# Should We Stop "The Lie"?



## John Bobinyec (May 28, 2015)

In news article after news article I'm sick of seeing the statement that the Amtrak NEC trains are profitable. What Mr. Boardman actually said was that those trains are profitable "above the rail". Of course everyone else has dropped that qualifying phrase.

It's dangerous because it supports the idea that Amtrak can be split up into the NEC, the profitable part, and everything else. If the idea gains momentum, and the Congress forces the split-up, they are going to be in for a rather rude shock when they find out that they STILL have to pay for a complete rehab of all that crumbling infrastructure that the trains require between Boston and Washington. Unfortunately, by that time the damage (of the split) will have already been done.

The question for us is, should we work to dispel the untruth that Amtrak's NEC trains are profitable, and hopefully keep Amtrak intact?

jb


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## Ryan (May 28, 2015)

I believe so, yes.

But I'm also a firm believer in trying to drive home the point that anyone expecting Amtrak to make a profit should have their heads examined.

Roads don't make a profit, but they provide a tangible benefit to society.

Overall, the aviation system doesn't make a profit, but provides a tangible benefit to society.

Police and Fire departments don't make a profit, but they provide a tangible benefit to society.

The military don't make a profit, but they provide a tangible benefit to society.

Why should rail transportation be any different?


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## Bob Dylan (May 28, 2015)

Everything the Government does benefits society. ( especially the rich and corporations) except the phoney war on drugs and the trumped up Middle East wars!

YMMV on this but you can look it up!


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## jis (May 28, 2015)

jimhudson said:


> Everything the Government does benefits society. ( especially the rich and corporations) except the phoney war on drugs and the trumped up Middle East wars!
> 
> YMMV on this but you can look it up!


Heh! Even those provide lots and lots of jobs that would otherwise be absent possibly. OTOH, if that money were channeled to other more productive activities then they would probably create as many or more jobs. But the military-industrial complex that Eisenhower warned us about is here, and looks like it is here to stay for a while yet.


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## xyzzy (May 28, 2015)

It is so difficult to make a true profit in the transportation business -- and that's been true for centuries. The business is capital-intensive, has cost inputs (fuel, labor, taxation, liability) that are difficult to control, has a production learning curve that flattens quickly, has only a limited economy of scale, has customers who are willing to change providers at the drop of a hat, is subject to regulation, etc. A few companies do manage to be consistently profitable over the long run. Most don't.


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## Ryan (May 28, 2015)

Companies may make a profit, but only on the backs of publicly funded infrastructure.

The system as a whole is unprofitable. We could make it profitable, but be prepared for the cost of everything you buy to go through the roof (among other negative things).


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## Paulus (May 28, 2015)

I don't see why we ought to care about it. Certainly we should say operationally profitable whenever possible, but Congress isn't going to abandon the NEC (nor are they as stupid as you seem to think they are). For that matter, they may decide that it's better to put the current 700 some odd million in LD subsidies into NEC capital grants to rebuild that infrastructure.


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## John Bobinyec (May 28, 2015)

Paulus said:


> I don't see why we ought to care about it. Certainly we should say operationally profitable whenever possible, but Congress isn't going to abandon the NEC (nor are they as stupid as you seem to think they are). For that matter, they may decide that it's better to put the current 700 some odd million in LD subsidies into NEC capital grants to rebuild that infrastructure.


That's exactly the point. When Congress finds out that they STILL have to sink a pantload of money into the NEC, the obvious place to get it is from the long distance trains. I think once Amtrak is split up it'll be bye-bye long distance trains. I'm trying to avoid that.

I don't really think individuals in Congress are stupid. I question the stupidity of the "crowd mentality" that they exhibit from time to time. They tend to go along with stupid ideas because their constituency believes in them, and it's the politically expedient thing to do.

jb


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## Ryan (May 28, 2015)

Paulus said:


> I don't see why we ought to care about it.


Because some of us want to see a nationwide, multi-modal transportation network.


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## jis (May 28, 2015)

John Bobinyec said:


> Paulus said:
> 
> 
> > I don't see why we ought to care about it. Certainly we should say operationally profitable whenever possible, but Congress isn't going to abandon the NEC (nor are they as stupid as you seem to think they are). For that matter, they may decide that it's better to put the current 700 some odd million in LD subsidies into NEC capital grants to rebuild that infrastructure.
> ...


