Wednesday, August 1, 2012

The idea of long distance trains as money makers

Among American rail supporters, there tends to be a persistent myth that Amtrak is hiding costs from the NEC and inappropriately transferring them to the long distance trains with the intent of making them look worse and justifying service reductions and increased spending on the Northeast Corridor. Among some, this goes sufficiently far as to suggest that the long distance trains are actually profitable. The United Rail Passenger Alliance said recently, as one example:
 So, why are we seeing program upgrades for Washington Union Station in the $7 billion range which only serves one city, and not seeing any realistic proposals to replace and upgrade the sleeping car fleet of the long distance system, which generates huge amounts of cash? Amtrak continues to have its priorities wrong, focusing on the care and comfort of the Northeast Corridor traveler, and mostly ignoring the unloved, but cash-generating long distance train traveler
Let's start with the question of whether Amtrak's sleeper passengers generate "huge amounts of cash." In Fiscal Year 2011, Amtrak's long distance sleepers generated $171,319,021 in ticket revenue, 35% of the total of $481,262,202 in ticket revenue that long distance trains generated. While that's a significant fraction of total long distance revenue, and a higher per passenger fare than any other Amtrak service, it's not really what should be considered a "huge amount of cash."It is, after all, less than the $204.9 million operating surplus that the Acela posted (excluding OPEBs and other costs).

However, that's just revenue and ignores the significant costs incurred with sleeper service and with long distance trains in general. Now, I am a critic of Amtrak's overstaffing: I see absolutely no reason why the Surfliner, for instance, should run with a crew of four to five. But that's half the crew size of a typical long distance train (page 92). In addition to the sleeper attendant, whose costs must be apportioned amongst those in his car, a significant fraction of the food service costs must be attributed to sleeper passengers, who receive food complimentary as part of their fare. That alone should dispel the idea of a sleeper passenger being a cash-generator since one should also include the opportunity costs of those free meals. In addition to this, there is the significant problem of late trains resulting in ordering busses and overnight hotel accommodations for connecting passengers.

What of the idea that Amtrak passes costs from the Northeast Corridor onto the long distance trains? That may very well have happened decades ago, but without any hard evidence, it's difficult to say that that currently is the case. Certainly it seems an odd thing to claim when Amtrak's costs are higher for their NEC trains per train-mile than for the long distance trains. It also doesn't pass the smell test: There simply aren't terribly many costs which could be plausibly passed on to long distance trains and what costs there are are, or should be, fairly insignificant next to the total costs of the long distance trains. Take for instance, the cost of maintaining the NEC, which is the most cited item I've seen for costs passed on to long distance trains inappropriately. At $150-200,000 per double tracked route-mile for high speed rail, a worst case scenario for Amtrak puts the cost of maintaining the 1,555 track-miles of NEC and Harrisburg Line rail at $116-155 million. With long distance trains expensed at over a billion dollars in Fiscal Year 2011, the idea that Amtrak is unfairly burdening the long distance trains seems outlandish.

Lastly, there is the question of opportunity costs. Every item of equipment which is currently operated in long distance service could also be potentially used in corridor service, even the diner equipment, though sleepers would likely need to be remodeled into a coach or business class car. Certain of the peak Surfliners, for instance, are projected for over a thousand passengers on their travel; it stands to reason that a dining car would be of far more use there than on a long distance train which serves only a few hundred passengers across its thousands of miles. But new or enhanced corridor service (such as turning the Cardinal/Hoosier state into an 8x daily service between Chicago and Indianapolis) is another area where equipment could be put to more productive use and this is fairly crucial when taking into account asset depreciation, something Amtrak currently does not display on a per route basis but which will hit long distance trains heavily.

5 comments:

  1. Sure, the long-distance trains don't make a profit, and it's debatable whether sleeping car passengers actually help the bottom lines of those trains or not, but I felt their point was ultimately relating more to the capital spending fantasies as opposed to operating costs.

    The $7 billion proposal for Washington Union Station seems really outlandish since that amount of money could probably build a short- or medium-length true HSR corridor in the Midwest. $1 billion was the pricetag for restoring the North Coast Hiawatha (daily as opposed to half-daily as it originally ran), or for getting the Sunset Limited running daily.

    Looking at sleeper prices, it's hard for me to imagine that Amtrak doesn't either break even with or at least not take any bigger of a loss with their sleeping car passengers than they do with coach riders. They sell out frequently, so it would seem to make sense to sell more of what people actually want.

