https://transportation.house.gov/calendar/eventsingle.aspx?EventID=401565
https://youtu.be/_CDq2bQ1H3A
First link is for the written statements of the witnesses. Second link is to the video of the long 3 and half hour hearing.
I watched most of it live earlier. Lots of interesting details about the NEC projects, Amtrak LD, CA HSR, and Brightline. One important item, without LD trains Amtrak cannot maintain NEC operations in the long term. Amtrak needs the ability to spread the costs of certain shared assets such as the reservation system over all trains, LD, corridor, and NEC.
Brightline/AAF stressed the issue of the length of time required to obtain permits and approvals and how they impact the ability to obtain financing/investors.
CHSRA leader Dan Richard got grilled by fellow Californian Denham throughout the hearing.
I did not watch the hearing. Was it Good Day for Amtrak?? on the hill?
Brian_Tampa One important item, without LD trains Amtrak cannot maintain NEC operations in the long term. Amtrak needs the ability to spread the costs of certain shared assets such as the reservation system over all trains, LD, corridor, and NEC.
One important item, without LD trains Amtrak cannot maintain NEC operations in the long term. Amtrak needs the ability to spread the costs of certain shared assets such as the reservation system over all trains, LD, corridor, and NEC.
This statement is simply not true. Operating the reservation system is entirely a variable cost. The fixed cost portion, the computer and the programming is sunk, that is already paid for. In addition the entire function could be outsourced to any of dozens, if not hundreds, of call center operators.
Off the top of my head I can not think of any significant fixed cost assests that are shared across the lines of business. As to cars, the NEC would simply keep what it wanted and the rest would be sold off. Diesel locos would probably go to scrap.
Corporate overhead below the Presidential level would be cut since corporate "services" for LD and corridor would no longer be requred. If ATK is not that ignorant maybe they think congress is, and they could be correct in that.
Mac
It not a good day for amtrak on the hill or at the White House.
PNWRMNM Brian_Tampa One important item, without LD trains Amtrak cannot maintain NEC operations in the long term. Amtrak needs the ability to spread the costs of certain shared assets such as the reservation system over all trains, LD, corridor, and NEC. This statement is simply not true. Operating the reservation system is entirely a variable cost. The fixed cost portion, the computer and the programming is sunk, that is already paid for. In addition the entire function could be outsourced to any of dozens, if not hundreds, of call center operators. Off the top of my head I can not think of any significant fixed cost assests that are shared across the lines of business. As to cars, the NEC would simply keep what it wanted and the rest would be sold off. Diesel locos would probably go to scrap. Corporate overhead below the Presidential level would be cut since corporate "services" for LD and corridor would no longer be requred. If ATK is not that ignorant maybe they think congress is, and they could be correct in that. Mac
Mac: You are right about that. Also, Moorman claimed 60% of ridership on Amtrak was "National" whatever that is. The statement appears to be misleading, by combining state-supported corridors with LD routes.
C&NW, CA&E, MILW, CGW and IC fan
schlimm PNWRMNM Brian_Tampa One important item, without LD trains Amtrak cannot maintain NEC operations in the long term. Amtrak needs the ability to spread the costs of certain shared assets such as the reservation system over all trains, LD, corridor, and NEC. This statement is simply not true. Operating the reservation system is entirely a variable cost. The fixed cost portion, the computer and the programming is sunk, that is already paid for. In addition the entire function could be outsourced to any of dozens, if not hundreds, of call center operators. Off the top of my head I can not think of any significant fixed cost assests that are shared across the lines of business. As to cars, the NEC would simply keep what it wanted and the rest would be sold off. Diesel locos would probably go to scrap. Corporate overhead below the Presidential level would be cut since corporate "services" for LD and corridor would no longer be requred. If ATK is not that ignorant maybe they think congress is, and they could be correct in that. Mac Mac: You are right about that. Also, Moorman claimed 60% of ridership on Amtrak was "National" whatever that is. The statement appears to be misleading, by combining state-supported corridors with LD routes.
What I said was actually paraphrasing what Moorman claimed in his testimony yesterday. He was saying without the LD trains, the overhead costs would fall greatly on the remaining service. therefore Amtrak would not be able to maintain those services over the long term. With amtrak's lousy/non-standard accounting methods, I have no way to verify or even believe if that is true. Maybe it's his way of sounding the alarm.
