When Amtrak was created in 1971, were ANY passenger trains still reaping a profit? I know there were several opt-outs. There were however several railroads that seemed reluctant to join Amtrak, such as one of those seaboard railroads,(SCL or SAL, I don’t remember which) and I have heard rumor that the ATSF was still making a profit on its name trains.
Also, does Accela have a competitive advantage? Is Amtrak making a profit off of Accela?
Can someone explain what is going on with Iowa Pacific’s Eastern Star?
The short line operating passenger service from Saratoga to North Creek, NY, will probably tell you they are making a profit on their passenger trains, and so will the operator of the service in Maine that connects (at times) with Amtrak’s Downeasterner service at Bangor and runs to Rokcland. Acela makes a profit, in the general the NEC makes a profit considering operating costs, but including not interest on capital and depreciation charges.
Acela has enough of a competitive advantage for some people to attract a solid ridership, and to generate an “above the rail” contribution. The NEC is not self supporting since it is not generating enough contribution to maintain the system to a state of good repair and is absolutely incapable of generating sufficient cash flow to carry out a number of delayed capital improvements such as rebuilding or replacing the B&P tunnels and the East River tunnels.
If the NEC was a private entity it would have long since been bankrupt. That is why it is a ward of the Federal Government.
Define “profitable” and never say “never”. Quite often we use the term “successful” when describing a passenger train or service which at least pays it way. But where does “way” begin and end? At building of the right of way and infrastructure, purchase of equipment, crew costs, off train personnel costs, fuel, maintaining everything, stop me at any point here and say from this point on. Private railroads always claimed they lost money operating passenger trains despite owning the trainset and the railroad which they used to run freight trains and make money. So if that is the point we choose, then, no, passenger trains never make money. But if we say the track is already there as is the off train personnel and don’t count those costs, one can argue some trains actually recoup their costs. Most notable is probably the current Amtrak Acela services and perhaps the Downeasters, too. And, oh yes, do you count the subsidy as income or not? And can the cost of moving the same number of people on another conveyance be considered against the cost of train or train service? There is no clear cut answer as the answer is emotional, political, and often not practical.
Using the same logic:
If many of our railroads had not been given their ROW’s and government-secured, low interest bonding rights, plus enormous plots of land to sell and develop – all from the federal government (especially for most western routes), they would have never been constructed.
Your statement is about 99% untrue. First, only a minority of railroad corporations received land grants, and only a minority or railroad mileage was built with land grants. Second, Federally Guaranteed bonds were not particularly low interest and not all “Land Grant” railroads got them, the Northern Pacific to name one.
As to “never” constructed, that too is false. I would agree that they might not have been constructed as early as they were. Look at the IC/Gulf and Ohio, a pre civil war pair. My sense is that land grants speeded them up by 2-5 years. Meanwhile the Mississippi Central and New Orleans and Great Northern were completed between the Ohio River and New Orleans before the outbreak of the Civil War without land grants.
The Union Pacific/Central Pacific was built after the Civil War over the central route. Absent the land grants and government bonds it almost certainly been built about where it wasbuilt in fact. It would have started later and been funded differently, but it would have been built.
The final case that proves the falsity of your statement is the Northern Pacific chartered in 1862 and completed in 1883. In 1893 the privately financed Great Northern was completed to Puget Sound largely parallel with the NP.
You are welcome to your opinions, but not to your own facts.
Interesting thread but most Commercial Air Flights are not profitable and some only marginally so. That the Airline Industry makes a profit at all is based on frequency of flights on the same route plus addition of cargo and mail contracts. In most cases…just one plane a day each way with just passengers on board will lose money for an airline.
I can’t see why Amtrak should be held to a higher standard than it’s competition.
Ditto. And next time,try reading more carefully,rather than hauling out your knee-jerk, anti-government memes.
The key modifiers: “If many”
Other than the GN, the other western lines benefited greatly from land grants and/or government bonds (which eventually - 30 years -were repaid). The IC was built on land grants. Other lines’ construction was aided by states.
Not nesse-celery. My brother, Captain Huey, has quite a few contacts in the airline industry, and from what he’s told me if First Class on any flight is full, then all othe revenues from that flight are the profit.
Take it for what it’s worth.
And were passenger trains ever profitable? It depends. It depends on where they were, when they were, what they were, and who you ask. From what I’ve read the long distance passenger runs made money, not scads of it mind you, while the commuter runs were always money-losers.
Unless things have changed, my information is that the county owns the rails that the S&NG operates on , and Iowa Pacific is the designated operator. Also, sadly, they have cut-back their schedule more than half. Maybe their Rio Grand Scenic is profitable. It’s on track that Iowa Pacific owns.
I’ve heard it said that no public transportation truly makes a profit.
Airlines rely on the federal government’s air traffic control system (paid for by you-know-who). And they land at and take off from airports generally furnished by local municipalities.
Buses use public highways (ditto). If they had to pay for their own lane (as do the railroads), you wouldn’t be able to afford a ticket.
Most local transit projects (light rail, et al) are considered a success not if they make a profit, but if they meet or exceed projected ridership.
Public transportation is usually considered an economic benefit for the communities it serves. Cities build transit centers (bus, train, airplane) not because they are money makers for the municipality, but because they create business for the community.
The NEC is successful chiefly because it is able to compete with the airlines for the short hops between the cities on the line.
Passenger rail transport at its best is like all other forms. It provides an essential public service to the economy and well-being of our society. Judging everything by profit is rather like one-size-fits-all clothing.
As of June 30, 2014, the Trailing Twelve Months average returns for the nation’s airlines have been impressive. The return on sales was 7.75 per cent, 36.05 per cent on equity, 5.92 per cent on assets, and 11.78 per cent on total investment.
The airline business is highly leveraged, and the margins are tight. So too are those for most if not all forms of commercial passenger transport modes. The financial picture for the nation’s airlines has improved dramatically. Many airline analysts believe the financial future for the airlines is bright, but as anyone who follows the industry knows, it can turn on a dime.
Not every flight generates a positive return. But in the aggregate most of them do. Otherwise, the airlines would not be able to generate the returns that they have been seeing.
Amtrak has never generated a positive return. It had accumulated losses of $30.5 billion at the end of FY13. Had it operated under the some constraints faced by the nation’s airlines, it would have been shutdown many years ago. If the airlines cannot figure out how to compete in the market place, they go out of business, i.e. Eastern Airlines, People Air Express, Northeast Airlines, Pan American, Braniff, etc.
Managers of a for profit activity have to generate a positive return for their investors or go out of business in the long run. They have an incentive to make good business decisions, which means that they have to satisfy the needs of their key stakeholders…
If a public service is outsourced, i.e. public transport in Melbourne, Australia; sanitation services in Georgetown, TX, etc., the contractor has to generate a return for its stockholders whilst meeting the performance standards of the sponsoring agency, i.e. the Melbourne City Council. If he does not meet the performance standards, he will lose money on the contract and perhaps the contract and the business.
A government bureaucrat has little incentive to get it right. If the agency is managed poorly, the results are usually fobbed off on the taxpayers.
