Why should anyone accept the Transmark study (with sleepers having an unbelievable 32% profit margin?) as more valid than that of Amtrak's OIG? Or the comment of a board member of a lobbying group over Joe Boardman's testimony at a hearing?
Amtrak had LD trains (serving 4.75 mil. passengers) revenue of $568.7 mil. in FY2013 vs costs of $1162.5 mil., which resulted in a loss of $627.1 mil. That staggering loss offset $372.9 mil.positive contribution from the NEC (serving 11.40 mil. passengers) and dwarfed the $180.8 mil. loss on state supported and other short distance corridor services (serving 15.41 mil. passengers).
The point of Amtrak is to provide the most transportation for the most people. LD services detract from that mission, so at the very least that is why the losses on LD non-core services need to be cut.
C&NW, CA&E, MILW, CGW and IC fan
Transmark was the consulting arm of British Rail back in the day. The rebutted report was done by the USDOT IG not Amtrak's IG, apparently under a congressional request, with what seems to have been a predetermined outcome given the faulty revenue assumptions. Mr. Beadles, the RF&P president has probably forgotten more than we know, take a look at his writing http://www.varpi.org/beadlesblog.htm and judge for yourself.
Now, what congressional testimony has Mr. Boardman offered regarding incremental costs and profit/loss from sleepers? I don't fault the other poster for sticking to the corridor train Volpe hypothesis as it is out there in the literature (probably the best that could be done given the era's auto influence) and Amtrak's financial reports are structured to ignore NEC capital in operations figures while reporting host railroad capital leases off corridor against operations.
Schlimm. You say the most transportation for the most people. Passenger miles is your standard then. But a person who uses Amrak ten times does get ten times the voting that a person who uses it once does. Most corricor riders are repeat frequent riders. Most long distance train riders are once a lifetime, once a year, or a few times a year. Amtrak exists to serve as many USA cizens and visitors as possible, so maybe you can understand why most citizens who think about the matter want long distance trains continued.
The statistic that represents the most usage is # of passengers, which Amtrak does report. Passenger miles gives a false weight to one person riding from NYC to SF, 3000 passenger miles, which by that metric is equal to 20 people riding Philadelphia to DC. People are people, not passenger miles. It is analogous to the false info from relying solely on ton miles for freight, which undervalues the lighter and more valuable container trains and overvalues coal trains.
If your assumption were true, just give everyone a one time only free pass to ride coast to coast.
I don't understand this argument. Are you saying somebody riding NJ transit (Amtrak supplied infrastructure/capital spending) 10 miles in every day of their life (4800 passenger miles yearly) or taking the regional 50 miles each way every week of their life (4800 passenger miles yearly) deserves more importance than a passenger making two 600 mile trips on the City of New Orleans from an intermediate station (say 2400 miles yearly)?
What if the only option is a two stage regional aircraft at $0.65/mile that takes 9 waking hours (drive time, security, two segments with a layover, drive time) when the City only takes 11 hours that you can use productively or sleep? I have already suggested that the cross-subsidy to rural interstate travel is just as high as the incremental cost of running the Long Distance trains and it is markedly more dangerous to the user.
Particularly for the commuter activity the argument would be why don't they move closer to work to avoid burdening the rest of us with the capital spending on the NEC that is not counted in the operations figures?
V.Payne capital spending on the NEC that is not counted in the operations figures?
In accounting, capital spending is not generally considered an operating expense to offset revenue, except some under IRS Section 179. Those are the rules.
But in determining the fairness between expenditures for citizens of the same country capital spending should be counted, subject to an appropriate term and interest rate to spread the capital out.
Ultimately, dollars are fungible in the democracy, or at least they should be.
It is time to use rationale financial analysis of both operations and capital dollars instead of the economic models that neglect capital while monetizing "time savings" at a rate higher than anybody would pay real money to buy in order to get high Benefit/Cost ratios.
Volpe entered into the assumptions for transportation modeling that existed in the mid 1960's and attempted to find a rationale for passenger rail service. He did his best against the misguided headwinds of the era and came up with theory of massive capital to produce high speed service, while using the operating only profits to offset a reduced national network. But the entire economic "time savings" monetized model had been created solely as the interstates would not generate incremental financial revenue from each user to pay for themselves, otherwise they could have been toll roads.