Here is a link to an article about the impacts to the NEC due to the proposed budget:
http://www.northjersey.com/story/news/new-jersey/2017/06/22/amtrak-ceo-trump-budget-eliminates-money-upgrade-northeast-corridor/419210001/
Brian_Tampa What I said was actually paraphrasing what Moorman claimed in his testimony yesterday. He was saying without the LD trains, the overhead costs would fall greatly on the remaining service. therefore Amtrak would not be able to maintain those services over the long term. With amtrak's lousy/non-standard accounting methods, I have no way to verify or even believe if that is true. Maybe it's his way of sounding the alarm. Here is a link to an article about the impacts to the NEC due to the proposed budget: http://www.northjersey.com/story/news/new-jersey/2017/06/22/amtrak-ceo-trump-budget-eliminates-money-upgrade-northeast-corridor/419210001/
A statement to the effect that if LD trains went away, the overhead costs would fall more heavily on the remaining services (or lines of business) is true by definition. If the only thing ATK runs is the NEC, then the NEC has to absorb all the overhead.
It does NOT follow however that the of overheads charged to the remaining line(s) of business would necessarily increase in significant dollar amount. The "therefore" part of the statement is not true and Wick knows it. The reason it is untrue is that most of the overheads he is talking about are what railroad accountants call Long Run Variable costs.
There are three types of railroad costs. Short Run Variable costs are those which vary directly with the activity. Diesel fuel varies directly with whether or not you run the train today.
Long run variable costs are those that vary in the long run, more than a day less than forever. Commisary costs might be a good example. ATK incurs commisary costs strictly for LD, strictly for the NEC, and perhaps some that serve both lines of business. If the LD trains go away so does the commisary Short Run Variable and Long Run Variable cost for them. NEC commisary costs are unaffected. Only to the extent that commisary costs can not be reduced prorata to loss of LD traffic at some specific point, would the NEC bear more commisary costs.
If your report of what Moorman said is true, and it probably is, it is misleading. In his defense, any extended discussion of STB regulated cost accounting causes most people's eyes to glaze over, and as you point out after 40+ years, ATK still does not have a credible accounting system.
The North Jersey story is 95% about the NEC, but does include a slightly modified version of what you reported Moorman to have said about overheads. The reporter simply repeated the claim with even less clarity than I think you did.
To the extent that LD trains are absorbing Fixed Costs, then yes that allocation would shift to NEC, again by definitiion. What are ATK's real fixed costs that should realistically be absorbed to some degree by the LD line of business? A portion of Moorman's salary, the cost of the Board of Directors, and fees paid outside accountants come to mind. This is not a complete list but a real list will be a short list and the amounts very modest in the context of ATK. It is what the accountants call not material.
In short, his comment is misleading at best.
The long distance trains are not going to be discontinued unless the United States hits a financial wall, which is a possibility albeit a small one. The best outcome would be to reconfigure them to the traveling needs of the 85 percent of riders who are in coach. Getting rid of the sleepers in favor of business class accommodations and the dining cars in favor of better lounge car servings could help reduce the costs and losses associated with the long distance trains.
Rio Grande Valley, CFI,CFII
If you eliminated the LD trains you have the shut down costs of LD which would take several years to disappear. Among the largest would be the labor protection costs, second largest would be the write downs or payoffs of LD equipment purchases or disposition of the excess equipment. Other things to consider would be contract termination fees. Then there would be the unavoidable National debate that if Amtrak is only regioinal in the NEC, shouldn't it be subsidized regionally instead of via the Federal Budget? The debt Amtrak owes would be allocated over a much smaller pool of assets and a dramatically smaller company and it would take a long time to pay that down.
NEC cannot support itself in it's current form and the reallocation of costs from the LD trains over to the NEC would make the NEC look like a huge money loser for at least 4-5 years while the costs of the LD trains were handled. During that 4-5 year timeframe likely that added cost structure would be used politically to pull the plug on the NEC as well or at least move it to some sort of regional or state compact.
I would not say the costs would "melt away" because Amtrak would still need to maintain a website of some sort, 800 reservations number and staffing (not cheap), some of the technical overhead is scaled for a National system and downsizing it to a Regional system also would take time and a good portion would still exist in smaller form.
