Amtrak to spin off NE Corridor?

krtaylor wrote:I love trains, and I believe in passenger rail, but I believe we would all be better off to scrap the no-hoper services, and spend the money saved on improving and upgrading the services that actually do have a prayer - like the NEC.

Why not keep subsidizing the long distance trains. Why do they have to make money. It's a government service just like our highways and air traffic control system. Where is this mentality that Amtrak has to turn a profit yet most other transit agencies are subsidized by the public?

Gilbert B Norman wrote:This means that parallel executive and entourage organizations would have to be built and maintained.

Not necessarily. I currently work for a corporation which is actually made up of several subsidiaries. In fact our New Orleans unit filed for bankruptcy as a result of the recent storms. Despite this there is one board of directors and all of us receive our paychecks from the same payroll address. Spinning off the NEC as a separate subsidiary does not necessarily mean a bloated overhead.

krtaylor wrote:Eliminate property taxes on railroad property and equipment.

A few years ago during an NCI conference there was an open forum with a panel of an Amtrak VP, lobbyists and a former senator. They were touting the bill to float government bonds for rail infrastructure including Amtrak. I asked about state property tax relief for railroads thinking this should be looked at first before handing over my tax dollars. Their collective response didn’t sound as if they took my query seriously so I adamantly pressed the issue. The former senator folded his arms, looked down and in a low voice explained this was not possible because "we can’t bash the states." The federal government is not in a position to tell states who or how much they can tax. And as been mentioned already, the states are loath to follow any such tact because "why buy the cow when one already gets the milk for free?"

krtaylor wrote:I have heard that, by itself, Amtrak's NEC operations turn a profit. The revenues from that profit are, in large part, spent elsewhere in the Amtrak network as cross-subsidies.

You are kidding, right?

In the end what does Amtrak have to lose by creating a separate NEC subsidiary? As a separate entity it will clarify of just how much of the annual stipend supports the NEC vise the rest of the 20,000 plus mile network. Amtrak's detractors hold up a huge dollar figure that may be saved by eliminating the LD trains. No one bothers to mention where the rest of the money is going. What if the NEC should completely melt down as a result of its exile? Everyone is well aware who insisted on this action. The NEC is still an important tool in Northeast travel. If it should so much as hiccup as a result of this action there will be hell to pay in the Beltway.

rhallanger wrote:Why not keep subsidizing the long distance trains. Why do they have to make money. It's a government service just like our highways and air traffic control system.

They don't HAVE to make money, but they have to at least cover their costs, unless they have a natural constituency. Everybody uses roads and thus is at least somewhat willing to support them with votes. Otherwise, you have the conststant funding troubles we've seen for decades.

I read the AAR's spin piece that Mr Hallanger kindly provided a link to. It doesn't impress. Mail business was always profitable for railroads, and they competed fiercely for it, so I don't see what the payback was. As for the discount on military business during WW2, railroads made great profits on military business during that war. In fact, the war allowed the Erie to pay its first divident in the twentieth century. And if landgrants were needed to build the transcontinentals, why did the no-landgrant GN prosper while the landgrant NP struggled? For that matter, the UP struggled for decades and was bankrupt at at least 1 point in the late nineteenth century,

The UP was actually bankrupt, or close to it, at several times when stock panics occured. I have to head for church; more later.

We have to remember that prior to FDR, the stock markets were essentially unregulated. Ponzi was only the guy who got caught.

Too many businesses in the late 19th and early 20th centuries were undercapitalized and over-valued. The result, as we saw with the dot com bust, was a market crash and panic.

Passenger rail is unprofitable for multiple reasons. The simplest of these reasons is: Passengers do not pay their pro rata share of the revenue stream. Now, that applies to air, rail, and to a lesser extent, highway and maritime. For rail, the problem is the subsidy given is done so *grudgingly* ... and THAT does not depend on who occupies either the White House or the various Congressional Office Buildings. We've been through the fight every bloody year since 1971. Passenger rail is Federal discretionary spending. As long as it is, the politics of the budget process and the folks in the Beltway will play.