I think you are way overstating the case. I have talked to at least half a dozen Congressperson and Senators who are on the relevant committees, and they are each quite aware of the difference between being positive on operation and the infrastructure requiring many billions of dollar tog et to SOGR and replace super-annuated infrastructure. Trust me, no one will be surprised. They know and that is why they wrote the PRIIA 2008 Section 212 creating the NEC Commission the way they did.

This business about getting anything from long distance trains is putting the reality on its head, and is fashionable in some circles. Obfuscation in any form is bad. It is also bad to refuse to recognize that Amtrak revenues from NEC can actually be used and are used to reduce the overall subsidy required for operations including those for LD train, that will never be as lucrative revenue sources relative to even their unloaded direct cost of operation, as short corridors can be, and NEC is. So I agree we should definitely present the whole truth and not just the convenient half of it based on ones view.

I would also add that there is a subset of LD trains that with some care can be brought very close to covering their cost of operation or even eking out a small surplus and we should do so. But there are a number of LD trains that are unlikely to ever reach that state. And of course ultimately just like for running the NEC someone has to pay for the infrastructure, for running the LD trains someone has to pay a fairly allocated overhead for the general and administrative costs.


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## jis (May 28, 2015)

Ryan said:


> Paulus said:
> 
> 
> > I don't see why we ought to care about it.
> ...


I would submit that there is no universal agreement among the NEC fare paying passengers that they should be paying high fares just to maintain the LD system either. It is not a cut and dried case, nationwide multi-modal or not. It is a small group of people trying to keep the rest in the dark to push their own agenda at best. At least that is another way of looking at truth telling and lies, or truth hiding as the case may be;


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## Ryan (May 28, 2015)

I would submit that the NEC fares aren't high just to support the LD trains. They are what they are because that's what the market will bear. One can have a reasonable discussion can be had about what is done with that operating surplus, but the severance of the Amtrak-NEC and Amtrak-LD would almost certainly mean the end of the LD trains. I'm not cool with that.


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## jis (May 28, 2015)

OK the danger of using the market will bear argument together with the firm conviction that such techniques can be used to fund other stuff is that this would create the tendency to maximize revenues by simply not increasing capacity as much as possible. It creates an incentive to keep caps on capacity on a monopoly business where there is upside revenue possibility. If that is to be used as a general technique, it stands to reason that those who are bearing the market get a say in it. That is they be fully informed of what is being done and be allowed to vote as to what extent they are willing to go along with it. Otherwise to some extent they are being fooled into doing something that they are not fully aware of. I am all for telling truths, but not limiting it to only the parts that are convenient to one particular agenda.

Specially in the case of NEC, the stark choice is either to use the revenue surplus as collateral for acquiring more rolling stock and put them into service which will actually put somewhat downward pressure on revenue per unit, but hopefully will still grow revenue, In this case it cannot be used for something else other than for paying down the financing that was received based on the promise of using the revenue to pay it off. Or simply siphon the surplus away to do something else somewhere - say run LD trains or build roads or whatever depending on whose agenda we are pushing. In the latter case one would be able to maintain artificially high unit revenue claiming that it is OK to do it because the market will bear. Similar techniques of using artificial scarcity to get higher unit revenues is often called extortion under other circumstances.


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## Alex M. (May 28, 2015)

One thing we must keep in mind is that while some costs will go away when you do away with LD trains, other costs, like Chicago Union Station and the various shops that must be kept to maintain rolling stock for the NEC and other corridors will remain. We must also remember that some of these trains contribute to the ridership of the NEC ( Palmetto, Silver Meteor, etc.). The result is that Amtrak ends up as a glorified transit system in three regions of the country.


