End of Amtrak chasing profitability?

[n2cbo]

Unfortunately the conclusion I think we're all aware of is that passenger rail cannot be profitable in a traditional sense when air and autos are so heavily subsidized, directly or indirectly. Ergo a different metric is called for. I'm no fan of governments pouring money into services "just becuase", so there has to be some sort of metric, but traditional profitability goals have seen 40 years of a dysfunctional system chasing its tail. If we keep chasing this metric, we'll keep seeing a marginal long-distance network politically propping up the NEC with some half-decent state corridors thrown in. The same input will result in the same output.

Shifting to some metric such as passenger-miles and discrete rides or even carbon mitigation units could go a long way to selling the concept to both parties. It could illustrate the way passenger trains help job growth and reduce paving expe1940'snditures as well as the green/sustainability improvements in a jurisdiction.

I wholly agree that the airlines are only profitable because of the subsidies that are given. If the airlines had to build their own airports and provide their own air traffic control (Kind of like what the railroads had to do), I believe they would be in much worse shape financially than Amtrak. Actually I believe (and this is only a "top of the head" calculation) If the railroads had been given the same kind of subsidies that were put into air traffic and roads back in the 1940s through now, we would still have had the traditional railroads providing PROFITABLE passenger AND freight service without the need for an Amtrak.
Now, I'm not saying that we should be subsidizing EVERY industry, just that we compare Apples with Apples and hold those that we subsidize to the same standards.

[Suburban Station]

If there were a way to remove government involvement from Amtrak, that would be ideal.

That is why operational profitability is a good way to go. I suspect if Amtrak was only going to Congress for infrastructure projects, Amtrak might get a more receptive audience.

exactly, anderson is 100% correct in that line of thinking. defazio is barking up the wrong tree, service is degrading not because Amtrak is pursuing operational profitability but because of inadequate capital investment over decades. that's not just the NEC but especially the NN. we don't need dining cars back on chicago-east coast trains, we need trains to chicago that don't require overnights in the first place. cut a third out of the trip and amtrak can offer more service, carry more passengers for the same or less operating subsidy.

[SouthernRailway]

I wholly agree that the airlines are only profitable because of the subsidies that are given.

In my view, airlines--and only a handful of airlines--are the only choice for trips above a certain length. They have significant pricing power, particularly since the latest round of mergers a few years ago, and they have cut costs and become much more efficient post-9/11.

Anyone who couldn't make money in that environment needs a psychiatric examination.

[electricron]

What airline subsidies?
Does the US government give one cent directly to any airline, short of buying tickets like everyone else?
Did the US government sell any part of the sky above America to airlines, or are the skies open to everyone to use with some minimum restrictions?
Shouldn't the entity controlling those restrictions pay the dispatchers doing and enforcing the controlling?
Does the US government own all the commercial airports and terminals in America, or are they owned mostly by cities?
Doesn't many of these same cities own most of the rail terminals throughout America?
Don't the airlines own or lease their planes they use in commercial service, just like the government also owns the planes they use.

Meanwhile, the freight railroads own their right of way their tracks are built on. They either own or lease the rolling stock moving over those rails. They also pay the dispatchers and signals used to control the trains over their tracks.

The main difference between these two modes of transportation is who legally owns the corridors - the railroad network and the skies.
Do you really believe anyone will allow the government to sell the skies over their homes to airlines? The same can be said for waterways. Do you really think anyone will allow the government to sell inland waterways or off shore seaways? Land ownership rights have been around forever in western society, the same can not be said for waterways, seaways, or airways.

[n2cbo]

What airline subsidies?

Let's see, like the Air traffic control system, the navaids, the approach navigation systems, and Yes the airfields themselves. Even though most airports are owned by municipal and state authorities, the airlines didn't have to buy the real estate, and the terminals are mostly subsidized by either federal, state or local money.

