Some of the short distance and corridor trains are showing an operating profit.
According to Amtrak's Monthly Performance Reports several corridor and short distance trains are actually showing a profit. The "profit" doesn't include items like depreciation, interest or a capital charge on the expense side of the ledger. And I'm sure state support is included on the revenue side of the ledger, but the result does indicate that passenger trains may have a brighter future than previously thought.
At the end of January, the Cascades and the Virginia trains were showing a positive result and several other trains were basically breaking even: Ethan Allen, Hiawathas, Chicago-St. Louis and Carolinian. With the busy spring and summer seasons ahead, Amtrak might be able to have its most "profitable" year ever.
Posted by Gilbert B Norman (Member # 1541) on :
Mr. Vincent, for most of my clients "cookie jar accounting" was all they were concerned with. The Northeast, both Acela and Regional, have met this setandard for some time.
But I'm pleased as punch to learn that other regions are following suit.
Now if we could only do something with those LD trains...maybe like get rid of 'em.
Posted by jp1822 (Member # 2596) on :
But Mr. Norman, I think you would agree that if you had to allocate the fully loaded costs of say infrastructure costs to maintain an expensive electrical infrastructure such as the NEC (or even add in an allocated depreciation as most things on the Amtrak owned NEC are capitalized), these trains too would NOT look profitable at all.
The long distance trains - aside from equipment - really have no allocated capital costs, as they operate over "rented" freight railroad trackage.
So how do we balance the intesive and expensive capital costs of the trains operating on the NEC - which said expenditure is needed to run these trains - and the largely operating costs that the long distance trains absorb? It's an accounting task that is quite unique and lends to varied interpretation......
Although I ride the long distance trains occasionally, I am largely on corridor trains. Ane the later is more for business than pleasure. The few long distance trains I take - yes, they are lagely glorified travel experiences. At one time the Silver Meteor made sense for clients I had in Charleston and Savannah. But this is not feasible with the current schedule of the Meteor any more.
It seems that the Auto Train and Acela Express come closest to breaking even. But the Acela Express trainsets are not cheap to maintain (e.g. inspections and parts). Where as I would put an assumption that the maintenance of the Auto Train's Superliner equipment is cheaper to maintain.
Posted by Gilbert B Norman (Member # 1541) on :
Well, fellow CPA, I certainly respect your views on that "big gray area" of allocatable costs. I doubt if anyone has contended that Acela and friends "put enough in the cookie jar over what they take out" to cover whatever allocatable costs are assigned to them.
That the "Cresilvers" (like that term from over at "that other site" we both are at) operate over the Corridor and are having capital costs of such allocated to them is likely a factor regarding why on the MPR's, they "don't look that good".
Secondly, allow me to concur (Adobe P 19) with Mr. Vincent's point that Local support is included as operating revenue. This does present a distortion favoring Locally funded (Local, as often defined in Federal publications means any jurisdiction other than Federal) service when compared to the Corridor, which is 100% Federal.
Now we move to thoughts regarding those anachronisms known as the LD's. Even though when any of us (yes; me included) who boards one and sees "things well populated', they all, including Auto Train, take more out of the cookie jar than they put in (Adobe Page 52). That of course means use of the most favorable measurement - Core Contribution - shown at that page. But of course the point those six daily "Cresiver" movements are simply absorbing costs that otherwise would inure to the Acelas and Regionals is, again, noted and well taken.
But I ask that this Forum accept that the LD's have another benefactor out there beyond Uncle Sam - and that is the Class I railroad industry. So long as these trains are "imposed" on the industry and paid for on some "incremental" cost method without any regard for their "opportunity" cost, i.e. how much profit did we forgo because we had one less "Z" or "Bakken" train out there?
disclaimer: author holds long positions CSX KSU UNP (YTD: KSU CSX are the two best performers I have; UNP is comfortably S&P outperform)
Posted by Henry Kisor (Member # 4776) on :
I would argue that we must look beyond bean counting to determine the value of long distance trains in the United States.
Look at the fourth paragraph of this press release, issued today, from Media Relations:
AMTRAK COVERS 88% OF OPERATING COSTS; Federal capital investment supports future growth
WASHINGTON - Amtrak President and CEO Joe Boardman told a Congressional committee today that America's Railroad® is leveraging record ridership to reduce dependence on federal operating subsidies. He announced that in FY 2012 the federal government paid just 12 percent of Amtrak's operating costs while Amtrak covered 88 percent with ticket sales and other revenue.
Boardman explained that while the railroad has taken actions to chip away at operating costs and increase revenue, a vital component of its success has been the federal government's willingness to invest in the Amtrak national network. Federal capital investment helps to reduce operating costs, supports the existing system, funds solutions to reduce future costs and provides the infrastructure and equipment to sustain ridership and revenue growth.
"Previous federal capital investment levels have sufficed to keep the system going, but they are not going to be adequate in the future," Boardman stressed. "If we are to realize rail's potential, we will need much higher levels of federal capital funding."
He added that the Amtrak long distance trains are an important part of a larger national network connecting rural communities to larger cities and major urban areas. They serve passengers with disabilities, the elderly and rural populations that are losing scheduled intercity air and bus service. In fact, long distance trains bring one million riders a year to the Northeast Corridor.
Posted by Gilbert B Norman (Member # 1541) on :
Mr. Kisor, I wholly concur that "we must look beyond bean counting to determine the value of long distance trains in the United States".
But the value of these losers simply is that they are the catalyst for having any Federal level support for rail passenger service and for an entity known as Amtrak that has the expertise to operate those trains.
OK, even Acela and Regionals fully allocated are losers. But let us consider that without them, far more costly ($$$$$ and environment) air and highway infrastructure would need be added. On the strength of that, they pay their way.
But it is very hard to apply a like analogy to additional capacity needed on US2, I-70, I-40 and I-10 (gee folks, why did I pick on those selected highways?). Assuming that everyone on those trains were to be driving instead, the impact on those existing infrastructures would simply be "minimal to non existent" (you will find that, Amtrak has done studies on "what would happen if a particular LD wasn't there? would they drive, fly, "pooch", or simply not go at all?").
Now back to my contention and in my capacity as a railroad security investor. Amtrak simply gets a bargain basement rate ride over my rails that will earn me more with a "Z", Bakken, or export coal. If Amtrak were to pay what I think is fair compensation, namely the opportunity cost of that train not running on my rails that will put some $$$ into my shareholder value, there is a little "theft of service" going on out there.
Posted by TBlack (Member # 181) on :
Well, Mr. Norman, your opportunity cost case only works if your CSX and UP are currently running at 100% capacity and can't squeeze that extra "Z" train onto the system w/o bouncing AMTRAK. Is that the case?