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## WoodyinNYC (May 28, 2015)

jis said:


> OK the danger of using the market will bear argument together with the firm conviction that such techniques can be used to fund other stuff is that this would create the tendency to maximize revenues by simply not increasing capacity as much as possible. It creates an incentive to keep caps on capacity on a monopoly business where there is upside revenue possibility. If that is to be used as a general technique, it stands to reason that those who are bearing the market get a say in it. That is they be fully informed of what is being done and be allowed to vote as to what extent they are willing to go along with it. Otherwise to some extent they are being fooled into doing something that they are not fully aware of. I am all for telling truths, but not limiting it to only the parts that are convenient to one particular agenda.
> 
> Specially in the case of NEC, the stark choice is either to use the revenue surplus as collateral for acquiring more rolling stock and put them into service which will actually put somewhat downward pressure on revenue per unit, but hopefully will still grow revenue, In this case it cannot be used for something else other than for paying down the financing that was received based on the promise of using the revenue to pay it off. Or simply siphon the surplus away to do something else somewhere - say run LD trains or build roads or whatever depending on whose agenda we are pushing. In the latter case one would be able to maintain artificially high unit revenue claiming that it is OK to do it because the market will bear. Similar techniques of using artificial scarcity to get higher unit revenues is often called extortion under other circumstances.


I'm not gonna worry about a surplus of capacity driving down fares on the NEC. LOL.

In due time rebuilding the NEC will advance to where the tunnel and bridge chokepoints are gone.

Then trains will run 4 times each hour between NYC and DC, almost like transit.

But by then we'll be running trains hourly down to Richmond, and 6 or 8 trains a day to Raleigh, with 4 to 6 of those going on to Charlotte, and at least two more reaching Atlanta.

A couple of trains will head down into Delmarva.

The _Cardinal_ will run daily, along with perhaps a couple of corridor trains D.C.-Charlottesville-Charleston, WV.

Meanwhile, _Keystones _will run hourly to Harrisburg.

The _Pennsylvanian_ will run thru the Allegheny mountains 6 or 8 times a day because it will come out to cost as much to upgrade to handle one more passenger train a day as to handle 8.

One more train will be needed to Florida.

And extending the Lynchburger to Bristol and then Knoxville and Chattanooga seems inevitable.

Somewhat similar growth will take place north of NYC.

The addition supply of frequencies and routes will call forth the extensive pent-up demand to fill these trains. And as long as demand is strong enuff to soak up any added capacity, there is no incentive to restrain such additions.

The fares on the Acela IIs, with 40% more capacity and more trains per hour, will be what the traffic will bear. The maximum rail fare will be set by the airline shuttles in fact, tho at times the walk-up Acela fares will be higher, due to the faster trip times and better value for money.

I'm expecting to see the NEC grow enormously once infrastructure and equipment permits it. The single-level Eastern LD trains to grow nicely, whether 5, 10, or 20-year outlooks. The Midwest and West Coast corridor services will also how substantially. It will be by at least 30% after the bi-levels replace the older cars and the 110-mph segments cut 30 or 40 minutes from Chicago trips to Springfield and St Louis as well as to Ann Arbor and Detroit. The Western LD trains will not be getting new equipment so their growth will be physically limited.

But letting the Western LD trains become a smaller and smaller part of the growing Amtrak will tend to protect them rather than put them at added risk. They will become relatively small enuff to seem hardly worth the fuss about their few hundred million in losses.


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## neroden (May 29, 2015)

jis said:


> And of course ultimately just like for running the NEC someone has to pay for the infrastructure, for running the LD trains someone has to pay a fairly allocated overhead for the general and administrative costs.


The overhead and G&A is an issue which affects all the trains. Now, when it comes to roads, we just accept that the government, at one level or another, will pay *all* the overhead and G&A costs. When it comes to flying, we again accept that government will pick up nearly all the overhead and G&A costs -- I haven't heard a big "make air traffic control pay for itself" campaign.
If we could get the federal government to consistently fund Amtrak's fixed overhead without complaining, it would be an accomplishment.



jis said:


> I would submit that there is no universal agreement among the NEC fare paying passengers that they should be paying high fares just to maintain the LD system either.


Ah, but they aren't. They're paying high fares to cover the fixed overhead, because unlike federally-funded ATC, government-funded airports, government-funded road maintenance, and government-funded traffic police, we expect Amtrak to fund the equivalents out of the same budget it runs its trains with.  I think if we could get a change in attitude regarding this disparity, we might get somewhere.


