It’s no secret that the big class 1 railroads are doing very well with operating ratios at or below 80%. They are profitable, and I’m glad I’m a shareholder in some of them. But I really wonder why the taxpayer is still being asked to support passenger rail operations in both Canada and the United States…it doesn’t seem fair with the railroads cherry picking the good stuff and leaving the rest for the taxpayer to support.
I appreciate that the railroads are in business to make a profit…but where does it state that passenger service cannot be profitable? Look at Southwest Air…an airline with one of the safest records, and they have similar high capitable investment requirements, and they’re very profitable. With the right managment passenger rail can be very profitable.
The governments should get out of the pasenger rail business and instead perhaps offer rail carriers a tax incentive and maybe other incentives to take back and run the trains. An added benefit would be a return to variety in trains that reflect the regions they run through. The railroads would also be able to showcase their operations to shippers and the public at large.
Well, the private RR’s left the passenger market to start with because they could not make money. There are no other carriers clamoring to take over any of Amtrak’s routes because they know there are no profits there. They could not compete with taxpayer funded highways, and the convienience of the car and cheap fuel. To upgrade existing lines in order to accomodate higher speeds would require a much more positive rate of return on the investment, and Amtrak has a negative rate of return - even on its busiest (read that: most capital intensive and demanding) routes. In fact, the shorter routes, which carry many people, are also the LEAST profitable on a train-mile or passenger-mile basis.
You also shoud not compare rail service to airlines, as the two are dissimilar items. SW Air does not serve the same markets, in identical fashion, as Amtrak does.
I appreciate that rail and air services are different…I brought up Southwest only to show that passenger transportation can be profitable even when the mode involves high capital expediture.
Freight was also unprofitable 30 years ago…but the railroads remained in that market. Maybe high speed passenger rail service is the wrong approach. Surely the current infrastructure can handle speeds of 50 mph, and passengers save time with downtown to downtown service.
I wonder about market factors in the old days, specifically was part of the low profitability the result of many railroads having to compete and interact with each other. If, today, the several giant railroads operated passenger rail service, could they make a profit from the benefit of their huge systems?
I don’t have any hard data handy, but I seem to recall reading once that passenger trains didn’t make money back in the day – rather that mail contracts subsidized passenger service. Is anyone else familiar with this notion?
My dear man. Do you have any idea – at all – how much effective subsidy the airline industry has? Or haven’t you really wondered just who pays for the airports and air traffic control? The airlines don’t – at best they lease them (often for peanuts, so the city can claim that they have airline service). Nor is the capital expenditure all that high – very few airlines own their aircraft or engines; they are leased on a per-mile or per-hour basis.
Freight was never unprofitable for the majors, on the main lines. Which is why so many branch lines were abandoned – there it was. Passenger service, on the other hand, to the best of my knowledge has never been profitable, either in this country or in the rest of the world, without some form of government subsidy. In the bad old days, that subsidy was the mail contracts – and as soon as they went, so did the passenger service, almost literally overnight.
I’ve read the same in several sources, but I don’t know if the indirect subsidy the RR’s received with their RPO contracts amounted to a full subsidy – it probably depends on how the RR did their accounting of cost of MOW and so on. What we do know is that part of the passenger train’s fast decline in the fifties and sixties is due to their loss of revenue from corporate types – once they seceded in lieu of commercial and corporate jets the railroads knew they had lost the ones making shipping decisions – and no longer felt such an urge to keep up service at a first-class level.
Richard Branson and his Vigin Rail is profitable…I don’t see wht that can’t be replicated here. Yes I realize that the airlines are subsidized…but so are all modes including rail.
I like Southwest. Very much. Usually I snag a pre-board which is really helpful. However, after observing some of the Airline episodes and seeing some airports in person Im convinced that the “Big” freight haulers dont want to deal with the great unwashed, messy and demanding masses. Anything that slows that coal train down isnt welcome and neither is Amtrack.
If you want pax rail all over the USA, you are going to have to leave the Big class 1’s with thier rusting and obselete mains and adopt European technology that allows dedicated and safe track for very fast (200+) mph trains.
The United States has always gotten something done with private money.
The last pax train I caught in the wild was a Union Pacific Executive train ripping thru my area at what must be above 75 mph behind a DD40x a few years ago hell bent for St. Louis and gone.
