Suppose that to talk about Amtrak deficit funding, we talked about the source of the funding, the Congress. Suppose we suggested Congress concentrate only on long-term policy for long-distance trains, and that such planning allow inclusion of sleeping accommodations, dining services, and checked baggage services.
Under such a plan and with plenty of advance notice, Amtrak would lose Congressional funding for regional trains, but could operate as many long-distance trains as it wished with as many frequencies as it wished, provided that the train routes each be over a certain length (presumably a minimum in the 500-750 miles range), and that Congress will fund the deficit, not to exceed a fixed amount per passenger mile or a fixed percentage of the annual loss on that train, whichever is less. The numbers would be intended to encourage long-term moderate growth of the system, but deliberately filter out over time the least financially viable routes.
If Congress picks up a portion of the loss on a route, who makes Amtrak whole on the rest of it? Are you assuming there are profits somewhere else in Amtrak that will cover it?
Also, there is dispute regarding Amtrak’s methods of assigning costs to specific train routes as well as track charges for Amtrak owned track. Don Phillips, for one, recently wrote about this and the purported “profit” of the Northeast Corridor. I don’t think any of us have enough information to make a judgment regarding it, but it is an area of potential gamesmanship should it become a factor in the federal level of funding.
Since money doesn’t grow on trees and Amtrak should be allowed to lose money on its worst performing long distance route(s), the Congressional funding formula would definitely need to provide Amtrak, on average for long-distance trains, a moderate allowance for administrative overhead and losses on a small number of underperforming trains.
The 1959 ICC hearing on the Railroad Passenger Train Deficit did not draw any conclusions on the question of optimal rate policy but did state “… that the railroads are best suited to volume carriage and that in order to put passenger travel on a paying basis they must devise ways of encouraging volume travel.”
One way to do so would be to tie the variable compensation to an equivalent automobile mile of passenger travel. Once you do so I would suggest that the financial performance improves as shown, even with reduced fares to generate the higher volume (green line).
So by my estimate you could get down to $0.055 of cross-subsidy per automobile equivalent vehicle mile with an expanded single level consist, 12 revenue cars, 6 sleepers and 6 coaches, in a 16 car total train, that could be moved with the currently assigned power. This is true as there is a lot of fixed cost to move the train in the crews, stations, and route access… The improved number is half the the Interstate cross-subsidy, which exists through leveraging off the property tax supported local road system and non-user coverage of accident costs which common carriers cover. Even the existing number is about equal.
Of course this strips out all the assignment that seem to occur by revenue that the Total Cost numbers make of about $600 million in shared NEC infrastructure and $200 million in shared large stations. But if we are talking about what would be saved in the long
You also have to run the train between places people want to travel at the time they want to travel. I’ll say it again. Running the Crescent at the dead of night through the “target rich” Piedmont and then daylight through rural AL and MS does not “encourage volume travel”!
What daytime schedule would work between New York and Atlanta? One of the metro areas would be served late or early wouldn’t it? A lot of people find traveling at night on a full service train makes better use of their time. The historical evidence of this route and population growth points toward the amount of volume, 12 revenue cars, on the current schedule.
The point is that you do need two schedules at a minimum, probably four, both paid at the variable rate that is found to be acceptable. So is the variable rate a good policy or not?
Not to be picky, but the Congress appropriates and authorizes funding. It uses the people’s money to pay for whatever it deems appropriate.
The long distance trains are not viable financially under any reasonable scenario.
I track the numbers for the three Amtrak trains that serve Texas. From 2009 to 2012 the Eagle saw an 11.9 per cent increase in its loss per passenger mile, and the Heartland Flyer saw an increase of 63.4 per cent in its loss per passenger mile. The Sunset Limited saw an 8.1 per cent decrease in its loss per passenger mile. However, its loss (49.9 cents per passenger mile) in FY12 helped it retain its status as the worst performing train in the long distance stable.