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## John Bobinyec (May 29, 2015)

I don't understand the banking system. What's to prevent Mr. Boardman from running down to the Bureau of Engraving and Priniting, having them print off a billion or so, and then deposit it in Amtrak's account? The money could be used to pay for all sorts of critical infrastructure projects along the NEC..

Basically, why can't the government just print up the money that it needs to pay for things? Please just don't answer that "they can't - it's a law." I'd like to know the fundamental reason that it can't be done.

jb


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## Ryan (May 29, 2015)

Mr. Boardman can't do it, but the government certainly can. There's really nothing stopping them.

This is a little hard to wrap your brain around, but is a decent explanation:

http://en.wikipedia.org/wiki/Modern_Monetary_Theory

Since the Federal government can create money, you can't think of it in the same way as you would you household or even state/local governments. Essentially, you break the paradigm that the government is funded by our tax dollars. Since the government can create money, picture it funding itself entirely on money that it wishes into existence, and collecting no taxes from anyone for anything.

Obviously (or maybe not), inflation would quickly make this an unworkable scheme, so at the same time as the government is creating money (injecting it into circulation by spending), it needs to be taking some money out of circulation via taxation. Both spending and taxation can be adjusted to make the economy work, but there's nothing that says the two have to be tied to one another or that you have to zero out the books at the end of an arbitrary time period.


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## WoodyinNYC (May 29, 2015)

John Bobinyec said:


> I don't understand the banking system. What's to prevent Mr. Boardman from running down to the Bureau of Engraving and Priniting, having them print off a billion or so, and then deposit it in Amtrak's account? The money could be used to pay for all sorts of critical infrastructure projects along the NEC..
> 
> Basically, why can't the government just print up the money that it needs to pay for things? Please just don't answer that "they can't - it's a law." I'd like to know the fundamental reason that it can't be done.
> 
> jb


"What's to prevent Mr. Boardman from …"

Congress prevents Amtrak management from doing lots of good things. 

Just printing up money is sort of fraught, with the inflation bogey man and all. But right now, with long term interest rates at remarkably low, historically record low, rates, Congress won't even let the government borrow to build stuff. Maybe after interest rates go up Congress will favor borrowing to build stuff and pay more to do it, maybe that would be good for bankers … but I digress.

Of course, when Congress wants to spend, there's no real limit. You probably noticed that the misadventures in Iraq were not paid for by taxes. Rather, it was all borrowed money, back when VP Dick Cheney said, "Deficits don't matter." Try to replace a deteriorating bridge or tunnel on the NEC today and the same jokers will squeal that we can't afford to do that because OMG the deficit.


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## Anderson (May 30, 2015)

I'm not too far off from Woody in my outlook. Here's how I see things...

On the NEC, Amtrak is constrained by two supply problems. One problem is a shortage of cars and locomotives, the other is a shortage of slots. The two are not unrelated as they trace back to funding issues; they also contribute to the supply/demand situation on the NEC.

The equipment shortage situation is particularly bad on the Acelas; the Acela IIs should relieve this issue and you'll probably see a large hit to PPR on the Acelas when the Acela IIs come into service: South of NYP, First Class space will roughly double while Business Class space will roughly triple (since you're doubling the train count and going from 4 BC cars to 6 BC cars). There's going to be a knock-on effect onto the Regionals as well since lower fares on the Acelas without any change to the Regionals will likely mean a respectable amount of near-peak-hour Regional traffic will end up getting shunted to the Acelas (if for no other reason than, assuming similar prices, plenty of folks will opt for a faster train; on NEC-North, the Acela and Regional prices are getting sufficiently entangled that there will almost assuredly be further migration up there).

On the Regional side, Amtrak could probably do with another 200 or so coaches (and a handful of additional food service cars) to double up service south of NYP as well as to extend more trains up into the 10-12 car range. For a note, on NEC-North 10 cars seems to be about the practical limit while on NEC-South I think a lot of stations can, in fact, take 12 cars (NYP, PHL, BAL, and WAS can take more and I'm fairly sure you can get more into TRE, WIL, and NWK).

