http://www.amtrak.com/ccurl/412/537/Amtrak-FY2015-Federal-Budget-Request-ATK-14-028,0.pdf
I think Boardman is being very astute. He’s cutting Amtrak’s critics off at the knees by not letting them point at the Sunset as the argument for selling the NEC. Brilliant!
He puts the ball for funding the LD trains squarely in Congress’s court.
It’s a different ballgame now. The critics used to point to the Federal Highway Program as self-sustaining and add, “Why can’t you do that?” The HIghway Trust Fund has been insolvent for the last 4-5 years. ALL Federal transportation schemes now depend on the General Fund to pay for upgrades and maintenance. The change came but not at Amtrak.
Something for everyone. Putting LD services as separate from the rest of Amtrak, with its own subsidy and capital budget makes sense.
I can’t fault Boardman’s argument, even as it puts the LD trains at risk. The NEC is a special case, is of unique importance to the country, and deserves to be able to put its operating profits to work on its own line, which needs them badly.
At the same time, Boardman was careful, I think, to make the case for the LD trains, and in eloquent terms, which I appreciate.
What I’m afraid of is that it will be too easy for Congress to simply cut the requested dollars for LD, and when Amtrak has to make some painful choices, be able to say, “Hey, we didn’t tell them they had to cut the Empire Builder (or Chief or Cardinal).”
“it will be too easy for Congress to simply cut the requested dollars for LD”…
I think Mr. Boardman got himself into a trap with this one as he quoted the Fully Allocated Cost of the LD trains as the $618 million number that needs to be provided_, or by inference could be cut._
But that number allocates a good amount of system overhead to the routes, by route mileage and revenue as far as I can tell. It seems like groups such as RailPAC ( check the reference to the letter to the Senator) and URPA agree. When you look at the disagreement between the FRA and Amtrak around 2000 over the “FRA Defined Cost” and now over the Long-Term Avoidable Operating Loss numbers that the 2008 PRIIA law required but still cannot be produced uhmmm… “Data for tables 1 and 3 will not be available until the avoidable costing methodology for the Amtrak Performance Tracking (APT) System has been completed” it appears the FRA agrees as well.
As far as I can tell the Long-Term Avoidable Operating Loss on LD service is $100-200 million at most to which you would add whatever equipment capital with a discount rate applied to get a true Long-Term Avoidable Total Loss. If you expanded the train consists the number would improve markedly.
The problem is that the system overhead will be difficult to cut as most of it is needed for the core NEC operations. Up to about $260 million a year can easily be defended for the LD network, as a comparable revenue shortage exists on a per passenger mile basis on the Interstate system.
I wish Mr. Boardman had just come clean on the need for $400 million, maybe $600 million with recapitalization, in infrastructure support for commuter operations by others over t
I don’t know, V.P.; if Boardman did overstate the need, and Congress provided less, wouldn’t that make it easier for Amtrak to avoid ruinous service cuts?
In other words, maybe Boardman is giving LD some negotiating room – as when, putting your house on the market, you ask more for it than you have to have and can live with.
This could almost be a separate thread, but here goes. Suppose that a doomsday scenario takes place in which Congress and the administration agree to defund Amtrak, with possible exception to publically owned track maintenance like the NEC and the Michigan line. What, if anything, would survive?
Would portions of the western LD trains continue as a seasonal Rocky Mountaineer type operation?
Would a consortium of corporations like Disney and Marriot assume a reprivatized Auto Train operation?
Would the states that fund corridor services stay with Amtrak to run these trains, or go to another contract operator that currently operate commuter trains?
How many eastern LD trains would be left? Would Amtrak provide operating crews and leave on board services to be provided by someone like Ed Ellis’s Pullman Rail?
How about Disney and Marriot as on-board service providers and terminal operators? Amtrak operates and maintains equipment and nothing more. Solves a lot of problems (like current food service cost issue) and creates opportunities, like vacation package deals, tie-ins, etc.
I guess they could, but there are all sorts of issues around freight railroads not really wanting to deal with multiple entities and whether rights owned by Amtrak are transferrable to others.
Or, flip and cut eastern LD routes into “corridor” day trains. Cut FL routes at Jacksonville and turn service south of there into corridor service for intra-state travel. FL is 4th largest state with lots and lots of folk who don’t (or shouldn’t!) drive much. Cut the Crescent at Atlanta and make it part of the Piedmont/NEC corridor extension. Cut the LSL and Capitol at Cleveland. Reconfigure into Cleveland-Chicago Corridor. Turn eastern half of Capitol into Cleveland -DC via Phila. Extend Pennsylvanian to Cleveland. Eastern half of LSL becomes extension of Empire Service.
You are assuming that Boardman doesn’t know what his costs are or what can be cut. It’s just as likely that whacking a portion of those “shared cost” areas could be done in any event. Amtrak’s attempts at austerity in the past have been focused on creating political pain - not operating efficiency. There have been hints from Boardman in his public statements that he knows this and “wants to change the culture”.
There is a current effort to sort this out now, so maybe it’s a bad idea to “stir this pot” now.
I don’t think he’s blaming the LD trains for anything. I also think he knows that, in the end, there is a near zero chance they don’t get funded. It’s just a “put up or shut up” moment.
And, you really don’t want to get into the hidden subsidy the frt roads are paying to keep the LD trains running. $10 a train mile doesn’t cover the cost of the capacity used. Just ask BNSF about that. There’s a chance that ND doesn’t melt down if the EB doesn’t have to run. A single oil train grosses much more than $10 a mile and the EB is consuming multiple frt train slots.