[east point]

One big subsidy is the US government's to airlines for the GPS system. Use of that system for airlines is "FREE" as it probably saves $6 - 10000 per trip for reduced fuel, time enroute, ATC, ADS-b out and soon in, Collision avoidance system, low visibility approaches and landings, and many other services. Now RR PTC needs GPS but not to the extent that airlines need.

[electricron]

What airline subsidies?

Let's see, like the Air traffic control system, the navaids, the approach navigation systems, and Yes the airfields themselves. Even though most airports are owned by municipal and state authorities, the airlines didn't have to buy the real estate, and the terminals are mostly subsidized by either federal, state or local money.

Amtrak runs around 300 train a day on average, visiting 528 train stations.
It's estimated that there are around 5,000 planes in the air over the United States at any given time. During the course of a day, about 87,000 flights are undertaken in the U.S. skies, and of those, probably one-third are commercial flights. On an average day, U.S. air traffic controllers handle 28,537 commercial flights, 27,178 private plane flights, 24,548 planes for hire flights, 5,260 military flights and 2,148 cargo flights. There are 503 commercial passenger airports, 5,087 public airports, 14,549 private airports, and 305 military airports making a total of 19,636 airports.

Every single train is being dispatched by the company or agency that owns that specific track. Can you imagine 503 commercial service airports centers separately dispatching or controlling 5,000 planes at once, or 87,000 total flights in a day successfully across the entire USA without one unifying organization ruling the roost, the USA government via the FAA"? I can't!

Additionally, the trains in the USA travel at 150 mph or less, airlines fly 500-600 mph depending upon if they are fighting against or surfing with the jet stream. Most trains can be dispatched using shunts, wayside signals, and radios; but airplanes require longer range radar and radios because of their much higher speeds. The US government may be providing airlines a subsidy trains do not receive with the national air traffic control system, but that subsidy is not for the benefit of the airlines as much as it is for safety for all the passengers.

[ThirdRail7]

Tablecloths, fresh flowers, metal flatware, glassware, comp wine, food quality at, say, Seasons 52 level.....

"Amenity kits", comp snacks, beverages (alcohol from the Attendant) in the Sleepers throughout the trip....

A 600 car order for Superliner III's; 300 additional V-II's, including "Pacific Parlor" Lounges.

Restoration of the LD's lost with the Carter, Clinton, and Bush cut's. Service restored to the Overland and the NP routes.

I doubt if any language within an Authorization Bill means any of the above nonsense could move forth. Travel in nature and scope has simply changed over the past sixty years. H.G. Wells' "Time Machine" would have more takers than the above.

Now a positive from removal of the "for profit" language is that "as the stuff that counts", such as infrastructure from appropriations and new short distance equipment is obtained in the private capital markets, comes to pass, the cost of all will be converted to expense by Depreciation (simply because Cash Flow measurements such as EBIDTA ignore such does not mean it's an Expense of the business enterprise). This could result in the return of significant Operating Deficits, that hopefully will be obviated as ridership in markets that count increases.

In short, I welcome the proposed language change, but not for the reasons that the various advocacy groups likely have in mind.

Exactly. I think most people get it. Getting rid of the "for-profit" mantra means there will be more flexibility to run trains that may not entirely cover their costs that includes infrastructure (such as in the Southwest Chief route). If new and additional equipment is ordered, the economies of scale can take help to eliminate some of the losses.

Holding on to some of the amenities has proven effective when it comes to retaining and attracting passengers as well. However, this will not be a call to return to the days of billion-dollar food losses. Showing that Amtrak puts the money o good use has gone a long way towards receiving funds.

Amtrak runs around 300 train a day on average, visiting 528 train stations.
It's estimated that there are around 5,000 planes in the air over the United States at any given time. During the course of a day, about 87,000 flights are undertaken in the U.S. skies, and of those, probably one-third are commercial flights. On an average day, U.S. air traffic controllers handle 28,537 commercial flights, 27,178 private plane flights, 24,548 planes for hire flights, 5,260 military flights and 2,148 cargo flights. There are 503 commercial passenger airports, 5,087 public airports, 14,549 private airports, and 305 military airports making a total of 19,636 airports.