As to slots, north of NYP an arbitrary 39 train-per-day limit is the main thing holding Amtrak back from expanding Acela and Regional service alike. Working through this limit is going to be tricky because of USCG limits on the SLE segment. There are also the well-known bottlenecks and issues at the Hudson and in Baltimore.

===== ===== ===== ===== =====

Honestly, how do I see things playing out on the East Coast? Well, assuming you can get Regional service up to twice-hourly south of NYP [1], you resolve a lot of the problems that Virginia/North Carolina service is facing [2]. I do suspect you get high-frequency service into Richmond...based on my talks with DRPT folks, it is highly likely that there will be several "pulses" of service expansion after the present one. [3] I figure you get almost commuter-level service down to Richmond, with the trains splitting off from there, and 4-5 daily trains on the Charlottesville-Lynchburg line. I also figure you'll see substantial timekeeping/timetable improvements on a number of lines in Virginia. [4]

In this context (and assuming that equipment is available), I expect to see 3x daily trains to Florida as part of the long-term picture, with a substantial expansion of sleeper space playing a big role. For what it is worth, though, I think you're going to see one of two things happen in Florida:
(1) A restoration of splitting the Silvers at JAX, with one section going down the FEC line to Miami and the other out to Tampa via Orlando; and/or
(2) A truncation of the Silvers to the Orlando International Airport station, with cross-platforms enabled to FEC's services to Tampa and Miami.

I could easily see Amtrak cutting the Tampa sections back to Orlando and agreeing to work with FEC's yard at MCO, while running sections to Miami Central Station as well (albeit at times roughly coordinated with FEC and handled in such a way as to not seriously cut into FEC's business). A truncation has at least one major advantage: Runtime NYP-ORL is 23:04 for the Star and 21:29 for the Meteor. Adding about half an hour to get the trains and to pad the schedule a bit would probably generate 23:30 and 22:00, respectively; after timetable improvements you can probably cut that to 22:30 and 21:30, respectively. This compares with 30:56 and 27:24 to Miami, respectively; you could /probably/ run all three trains on the present requirement of eight sets if you handled the timing right, and you could almost assuredly run four trains on 10-11 sets if you so desired.

On the other hand, FEC-line service would probably be relatively cheap to set up...if Amtrak threw in $250m for the Cocoa-Jacksonville extension that would probably cover about 1/3 the cost of the extension when the dust settles, and I'd be surprised if doing that (and saving FEC from having to issue more bonds) wouldn't be enough to get 3x daily round-trip slots. At a bare minimum, a Palmetto extension wouldn't cause problems for FEC (it wouldn't be up against their schedules) and if some coordination were made on ticketing FEC would basically be getting 3x daily frequencies to supplement its service on the northern end of things without having to buy more equipment; the added frequencies should help them the same way that adding trains elsewhere stimulates demand.

Moving onto the Western trains, I suspect you're going to see a few trains forced back to single-level status over the next decade or two. The Capitol Limited and CONO are probably the biggest targets for this. I would not be at all surprised if CA, OR, and WA were to take over the Coast Starlight...there's a logical overhaul of service along the West Coast, and if what I've heard is true those states would just assume tell Amtrak to walk north until its hat floats: WA and OR have issues with various aspects of Amtrak fighting them on OBS for the Cascades, while I think California is also more than a bit steamed over some other treatment issues. [5] The one place for a major bump for equipment would be an overhaul of the Auto Train in some form, something that I think Amtrak can justify. Doing so would free up something like 40 Superliners for use on the Western trains.

I will say that I don't quite see some services booming the same way Woody does...particularly those going past Harrisburg. Yes, the track improvements may be about the same for 8x new trains as for 1x, but I'm not sure the level of demand is there. I could see a situation where the state arm-twists those slots free...but only bumps service up to 3-4x daily service at most. You're more likely to see an aggressive ramp-up of Main Line service to Harrisburg before you see massive growth west of there.