CMStPnP: Well said.
If someone could pull out the various costs associated with LD service, we could have something mor realistic than mere specualtion.
To understand this argument better we need to know the number of revenue passenger miles carried by LD and NEC trains. It has appeared to some that costs are allocated based on revenue passenger miles. ( Or revenue seat miles ? ) A figure of those and state supported trains is really needed.
CMStPnP If you eliminated the LD trains you have the shut down costs of LD which would take several years to disappear. Among the largest would be the labor protection costs, second largest would be the write downs or payoffs of LD equipment purchases or disposition of the excess equipment. Other things to consider would be contract termination fees. Then there would be the unavoidable National debate that if Amtrak is only regioinal in the NEC, shouldn't it be subsidized regionally instead of via the Federal Budget? The debt Amtrak owes would be allocated over a much smaller pool of assets and a dramatically smaller company and it would take a long time to pay that down. So many claims in one paragraph. Congress created the labor protection scheme, probably to buy labor's support for something. Congress can take away what congress gives. Equipment debt is a sunk cost. It is what it is and will NOT change with the shutdown of the LD network. It is irrelevant to the decision. What contract termination fees? The freight railroads would be so happy to see ATK quit stealing their capacity that the bosses would dance a jig! If ATK was cut back to the one market where it makes sense, and the rest of the country figured out it was a regional subsidy to the northeast and congress gave ATK to the affected states, I and everyone outside the NEC would count that as a good thing. NEC cannot support itself in it's current form and the reallocation of costs from the LD trains over to the NEC would make the NEC look like a huge money loser for at least 4-5 years while the costs of the LD trains were handled. During that 4-5 year timeframe likely that added cost structure would be used politically to pull the plug on the NEC as well or at least move it to some sort of regional or state compact. What happened to the vaunted operating surplus?? Your statement accepts the premise that ATK is misallocating its overhead. In other words they are a bunch of crooks. That is your hypothesis, not mine. In fact if the LD trains are shut down the costs to run them go away. See my previous post about the nature of costs. If ATK has misallocated overheads and the remaining fall to the NEC that is a good thing. At least we would have honest accounting! I would not say the costs would "melt away" because Amtrak would still need to maintain a website of some sort, 800 reservations number and staffing (not cheap), some of the technical overhead is scaled for a National system and downsizing it to a Regional system also would take time and a good portion would still exist in smaller form. Long run variable costs do "melt away" when the underlying activity goes away. You scale down the reservation system, maybe even contract it out if it is not already. You fire the subbosses associated with the LD trains. This is NOT complicated. Of course costs associated with the NEC will continue. How could they not?
So many claims in one paragraph. Congress created the labor protection scheme, probably to buy labor's support for something. Congress can take away what congress gives. Equipment debt is a sunk cost. It is what it is and will NOT change with the shutdown of the LD network. It is irrelevant to the decision. What contract termination fees? The freight railroads would be so happy to see ATK quit stealing their capacity that the bosses would dance a jig! If ATK was cut back to the one market where it makes sense, and the rest of the country figured out it was a regional subsidy to the northeast and congress gave ATK to the affected states, I and everyone outside the NEC would count that as a good thing.
What happened to the vaunted operating surplus?? Your statement accepts the premise that ATK is misallocating its overhead. In other words they are a bunch of crooks. That is your hypothesis, not mine. In fact if the LD trains are shut down the costs to run them go away. See my previous post about the nature of costs. If ATK has misallocated overheads and the remaining fall to the NEC that is a good thing. At least we would have honest accounting!
Long run variable costs do "melt away" when the underlying activity goes away. You scale down the reservation system, maybe even contract it out if it is not already. You fire the subbosses associated with the LD trains. This is NOT complicated. Of course costs associated with the NEC will continue. How could they not?
I would ever ride a LD train ever again without Full Dining Car and sleeping Car to sleep in Bed at night. I can't take ride in coaches for few days. I would go Nuts in coaches. I am only 39 years old too.