"Time Savings" isn't a truth of economics but a political shell game. People do value their time but it is according to dis-ultility of time methods that are a lot more nuanced as to number of transfers and quality of time.
Many commentators to this day do not realize that we professionals invented this shell game to address the congestion and accident rate failures of the WPA era 2 lane roads as professionals felt bound to do something about the loss of life. So the fuel tax was used to financially leverage the interstates off the existing urban roads while claiming a high B/C ratio. It is just that simple. I have one series of large highway projects that will generate a $0.23/automobile mile financial loss to my department's capital, excluding accident and maintenance costs. But we leverage it off the fuel taxes, borrow, produce a report with a high B/C ratio, and call it a day as the politicians want the project.
schlimm . People are people, not passenger miles. It is analogous to the false info from relying solely on ton miles for freight, which undervalues the lighter and more valuable container trains and overvalues coal trains. If your assumption were true, just give everyone a one time only free pass to ride coast to coast.
. People are people, not passenger miles. It is analogous to the false info from relying solely on ton miles for freight, which undervalues the lighter and more valuable container trains and overvalues coal trains.
The point is to use resources wisely. LD trains are already a poor use of resources compared to other Amtrak services, using most of the subsidy while serving only a fraction of the total passengers. Streak gives the FL trains as example where about $2.00 is spent for every dollar of revenue.
In any case, 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. Ditto with food service: charge patrons the for what they choose to eat - no less, no more.
Seems that the point that the Long Distance trains are a relatively poor use of (financial) resources has not been proved as the capital expenditures for the NEC at $600-800 million a year are being disregarded to make the case. If that is the case how about disregarding $500 million in one time capital for new long distance cars to increase the train length by 50%? This would markedly reduce the operating loss, as Train and Engine crews are an expensive fixed cost per mile irregardless, just as capital reduces the operating loss in the NEC.
An analysis has already been provided that shows the sleeping car class is already paying their incremental costs and more. A point by point rebuttal of that analysis is welcome. The amenities of the train are a joint expense of the service, the provision of which that has been experimentally proven to reduce the total subsidy by increasing the revenue to the train in all classes of service.
What killed the pre-Amtrak passenger rail system - was that with all the cuts the individual carriers were making - it ceased being a passenger rail system, as all the feeder routes were cut and thereby reduced the traffic available for the main routes.
No business has ever cut itself into growth!
Never too old to have a happy childhood!
The railroads themselves killed off the passenger train services. The CPA's under the guns of the investor community, were able to prove that branch lines and passenger trains did not directly add to the bottom line and therefore had to be done away with. The additional carloads from branch lines were shown to cost money on the branch despite adding to the mainline traffic. Passengers needed people to attend to them and clear tracks to operate keeping precious cargoes in sidings awaiting their passing. You can't move freight on time when you got to time yourself to passenger schedules. But if you can put together make a 200 car train at the tidewaters of the Atlantic and keep the train moving until the California surfers can see it, a railroad will make millions of bucks. For the investors. But if you have to stop at one mill town for one car in the 3000 mile journey, then you'll lose your shirt. This is the investor railroading than killed the passenger train, not people not wanting to ride trains.
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.
What Balt and Henry say above is simply not correct. I rode a lot of trains in the 1950s and '60s and saw the problem unfolding in front of my eyes. People simply quit the trains in favor of their cars -- on those nice new interstates -- and the new jet planes. I remember the spring day in 1969 on which, as the conductor informed our mail foreman, the City of Portland pulled into Cheyenne with FOUR passengers aboard.
The real killer was loss of the business, expense-account trade that is the backbone of airline service today. Take that away, and you'd see PLANE-offs to rival the train-offs of 50 years ago. In fact, I would be surprised if that isn't coming rather soon, given the leaps being made by modern communications.
Why do you need your corporate vice president's body in New York, when his face on a telecom screen and electronic signature will do just as well?
I know the why's of pruning the branch line passenger operations of the carriers before Amtrak - and with each pruning of a branch line, additional passengers were lost to the main line trains that the branch line trains fed to. The SYSTEM was dismantled - and considering the financil burden, rightfully so; the pruning of branch line feeder trains did not help the main line trains.