[1] Which will probably deal with most of the demand in the region now; if you can run 12-car trains with 9 coaches, two half-cafe half-seated cars, and one full Premium car you're probably looking at about 750 pax per train. Beyond this point you start running into a mix of platform length issues and trouble with passenger turnover at more stops than just WAS and NYP. This allows for 1500 pax/hour in each direction versus a limit of a bit over 600/hour now. I'm hard-pressed to see Amtrak needing to add more than this most of the time, though obviously tossing a few extra frequencies in around peak hours is feasible.
[2] The issues here relate to a lack of trains at desired hours. As things stand, there are four desirable termini for trains: Lynchburg, Newport News, Norfolk, and Raleigh/Charlotte. With only one Regional per hour, only one line out of the four gets to have an arrival in WAS the hour or so before 9 AM.
[3] At the first Richmond-Washington HSR meeting I noted that in adding only 4/day trains they'd probably be back in those meetings in 10-15 years and I got one of those knowing smiles and nods from them with a confirmation that this is what they expect to be doing.
[4] Not in the picture: Extending the Acela much south of DC. To be fair, I think Amtrak could make a real case for extending everything down to Fredericksburg and replacing Ivy City with a much larger yard down there; redeveloping Ivy City might even offset most of the cost of doing so.
[5] From what I've heard, the San Diegans were basically profitable above the rails until the 90s. Then service to SBA/SLO kicks off and suddenly the route is losing lots of money...which points back to more than a few states' complaints about Amtrak's accounting.


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## jis (May 30, 2015)

neroden said:


> jis said:
> 
> 
> > And of course ultimately just like for running the NEC someone has to pay for the infrastructure, for running the LD trains someone has to pay a fairly allocated overhead for the general and administrative costs.
> ...


I agree. The principle that infrastructure construction and heavy maintenance financing is the government's job should be applied equally across all modes.



> jis said:
> 
> 
> > I would submit that there is no universal agreement among the NEC fare paying passengers that they should be paying high fares just to maintain the LD system either.
> ...


Again agreed.

I was just thinking, just a random thought mind you.... which could be dangerous admittedly...... As the total above the rails purported surplus on the NEC starts approaching the total amount of Capital allocated to NEC each year, and the funding continues to be in the present form of division between cap and op, then essentially NEC just operates as a neat money laundering scheme for essentially turning cap money in to ops money for supporting the LD. From and accounting perspective one might want to continue doing that because of one of the arcane scoring rules for federal budget reconciliation.

I learned from my Day on the Hill that Capital budget amounts get scored at 80% for determining impact on the total budget whereas Expense/Ops is scored at 100%. So for the same impact on the budget bottom line you can effectively fund $100 in expense budget by having only a $80 impact on the overall budget bottom line if you can do so by funding $100 in capital budget and then figuring out a legal way to convert that to expense budget, i.e. actually spending the capital budget on capital but getting back $100 in operating surplus out of it. So given the arcane accounting rules the way Amtrak funding is done makes a lot of sense, provided of course you don;t lose sight of what you are doing and start over-milking the cow that provides the conversion mechanism from hay to milk.

It was also explained to me that one of the motivations for splitting the accounting between NEC and the rest has to do with auditors complaining that they don't have transparent enough accounting to verify that the capital budget is actually being spent on capital and the expense money is actually not capital money just repainted expense and used to subsidize train ops elsewhere. Frankly I find that somewhat hard to digest, but well, I guess they get their last say. Apparently by asking for explicit recorded transfer of this money from NEC to LD they will have a better handle to figure out where that transfer money really came from. I am no accountant, so I don't know if this is legit or hogwash, but that is what I was given to understand.

So here is the well grounded argument on why unlike what many of the LD partisans seem to want, i.e. get rid of the NEC infrastructure completely, would be really bad for LD trains. Because what that will do is require that all of LD subsidies be accounted for at 100%, i.e. for the same amount of money that they are getting now, the impact on the budget will be higher, and hence in effect theya re likely to get a lower amount than they are getting now. And since just having the infrastructure without running any service which actually allows the conversion is kind of pointless, their whole carping about the NEC is wrongheaded. The fact is LD needs the NEC at least as much as NEC might need LD if not more so., They have to get off of their tea-party-esque belief that LDs subsidize the NEC.

