According to what I keep reading that Class ones always lost money on paseenger trains from about 1930 on and that untill the railroads seperated there freight revenues from there passenger revenues in there accounting practices in the late 1960s they did not realize how much they were being hosed. The only thing that kept the passenger trains going was the mail revenues in the mail cars. Some trains woild have has many as 10 mail cars in the consisit.
When the USPO droped the mail cars the passenger service soon died out.
But if this is the case what would explain the class ones buying new passenger cars into the 1960s and the deveopment of the Metroliner by Pennsy and Penn-Central?
G’Day, Y’all,
I heard the president of Seabard Coastline RR, Thomas Rice, say that the railroad made a profit of $3 million in its final year of service. But he noted, in telling the crowd at the ribbon cutting at the hump yard in Waycross, GA named for him why the SCL dropped passengers, was that such a small return could be eaten up in one law suit.
If you do your research, you’ll find that most rr’s made a profit on passenger service well into the 1950’s, largely due to govt. contract of military shipments (ie. draftees) in addition to the mail. The new passenger cars, however, were more along the line of planning for a future that never came. But they did give us some still-living examples of the finest in passenger transport ever built in any era. See the C&O 1950 Pullman Standard lightweight order, most of which was sold to other rr’s including NYC and IC. Some amazing examples of the lightweight carbuilders art in that order.
I suggest reading “The Hiawatha Story” by Jim Scribbins who notes several times in this book that the Milwaukee Road made about $2.50 per mile the train traveled from about 1935 to 1945.
A word such as “profit” gets you deeply involved into the arcane world of cost accounting, and most particularly what expenses are charged against passenger operations. Accepted accounting principles gave the railroad much discretion in terms of cost allocation. Just by way of example, if an operator was at a depot to give out train orders but that same operator also sold tickets and handled baggage, what percent of the costs of that depot and that operator were assigned to the passenger traffic department?
At this remove it is probably no longer possible to know what passenger operations showed a “real” profit. Most railroads were anxious to claim their passenger trains – particularly those with dining car service – lost money. The C&NW long insisted that its commuter trains in Chicago were profitable.
Another question is “which passenger service?” As mentioned above, the MILW claimed a profit on the *Hiawathas…*and the SP on the Daylights-not to mention the Chief, Century or Broadway. The premium trains probably put money on the bottom line-but when you look at some of the secondary trains and branches (and commuter services) my impression is that is where the profits went (and sometimes went away).
One of the issues here is that the ICC regulated passenger fares. When the railroads invested in new equipment after WWII they also wanted to raise the fares to cover the cost of there new investment in equpment and the ICC would not let them raise the fare. If you were to compare costs to travel on the 20th Century Limited in 1942 in first class and inflation adjust it to 2006 the cost would be close to that of a Airline ticket on the same route.
The question is when was the last time the railroads made a profit on passenger service? Probably during WW II and possibly through the late 1940’s the railroads made a profit because cars were not that readily available, there were no interstates or expressways, the airlines didn’t have the capacity, and flying wasn’t that popular.
The railroads did a lot to attract passengers after WW II, especially coach passengers. For example the New York Central re-equipped the Empire State Express which was primarily a coach train since coach passengers could use the observation lounge car; the New York Central also ordered 400 new stainless steel coaches for their system mainline trains; Then who can forget the domes on the California Zephyr, the B&O’s Columbian (another primarily coach train), and the GM “Train of Tomorrow?”
I cannot verify the truth to this or not, but when I was a young railfan in NJ in the 1970s, we were always told that the Pascack Valley Line of the Erie Lackawanna, and then Conrail, was the olny passenger operation in America that made money.
It may have been apocrphyl. I just don’t know. It’s what was said at the time though.
At one time,Southern Pacific claimed that the Coast Daylight was the most profitable passenger train in the country.I recall reading somewhere that C&NW made a profit on their commuter service as late as 1965.
May yet be possible. The Pascack Valley Line, even today, operates peak-directional commuter service with no off-peak trips, no reverse-commuting trips and no weekend service. (The original name of this road was the New Jersey and New York Railroad, a division of the Erie for several decades.)
