Monday, July 2, 2012

Value for public money: Pacific Surfliner compared to Metrolink and Coaster

Something which struck me when reading the recent Metrolink budget was how high Metrolink's cost recovery was. It was, in fact, rather close to where the Surfliner was supposed to be at, which posed a rather interesting question: How was it that, with greatly higher fares, the intercity system was doing no better or even worse than a commuter rail system with cheap tickets, something which was intended to be subsidized? This was noticed as well by Noel Braymer in RailPAC's weekly newsletter for this week, which prompted me to dig in a touch.

Data for Metrolink and Coaster is the actual results for Fiscal Year 2011. Amtrak, unfortunately, has not provided cost data for quite some time; the last available year is that of FY2010. The LOSSAN Corridorwide Strategic Implementation Plan reports a different set of numbers (page 52); these appear to be the budget estimates for Fiscal Year 2012. All figures are in thousands of dollars.





Ventura County Line
Orange County Line
NCTD Coaster
Pacific Surfliner (2010)
Pacific Surfliner (current)
Operational costs (including MOW)
$21,629.00
$27,306.00
$15,876.00
$107,200.00
$99,388.00
Operational costs (excluding MOW)
$17,684.00
$22,325.00



Fare revenue
$5,933.00
$15,464.00
$6,258.00
$49,523.00
$56,674.00
Other revenues
$3,053.00
$3,995.00

$31,300.00

Farebox recovery (with MOW)
27.43%
56.63%
39.42%
46.20%
57.02%
Farebox recovery (without MOW)
33.55%
69.27%
0.00%
0.00%
0.00%
Total cost recovery
41.55%
71.26%
39.42%
75.39%
57.02%
Combined commuter farebox recovery
42.67%




Combined commuter total recovery
53.54%







In the case of the Metrolink routes, "other revenues" refers to maintenance of way and dispatching fees paid by Amtrak and freight companies which travel over their tracks (from Moorpark in the north to the Orange/San Diego county border). For Amtrak, it includes any non-ticket revenue such as food and beverage sales, but is predominated by subsidies from the state of California.

Combined, these commuter routes represent the majority of the Surfliner route. All 500 series trains between San Diego and Los Angeles share tracks and stations with the Orange County and Coaster Lines, and the Ventura County Line occupies about 70 of the 113 miles between Los Angeles and Goleta, where most 700 series trains start or stop (a few continue to San Luis Obispo, an additional 109 miles north).

A rather obvious concern arises looking at the data: Why is Amtrak doing so poorly? Certainly the raw farebox recovery ratio has evidently improved with the past year's fare hike, but Amtrak does not look terribly good when it beats the commuters by only a few percentage points and that only when the commuters are not reimbursed for services provided to Amtrak, Union Pacific, and BNSF. With such reimbursement, Amtrak actually performs worse than the commuter railroads, despite significantly higher ticket prices; extremely so in the case of Coaster, who charges $5.50 from Oceanside to San Diego, while Amtrak currently charges $17 for the same 41 mile trip.

Most of the answer can be found in all the excess baggage which Amtrak carries. Metrolink and Coaster trains have a crew of only two; the engineer and conductor. Amtrak's Surfliner trains have at least 4: Engineer, conductor, assistant conductor, and a lead service attendant in the cafe car. Metrolink and Coaster use ticket machines at all stations rather than ticket agents; to my knowledge the only Metrolink staff who interact with the public at train stations are a pair of customer service agents at Los Angeles Union Station and I suspect the same applies for Coaster and San Diego Santa Fe station. Amtrak, however, has ticket clerks at most of its stations, and they can be rather pricey: If one totals up wages, benefits, and employer paid taxes, the cost per ticket agent is about $40 an hour. With the exception of Los Angeles and Fullerton, which service long distance trains, Amtrak should consider eliminating, reducing, or transferring station staffing to station owners, especially when it comes to stations that do not provide baggage services, such as Irvine.

Some of Amtrak's poor performance could be explained as well by the routing. The Ventura County Line has a greatly lower cost recovery than does the Orange County Line: It's possible that north of Los Angeles, Amtrak has poor patronage, and that this is only exacerbated by the trains which continue further north to San Luis Obispo. That is a possibility: NARP's data shows that 8 out of the top 9 city pairs for ridership, and 7 of the 9 for revenue, are between Los Angeles and San Diego.

Amtrak's poor cost recovery really should sound alarm bells in their management as well as that of the unions responsible for maintaining rules which require overstaffing. With PRIIA coming into force soon, California will be on the hook for the entire bill, and the legislative process is working on putting control of the Surfliner in the hands of those who are also responsible for Metrolink and Coaster. Given the tight budgets we can expect for the next several years, I don't expect it to take long before an accountant starts questioning why the state is paying extra for a habitually late service.

3 comments:

  1. The reason the Surfliners "Cost" so much is we don't know what Amtrak is charging to run the trains. Ancient history from Caltrans. In 1976-77 the first year California subsidized the San Diegans the fare box recovery was 36%. By 1985-86 it was 88% by 1987-88 it was 104%. That was the year the trains were first extended to Santa Barbara. 104% sounds like an operating profit.

    In 1993-94 the accounting was changed to include something called Amtrak costs.That year it was $728,000 and farebox 91%. For 1996-97 and 1997-98 it was 10 million. Farebox dropped under 40%. The last year I have data from a 2001 report for 1999-2000 Amtrak costs was 1.38 million and farebox 48%. Some numbers have been rounded off.

    The thing about Amtrak accounting is they know how much money they spend and where the money comes from. What Amtrak doesn't know is the exact costs to run a specific train. They take their costs and assign costs usually by route miles. No accounting for economies of scale. It is an old trick in large organizations to assign costs to areas you don't care for from areas you want to look better. Is this what is going on?

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    1. The problem with those figures is that Amtrak's changed the accounting that they use for that, which of course makes comparisons rather difficult. When they finally release numbers with PRIIA methodology, we won't be able to compare to previous years, but at least we should have the cost breakdown available to see what in the world is costing so much.

      I don't think the Surfliner is getting assigned costs from inappropriate areas;it's on the high end, but not terribly so. On the other hand, I will eat something terribly obnoxious if some of those rather cheap corridor routes aren't having costs off-loaded elsewhere.

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  2. "As early as 1975, the late Joseph V. McDonald, an Amtrak board member, discovered Amtrak’s route accounting was arbitrarily charging train (not service) crew costs to the Montrealer at a rate sufficient to pay for 26 enginemen and trainmen per crew, rather than the actual complement of five men. He concluded that Amtrak route accounting was arbitrary and misleading. The same thing is still going on in 1984.

    As we will see. Amtrak’s accounting system may overstate the projected cost of adding or retaining any particular train by as much as 1700 percent. Coupled with management’s persistent sociometric bias in favor of certain specific Northeast Corridor (NEC) submarkets, the accounting system’s distortions cost the nation hundreds of millions of dollars annually in wasted costs and lost opportunities. The accounting system thus precludes informed route planning and evaluation, and causes huge overcharges to 403(b) states. Amtrak’s system conceals the profitability, at the margin, of many carefully selected new rail passenger markets."
    This quote is from an article "The high cost of Amtrak accounting" by Andrew C. Selden and E. P. Hamilton III
    Reprinted with permission from Passenger Train Journal, 1984.
    the whole article is available at http://www.unitedrail.org/1984/06/04/highcost/
    It was written several years ago (1984) but things have not changed much at Amtrak. The railroads have a long history of manipulating their accounting. Back in the 1950;s railroads would charge the entire cost of maintaining a line to a single passenger train to justify to the ICC abandoning the service.

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