PNWRMNMCMStPnP If you eliminated the LD trains you have the shut down costs of LD which would take several years to disappear. Among the largest would be the labor protection costs, second largest would be the write downs or payoffs of LD equipment purchases or disposition of the excess equipment. Other things to consider would be contract termination fees. Then there would be the unavoidable National debate that if Amtrak is only regioinal in the NEC, shouldn't it be subsidized regionally instead of via the Federal Budget? The debt Amtrak owes would be allocated over a much smaller pool of assets and a dramatically smaller company and it would take a long time to pay that down. So many claims in one paragraph. Congress created the labor protection scheme, probably to buy labor's support for something. Congress can take away what congress gives. Equipment debt is a sunk cost. It is what it is and will NOT change with the shutdown of the LD network. It is irrelevant to the decision. What contract termination fees? The freight railroads would be so happy to see ATK quit stealing their capacity that the bosses would dance a jig! If ATK was cut back to the one market where it makes sense, and the rest of the country figured out it was a regional subsidy to the northeast and congress gave ATK to the affected states, I and everyone outside the NEC would count that as a good thing. NEC cannot support itself in it's current form and the reallocation of costs from the LD trains over to the NEC would make the NEC look like a huge money loser for at least 4-5 years while the costs of the LD trains were handled. During that 4-5 year timeframe likely that added cost structure would be used politically to pull the plug on the NEC as well or at least move it to some sort of regional or state compact. What happened to the vaunted operating surplus?? Your statement accepts the premise that ATK is misallocating its overhead. In other words they are a bunch of crooks. That is your hypothesis, not mine. In fact if the LD trains are shut down the costs to run them go away. See my previous post about the nature of costs. If ATK has misallocated overheads and the remaining fall to the NEC that is a good thing. At least we would have honest accounting! I would not say the costs would "melt away" because Amtrak would still need to maintain a website of some sort, 800 reservations number and staffing (not cheap), some of the technical overhead is scaled for a National system and downsizing it to a Regional system also would take time and a good portion would still exist in smaller form. Long run variable costs do "melt away" when the underlying activity goes away. You scale down the reservation system, maybe even contract it out if it is not already. You fire the subbosses associated with the LD trains. This is NOT complicated. Of course costs associated with the NEC will continue. How could they not?
Too many issues to respond to here, I don't have the time. I am offering an opinion not a claim, BTW. You want a claim go see a judge. Also, once you have experience liquidating or shutting down a line of business we can have the argument........right now it is a waste of my time.
In regards to labor protection being a "scheme". I think that is pretty heartless to say that. Actually no it is a method of attracting quality employees for on board service and at the Depot. If you want to staff those positions with homeless people or winos from the gutter.....go ahead and let us know how that works with attracting passengers and repeat business. Granted we have all had run-ins with Amtrak employees but overall they try to do a good job and show up for work in presentable uniforms perfectly sober.......that costs money and benefits to get people like that.
In the real world, you need to be less heart less and provide a route for an employee who is mobile on a train to find a new job and you need to pay for that time period. Now we can argue over time period (which I have no clue what it is but have read in these forums and elsewhere it spans more than a year) but you can't argue that it exists in the first place because Amtrak would not run without the labor protection clause that pays for folks seperated for a time frame after a route has been discontinued. Given the number of employees involved in running LD trains, the costs would not be trivial, IMO. In some states if the loss of employment was no fault of the employee, your asked to contribute to their unemployment compensation as well......if they claim it. This will drive up your unemployment insurance costs for any line of business that remains in the places where you cut LD.......for a time until you re-establish yourself as a stable employer. I can go on and on but your not basically understanding the concept because you have never laid anyone off before nor have you liquidated a business.
Also, BTW, you might like this as a taxpayer but you currently pay "seperation payments" to each member of the Armed Forces that is sent home as part of a involuntary force reduction........and some of those can be substantial depending on years of service. So reducing the size of the uniformed part of DoD is not cost free either.
One more comment on labor and labor protection. In the State of Texas the employer pays child support via withholding from the employee's paycheck. The employer is held equally accountable for that child support payment reaching the kid on time. It's easy in a discussion forum to say "cut them off" when it comes to labor protection issues.......quite a different story in real life when it involves kids that had nothing to do with the current set of circumstances of their Parents that you employed. Same deal with pregnant employees a few months away from their birthing date. Tear-jerking stories BUT also real life vs a discussion forum. You owe these people something if they worked for you.
schlimm If someone could pull out the various costs associated with LD service, we could have something mor realistic than mere specualtion.
schlimm ............... Also, Moorman claimed 60% of ridership on Amtrak was "National" whatever that is. The statement appears to be misleading, by combining state-supported corridors with LD routes.