June 1985, Trains Magazine, Page 10 - Item titled “Train vs. Plane”
"A comparison of the 1984 performance of one airline, Southwest, and Amtrak helps explain the problem. The contrast is skewed by the fact that the airline operates as single-class, high-frequency service in its namesake boom region, eschewing mail and interline passengers. Again, Amtrak serves 510 stations; Southwest 22 airports. And Southwest has no equivalent for the Amtrak employees assigned to right of way and terminal maintenance–or, for that matter, dining cars and sleepers. Nevertheless, the plan vs. train productivity is illuminated by these 1984 statistics:
Amtrak carried 19.9 million passengers; Southwest 10.6 million. But because the average rail journey was 223 miles vs. 436 miles on Southwest, the total passenger miles (1 passenger carried 1 mile) wer about equal: 4.2 million for Amtrak, 4.6 million for Southwest. Interestingly, average fare per mile is similar: 10.6 cents for Amtrak, 11.1 cents for Southwest. Amtrak required a fleet of 284 locomotives and cars; Southwest operated 54 aircraft. Amtrak employed 25,000 people; Southwest 3934. Amtrak grossed $758.7 million in operating revenues against operating expeneses of $1.4 billion; Southwest grossed $539.9 million against expenses of $467.4 million
Apples and oranges? Yes, in the sense of a superior airline contrasted with a rail system saddled with a Congressionally designed route structure, dependent upon on-and-off Corridor trade for half of its riders, and obligated to subcontra
Forget subsidies…the rails, truckers, and everyone else all gets a subsidy of some kind albeit often indirectly. A privatized passenger rail system would bring in competition and innovation…Make the trains worth taking and raise the fares to cover the cost…that’s how business works. Competition works wonders…I’m in a competitive industry but I’m profitable to the extent that I outperform my competition. It keeps me on my toes and, I’m always looking for an angle that will save my customers money or improve service levels. That wouldn’t be the case if I had no competitors.
would you pay over $1000 to go from Detroit to St.Louis and take 2 days to do it?? the reason the carriers wanted out of passenger service is because you couldnt get enough people on a train to make it profitable…and as you know an unprofitable buisness doesnt last…and face it in todays (starting in 1945) hurry-it-up world no one has the time or will take the time to enjoy a slow train thru Missouri
and as far as “making it worth it…” there was somekind of luxury train in the 90’s…AOE? maybe? American oreint express?? or something…anyway it went broke…no riders…and way to expensive…its a sad fact that railfans alone cant keep passenger buisness afloat
Is competition on the same route = multiple carriers in the same modal type (ie. CSX and NS each offering NYC to Washington DC service) OR is it a choice between modal types on the same route (ie. owned car, rental car, bus, plane, train)?
If it’s the first choice, where (outside NEC) would there be enough demand for multiple rail carriers to compete?
If it’s the second, on shorter trips, cars beat trains,planes and buses for ease of use and overall economy (especially if the traveler has companions.) Case in point, business trip to plymouth, MA for a meeting, then to Hartford, CT for a convention…origin and end point is Newark, NJ. Flying is too expensive (cost of rental car or taxis included), rail requires transfers in Boston to commuter rail, and there seems to be no service between New Haven and Hartford on Thursdays. Can rent a car for 3-4 days, pay tolls and gas for less than the Amtrak fare (and you’re suggesting that railroads run UP their fares to be profitable and competitive). My business partner and I will rent a car and drive instead of Amtrak or Airline.
For a long distance trip (say Newark to Chicago, or points further West), travel time of 20 hours or more is unreasonable - air is the only option. If airline prices go up, we’d do more web casts until prices go back down.
Personal travel? I get limited vacation days – I love trains, but my family would rather spend time at the destination – air trumps trains on long trips, car beats train on short trips for economy of family in one minivan vs. four fares on Amtrak.
Is competition on the same route = multiple carriers in the same modal type (ie. CSX and NS each offering NYC to Washington DC service) OR is it a choice between modal types on the same route (ie. owned car, rental car, bus, plane, train)?
If it’s the first choice, where (outside NEC) would there be enough demand for multiple rail carriers to compete?
If it’s the second, on shorter trips, cars beat trains,planes and buses for ease of use and overall economy (especially if the traveler has companions.) Case in point, business trip to plymouth, MA for a meeting, then to Hartford, CT for a convention…origin and end point is Newark, NJ. Flying is too expensive (cost of rental car or taxis included), rail requires transfers in Boston to commuter rail, and there seems to be no service between New Haven and Hartford on Thursdays. Can rent a car for 3-4 days, pay tolls and gas for less than the Amtrak fare (and you’re suggesting that railroads run UP their fares to be profitable and competitive). My business partner and I will rent a car and drive instead of Amtrak or Airline.
