You want nicer food? Pay for the full cost yourself. Amtrak is in the transportation business, not for subsidizing folks to have a mid-level dinner.
C&NW, CA&E, MILW, CGW and IC fan
ACYQ: "Why do you lose money selling food on trains?" A: "We shouldn't and we won't." That does not respond to the question and doesn't provide the explanation asked for. It does not explain the "why". It is a response that plays right into the hands of those who want simple answers to questions that are too nuanced for that. IMHO, simple answers appeal mostly to simpletons. If Amtrak gave such a mealy-mouthed answer to this question, then Amtrak is guilty of allowing false assumptions to rule the "discourse". It is true that the law creating Amtrak stipulated that the Company would be a "for profit" enterprise. However, everybody who is awake knows that was a pipe dream from the start, just as it is naïve to think the Highway Trust Fund alone can support our highway system. I'm not sure how to solve these problems, but I'd sure like to see some honesty in the discussion for a change.
I don't disagree with a single thing you say.
I'd just say that the game that Amtrak is playing, the game the advocacy community want them to play, the game the public thinks they're playing, and the game that would provide the best value for the cost are wildly different - but shouldn't be!
I'd also add that Boardman has been doing a pretty good job of trying to align some of these things of late. He seems to know the growth market for Amtrak is corridors and has been drawing bright lines between that work and the LD trains. He makes no bones about the financial reality of the LD trains and has basically told Congress to "put up or shut up."
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
I am confusing nothing. My point is that Amtrak is a Congressional football and that that Congress therefore passes legislation and ignores it for their own well being. The don't have to mean what they say or what they pass so they often ignore for their own benefit at any given time, especially for public show du jour.
As for providing food service. Sit on a train for 4, 10, 18, 24 hours...don't you get hungry or tired...need food and sleep? So those services should be made available. And at the least expensive price (not cost) to the traveler so that he will buy your train fare at the price you are charging. Thus, food service and or sleeping quarter service might become a loss leader in retail trade terms.
But we have another bugaboo here. Government agency. To provide for the most public good. So, by keeping cars off the roads for long distance travel could be cutting down on fuel consumption, air pollution, and promoting driver and passenger safety while relieving wear, tear, and congestion on the public highways. The government(s) own and operate the highways and roads, so anything they can do to help relieve congestion, lengthen the life of the plant, lessen the negative environmental impacts, and at a cheaper cost, would be important. We cannot look at running trains as a hobby or being done for just the sake of running trains. We have to look at the benefits it brings to the rest of the transportation system and to society. Since it is something no private railroad in this country wants to do...not tourist train services or museum rides...then the government has to step in to do it. Yeah, there are many willing to operate passenger trains and services for a price, but they will charge their costs plus a profit, and a government agency will be asked to cover the losses. So that's not the answer, the government still pays the difference so it is smoke and mirror financing.
What has to change is that Amtrak has to be set free from Congressional hovering with short term goals and financing and given enough money to meet long term goals and needs. Esso Mobile,GE, IBM, Microsoft, Disney, ...all these companies working on plans and programs stretching out 5, 10, 15 or more years and not just to the next Congressional election.
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.
1. Amtrak is not an Exxon Mobil or Microsoft, answerable to investors. It is a quasi-government public corporation answerable to the people through Congress. You now want to privatize?
2. You do not understand loss-leader concept in retailing. It is used to attract customers at a loss so they will buy other, profitable items. The rest of the operation makes a profit so that the net is an increase in profit. Food and beverage service is primarily on long distance and only increases the LD loss.
3. Passenger rail advocacy that misses the point of a public passenger service does not advance the agenda because it is mired in outmoded nostalgic concepts of 60 years ago.
Does the Congressional 'food service' make money for the US?
Never too old to have a happy childhood!
All well and good. I personally believe Congress is totally dysfunctional. But the requirement that Amtrak break even (not "profitable food service") has been the law of the land for 23 years. Lobby to change the law if you wish. Why can't those of you who want the current food and beverage service maintained or improved simply agree that the passengers who choose to use it should simply pay the full cost? What is so sad, political, or unrealistic about that? Why conflate the survival of Amtrak LD service with a highly subsidized food and beverage service? We all make choices about whether to eat out, choices of meals and what we wish to pay everyday. Why is Amtrak food and beverage service some "sacred cow" that has to eat up subsidy dollars that could be used for better LD services?