A coach ticket on the Sunset Limited on August 28th or September 4th or September 11th from New Orleans to Los Angeles is $163. The subsidy would be $995.50 per passenger. This means the passenger pays only 14.1 per cent of the cost of carrying
We might also talk about a larger issue, over all deficit funding of all transportation. The fact of there matter is that there is no kind of transportation that really pays for itself. All of it must be supported by some kind of government allocation of funds. Probably the largest single source of deficit funding is local and country roads all of which are supported by property taxes. But we are not about to abandon our local roads.
The real issue is what is a proper balance of funding for all of our transportation needs. When you consider of how little of our Federal funds for all transportation needs go for Amtrak I just cannot see how that funding stands out for any special consideration not given to other kinds of transportation.
What is the proper balancing of funding for transportation that you are proposing? Yes, very little Federal funds go to Amtrak – 1.5 billion out of about 10 times as much for aviation and 30 times as much for highways, but Amtrak does very little – .1 percent of total passenger miles.
What increase in Amtrak funding do you think we should have, and what is your projection on the passenger miles this will support, in absolute amounts and in percentages of the national total?
"The long distance trains are not financially viable… "
I believe the issue is what are you comparing them to. “Free” Interstates are almost always the competition. On a Direct Cost basis some of the Eastern Long Distance trains are operating at less of a loss than just the financial accident cost not covered by Interstate users, disregarding the capital cross-subsidy. Even adding in capital cross-subsidy for both, they are all better than “free” interstates, with the exception of the the Crescent if it just had more capacity to meet the market demand, the point of the top graph. Also note the amount of fixed cost in the Full Cost numbers. I can only conclude this is assigned cost.
The actual 2012 data is better than some of the PRIIA improvement projections for 2011.
The Crescent lost 26.1 cents per passenger mile in FY12 before depreciation, interest, and miscellaneous charges. The Lake Shore Limited lost 16.2 cent per passenger mile, and the Silver Star lost 20.9 cents per passenger mile.
I have glanced at all the PRIIA studies. And I read in-depth the studies for the Texas Eagle, Sunset Limited, Pennsylvania Service Studies, and the Capitol Limited. The PRIIA studies recommended improvements that might have reduced the losses associated with the long distance trains, but they did not eliminate them. And we are talking just about the operating losses.
If the Crescent, as an example, were able to cut is losses by 25 per cent, based on FY12 numbers, it would still have lost $31.7 million before capital charges. Here is a better, real life example. Between FY09 and FY12 the number of passengers on the Texas Eagle increased 29.8 per cent. Revenues were up 33.2 per cent. The change was due in part to the fact that the Eagle added a third coach south of St. Louis and opened up eight rooms in the transition sleeper for sale. Unfortunately, operating losses on the train increased by 35.2 per cent. They were $9 million more in FY12 than FY09. These are not theoretical numbers. They are audited numbers taken from Amtrak’s records.
A service that losses $31.7 million a year before capital charges, whilst being operated by the railroad that pays no taxes, only nominal or no station rents in most locations, and only the marginal cost of carrying its trains by its host carriers ,does not strike me as being a financially viable result.
To the best of my knowledge, with the possible exception of some tweaking, no major changes have been implemented as a result of the PRIIA studies. If the teams had developed compelling recommendations, Amtrak probably would have been able to take them to Congress and have them blessed. Or it might have been able to convince private interests to invest in the additional equipment
You are talking about Full Cost, which tries to allocate $800 million in fixed costs for the NEC and shared stations by formula. I gave Direct Cost plus equipment depreciation and 3% administration. If you cut the route that is all that would go away, the long run variable costs.
Um, if you cut a route, would not that free up equipment and staff to operate a different route or increase service on an existing route, with potentially less loss, arguably a better social return on the subsidy investment, or maybe serving more Amtrak customers to garner more support for Amtrak?
What strikes me, Sam, is that the significant change that came out of PRIIA is that the Federal Government will no longer provide funds for intercity trains within the same state except in Pennsylvania. I can understand the logic that a state should pay for transportation within its own borders. However, that same logic is not applied to interstate highways within the border of a single state.