BTW, there is a second reason for passenger rail being unprofitable: Not enough passengers choose rail as a transportation option. That's a timeliness, price, and quality of customer service issue and we've all written whole threads about those!

Our challenge is to advocate an appropriate and rational transportation system across the Nation: There are proper places for air, highway, rail, and local intraurban. Anyone who challenges that sentence in favor of one and only one form will marginalize himself in the debate, imo.

John Perkowski

<i>BTW, there is a second reason for passenger rail being unprofitable: Not enough passengers choose rail as a transportation option. That's a timeliness, price, and quality of customer service issue and we've all written whole threads about those!
</i>

The bigger reason is: Current rail equipment is flat out too expensive to operate. Budd figured this out in the 50's, went off and created an experimental series of EMUs that resulted in a train that was 1/2 the weight of and equivelent MP-54 based train, rode better, far far outperformed the '54, yet used the same amount of power, but had a more robust propulsion system (save for a marginal main transformer). The end result was the 6 car Pioneer III set, which was lighter than any EMU before or since, yet met all ICC regulations well into the 60's - the exact same car body is running to this day in Philly, in the Silverliner IIs.

Schedules got tighter, costs dropped as the same train was faster, moved more people, and did so in less time, yet used the same amount of energy as the stuff it replaced. The ride was far better, the user experience was far better. i.e., a huge improvement with a decrease in costs.

Of course, if you insist on pulling unpowered cars that are as heavy as EMUs, do so with horridly overweight and underpowered locomotives that are high maintenance and have laughable reliability, slow your schedules because your track is a joke and you can't be bothered to run on time, and offer service that's the laughingstock of the industrialized world, with costs that are unseen anywhere else...what the heck do you expect is going to happen?

Sure Amtrak's begging for money. With the state of Amtrak today, this shouldn't surprise anyone

Why are people expecting Amtrak to be profitable? Well, look at the promises and excuses for it in the 80's and 90's:

* Rail was cheap.
* High speed rail could make money
* Amtrak could build such a system and make money
* Amtrak could haul fast freight and make more money

After a decade of hearing this, it's not unreasonable for congress to say 'show me the money'. Right up until Warrington's departure, despite plenty of warnings, Amtrak - and it's advocates - kept insisting that yes, Amtrak WOULD be 'operationaly self sufficient'.

Now, the excuse for Amtrak's piss poor performance is 'no mode of transportation makes money'? Is this REALLY the way to convince an understandably skeptical public to form Amtrak? That since 'everything else' 'loses money', that it's ok for Amtrak to operate with no concept of cost control?

The problem isn't that passenger rail isn't profitable in the US, it's that it moves far too few people for far too much money to be worthwhile. ove more people, faster, for less money, and you might have an argument for Amtrak. Act as if the taxpayer handed you a blank check...well, don't be surprised if they (via congress) decide to reel you in or cut the money off...

I'm sure if you asked most people if they knew that the whomever they voted for congress/the white house was going to try to kill Amtrak, they'd likely say 'yes'. Ask if they care? They'd probbably tell you 'no'....

Nasa understand this I dont think no one in Congress takes Amtrak. No one understand the pain and hardship that we the employees go through. We can do alot of things better with the company but we need a person that wants to put some time and effort. Gunn has done alot changing. We are losing alot of commuter service like we lost the MBTA. Someone needs to wake up and smell something because Amtrak is important to alot of people but we havent notice yet.

Well, look at the promises and excuses for it in the 80's and 90's:

* Rail was cheap.
* High speed rail could make money
* Amtrak could build such a system and make money
* Amtrak could haul fast freight and make more money

Those are not the real reasons; they were made up by Amtrak "management" (read: political hacks). Amtrak's advocates didn't go along with everything that was said by them, and you know it.

Now, the excuse for Amtrak's piss poor performance is 'no mode of transportation makes money'?