schlimm 1. Amtrak is not an Exxon Mobil or Microsoft, answerable to investors. It is a quasi-government public corporation answerable to the people through Congress. You now want to privatize? That's my point...it is not a private company answerable to investors, it is a quasi-government public entity, so don't expect the same conduct. I'm not advocating it be privatized, in fact I don't think it would be a good idea because it won't be independent of government subsidies. What I do think should be done is that Congress operate it as a private enterprise would be operated allowed to plan for and be funded for normal business timing instead of what a Congressman needs to do or say to make in through the next election. As is, it cannot be anything more than as it is! 2. You do not understand loss-leader concept in retailing. It is used to attract customers at a loss so they will buy other, profitable items. The rest of the operation makes a profit so that the net is an increase in profit. Food and beverage service is primarily on long distance and only increases the LD loss. The point here is that you've got to provide the amenities to attract and hold customers. Eliminating sleeping cars and dinning cars sets American passenger rail even further back than it already is. Greyound bus's and the first Erie train from Piermont to Dunkirk had to stop every couple of hours to feed the people and at dark to allow them a hotel room to sleep in! For God's sake this in 2014 not 1849! 3. Passenger rail advocacy that misses the point of a public passenger service does not advance the agenda because it is mired in outmoded nostalgic concepts of 60 years ago. So, what are you saying here? That's exactly what I am saying. And others who advocate rail passenger services. Yeah, America lives on nostalgia and complaints and puts anyone down who advocates progress as communists, socialist, or anti American in some way. Sorry about the political names, but, that what the anti progressives say not understanding the roles of business and government as separate intertwined entities dependent on each other for success. And progress.
That's my point...it is not a private company answerable to investors, it is a quasi-government public entity, so don't expect the same conduct. I'm not advocating it be privatized, in fact I don't think it would be a good idea because it won't be independent of government subsidies. What I do think should be done is that Congress operate it as a private enterprise would be operated allowed to plan for and be funded for normal business timing instead of what a Congressman needs to do or say to make in through the next election. As is, it cannot be anything more than as it is!
The point here is that you've got to provide the amenities to attract and hold customers. Eliminating sleeping cars and dinning cars sets American passenger rail even further back than it already is. Greyound bus's and the first Erie train from Piermont to Dunkirk had to stop every couple of hours to feed the people and at dark to allow them a hotel room to sleep in! For God's sake this in 2014 not 1849!
What a great point in this thread!
Question: What do you suppose the tips are like in the US Capitol restaurants?
henry6 2. You do not understand loss-leader concept in retailing. It is used to attract customers at a loss so they will buy other, profitable items. The rest of the operation makes a profit so that the net is an increase in profit. Food and beverage service is primarily on long distance and only increases the LD loss. The point here is that you've got to provide the amenities to attract and hold customers. Eliminating sleeping cars and dinning cars sets American passenger rail even further back than it already is. Greyound bus's and the first Erie train from Piermont to Dunkirk had to stop every couple of hours to feed the people and at dark to allow them a hotel room to sleep in! For God's sake this in 2014 not 1849!
You do not have a clue about the concept. If LD trains require a highly subsidized food service to attract customers, then perhaps we do not need those trains at all. As to sleepers, they should pay the full cost of their superior accommodations, above the charge for a coach ticket. Apparently the coach patrons didn't get your message. As to modernity, this is 2014, not 1950.
Schlimm: Arre you saying coach passengers shoujld be subsidized but not sleeping-car passengers?
daveklepper Schlimm: Arre you saying coach passengers shoujld be subsidized but not sleeping-car passengers?
I'll add another question to this. Do you think Ed Ellis's operation on the City of New Orleans would have more or fewer passengers if the train did not carry Amtrak sleepers?
oltmannd daveklepper Schlimm: Arre you saying coach passengers shoujld be subsidized but not sleeping-car passengers? I'll add another question to this. Do you think Ed Ellis's operation on the City of New Orleans would have more or fewer passengers if the train did not carry Amtrak sleepers?
And I'll add yet another question: If a private operation can even partially subsidize Amtrak's cost to run coach service ... or even the Amtrak version of sleeper service, which in the absence of 'premium services' would have less effect on the 'take rate' for AOE or Ellis Pullman-level 'cruise' or luxury sleeper service) ,,, might Amtrak be prepared to run their service over segments they would otherwise have to avoid? A Harrisburg-Pittsburgh section for a particular example? Or be less opposed to something like Ross Rowland's proposed Greenbrier Express?