............... Also, Moorman claimed 60% of ridership on Amtrak was "National" whatever that is. The statement appears to be misleading, by combining state-supported corridors with LD routes.
In 2016 the long distance trains carried 14.9 percent of Amtrak's system passengers. The State Supported and Other Short-Distance Corridor trains carried 47 percent. The two add to 61.9 percent, which can be rounded to 60 percent without causing too much heartburn.
The percentage of passengers on the long distance trains has hovered around 15 percent for at least the last five years. In 2012 it was 15.2 percent.
In 2016 15 percent of the long distance passengers booked a sleeping. In 2012 it was 14.6 percent. Sleeping car passengers make up approximately 2.2 percent of the system total.
I hope Amtrak stay the same or gets little better over next few years. Congress and Trump got Bigger Fish to fry USA, then poor old Amtrak.
JPS1 schlimm ............... Also, Moorman claimed 60% of ridership on Amtrak was "National" whatever that is. The statement appears to be misleading, by combining state-supported corridors with LD routes. In 2016 the long distance trains carried 14.9 percent of Amtrak's system passengers. The State Supported and Other Short-Distance Corridor trains carried 47 percent. The two add to 61.9 percent, which can be rounded to 60 percent without causing too much heartburn. The percentage of passengers on the long distance trains has hovered around 15 percent for at least the last five years. In 2012 it was 15.2 percent. In 2016 15 percent of the long distance passengers booked a sleeping. In 2012 it was 14.6 percent. Sleeping car passengers make up approximately 2.2 percent of the system total.
That was my point. Referring to the short State Corridors as part of a "national service" appears to be an attempt to justify the existence LD trains.
In these discussions, someone always tries to use raw passenger numbers to marginalize LD. Look at the March issue of Trains at the chart on the bottom of page 25. While the LD trains carry 15% of passengers, that translates to 43% of the passenger miles. In other words they do almost half the work of ATK.
We have also had the discussion before on sleeper contribution to the LD trains. Because they pay so much more for the accommodations, they contribute about a third of the revenue of LD trains.
JPS1. The percentage of passengers on the long distance trains has hovered around 15 percent for at least the last five years. In 2012 it was 15.2 percent. In 2016 15 percent of the long distance passengers booked a sleeping. In 2012 it was 14.6 percent. Sleeping car passengers make up approximately 2.2 percent of the system total.
MidlandMike Because they pay so much more for the accommodations, they contribute about a third of the revenue of LD trains.
Based on ticket revenues as opposed to total revenues, in 2016 sleeping car passengers paid 37.7 percent of the long distance train's ticket revenues. In 2012 it was 35.2 percent.
Revenues are only half of the story. The other half are the expenses of operating the sleeping cars plus the allocated capital charges. Amtrak does not make these numbers public.
In a 2005 study the DOT IG found that passengers in Amtrak's sleeping cars got a greater subsidy than the coach passengers. Whether this is still true is unknown.
In 2016 the long distance ticket revenues were 22.5 percent of Amtrak's total ticket revenues; in 2012 they were 25.5 percent. This is just half the story. How much did they lose per passenger mile and per ticket is equally important.
The use of passenger miles is misleading, as it inflates the value of LD service. The metrics that matter are number of passengers served, the revenue they generate and the actual cost to operate those trains, setting aside various fixed costs, overhead, etc.
schlimmThat was my point. Referring to the short State Corridors as part of a "national service" appears to be an attempt to justify the existence LD trains.
So your contention is that whenever a LD train uses a State Corridor station, it shares no costs of that station, staffing, etc and no costs of that station are allocated to the LD route.......your contention is the facility is entirely bought and paid for by the state, including all expenses and equipment.
I would be really surprised if that is how the accounting works because the State Corridors were mostly built on the backs of LD train routes already in place and that is why the states found them so financially attractive. They did not have to build from scratch.....most of the infrastructure was there and a bonus was the LD routes were paying the costs already, they just had to sub-divide them out more.