V.P. keeps saying that LD services are being allocated a disproportionate share of overhead and now even capital costs in the NEC. What is his evidence for this charge? We do not know the formula used by Amtrak for overhead allocation, but capital costs are not an operating expense.
Here is an example from the Claytor years, the 1992 Annual Report, of what the annual budget presentation looked like. Note the Revenue to Short and Long-Term Avoidable Cost ratios (What is missing from the PRIIA reporting), back when the equipment wasn’t very easy to maintain (there was also a recession in 1992). Note the ($2014) 1,164 million fixed difference being expressed between Revenues and Expenses.
This fixed gap is reality, stemming from the NEC infrastructure used by others, equipment purchases of that era, government agency costs, and just the high costs of owning infrastructure. What is not reality is trying to allocate this fixed amount onto various trains, dividing it by passenger miles, and then acting like you could save that amount if the train was discontinued. This is the problem of the Fully Allocated Costs Boardman cited. Claytor was well liked in Congress from what I have read, why can’t we do the same type of reporting today?
Consider as well this example of the train density into New York Penn Station. Amtrak is a minority user of its own line, the rest being commuter trains. How you allocate a fixed infrastructure cost is a hard question, but given the ratio of users, I would lean toward the FTA being responsible for this line more than Amtrak’s operations.
Finally, consider this GAO analysis of the Autotrain from 1985 and note a similar pattern of ratios. Since th
How you allocate fixed costs and overhead is completely dependent on the question you are trying to answer.
In the case of Amtrak’s budget, it’s probably a pretty reasonable view of what the total cost of each type of service is - not a view of short term variable costs.
Certainly, the NEC is expensive to own and operate, and just as certainly, Amtrak could not be allocating NEC costs based on system pass-miles! That would be real, prosecutable fraud.
As for method of allocation, pass-miles is not a panacea, but it probably correlates well enough with train miles and car miles to make little difference at the end of the day.
Also, it is equally misleading for Congress to read the budget request as a “what if I sell the corridor to the states, then all I have to pay is XX for state and LD trains”
P.S. I would allocate Penn Station costs by total train time from the time the train enters the interlocking on each end of the station with a factor for train length.
From what I see, some of what Boardman says makes sense. But I see a glaring error in the statement that the NEC covers it’s costs. Yes it might cover operating expenses, but what about capital expenses? Track isn’t free, nor are bridges. True Boardman did say the excess from NEC can cover the interest on capital loans, but makes no mention of the principle on those loans.
It also makes no sense to allocate capital investement expenses to the LD trains, the only real infrastructure that Amtrak owns is the NEC. And most LD trains don’t use it. True LD trains do have some capital expense (station buildings, yards and repair shops) but most track is rented, which normally is an operating expense.
After seeing how costs are “randomly” allocated and the inconsistant reporting, I have to wonder if Amtrak even knows what it spends and where the money really goes. I’d bet the NEC is actually the biggest single money loser (due to it’s tremendous capital needs) and the :LD trains may be doing well. That’s not to say any make profit, but the NEC certainly doesn’t.
OTOH kudos for standing up and stating the fact that Amtrak needs to be properly funded, and to not do so will cause major greif.
I just feel that a true representation/accounting of the profit/loss for each train would go farther to getting the fundinig, rather than a feel good story about the star of the show.
If you have 100 cost accountants on a project, each will assure you that the other 99 are applying the wrong methodology to the project.
The capital cost of the LD trains is most likey capital rebuilds of the existing equipment. If you put enough into it, a rebuild can be capitalized.
…and they can all prove it!
How much (more) of the NEC capital should be paid by LIRR, NJT, VRE, MARC? If you do that “right”, maybe the NEC is a winner?
If you count the hidden subisidy the LD trains are getting from the frt roads, maybe the LD trains are even worse losers?
At the end of the day, it’s all money coming out of one of Uncle Sam’s suit pockets. Does it really matter which one? The Amtrak budget is an explanation, not a menu, and it probably does a pretty fair job of what it set out to do…whether we like the “story” or quibble with the details.
OK I admit the oversight of equipment being a capital expense, but over the years hasn’t Amtrak spent much more on NEC equipement than LD equipement?
And yes the freights aren’t chargning LD what it should, but that’s the contract. I’m not talking about how much things should cost, more what do they actually cost. It would be interesting to figure out what LD expenses woudl be if paying the proper amount for use of tracks. Might even be able to say “We can up our on time incentives since we are getting such a savings on track usage” That would make the freights happy for sure, or at least have less animosity to passenger trains.
And I wholeheartedly agree that the NEC users should pay their share, but that’s the flipside to the freight subsidy. If Amtrak is allowed to charge full price, why can’t the freights. And again that’s a what might be, as opposed to what is.
What I’m having trouble with is why can’t Amtrak just come out and say “this is what it cost to runthe Empire builder last year” and include things like, payroll for on train employees, maintaince charges for equipment from Beech Grove, track fees and the other expenses that are honestly attributable to that train, without watering it down with NEC expenses. It seems you need to know what things actualy cost before saying it makes or loses X amount every year. And after you know that, then you can got to the NEC users and say “this is what we need to charge for use of our tracks” Fully expecting some of that money will go to paying for track usage after the freights come to Amtrak and do the same.
Supposedly that precision is coming. But many of the charges are already allocated correctly. Overhead for administration has to be allocated on some formula. That is true in most endeavors, and always a source of irritation for those who feel they are carrying too much.