End of Amtrak chasing profitability?

[JoeG]

Yeah, Greg, looks like I missed that. The power authority, which claims to get no tax money, has owned the canals for a couple of years. Well, I guess hydroelectric plants and canals both use water.....The authority is called nonprofit, but looks like somehow it has enough surplus to subsidize what is mostly a pork barrel canal system. (I love those canals but I think they should charge boat owners tolls to maintain them. The boats I see on the canals look pretty plush to me.)

[BandA]

Highways aren't profitable. The army isn't profitable. The courts aren't profitable. ICE isn't profitable. Schools aren't profitable. That doesn't necessarily mean that Amtrak shouldn't make money if it can, or break even if it can. It's just pointing out that we spend a lot on public services that even a libertarian probably thinks don't need to be profitable. Maybe you don't seem passenger trains that way, but public services paid for with taxes are not necessarily wastes of money. They can also be ways of doing collective tasks that we think are important but which don't make money.

The Massachusetts Turnpike Extension (I-90 toll road in Newton / Boston) was profitable enough that they were required to subsidize another untolled highway ("The Big Dig" / I-93). The Massachusetts Registry of Motor Vehicles is (was?) profitable despite their criminally incompetent bureaucracy. Many courts & police forces, although not overall profitable, derive significant income off of usury fines, speed traps, etc. Many passenger railroads, streetcar lines were quite profitable until 100 years ago, and most freight railroads are still profitable. MTR, the world's most profitable passenger operator, profits are down to only $11B due to $1.5B in property damage & lower revenue in Hong Kong. https://www.nhstateparks.org/getmedia/3 ... -23-19.pdf

The State Park System in New Hampshire is operationally self-funded, one of the only such systems in the country.

Still a worthwhile goal or aspiration for a railroad which provides services that people value.

[R36 Combine Coach]

The TBTA (dating back to Moses in the 1930s) has always been profitable with huge revenue, as is PANYNJ. Both agencies end up subsidizing various transit agencies, as the NJTA (Turnpike Authority) is used to fund NJDOT and NJT.

[SRich]

Yes airlines are direct subsidized, just one example. FUEL TAXES. Nowhere in this world is tax charged on jet a1. So indeed is the government subsidizing airlines.

A lack of a specific tax, in this case a fuel tax, does not mean it is being subsidized. Does Amtrak or other governmental transportation agencies pay a fuel tax? Or is it exempt? Does Amtrak pay income taxes? Why, it has never made a profit.

Airlines are taxed to use the airport, to use a flight segment, to use security forces. Are you tax on trains for the same purposes at a rate 20%-25% of your fare? Do airlines pay income taxes? When they make a profit they do.

Webster on subsidy:
: a grant or gift of money: such as
a: a sum of money formerly granted by the British Parliament to the crown and raised by special taxation
b: money granted by one state to another
c: a grant by a government to a private person or company to assist an enterprise deemed advantageous to the public

Again I repeat, the lack of a tax does not mean there is a subsidy.

And you’re mistaking that. Road traffic, rail traffic and seaborne traffic paying fueltaxes. So why doesn’t the airlines not? Anser: subsidy.

Just one example... in the EU al governments talking about taxing fuel voor aviation, i guess you know what the airlines are saying...

In 2004 a US senator(MCcain) demanded the elimination of all operating subsidies; then Amtrak CEO Gunn responded by asking the Senator if he would also demand the same of the commuter airlines, upon which the citizens of Arizona are dependent. Just another example of government subsidy for airlines...

[rcthompson04]

Yes airlines are direct subsidized, just one example. FUEL TAXES. Nowhere in this world is tax charged on jet a1. So indeed is the government subsidizing airlines.

A lack of a specific tax, in this case a fuel tax, does not mean it is being subsidized. Does Amtrak or other governmental transportation agencies pay a fuel tax? Or is it exempt? Does Amtrak pay income taxes? Why, it has never made a profit.

Airlines are taxed to use the airport, to use a flight segment, to use security forces. Are you tax on trains for the same purposes at a rate 20%-25% of your fare? Do airlines pay income taxes? When they make a profit they do.

Webster on subsidy:
: a grant or gift of money: such as
a: a sum of money formerly granted by the British Parliament to the crown and raised by special taxation
b: money granted by one state to another
c: a grant by a government to a private person or company to assist an enterprise deemed advantageous to the public

Again I repeat, the lack of a tax does not mean there is a subsidy.