Please don't act like you have not been keeping up with things. That's the truth, notwithstanding, and Amtrak should not be singled out because of it, whether rail, air, water or road...and if Amtrak was the sole carrier that was doing "piss poor" on the ledgers, you might have a point; but you don't.

And I lay down the challenge to you yet again to show us all how you could make a system like Amtrak work on the funding they've received since 1971. If you ignore that challenge again, then I suggest you hold your peace.

I would also add that a lot of you need to get off of this kick about demanding that Amtrak turn a profit.

Demanding is not the issue...what is the issue is a dependable form of transportation that a good part of the US population will use.

F3A wrote:I would also add that a lot of you need to get off of this kick about demanding that Amtrak turn a profit.

There are 536 people who matter in determining whether Amtrak's continued mission is to provide intercity passenger service, period, or to provide intercity passenger service at a profit.

One is the President of the United States, whoever he/she may be at any instant in history.

The other 535 are 435 Representatives in the House, and 100 Senators.

http://www.house.gov/writerep

http://www.senate.gov

What we have to decide, as advocates of transportation in general and passenger rail in particular, is:
- Is Amtrak a business? OR
- Is Amtrak a Governmental service?

FWIW, absent the ability the RRs had to operate high-tariff cargoes under the auspices of the Passenger Traffic Departments (read US Mail, REA, and express refrigerator services), I believe passenger rail cannot sweep in enough revenue to be a business... hence it should be regarded as a Governmental service.


John Perkowski

No form of transportation turns a profit? There's just one word for this, and I needn't mention it.

Obviously, if transportation is important and essential, it can turn a profit if it's required to. If it isn't required to, then why bother? If airlines can stay around forever without being dissolved in Ch. 7, where's the pain to the management? If railroad executives find it easier to fish for a handout from Uncle Sam, than to try to develop a profitable service people will actually pay to use, then why be surprised that service isn't the priority? If the driving public is used to not paying for highways, and not required to, of course they aren't profitable. But that is a far, far thing from saying transportation cannot be profitable.

If Amtrak wants to get in a fight for government funds with all the other forms of transport, it will always and inevitably lose, because far fewer people use it than use any of the other forms, and even those that do travel otherways more often. There just is no natural constituency for it.

The only long-term viable success strategy, is to come up with some kind of service that can cover its costs from revenues. Do we truly believe that this is an impossible task? If so, then the future is hopeless and this discussion pointless. Surely we have more faith in the inherent economies of railroading than that, most especially as fuel prices climb.

No form of transportation turns a profit? There's just one word for this, and I needn't mention it.

Does that word begin with "T" and end in "H" by any chance?

When it comes to Amtrak, infrastructure costs are never divorced from total costs. Same goes for private railroads and urban passenger rail. However, with roads, airports and waterways, they indeed are divorced thus.

The only long-term viable success strategy, is to come up with some kind of service that can cover its costs from revenues

There's such a service running in Japan, Germany, France, Spain, even South Korea and the UK; but such requires up-front capital costs. They won't build themselves.

In the US, no mode of public passenger transportation makes money. Airlines as a group lose money, and only Southwest has a long history of profitability. Bus lines fold all the time, and Greyhound has been through a couple of bankruptcies in the last few years. Why would anyone expect railroads, which have higher infrastructure costs, and which usually have to pay taxes on that infrastructure, to be able to make a profit on passenger transportation? If we did what Europe and Japan do, and built modern railroad infrastructure and provided modern rolling stock, and changed the FRA so it didn't make passenger rail equipment suffer crippling weight penalties, then we could have low-cost (per passenger mile), high speed trains that could earn their operating costs.

Boston Globe has editorialized today.

Brief passage:

• It is telling that there is no evidence that the Amtrak board first conferred with state officials or Congress before approving the resolution on Sept. 22. The board action became public only when notice of it appeared in the newsletter of a rail passenger organization that has been critical of Amtrak management [Author's note: URPA]

Boston Globe is owned by the New York Times Company, but the editorial content is represented to be independent of any positions taken @ 229W 43rd.