For a long distance trip (say Newark to Chicago, or points further West), travel time of 20 hours or more is unreasonable - air is the only option. If airline prices go up, we’d do more web casts until prices go back down.
Personal travel? I get limited vacation days – I love trains, but my family would rather spend time at the destination – air trumps trains on long trips, car beats train on short trips for economy of family in one minivan vs. four fares on Amtrak.
Air Travel is cheaper and faster and easier to endure from… Little Rock to Baltimore. But take Amtrack for almost twice the money (and two days) with a train change in chicago on a iffy schedule? No thanks.
TGV or Bullet trains in NEC style traffic at 250-300 mph will most certainly compete with the Air. Especially when storms arrive and screw up the eastern airports. If you equipt these trains with a common area, social area, food, wireless or other internet network etc and take care of the people while they travel… there should be an increase in passenger work.
Then again, I think we are 100 years or more from such fast rail service as a alternative to interstate or air travel.
Maybe Im dazzled by the new A380’s recent entry into service.
In all of the preceding posts I notice one glaring omission.
AMTRAK has a Congressionally-mandated monopoly on intercity/long distance rail service. The privately-owned, commercially-oriented railroads ARE NOT ALLOWED to put in anything that might compete with AMTRAK - even on routes where AMTRAK has no service and doesn’t plan to start any.
Doubtless, the PD&Q or XY&Z could figure out how to operate profitably from Alpha to Omega. The Feds won’t let them. Only the State-funded and operated regional passenger carriers seem to have found some gap in that politically-mandated armor. I’ll bet it’s not available to anything not under the direct control of politicians.
I can’t realistically see the Big Class I’s ever taking back passenger trains (and yes, I do remember when the RR’s still had their own passenger trains; particularly the “Cities” trains that operated on the MILW between Chicago and Omaha). However, one thing that could be done (and I would personally like to see happen) is some form or type of “joint” advertising; whereby on a particular route or train there would be advertising or promotions done to demonstrate the rich history of that railroad and the trains that once traveled on that route(s). You would think that both Amtrak and the freight railroads could benefit from something like this. Why not?
I can understand the idea of wanting a profit motive oriented organization to replace Amtrak, but here are a few of my thoughts on the matter.
An operating ratio of 80% is almost good enough for the RRs to stay in business long term. There is little fat to pay for extra goodies. There’s just enough profit to service the debt necessary to keep the RR in track and equipment. And forcing private, for profit, companies to take on a public welfare role is really just a fancy way of stealing!
The current class one track structure and traffic patterns are designed for freight. In many places, the more optimal passenger routings are long gone. In some instances, new routes for Amtrak trains have been cobbled together from multiple roads. Putting passenger train operation back onto the frt RRs would be a little bit like unscrambling an egg.
The frt RRs no longer have any passenger expertise on their staff. There are very, very few still in RR mgt who were around in 1971 (or even 1980, in the case of NS and UP)
The basic economics and technology of passenger rail that failed in the 1950s are still in place. If you want different results, you have to change the game. Tax incentives are too small to really change the game.
Once upon a time, state and local gov’t tried exactly what you suggest to keep the frt RRs in the commuter business. They bought some new equipment for the RRs and subsidized the direct operation of the trains. The result was some of the worst customer service in the history of railroading - and the RRs wanted out of that arrangement. Passenger service, at best, was a distraction to them at that point.
If the goal it to get some profit motive into the game, you don’t have to throw the baby out with the bathwater. A gov’t owned, national network of passenger service is not necessarily evil by definition. In fact, there is a lot to
Becasue the taxpayers HAVE to pay for it in order for it exist…
If the taxpayers didnt fund it, it would not exist…Amtrak has never made a profit…ever. It has always taken in more money than it has generated.
Simply because passenger rail is not profitable anymore…which is why the railroads gave it up, which is why the taxpayers must fund it if its going to exist at all.
Plenty of railroads made money on passenger service in the 19th century. many made more money on passengers than on freight.
but…no good roads, no automobiles, no planes…rail travel was the ONLY reasonable way to get anywhere back then…very different world back then.