Now this is not to say that there are not other arcane accounting goofery carryovers from the private railroad days that should not be gotten rid of. One that needs to be dumped forthwith is the business of over allocating costs to LD trains that even touch the NEC, say by terminating at Washington DC. This practice carries over from the PRR days based on then cross-charging practices within PRR, and for some reason no one seems to have bothered to change it. It artificially boosts the fully loaded cost of trains that touch the NEC but operate mostly off NEC. Ironically of course they get the money right back in the form of the ops transfers. This may be the thing that people refer to as LD trains subsidizing the NEC, but the amount is nowhere near as significant as the several hundred million dollars that flows the other way now. Also ironically, this affects mostly LD trains that are doing relatively well, and have no effect on the more problematic western LD trains since they don;t touch the NEC.

So this is my cogent argument for keeping Amtrak together as a whole given of course that we collectively want to have a passenger rail service generally available across the nation, over and above regional services. Notice that hiving off the regional services as a separate unit and have its budget shortfalls funded by the regions is perfectly consistent with the overall goals of this scheme.


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## John Bobinyec (Aug 18, 2015)

The Gateway Project is the perfect illustration, along with the Susquehanna Bridge Project, the B&P tunnels, etc..., why it's ludicrous to consider Amtrak as "profitable above the rails". With the North River tunnel dilemma and political scrambling reaching a crescendo, I'm waiting for one of the participants to simply say that Amtrak should be restructured in order to separate the NEC from the non-NEC operations and finances, and then let all those profits from above the rail be plowed back into "below the rail" where they belong.

The NEC is "profitable above the rail" only if someone else is paying for all of the infrastructure that the trains run on. I'd like to see a comparison between all of the so-called profitable operations to the long distance operations, but taking *all *expenses, both operating, and capital, into account.

jb


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## Paulus (Aug 19, 2015)

> The NEC is "profitable above the rail" only if someone else is paying for all of the infrastructure that the trains run on.


That's kinda what "above the rail" means.



> I'd like to see a comparison between all of the so-called profitable operations to the long distance operations, but taking all expenses, both operating, and capital, into account.


The long distance operations would look absolutely horrific, even worse than they currently do, as one would expect when comparing them to services that earn 3-5x what they do per train mile.


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## John Bobinyec (Aug 19, 2015)

Paulus said:


> > The NEC is "profitable above the rail" only if someone else is paying for all of the infrastructure that the trains run on.
> 
> 
> That's kinda what "above the rail" means.
> ...


I don't agree - remember that the money necessary for the Gateway Project and all those others that I mentioned - would have to be INCLUDED in the comparison.

Think of it this way. Suppose you wanted to start up a rail service from point A to Point B. You come up with several options like whether to use electric propulsion or diesel. Several bridges and tunnels must be constructed. You go looking for money. In order to know how much you'll need, you must include ALL OF THE COSTS. THAT's what I'm talking about.

Since Boardman's statement, no one is talking about ALL OF THE COSTS of the NEC. Up until now, they just believe that the Railroad Infrastructure Fairy will provide what's necessary. "Suddenly", since Hurricane Sandy, they are finally finding out that there is no Railroad Infrastructure Fairy.

jb


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## jis (Aug 19, 2015)

Frankly I am a bit baffled. When one says that Greyhound makes a profit (just as an example, not necessarily a fact) that is based on whatever its costs of using the infrastructure is. It does not include the cost of building the next intersection on I-95 and adding three lanes to it between exit X and exit Y. It just includes the taxes and tolls that it pays to make use of said infrastructure.

Why is it so difficult to understand that the above the track P&L is a similar construct where the cost of current use of the infrastructure is all that is included in the P&L statement of an operating company.

Sorry I simply don't understand your logic, and so I disagree with your analysis. I do agree with the position that Paulus is articulating. If you loaded up the capital cost of all infrastructure enhancements that are needed for running the LD trains in their operating P&L they would indeed start looking horrific. What is included instead are trackage charges and fuel, staffing etc., and a mysterious bunch of allocated charges for services ostensibly provided by Amtrak central such as CNOC, Reservation and Ticketing and such, which sometimes appears to be way out of line due to the way accounting is done at Amtrak. But that is somewhat irrelevant to the point I am making here.