And you’re mistaking that. Road traffic, rail traffic and seaborne traffic paying fueltaxes. So why doesn’t the airlines not? Anser: subsidy.

Just one example... in the EU al governments talking about taxing fuel voor aviation, i guess you know what the airlines are saying...

In 2004 a US senator(MCcain) demanded the elimination of all operating subsidies; then Amtrak CEO Gunn responded by asking the Senator if he would also demand the same of the commuter airlines, upon which the citizens of Arizona are dependent. Just another example of government subsidy for airlines...

Not charging tax on jet fuel is not a subsidy if the airlines are taxed elsewhere, which they are subject to taxes not seen in other areas of transportation. Jet fuel is not taxed as it was perceived there would be a level of selective refueling, which we see in other forms of transportation.

A more holistic analysis needs to be done by looking at two things. First, the total revenue collected from a sector as a percentage of tax revenues then look at what the GDP percentage is for that sector. Second, look at the total revenue collected from a sector and total outlays to said sector. The former will highlight any obvious subsidizing of the sector via tax breaks. The latter will highlight if any cash is given to the sector.

[rcthompson04]

The TBTA (dating back to Moses in the 1930s) has always been profitable with huge revenue, as is PANYNJ. Both agencies end up subsidizing various transit agencies, as the NJTA (Turnpike Authority) is used to fund NJDOT and NJT.

It is quite interesting if you look at this state by state how it is just a rob one agency to pay for another agency game. Here in Pennsylvania our transportation funding web starts with motor vehicle licensing/registration funds being pulled out of the transportation trust fund to partially fund the State Police. Then to fill that hole, the Turnpike Commission gives money to PennDOT from tolls that were never enacted on I-80, which means borrowing and rolling the Turnpike higher. Then PennDOT uses this money to fund mass transit while short changing certain metro areas on highway funds as well. During the last crisis several years ago PennDOT said on average a state highway with an AADT less than 8000 vehicle would not cover its operating costs.

What it came clear to me from such a debate is that it is wrong to look at what mode is getting what, but where the money is spent is far more important. Almost always urban and suburban are subsidizing rural and that gap is widening.

[Suburban Station]

Plenty of people argue that we dont apply enough financial standards to highway decisions. Pennsylvania has a very high gas tax. Admittedly there is an 800 million diversion to the state police bleeding their funds but somehow it is still not enough to keep up with repairs. Why? Because decisions on expanding capacity are often political so they happen at the expense of maintaining projects.

I also think that pennsy fares were lower and there were more generous child and companion fare discounts as well. That said, amtrak has used NEC fares to cross subsidize commuters and long distance trains in order to keep their funding. This isnt actually all that unusual and if amtrak had an NEC like service in chicago, la San Diego, texas, and the pnw it would probably be sustainable

[eolesen]

Not charging tax on jet fuel is not a subsidy if the airlines are taxed elsewhere, which they are subject to taxes not seen in other areas of transportation. Jet fuel is not taxed as it was perceived there would be a level of selective refueling, which we see in other forms of transportation.

Actually, jet fuel *is* taxed in the US. Not sure where folks got the idea it wasn't, but you're wrong.

Last I recall, at the Federal level, commercial jet fuel is taxed at $0.044 per gallon, and non-commercial fuel at $0.193 for AvGas and $0.218 for Jet-A.

Then you have ~40 states which tax jet fuel, ranging from $0.01 to $0.26 per gallon *AND* another 10 states have sales tax on top of the per gallon taxes....

For a 737-800 that burns around 850 gals per hour, the Federal tax alone comes out to $37 for every hour of flight, or around $133,000 a year per aircraft.

That's $99M per year in Federal fuel taxes alone for Southwest Airlines......

[rcthompson04]

Plenty of people argue that we dont apply enough financial standards to highway decisions. Pennsylvania has a very high gas tax. Admittedly there is an 800 million diversion to the state police bleeding their funds but somehow it is still not enough to keep up with repairs. Why? Because decisions on expanding capacity are often political so they happen at the expense of maintaining projects.

That is my point with the rural versus suburban/urban transportation funding paradigm. "Economic development" highway building has been a bipartisan trend in western PA for decades.

The high gas tax in PA is offset by relatively low registration fees and no personal property tax on cars. That has lessened the revenue collection disparity. Works out good for me as someone who barely uses a tank a gas a month in a Subaru.