(And there might be some incentive, even if only related to certain economies of scale, in the private company providing 'sussies' to the Amtrak passengers, say at their marginal cost... ;-} )
No. "As to sleepers, they should pay the full cost of their superior accommodations, above the charge for a coach ticket." To state it more correctly, patrons of sleepers should purchase the subsidized base coach fare, as now. Whatever they choose for sleeper accommodations, they should cover the actual cost of that. My point is that transportation only should be subsidized. The coaches are offered and patronized on LD trains. If someone wants an upgrade, they should pay what it costs to operate. We do not subsidize the hotel accommodations of highway travelers, so why should the Amtrak patrons receive one for their beds/
Perhaps if sleepers were outsourced, they could be run more efficiently. Ditto with the food service. Simply eliminating those large subsidies might allow Amtrak to offer more LD services on the same budget.
schlimm No. "As to sleepers, they should pay the full cost of their superior accommodations, above the charge for a coach ticket." To state it more correctly, patrons of sleepers should purchase the subsidized base coach fare, as now. Whatever they choose for sleeper accommodations, they should cover the actual cost of that. My point is that transportation only should be subsidized. The coaches are offered and patronized on LD trains. If someone wants an upgrade, they should pay what it costs to operate. We do not subsidize the hotel accommodations of highway travelers, so why should the Amtrak patrons receive one for their beds/ Perhaps if sleepers were outsourced, they could be run more efficiently. Ditto with the food service. Simply eliminating those large subsidies might allow Amtrak to offer more LD services on the same budget.
CMStPnP schlimm No. "As to sleepers, they should pay the full cost of their superior accommodations, above the charge for a coach ticket." To state it more correctly, patrons of sleepers should purchase the subsidized base coach fare, as now. Whatever they choose for sleeper accommodations, they should cover the actual cost of that. My point is that transportation only should be subsidized. The coaches are offered and patronized on LD trains. If someone wants an upgrade, they should pay what it costs to operate. We do not subsidize the hotel accommodations of highway travelers, so why should the Amtrak patrons receive one for their beds/ Perhaps if sleepers were outsourced, they could be run more efficiently. Ditto with the food service. Simply eliminating those large subsidies might allow Amtrak to offer more LD services on the same budget. So I am curious what you think of the Federal Government via the WPA financing the new Milwaukee Road Hiawatha in the 1930's. Certainly runs against your government subsidy model but.........look at how many people rode it. It was considered a luxury train as well.
Or what about the Federal Government funding airplane research and development so that manufacturers can manufacture commercial airliners? Or funding the traffic control system for all air traffic. Or funding lighting and runway improvements for airports? Or the highways the buses run on and the terminals they operate to and from? And the locks and dams on waterways so barges can be moved? None of that stuff gets paid for out of the budgets or bottom lines of any of the airplane, bus, truck, or barge companies nor their shippers or passengers?
Apples and oranges. I see no reason why the taxpayer should pay for your meal or lodging, whether on a train or not. Of course if you are indigent, then you should receive appropriate government assistance. However, the folks who use sleepers (many of them seniors) are not indigent and therefore do not need financial assistance.
Most of the eastern long distance trains operate at direct loss rates per passenger mile that are less than what the government and others than those traveling statistically pick up for automobile accidents alone.
In the end analysis a dollar is fungible.
Schlimm: First of all, subsidazation for the handicapped and elderly is across the board in the USA. When you go to a movie or threatre to pay for special services, handicapped elevators and ramps, hearing asistance, that you don't use but they do. And a good proportion of sleeper passengers are elderly nd handicapped, many of whom cannot fly and cannot spend more than several hours in an auto even if they wished to do so. Second, if the sleeper passengers were not riding, and by far the majoritiy would not ride coach, the loss in revenue would be greater than the reduction in expenses. Third, you and I and anyone else do not have any figures that prove that sleeper passengers are subsidized more than coach passengers, in general, on a per-mile-per-person basis.
Sorry, but the justifications for subsidized food and subsidized sleepers are largely irrelevant and illogical. Hard luck cases are suggested, but you would have to show that to be true. They could receive a discounted fare based on documentation. Handicapped cases? Since very few of the sleeper spaces are for the handicapped, that is no argument. The larger, accessible space is provided but otherwise. they should pay the sleeper cost, just like the others. Seniors already receive a discount on the basic fare. The point that I and others who favor subsidized passenger transportation service make is to do just that: provide competitive transportation where rail makes sense, not subsidized meals and overnight rooms. Seniors who want subsidized dining should look to restaurants that give an "early bird" rate. And of course I am simply saying Amtrak should start complying with federal law.
Quite true. Until our last trip, taken when my wife needed help to stand and could no longer walk, we always traveled in ordinary bedrooms. Only when she had to use a wheelchair did we make use of room H.
Johnny
The basic point, which you did not answer, Schlimm, is that if the sleeping car passengers and their special wants were not accomodated, and their revenue was lost, the savings in dropping the sleeping and dining cars would not compensate for the loss in revenue, and the subsidy for the straight transportation folks would be higher, not lower. Furthermore, some of the coach passengers would also not ride unless decent meal service was provided.