Why do you believe that when Boardman is talking about above the rails P&L he is talking about all the capital costs for the next half a century?. That seems like a construct in your mind that is at variance with what Boardman or most others seem to understand from the term "above the rails".


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## John Bobinyec (Aug 19, 2015)

Oh, I understand what "above the rails" means and that it's similar to "above the road". And I do feel that if the road is provided for the trucking company then the tracks should be too (for the railroad company). However, I don't think that the media and most of the politicians understand it and they gravitate to the "NEC is profitable" part and forget about the "above the rails" part. I see it as a catalyst to break Amtrak up into pieces, and I'd rather not see that happen.

jb


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## jis (Aug 19, 2015)

I am with you on the possible dangers of misinterpretation. We should certainly correct such misinterpretations and actively deal with any consequent silliness that ensues. I think we are on the same page now.

OTOH, I think there is a reasonable discussion to be had on whether the NEC infrastructure, which Amtrak came to own as an accident almost, should be separated out as a infrastructure entity leaving Amtrak the train operating company to concentrate on running the best train service that thy can. I don;t see that possible restructuring as a universally bad thing. Just IMO of course, and I suppose I am entitled to at least one


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## neroden (Aug 23, 2015)

Anderson said:


> I will say that I don't quite see some services booming the same way Woody does...particularly those going past Harrisburg. Yes, the track improvements may be about the same for 8x new trains as for 1x, but I'm not sure the level of demand is there. I could see a situation where the state arm-twists those slots free...but only bumps service up to 3-4x daily service at most. You're more likely to see an aggressive ramp-up of Main Line service to Harrisburg before you see massive growth west of there.


I've said before that what is needed is new-build from Lewistown (west of Harrisburg) to State College, which is the big population center between Harrisburg and Pittsburgh -- roughly following US 322. It would require a significant base tunnel (maybe as much as 10 miles), but the gains are likely to be worth it. The line would be electrified to State College. NS would likely require capacity expansion Lewistown-Harrisburg before allowing electrification.

This is viable on its own as an extension of the Keystone Service. There is no complete expressway route from that area to Philadelphia, so I expect the State College station would have a very large catchment area. And then there's the college students!

Continue west on rehabilitated track Tyrone, and reroute the Pennsylvanian. You bypass Huntingdon, but you gain State College. You've just removed Amtrak from NS's mainline for a large distance, which they'll appreciate, and you can build faster track to gain time. This also allows for the relocation of the Lewistown and Tyrone stations off of the NS mainline into better locations downtown in the actual cities. Probably with grade separations for stuff like the street trackage in Lewistown.

I'm not sure whose attention I have to get to promote this idea. Most of the Keystone West and Pennsyvlania HSR studies have been abominable and incompetent. This might be a $2-3 billion project, but it would add a valuable station, and connect areas faster than an expressway (which does not exist anyway). The consultants for Pennsylvania have come up with more expensive projects which are a lot less useful.

There needs to be advocacy for a "Harrisburg-State College" HSR project, but I don't even have a spiffy name for it.  It is the logical next step after the Keystone improvements.


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## neroden (Aug 23, 2015)

jis said:


> Now this is not to say that there are not other arcane accounting goofery carryovers from the private railroad days that should not be gotten rid of. One that needs to be dumped forthwith is the business of over allocating costs to LD trains that even touch the NEC, say by terminating at Washington DC. This practice carries over from the PRR days based on then cross-charging practices within PRR, and for some reason no one seems to have bothered to change it. It artificially boosts the fully loaded cost of trains that touch the NEC but operate mostly off NEC. Ironically of course they get the money right back in the form of the ops transfers. This may be the thing that people refer to as LD trains subsidizing the NEC, but the amount is nowhere near as significant as the several hundred million dollars that flows the other way now. Also ironically, this affects mostly LD trains that are doing relatively well, and have no effect on the more problematic western LD trains since they don;t touch the NEC.


Well, that's exactly what ticks me off about that piece of accounting goofery. It makes the best LD trains look worse, so when people go around attacking "LD trains", they end up cutting the better ones rather than the worse ones (which is madness), and when plans are made to expand LD routes, they plan to expand the worse ones rather than the better ones (which is also madness).


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