Passenger traffic on the branch lines was dying in the 1920s and Depression '30s already. Surely, its loss hurt the mainline trains, but the rails still responded strongly with diesels and streamliners. These thrived for a while, before dying in their turn.
To me, the rails did their best with the passenger trade for as long as they could, consistent with the interest of the folks who were putting up the money they depended on, the stockholders.
Dakotafred...I don't disagree with you. There was no one factor as to why people left the trains. My references were more toward how railroads reduced income for freight by eliminating branch lines as an example of how they were thinking. But railroads really weren't interested in providing services for passengers because it cost too much to provide and they were led to believe structured schedules of passenger trains impeded the movement of freight (my take on that is that a structured passenger schedule forced a structured freight schedule thus a reliable freight service(. The other factor we are all missing hre is that the railroads had come to rely on the contracts with the United States Post Office to be the reason or need to operate any given passenger train or service. When Congress eliminated the Post Office and supplanted it with the US Postal Service taking the mail off the rails and putting on highways and roads the railroads quickly took passenger trains off the tracks. And I should also point out, at least in my case, a lot of these passenger services I saw were commuter main and branch line services in the likes of North Jersey and the New York City area.
Another issue that should be considered was the mandated cross-subsidy of passenger service by freight revenues by ICC policy. Passenger fares were kept artificially low with the expectation that other revenues would cover the losses. Needless to say, that created a disincentive for maintaining passenger service.
Financially undercharging roadway users (automobile and freight) for the extra miles driven on the rural interstates cannot be ignored as a causative reason for loss of volume.
ACYBig changes are coming, & I'm surprised nobody is commenting.
OK, would you like to tell us about them so we can comment?
In the interest of keeping this board interesting until we who are not in the know do know what the big changes are, let’s briefly revisit the food and beverage service losses on LD trains reported by the OIG last October.
Disclaimer
Before delving into my over-simplified analysis, please be aware I do not have any experience in accounting, hotel and restaurant management, marketing, or operating a railroad. I have no agenda and I only looked at the available numbers in my own way, others are obviously welcome to come up with different analyses.
Introduction
I am looking at the published OIG numbers and combining them with a few other published numbers. There are many possible ways to reduce food and beverage service costs, and since I mentioned I have no experience in this area, I focused on raising revenue to match reported expenses. I will leave it to others to provide insight on lowering costs.
Palmetto
The Palmetto is included as an LD train, although it carries no sleeping cars and no dining car. Therefore I will use it to evaluate menu pricing since all passengers pay for what they consume. The food service revenue in the café car was $791,000 and the direct cost was $1,009,000, so the café car revenue covered 78% of the direct cost. This leads me to conclude the menu prices should increase approximately 25% to cover direct costs. This is over-simplified because it is only the café car.
Auto Train
The Auto Train coach and sleeping car fares both include all meals, and the Auto Train makes no intermediate passenger stops so all the passengers ride the entire length of the trip. Therefore, I will use the Auto Train to evaluate how much sleeping car fares should be raised to cover the cost of the meals included with the fare. The Auto Train carried 264,096 passengers in FY 2012. The Auto Train had a food service cost of $22,290,000 on revenue of $9,195,000, covering 41% of the cost. This results in food service revenue of $34.82 per passenger, and a direct cost of $84.40 per passenger. This leads me to conclude sleeping car fares should increase approximately $50 per passenger to cover the food included in the fare. This is oversimplified because the Auto Train offers different menus for coach and sleeping car passengers, and also has a café/lounge car. Although this trip is considerably shorter than most LD trains it is very similar to the Palmetto (855 versus 829 miles).
There are many other ways to digest the numbers for the other LD trains, which are combinations of length, passengers, average trip length, etc. Other interesting observations:
Silver Meteor
The best performing LD train (percent of cost) with both a dining car and a café car is the Silver Meteor. On the Silver Meteor revenue of $3,616,000 covered 65% of the $5,564,000 direct cost. If sleeping car fares were raised $50, the entire food service loss would be eliminated. This assumes that approximately 11% of the 375,164 passengers in FY2012 are in the sleeping cars (the percentage based on 2013 statistics by the National Association of Railroad Passengers). So why does the Silver Meteor food service revenue cover more cost compared to many LD trains?