However, I am at one with those who wish to cut food losses by adopting the Acela approach for long distance trains' meals.
Now, as far long distance trains in general, remember that there are people in rural America who have zero plans to use these trains, but wish them to continiue, just in case they need them.
I was reminded of this fact by somewhat analagous incident in my life. The bus Egged bus stop nearest my Yeshiva has no service between 6:35pm and the last bus at 11:35pm. Don't ask why. But I am usually the only passenger on the 11:35pm bus which takes me to the University, where I can catch the 11:45pm, the last 68 bus, to the stop near my apartment. Sometimes a soldier for the camp is on the bus to get off at the camp's intermediate stop, sometimes one boards, but both are rare occasions. And sometimes the 48's driver is extra friendly and takes me directly to my stop on his way to the garage-yard. But on Monday evenings, for several years, one of the teachers, whose class from 10pmm to 11pm I usually attend, drives me home on the way to his home.
Last evening he had other plans, and i thus planned on taking the bus. it did not show up. I waited 11:25-11:45pm.
So it is with those in rural America who know corridor travelers are subsidized to make cities work, and some corridor travelers are as wealthy as any sleeper passenger, and have no plans to use Amtrak, but want it there in case they need to use it. Like my Monday evening bus that I never used.
1. Please attempt to respond to what I actually said instead of throwing out a straw dog. I did not say sleeper service has to be dropped; only that the patrons pay the full cost. Some folks on here seem to be saying if they actually have to pay the cost for food and bed on Amtrak, they won't use it. Try selling that concept to the public.
2. Ditto with food service: charge patrons the for what they choose to eat - no less, no more.
3. The actual data on the total losses from LD services broken down by source have been posted before. As I recall, the majority of the losses on most routes comes from the food and sleepers.
4. Reduce or eliminate the need to subsidize the losses from food and sleeper services and more folks in rural areas might be served with more routes and more trains on existing routes.
5. The NEC is not losing money. In fact it is subsidizing the rest of Amtrak. Short corridors are still losing, but their position is far better than that of the LD segment. Joe Boardman is acting on this.
"The actual data on the total losses from LD services broken down by source have been posted before. As I recall, the majority of the losses on most routes comes from the food and sleepers."
I don't recall seeing such. Can anyone provide this document? I remember seeing something like this based on Amtrak's RPS but it isn't meant for such analysis. It had the host railroad paying Amtrak if you believed the numbers.
schlimm3. The actual data on the total losses from LD services broken down by source have been posted before. As I recall, the majority of the losses on most routes comes from the food and sleepers.
It is really hard to compare, but we do know from Amtrak's monthly reports that the LD trains lose money at a great rate compared to corridor trains. Worse, this doesn't take into account the indirect subsidy the LD trains get from the frt RR hosts - that is the "sweetheart" rent that Amtrak pays for the rights to run their train.
There were a couple of reports on sleeper and food service losses.
Here's a tidbit about food service: "Ted Alves, the Amtrak inspector general, testified that the bulk of the losses were on Amtrak’s long-distance routes, which account for 87 percent of the deficit. " (from http://www.nytimes.com/2012/08/03/us/politics/amtrak-lost-834-million-on-food-in-last-decade-audit-finds.html?_r=0 )
And this on incremental cost of carrying sleepers http://www.oig.dot.gov/sites/dot/files/pdfdocs/CR-2005-068.pdf
The only credible analysis that I have seen is this study from 2004/2005 and the rebuttal of the DOT IG study (the link referenced by another poster above). The DOT IG report had negative payments to the host railroads on one line and assumed the coach lounge and all checked baggage service could be eliminated for long distance coach passengers along with the dinning car and sleepers, with no loss of customers. Now tell me, is that a valid revenue assumption?
The chart from within the study I would recommend gives the breakdown above. To update the study from FY 2004 I offer this comparison.
For FY 2013 sleeper revenue was about $188.2 million and FY 2012 $181.5. I get a cost basis of $109.4 using the BLS inflation calculator, add in another $4 million for fuel increases above inflation, and we’ll call the cost basis $114. So perhaps $74 million in operating cash above incremental costs.
Here what drives this. I get an long-term incremental cost of about $3.25/mile (including depreciation). Or a short-term incremental cost of $2.35 with just running and heavy maintenance and overhauls per each carmile added to a train. Both assume one staff member per car. The short-term cost is backed up a Transmark analysis from 1978, a snippet of which is shown below along with some explanation from a paper I wrote.
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