CMStPnP schlimm That was my point. Referring to the short State Corridors as part of a "national service" appears to be an attempt to justify the existence LD trains. So your contention is that whenever a LD train uses a State Corridor station, it shares no costs of that station, staffing, etc and no costs of that station are allocated to the LD route.......your contention is the facility is entirely bought and paid for by the state, including all expenses and equipment. I would be really surprised if that is how the accounting works because the State Corridors were mostly built on the backs of LD train routes already in place and that is why the states found them so financially attractive. They did not have to build from scratch.....most of the infrastructure was there and a bonus was the LD routes were paying the costs already, they just had to sub-divide them out more.
schlimm That was my point. Referring to the short State Corridors as part of a "national service" appears to be an attempt to justify the existence LD trains.
Whenever someone starts a post with "So your contention is..." you'd better watch out because it is someone trying to put words in your mouth.
I never said what you alleged. Any station's costs should be worn by all the routes that use it, using som method of cost allocation.
What I was saying was that calling shorter state corridors part of a National System is misleading because it inflates the size of ridership to make LD trains appear more significant than they actually are. LD train ridership is a minor part of Amtrak and a miniscule part of overall passenger transportation. Drop LD service tomorrow and very few Americans would notice it other than their small ridership (most of whom have alternatives), some readers on here and the NARP's 24,000 members.
schlimmDrop LD service tomorrow and very few Americans would notice it other than their small ridership (most of whom have alternatives), some readers on here and the NARP's 24,000 members.
Not 100% sure of that. I think some will notice and I think some shared costs will shift making state corridors more expensive to run without the cost sharing from LD trains . Likewise you will see a slight drop in ridership in state corridors as some state trains are used to complete LD train trips. I think that is what they meant when they said part of the National system, they are not completely independent. There is overlap. I think in Illinois especially you will see a jump in costs to the remaining state corridors due to the Chicago Union Station hub plus commissary plus staffing there for LD trains.
CMStPnPThere is overlap. I think in Illinois especially you will see a jump in costs to the remaining state corridors due to the Chicago Union Station hub plus commissary plus staffing there for LD trains.
Yes, but minor. CUS is/will be a profit center due to Metra rent and more commercial facilities paying rent in the future.
schlimm The use of passenger miles is misleading, as it inflates the value of LD service. The metrics that matter are number of passengers served, the revenue they generate and the actual cost to operate those trains, setting aside various fixed costs, overhead, etc.
"The use of passenger miles is misleading..." (?)
New York's MTA commuter trains & subway (and bus) routes carry as many passengers in 3 days as Amtrak carries in a year. So I guess by your logic, all ATK should be shut down in favor of putting all the effort in the MTA since the only thing that counts is the overwhelming number of passengers served.
Agreed. I'd rather have 10 passengers traveling 200 miles between New York and DC vs. 1 passenger traveling 2,000 miles between Chicago and Seattle. You have a bigger audience and it costs a lot less to carry those 10 than that 1.
The metric used by the Department of Transportation back in the 70's when they cut a bunch of trains was PM/TM (Passenger Miles Per Train Mile).
https://www.fra.dot.gov/eLib/details/L16827
Back then one of the worst performing trains was the Cardinal which Amtrak did cancel but Sen. Byrd from West Virginia demanded it be brought back while other trains like the Floridian, National Limited, and Lone Star (all with higher PM/TM than the Cardinal) were canceled and later the Broadway Limited/Three Rivers (Pennsylvania's main train to Chicago and the ability to transfer west) while the Cardinal who serves no one outside of West Virginia is still around (the train is worthless between New York/DC and Chicago since the Lake Shore Limited/Capitol Limited are a good 6-7 hours faster, Cincinnati is served in the middle of the night, and Indianapolis's times aren't ideal either). To this day Byrd Crap still has the worst PM/TM of any LD train.
https://www.fra.dot.gov/eLib/Details/L18616
I think plenty of LD routes contribute well to Amtrak but there are some dead weights like Byrd Crap that could be canceled and save us some money (or the money could be used for more useful routes like a new Three Rivers). Amtrak should decide to keep/cut trains based on performance and not who's in charge of the Senate. They'd be in a much better financial state if they did.
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