As you point out, no changes have been made in long distance trains despite recommendations.
At the beginning, if I remember correctly, the states paid 20 per cent of the cost of building the interstate highways in their state. Subsequently, the formula was changed to 10 per cent.
The Interstate Highway System is a true national system. So too is the airways system. Accordingly, it makes sense to have the federal government contribute the lion’s share of the cost, although irrespective of who funds it, the money comes from the users and taxpayers.
Outside of the long distance trains, most of the State Supported and Other Short Corridor trains serve only a state or region. They are not national systems. Requiring the states to fund them makes sense. People in Illinois should not be required to fund intrastate trains in Texas any more than Texans should be required to fund trains that only serve Florida.
Some argue that the long distance trains are part of a national passenger rail system and, therefore, they should be funded by the federal government. They are!
“Um, if you cut a route, would not that free up equipment and staff to operate a different route or increase service on an existing route, with potentially less loss, arguably a better social return on the subsidy investment, or maybe serving more Amtrak customers to garner more support for Amtrak?”
The existing Long Distance routes are probably as good a performer as any. If you redeployed the equipment to create longer trains your argument would be true in the isolation of a route, but I believe most of the talk is just about eliminating the entire Long Distance system, and once you take away one route why not the others? Once you let any other routes go the political support would evaporate for the entire mode, NEC included. Additionally, I can’t see how a sparser network would have a Transportation benefit as connections drop off. The Long Distance route miles probably need to be about 2 times what they are to fit travel patterns, N, S, E, W out of major metro areas. This was a huge critique of the Volpe plan in the 1970’s. We don’t do things like cull the least used roads in the network.
But why not look at it the other way? Invest in the equipment to add capacity to the existing routes at the very least, as most of the operating costs are already paid for when you run any size train. The social gain is in a financially efficient mode of transportation that is also a lot safer than automobiles. If you shrink the network and break connections further it will not function, that was shown in the 3 days a week frequency experiment.
As to the Long-Term Avoidable Operating Costs, let’s look at some numbers from 1968, near the end of investor operated passenger service, that are independent of the current Amtrak
The reason long distance passenger rail can never be a transportation system, no matter how many routes one keeps and creates, is quite simple. Distance (too far to be competitive) and time (takes too long to travel over 700 miles to be competitive) and density of population (the population nodes from Omaha to the coast are too far apart). Competitive? Aside from a relatively small number of travelers who seek land/rail cruises, almost all people traveling from CHI to SF will fly; ditto DAL to SEA; ditto NYC to DEN or Phoenix.
Regardless of the proffered opinions of some, discontinuing a wasteful and irrational system need not spell the end of Amtrak or passenger rail; it is the only way to save it. I also believe that many of the sensible 500 mile or less corridors are interstate and thus should continue to be Amtrak. Routes entirely within one state or two-three states that seek a service not offered by Amtrak or to greatly improve one should do so, finding funding wherever they can, including the federal DOT.
So you can’t make a 500 mile trip on a 1000 mile route. Why is that?
Interconnected Corridors Def: An operational plan in which trip origin and destination pairs of multiple individual travelers are aggregated at peak times of travel and overlap, utilizing vehicles traveling through Metropolitan Statistical Areas; where adjoining Corridors might otherwise be defined to end, eliminating the disincentive of transferring vehicles. Syn: Long Distance Route or Through Corridors
Corridors Def: A route path that is a numerical simplification used for modeling demand using data known about Metropolitan Statistical Areas for input as developed for highway planning with the assumption that continuing and feeder routes that are not part of the model exist. Comparisons between modes using this simplification present many problems in reality. Syn: Lane Expansion Analysis.
Everybody recognizes we need Avoidable Cost numbers, see the TBD* blanks below from PRIIA reports in 2011.
You know, honestly I might get a bit annoyed as a member of Congress and pull a Central Florida, if Amtrak couldn’t provide what we are talking about here, Short-