Another bit of apocrypha persists, that being the high-speed operation of Amtrak on the Northeast Corridor is also a moneymaker. This has yet to be independently verified, at the very least—and if it proves true, then it lends weight to the argument that high-speed rail ought to proliferate in the USA to a far greater degree.
As for historical perspective, passenger revenues for the private railroads took a huge hit with state taxation of rights of way plus other railroad properties (as did freight revenue). In 1950, the ICC ruled that passenger trains operating on main lines whose signaling was CTC and no higher were restricted to 79 mph, and that signal upgrades would have to be paid for by the railroads, out of pocket, if they wanted to run passenger trains faster (for a comparison, in a number of European countries, CTC and wayside signaling allows a maximum speed of 100 mph).
The C&NW felt it was important to be known as having the most improved and best commuter service in Chicago during this period. The “profits” were a part of that campaign. It was a useful tactic when trying to take off intercity trains to point to the C&NW’s dedication to an excellent Chicago comuter operation.
The C&NW got permission to take off a fair number of passenger trains by promising the new Penninsula 400 with new equipment. Except for the diner, the new equipment, both coach and parlor, were gallery cars built for easy conversion to coommuter cars when the service was finally expected to cease. But it ran until Amtrak and Amtrak used the cars for a while (probably under lease and not purchase).
The New Haven did make money on passenger service until the Hurricane of the 1950’s and the interstate construction that took place in the directly following years. They were the only railroad that made money on dining car service. The service included the bar cars on the commuter trains, where drinks were both highly expensive and still very popular.
Possibly a dumb question from a dumb Brit - and I realise that the qualifier in the opening post is “Class 1” - but are LIRR, SEPTA, Metra and other urban networks not profitable?
I accept that for such operations cash injections from local and regional government are necessary to fund infrastructure improvements, stock renewal etc…
Does the daily farebox revenue meet the daily expense?
Simon:
The quick and short answers to both your questions is/are “No.” No system in North America makes money. I have no figures for LIRR and SEPTA, but METRA (Chicago area) has a farebox recovery of between 50 - 60 %. The rest of the funding has to come through a sales tax in each of the Illinois counties served by METRA.
Good question. People that quote farebox recovery ratios don’t usually explain which expenses they’re counting, but I’m guessing tickets don’t pay daily expense anywhere in the US.
If you read John Signor’s excellent THE COAST LINE, it turns out that Southern Pacific built that particular line with the intention of providing a fast passenger line between San Francisco and Los Angeles, at the turn of the 20th century. Though there was freight traffic involved, SP always seemed to focus on the Coast Line for fast, efficient passenger service between the two California terminals. At one time, there were four day-time passenger trains (Coast and Noon Daylights) and two night-time (Lark) plus the two daily Coast Mails. And during WWII, troop-train traffic often had all of these trains running in multiple sections.
SP sent most of its Bay Area-Los Angeles freight traffic down its Valley/Tehachapi Line, though there was heavy seasonal produce traffic on either end of the Coast Line (Santa Barbara south to LA, Salinas Valley north to Oakland). But generally speaking, the Coast Line was for passenger traffic. There was only one portion of the line over the 17-mile 2.2% Cuesta Summit between San Luis Obispo and Santa Margarita to the north, that required helper locomotives, and for the most part, the line could be traversed by a single 4-8-4 (The beautiful GS-series of locomotives specifically designed by SP and Lima for the line). The official speed limit on the Coast Line was 79mph, though engineers regularly ignored this. There are rumors that the Daylights could be clocked at anywhere from 80-100 mph whizzing through the Salinas Valley. From 1937 to well after WWII, the Daylights were among the most profitable passenger trains in the country, and SP was VERY happy to count the profits. Even the night-time “Lark” was so heavily patronized that it often ran in multiple sections.
In fact, when SP, along with most of the other railroads, lost passenger trains to the automobile and the airplane, and discontinued both the “Daylight” and “Lark” services, the C