Every single train is being dispatched by the company or agency that owns that specific track. Can you imagine 503 commercial service airports centers separately dispatching or controlling 5,000 planes at once, or 87,000 total flights in a day successfully across the entire USA without one unifying organization ruling the roost, the USA government via the FAA"? I can't!

Additionally, the trains in the USA travel at 150 mph or less, airlines fly 500-600 mph depending upon if they are fighting against or surfing with the jet stream. Most trains can be dispatched using shunts, wayside signals, and radios; but airplanes require longer range radar and radios because of their much higher speeds. The US government may be providing airlines a subsidy trains do not receive with the national air traffic control system, but that subsidy is not for the benefit of the airlines as much as it is for safety for all the passengers.

Whatever reason you use, it still amounts to the airlines not paying for this operation out of their pocket...like most railroads...and that is the point.

[electricron]

Whatever reason you use, it still amounts to the airlines not paying for this operation out of their pocket...like most railroads...and that is the point.

Most railroads do not pay any federal taxes - short of taxes on their income. The property taxes they pay go to state and city governments. They do not even charge passengers a boarding tax. Unlike airlines that do. Here's a link listing them ---
https://www.airlines.org/dataset/govern ... portation/

Here's their typical round trip one hub stop example:
"Sample Round-Trip Itinerary Sold January 1, 2019: Peoria (PIA) – Raleigh/Durham (RDU) via Chicago O’Hare (ORD)
Base Airline Fare
$236.28
: Federal Ticket (Excise) Tax (7.5%) 17.72
: Passenger Facility Charge (PIA) 4.50
: Federal Security Surcharge (PIA-RDU) 5.60
: Federal Flight Segment Tax (PIA-ORD) 4.20
: Passenger Facility Charge (ORD) 4.50
: Federal Flight Segment Tax (ORD-RDU) 4.20
: Passenger Facility Charge (RDU) 4.50
: Federal Security Surcharge (RDU-PIA) 5.60
: Federal Flight Segment Tax (RDU-ORD) 4.20
: Passenger Facility Charge (ORD) 4.50
: Federal Flight Segment Tax (ORD-PIA) 4.20
Total Taxes 63.72
Total Ticket (Fare + Taxes) $300.00
Taxes as % of Fare 27%
Taxes as % of Ticket 21.2%"

What do you think the 21%-27% of your air fares goes to, to pay those subsidies you think are unfair.

How much of your Amtrak fare goes to pay federal taxes? Would you believe it is 100%? Since the US Supreme Court has ruled Amtrak is a governmental agency, every penny of your fare is a tax. Yet, on average, the governments pays you $35.14 subsidy for every ride.
Math follows:
4.3 - 3.2 = 1.1
1.1 billion / 31.3 million = $35.14 /passenger
Source of Amtrak data
https://www.amtrak.com/content/dam/proj ... 6-0717.pdf
"In FY 2016, Amtrak earned approximately $3.2 billion in revenue and incurred approximately $4.3 billion in capital and operating expense.
Amtrak covered nearly 94 percent of operating costs in FY 2016 with ticket sales, payments from state partners and agencies and other revenue.
During FY 2016 (Oct. 2015-Sept. 2016), Amtrak welcomed aboard approximately 31.3 million customers, another record year. On an average day, nearly 85,700 passengers ride more than 300 Amtrak trains."

That's a major difference between a tax that collects more revenues than spent vs a tax that collects less revenues than spent.
Amtrak requires additional "direct" subsidies from the US government general funds than it collects in taxes - while airlines don't.

[SRich]

What airline subsidies?
Does the US government give one cent directly to any airline, short of buying tickets like everyone else?
Did the US government sell any part of the sky above America to airlines, or are the skies open to everyone to use with some minimum restrictions?
Shouldn't the entity controlling those restrictions pay the dispatchers doing and enforcing the controlling?
Does the US government own all the commercial airports and terminals in America, or are they owned mostly by cities?
Doesn't many of these same cities own most of the rail terminals throughout America?
Don't the airlines own or lease their planes they use in commercial service, just like the government also owns the planes they use.