    Anyway, speaking as someone who lives out in Minnesota, I appreciate the need for improvements to the NEC, but there really has to be a broad effort to improve train travel all around the country. Inside the beltway, I think a lot of people have gotten it banged into their heads that trains can only work in the Northeast, or they can only work in the Northeast, California, and Florida. But with the plans I've looked at over the years, it really seems to me that there are more like 20 good routes around the country which would probably be suitable for true HSR, but at least should have frequent enhanced-speed service. Even the long-distance trains should probably be running 3x or 4x daily.

    I'm not sure the dining cars could get much more use on corridor trains -- I've been on the Empire Builder when coach passengers weren't able to get into the dining car in the alloted time for supper, so it does get used about as much as it can. Actually, I wonder if food service is placing limits on how big Amtrak trains can get.

    Anyway, the NEC is roughly half of Amtrak's business today -- significantly more than that if you look at the Northeast as a whole -- and they actually own most of it. But a 50/50 or 60/40 split is still way more generous to the rest of the country than what the company seems to have planned at the moment -- right now, Amtrak's plans seem to be to spend $160 billion in the Northeast and virtually nothing anywhere else. Pretty much everything else has to be led by states. Some like California have grand plans, while others like Illinois are more modest. Most states haven't really been able to move forward with anything, of course.

    There's just some resentment that Amtrak is focusing on one corner of the country at the near exclusion of everything else when the company really needs to keep cultivating a broader base of political and popular support and doing some actual good along the way. It's fine by me if the NEC is their focus, but their priority list should be more than one item long.

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    1. I don't get where people get the idea that Amtrak isn't investing in LD service, especially sleepers. The investment is just larger in the corridor services because the locomotives and track have seeing a whole lot more wear and tear. Also, most of the NEC's catenary (poles and wires)is ORIGINAL between NY and DC and desperately needs to be replaced. Most lines outside the NEC are railroad-owned and Amtrak doesn't pay for their maintenance.

      As for sleepers, Amtrak has already contracted out, and work has already begun on, an order for 25 new single level sleepers to compliment the current fleet (which will all be rebuilt as well). Additionally, 25 more cars that are half sleeper-half baggage space are also being built for routes West of Chicago. The new cars on order are all modular (like Disney's Contemporary Resort),so they can be quickly reconfigured to any layout that may be needed.

      As for food service, I believe that is a federal requirement for trains that travel overnight or over x hours, don't know how long for sure. So it's a mandate, not an economic decision. All single-level diners are being replaced by 2020.

      Seperately, Amtrak did recently get a grant to build 70 new electric locos. Most of the locomotives being replaced are 30+ yrs old
      (beyond usefull life), or are 2001 vintage PoC Bombardier HHP-8s that are incapable of running at speed without all but falling apart. This purchase is necessary to protect NEC services from a short-looming loco shortage.

      The NEC is in need for more 'investment' than it is currently getting. State corridors are almost over capacity, in some places leading to sell-outs days in advance. (I know, how terrible!)

      We must remember, at the same time, that the 'amcans', which are in use on the NEC, are fast approaching 40+ yrs old. These cars make up ALL of NEC services (besides the acela), and there are currently no plans for their replacement. Also, there are no plans to replace the acela sets (which suffer the same problems as the HHP-8) with something safer/faster. So, if anything, Amtrak is using NEC profits (yes it runs a 'profit') to fund upgrades elsewhere.

      The idea that Amtrak has a preference or bias against long distance trains is absurd, they are simply doing work where it is needed, and as they have the funds available. Who can blame them? It's like an old county road, you patch over the potholes untill the whole road is popcorn, then you have to find the money to repave it.

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  2. Looks to me like Amtrak, in building up the Northeast, is playing to its strength. A good strategy for the rest of the country would be to help Amtrak build out from the NE. Incremental development moving west and south would test the patience of California and its neighbors, but it would make the most of what's already been built.

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  3. At this point I am of the opinion that Amtrak needs its own rights of way. There is only so much you can do while sharing freight trackage, which is possibly why Amtrak is so myopic towards only investing in its own territory.

    If Amtrak was to purchase any route that it ran on that a freight wants to abandon, such as Lamy-La Junta on the Southwest chief route, and simplified it to fit its own needs (In the case of the Lamy-La Junta section, converted it to a single track single block line 200 miles long) it could fairly rapidly move a larger percentage of its train-miles beyond the interference of the freights and would be able to invest in linespeed and service improvements just as easily as it does on the NEC.

    100mph (Superliner max speed?) on Lamy-La Junta could easily cut an hour off the SW Chief.

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    1. So we've cut an hour. How much does that really change?

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