Crescent
The worst performing daily LD train (excluding the tri-weekly Sunset Limited) is the Crescent. On the Crescent revenue of $2,793,000 covered 36% of the $7,810,000 direct cost. If sleeping car fares were raised $50, the food revenue would increase by an additional $1,481,000, but would still cover only 55% of the direct cost. Raising the menu prices 25% will not bridge the remaining gap for the Crescent.
Having ridden the Crescent last April, I noticed some oddities in the train schedule and train operation potentially contributing to the poor food service revenue. If the train is on time, it is due into Atlanta between 8:13 and 8:38 am going south, and 7:35 and 8.04 pm going north, so I suspect most passengers boarding in Atlanta eat a meal prior to boarding the train. When I rode the train last April the dining car and café were both closed (I witnessed the conductor lock the doors on the southbound trip) well before arriving in Atlanta until after departure (about one hour in the middle of breakfast and dinner). My planned southbound railroad french toast breakfast turned into late morning coffee only, and I skipped dinner entirely northbound due to this. The reason appeared to be related to a crew change in Atlanta, or possibly issues with Atlanta passengers not finishing meals before arrival, or both. Therefore, the opportunity for Atlanta bound passengers eating on the train is also limited. The Crescent also arrives in New Orleans at 7:32 pm, so New Orleans passengers may not eat dinner on the train (I had dinner in New Orleans after arrival). So maybe the Crescent is a candidate for a combined dining/café car like the Cardinal.
Cardinal
The Cardinal has a combined dining/café car serving pre-plated meals, and appears to me to be a potential model for reducing food service costs on trains like the Crescent. What is interesting is the Cardinal food service revenue only covers 49% of the direct cost, and the loss per passenger is higher than the Silver Meteor and Silver Star which both have a dining car and a café car. Is this the answer for some trains, or is more understanding of the Silver Meteor and Silver Star needed?
Conclusion
I know I do not have to ask for comments. However, if you have your own analysis of these or other numbers, please elaborate. I do not have any recent experience with the other LD trains to offer any informed opinions or analysis. However each LD train appears to be somewhat unique like the Silver Meteor and Crescent. Enjoy until we have more information about the big changes.
(The table below may not all be visible, it is hard to tell prior to posting, so I will post it in sections for those who like to see numbers and indepent verification)
Re. ACY above:
This is upsetting news. I can understand, while disagreeing with, nickel-and-diming the LD trains elsewhere. But on Auto Train, the closest thing Amtrak has to a moneymaker? It makes no sense. One size does NOT fit all. You don't mess with success. Etcetera.
A coworker just came back from a trip on the Auto Train and reported the same rumors from the staff. I found it difficult to believe. I also told her to take crew rumors with the same level of seriousness that we treat rumors from Pilots and Flight Attendants, with a large grain of salt.
The Auto Train is probably the easist LD to change since they serve one dinner after departure and then just a light continental breakfast the next morning.
I would think that would lend itself to pre-plated meals, like a dinner train. No need to cook anything on the train - just warm and serve.
I liked the wine and cheese on boarding and the "free" wine with dinner, but that's a "nice to have" thing.
One hopes that Amtrak's marketing folk know what they're doing - that they know the value of the things they are effecting and are making cost effective changes. But, even the best and brightest goof. JCP anyone?
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
oltmanndOne hopes that Amtrak's marketing folk know what they're doing - that they know the value of the things they are effecting and are making cost effective changes. But, even the best and brightest goof. JCP anyone?
Failure to identify and serve one's market niche is a prescription for retail disaster: K-mart, Sears, etc.
If Amtrak wants to provide more leverage to show the Prez's rail initiative isn't just money thrown down the drain, they'd better hurry up with some highly visible cost-cutting and vision focusing.
Thanks to thegreatpumpkin for some actual numbers. I may have misread, but if you could post the overall revenue and cost (including coach) for each LD train, we would have an even better and realistic picture of the current situation and what to do in the way of solutions.
oltmannd The Auto Train is probably the easist LD to change since they serve one dinner after departure and then just a light continental breakfast the next morning. I would think that would lend itself to pre-plated meals, like a dinner train. No need to cook anything on the train - just warm and serve. I liked the wine and cheese on boarding and the "free" wine with dinner, but that's a "nice to have" thing.
Why are Auto Train's commissary costs so much higher than the other trains?
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