail can never be a transportation system, no matter how many routes one keeps and creates, is quite simple. Distance (too far to be competitive) and time (takes too long to travel over 700 miles to be competitive) and density of population (the population nodes from Omaha to the coast are too far apart). Competitive? Aside from a relatively small number of travelers who seek land/rail cruises, almost all people traveling from CHI to SF will fly; ditto DAL to SEA; ditto NYC to DEN or Phoenix.
Regardless of the proffered opinions of some, discontinuing a wasteful and irrational system need not spell the end of Amtrak or passenger rail; it is the only way to save it. I also believe that many of the sensible 500 mile or less corridors are interstate and thus should continue to be Amtrak. Routes entirely within one state or two-three states that seek a service not offered by Amtrak or to greatly improve one should do so, finding funding wherever they can, including the federal DOT.
C&NW, CA&E, MILW, CGW and IC fan
So you can't make a 500 mile trip on a 1000 mile route. Why is that?
Why? What routes over 500 miles are competitive? Why bother to run a train beyond the limits of competitiveness? What 1000 mile route has 2 x 500 mile corridors within it? And if so, run it as two connecting corridors for the few who ride beyond the middle. Connections work fine in Europe and with the airlines. They simply need to haveshort and reliable overlaps.
We need to tell the consumer to stop doing what makes sense to them on a dis-utility of time basis and obey the corridor highway modeling theories meant to determine the number of lanes!
I believe the Crescent has around twenty 500 mile overlapping corridors. Look at the PRIIA breakdown to see the how evenly distributed they are in terms of volume.
There are two types of connections, end-to-end and perpendicular or crossing. The East Side Access project is investing a lot of money to eliminate an end-to-end connection in the most transit friendly place in the US. Why, because of the utility to the consumer. The TGV routes continue off the end of the LGV onto the classic lines, why because they originally terminated and forced a connection to a local train until it was discovered that the consumer preferred a one seat ride. Southwest used to operate all those end to end chained routes, the only reason that they don't seem too be spreading is they are pulling out of the routes under 500 miles.
Think how much more utility the Downeaster trains would have if they continued onto the corridor in Boston. The new Virginia trains are doing so well as they do exactly that in Washington in a end-to-end connection of corridors. I have been trying to get the ITS guy to do a study using Bluetooth discovery loggers of the state travel patterns, as litterly nobody knows what the paths are on the highways, only the volume in one place. That is one of the problems we are attempting to use methodologies that were just designed to meet the volume in one place on a highway instead of understanding the paths that consumers actually want to take.
V.Payne So you can't make a 500 mile trip on a 1000 mile route. Why is that? Interconnected Corridors Def: An operational plan in which trip origin and destination pairs of multiple individual travelers are aggregated at peak times of travel and overlap, utilizing vehicles traveling through Metropolitan Statistical Areas; where adjoining Corridors might otherwise be defined to end, eliminating the disincentive of transferring vehicles. Syn: Long Distance Route or Through Corridors Corridors Def: A route path that is a numerical simplification used for modeling demand using data known about Metropolitan Statistical Areas for input as developed for highway planning with the assumption that continuing and feeder routes that are not part of the model exist. Comparisons between modes using this simplification present many problems in reality. Syn: Lane Expansion Analysis. ------- Everybody recognizes we need Avoidable Cost numbers, see the TBD* blanks below from PRIIA reports in 2011. You know, honestly I might get a bit annoyed as a member of Congress and pull a Central Florida, if Amtrak couldn’t provide what we are talking about here, Short-Term and Long-Term Avoidable Operating Costs. The TBD* thing is a little old now in 2013 and just reporting the Fully Allocated numbers doesn’t help make decisions about what to keep. So piecing together the TBD* metrics myself, for 2011 Long-Run Avoidable Operating Costs for the Crescent I get $41.17 + $1.24 + $8.16 = $50.57 Million or $50.32 a Trainmile, about $5 more than the 1968 ICC report, but I took current replacement values for the depreciation numbers, whereas the ICC report was a book value depreciation near the end of asset life. I suspect the reality is that Amtrak should be more efficient given the current service type and crew size, but isn’t due to the pot-o’-money effect. I don’t blame them, as they are living year-to-year and wages and fuel have gone up. This is why I suggest the way to drive efficiency and volume is a cross-subsidy that is variable with passenger miles, allowing for equipment investment as needed without defending it during Congressional appropriations.
Southwest is pulling out of routes less than 500 miles?
For September 11th Southwest shows approximately 44 daily flights between Dallas and Houston. It offers approximately 26 daily flights between Dallas and San Antonio. It even has approximately 24 daily flights between Dallas and Austin, a scant 175 miles. The approximate distance between Dallas and Houston is 240 miles; the approximate distance from Dallas to San Antonio is 275 miles.
Southwest has increased the number of flights between Dallas and Houston over the last couple of years. Many of them originate at other points and stop in Austin, Dallas, Houston, or San Antonio before continuing on to the aforementioned paired locations in Texas. Southwest has operated this way from the beginning. In its earliest days it flew Dallas to Houston, Harlingen, San Antonio, back to Dallas. And they did it with three airplanes.