Pennsylvania does need to engage in a serious amount of downloading of state highways with low traffic counts to municipal governments. You could probably solve the state's highway funding issues and force local governments to raise property taxes in rural areas if roads with traffic counts under a certain amount were automatically downloaded to municipal jurisdiction.

[Tadman]

For a 737-800 that burns around 850 gals per hour, the Federal tax alone comes out to $37 for every hour of flight, or around $133,000 a year per aircraft.

That's $99M per year in Federal fuel taxes alone for Southwest Airlines......

This brings up another interesting accounting question: how do we compare modes?

Does Southwest pay more or less taxes than Greyhound?

Depends, perhaps, if the taxes are measured per gallon, per passenger mile, per revenue dollar, per profit dollar, per seat mile... This is the kind of question that could (and probably does) occupy a few economists for a lifetime. Guaranteed some PhD candidate wrote a paper on this in order to receive his/her doctorate.

[electricron]

This brings up another interesting accounting question: how do we compare modes?

Does Southwest pay more or less taxes than Greyhound?

Depends, perhaps, if the taxes are measured per gallon, per passenger mile, per revenue dollar, per profit dollar, per seat mile... This is the kind of question that could (and probably does) occupy a few economists for a lifetime. Guaranteed some PhD candidate wrote a paper on this in order to receive his/her doctorate.

Does it really matter who pays more in taxes than the other?
The various tax rates are set by Congress regularly as the various programs come up for renewal. The Congress weighs and then sets the tax to pay for the different programs. It's up to Congress to decide how much. It is up to Congress to balance the taxes as needed for fair competition - or to set the tax rate lower to favor one mode over the other - or to set the tax rate higher to punish that mode.
That's why so many political action committees and lobbyists in D.C.
I guarantee, they are all always lobbying for lower taxes and less regulations for their company.

[RRspatch]

According to House T&I Chairman DeFazio, he intends to strip Amtrak's for profit mandate in the Surface Transportation re-authorization that will supersede the current 2015 FAST act due to expire in 2020.

While it's a safe assumption that some around here (and many at the various advocacy sites) are hoping that Rep. Peter DeFazio's (D-OR4) "re-authorization" resolution (lest we forget, such is not an Appropriation) will mean a restoration of full service dining on all LD trains, what to me is really "scary" is that Amtrak starts to convert the V-II Diners to some kind of Food Service Car open to all passengers, and the dictum to restore the full service comes down.

What a waste!!!!

Well, if you're going to get rid of the profitability requirement wouldn't that automatically make the Mica rule null and void? The Mica rule IS the reason Amtrak downgraded meal service on the eastern trains and NOT fussy Millennial's. It would be interesting to see Anderson's response to Congressional pressure to restore dining service once the Mica rule died. I wouldn't send those V-II diners to Bear or Beech Grove just yet.

[rcthompson04]

Well, if you're going to get rid of the profitability requirement wouldn't that automatically make the Mica rule null and void? The Mica rule IS the reason Amtrak downgraded meal service on the eastern trains and NOT fussy Millennial's. It would be interesting to see Anderson's response to Congressional pressure to restore dining service once the Mica rule died. I wouldn't send those V-II diners to Bear or Beech Grove just yet.

Amtrak still needs the money to afford it. Not being profitable doesn't mean you get to spend whatever you want.

[Suburban Station]

Well, if you're going to get rid of the profitability requirement wouldn't that automatically make the Mica rule null and void? The Mica rule IS the reason Amtrak downgraded meal service on the eastern trains and NOT fussy Millennial's. It would be interesting to see Anderson's response to Congressional pressure to restore dining service once the Mica rule died. I wouldn't send those V-II diners to Bear or Beech Grove just yet.

would depend on whether Amtrak has found it to be a cost saving measure or not. it is unlikely amtrak's mission will be changed to wasting taxpayer money and unless the elimination of dining service is costing amtrak money, I would not look for it to return. it's mission is transportation not providing meals to first class passengers, that's true whether it includes a profitability goal or not.

[Tadman]

I look at it this way - there is no profitability requirement for commuter carriers, but they are not about to bring back the first class commuter club cars that were once found on quite a few New York and Chicago lines. It's really bad optics, even if it breaks even or turns a profit, because it's a distraction from moving middle class people to their jobs. In a capacity-constrained operation like Metro North, it downright hurts the typical commuter because for every "profitable" car full of 40 first class commuters, 130 average commuters can't ride the train.

Translate that back to Amtrak and you could say each diner for first class passengers is a carload budget detracting from coach passengers being moved.