Meanwhile, the freight railroads own their right of way their tracks are built on. They either own or lease the rolling stock moving over those rails. They also pay the dispatchers and signals used to control the trains over their tracks.

The main difference between these two modes of transportation is who legally owns the corridors - the railroad network and the skies.
Do you really believe anyone will allow the government to sell the skies over their homes to airlines? The same can be said for waterways. Do you really think anyone will allow the government to sell inland waterways or off shore seaways? Land ownership rights have been around forever in western society, the same can not be said for waterways, seaways, or airways.

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.

[Suburban Station]

Now a positive from removal of the "for profit" language is that "as the stuff that counts", such as infrastructure from appropriations and new short distance equipment is obtained in the private capital markets, comes to pass, the cost of all will be converted to expense by Depreciation (simply because Cash Flow measurements such as EBIDTA ignore such does not mean it's an Expense of the business enterprise). This could result in the return of significant Operating Deficits, that hopefully will be obviated as ridership in markets that count increases.

In short, I welcome the proposed language change, but not for the reasons that the various advocacy groups likely have in mind.

the for profit goal does not necessarily inhibit ridership growth. there are plenty of examples of commuter railroads who have no such stated goal that also do not focus on ridership growth. losses are often acceptable since the true benefit, for many in charge, is the awarding of contracts. for amtrak, whose business is not as unprofitable as commuter railroads, operating losses primarily stem from lack of capital investment (aka slow, unreliable trains). anything that does not fundamentally improve the product is window dressing (or worse). one language change that might result in real change is anything that allows growth of short distance corridors without state support.

[electricron]

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.

[rcthompson04]

the for profit goal does not necessarily inhibit ridership growth. there are plenty of examples of commuter railroads who have no such stated goal that also do not focus on ridership growth. losses are often acceptable since the true benefit, for many in charge, is the awarding of contracts. for amtrak, whose business is not as unprofitable as commuter railroads, operating losses primarily stem from lack of capital investment (aka slow, unreliable trains). anything that does not fundamentally improve the product is window dressing (or worse). one language change that might result in real change is anything that allows growth of short distance corridors without state support.

What should be Amtrak's goal is the fundamental question. Nobody seems to be in agreement on what Amtrak is supposed to be doing. If it was up to me, I support maximizing ridership to reduce auto/aviation usage while obtaining profitability. That would mean gutting all but a few long distance trains and using the resources to build out corridors and improve the remaining long distance trains.

I like retaining profitability because it is a good check to the "advocacy group" nonsense that we see throughout the transportation sector who push for things that are good for their limited groups, but are a terrible use of resources. You see this nonsense with things like a lot of rural road spending and Essential Air Service.

[electricron]

What should be Amtrak's goal is the fundamental question. Nobody seems to be in agreement on what Amtrak is supposed to be doing. If it was up to me, I support maximizing ridership to reduce auto/aviation usage while obtaining profitability. That would mean gutting all but a few long distance trains and using the resources to build out corridors and improve the remaining long distance trains.

I like retaining profitability because it is a good check to the "advocacy group" nonsense that we see throughout the transportation sector who push for things that are good for their limited groups, but are a terrible use of resources. You see this nonsense with things like a lot of rural road spending and Essential Air Service.

Amtrak was created by politics, and its goals will shift as the political wind blows.
If you lived in the wilderness, very rural areas of this country, and pay taxes on fuel like everyone else, you would also want roads. Without roads to farms, you would starve to death in your penthouse apartment in the city.

[rcthompson04]

Amtrak was created by politics, and its goals will shift as the political wind blows.
If you lived in the wilderness, very rural areas of this country, and pay taxes on fuel like everyone else, you would also want roads. Without roads to farms, you would starve to death in your penthouse apartment in the city.

I am not against rural road spending, but rural areas tend to have this notion that they are not receiving their fair share, but are arguably some of the biggest welfare queens on bad pork.