The Washington to Lynchburg and Washington to Newport News trains are New York to Washington NEC trains that have been extended into Virginia. The distance from NYC to Lynchburg is 405 miles, and the distance from NYC to Newport News is 397 miles. The extensions, however, are keying off a dense corridor as opposed to operating in a stand alone corridor.
In FY 12 these trains showed an operating profit. Did they earn an operating profit on the Washington to Virginia legs or is the operating profit a function of the returns generated by the trains in the NYC to DC corridor? Without access to Amtrak's books it is impossible to know.
V.PayneI believe the Crescent has around twenty 500 mile overlapping corridors. Look at the PRIIA breakdown to see the how evenly distributed they are in terms of volume.
What jumps out at me is lack of ridership in areas where the train runs in the dead of night vs. daylight. The SC cities aren't in any of the top ten despite being larger than everything but NOL south of ATL.
We'd be better off with two ATL to NYP trains than one NOL to NYP train.
Sam1Southwest has increased the number of flights between Dallas and Houston over the last couple of years. Many of them originate at other points and stop in Austin,
While Southwest has increased its flights in Texas, Sam, it has abandoned some routes in other parts of the country. Here is an article that lists several abandoned routes:
http://centreforaviation.com/analysis/southwests-latest-network-revamp-features-short-haul-cuts-and-tweaks-at-laguardia-77944
Also, the Seattle Spokane route, the Philadelphia to Boston route as well as other routes around Phildadelphia are reported to be abandoned.
It may be that Southwest has decided to concentrate around its base area where it was first successful.
V.PayneThe existing Long Distance routes are probably as good a performer as any. If you redeployed the equipment to create longer trains your argument would be true in the isolation of a route, but I believe most of the talk is just about eliminating the entire Long Distance system, and once you take away one route why not the others? Once you let any other routes go the political support would evaporate for the entire mode, NEC included. Additionally,
V. Payne,
I hope you will bear with me if I am tedious on this subject. Sam, Don and Schlimm have long discussed it with me. I do agree with them that the long distance routes require the highest subsidies. There is a lot of logic in what all of them say. But I, for my own reasons, still disagree with them. So please allow me to got out to the end of my limb before I saw it off.
I have long maintained that to cut off some routes is to weaken all of Amtrak and if it is sufficiently weakened the whole organization will collapse. I don't want to see that. I think you and I agree but I don't want to put words in your mouth.
Recently Sam referred to a recent report by the Brookings Institute. That report stated the long distance routes are needed for reasons of equity, to give all parts of the country (or at least almost all parts) some benefit from Amtrak. That is a somewhat different perspective and one that I think deserves thought.
I do appreciate your contribution to this discussion.
John WR Sam1Southwest has increased the number of flights between Dallas and Houston over the last couple of years. Many of them originate at other points and stop in Austin, While Southwest has increased its flights in Texas, Sam, it has abandoned some routes in other parts of the country. Here is an article that lists several abandoned routes: http://centreforaviation.com/analysis/southwests-latest-network-revamp-features-short-haul-cuts-and-tweaks-at-laguardia-77944 Also, the Seattle Spokane route, the Philadelphia to Boston route as well as other routes around Phildadelphia are reported to be abandoned. It may be that Southwest has decided to concentrate around its base area where it was first successful. John
My post was a response to the notion that Southwest Airlines had abandoned the under 500 mile market, which you left out.
Southwest is reducing its short haul flights in favor of longer flights in some instances for a variety of reasons. One of them is airport security. With the coming of the TSA, many people in Austin, who would have flown to Dallas, now drive because they don't want to put up with the perceived security hassle, although clearing security at Austin's airport rarely takes more than five to ten minutes.
Southwest Airlines is a dynamic, market driven company. It has been entering and exiting markets since it was founded. It will continue to do so. That's what investor owned, market driven companies do.
Southwest has earned a profit for its investors over the long haul. It has never been in bankruptcy; it is considered a premier employer in Dallas; and it is a featured case study at the Harvard Business School.
oltmanndWe'd be better off with two ATL to NYP trains than one NOL to NYP train.
Actually there is a daytime train between New York and Charlotte, NC, Don. The Carolianian. It could be extended to Atlanta. I suspect, though, South Carolina and Georgia would have to put up some of the money to get Amtrak to do it. From New York to Atlanta is about 859 miles, long enough so the train would qualify for Federal funding. However I doubt Congress is in a mood to even think about such things. The House seems to have its hands full just coming to an agreement to keep the country from closing down come September.
As soon as someone can tell me why Midland, Lubbock, and McAllen, Texas, amongst others, don't have passenger rail, I'll buy the equity argument.
There is no evidence that eliminating the long distance trains or short corridor trains that carry few passengers would kill passenger rail where it makes sense, i.e. NEC, Southern California, Illinois, etc. Killing these money losing trains could, as an alternative scenario, free up monies to be invested where passenger rail has a reasonable probability of covering its operating expenses and maybe in time its capital expenses.
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