Amtrak concedes perpetual $1 Billion/Year operating losses

[Amtrakfflyer]

Red meat for conservatives and general public. Long distance trains show huge loss per passenger.


https://www.enotrans.org/article/amtrak-concedes-perpetual-1-billion-year-operating-losses/
“And then, there are the long-distance trains, which (pre-COVID) were expected to lose around $450 million per year. In the new budget, operating losses for the long-distance trains will almost double by 2027, from the pre-COVID $450 million to $889 million in 2027. And, yes, the new five-year plan book does include, starting on page 226, the ridership projections for each line by year, including allocated profit-and-loss on each train route. They estimate that, in FY 2022, the Sunset Limited will post an operating loss of $614 per passenger, but at least this will drop to $514 per passenger by 2027. The Southwest Chief, which the Senate specifically kept open through the appropriations process a few years ago, is expected to lose $352 per passenger in 2027, up from $237 per rider in 2022”

 

[TheCrescent]

I’d like to see accounting information provided by a neutral third party before confirming Acela profits vs. long-distance losses.

For Amtrak to say that the Acela makes money, while Amtrak can’t afford the tens of billions of dollars of Northeast Corridor work that is required for the Acela to operate, is like a store that says that it’s extremely profitable even though it can’t pay for its building.

 

[jis]

Incidentally, all the information in that article is extracted from this document (PDF):

https://www.amtrak.com/content/dam/...lative-Annual-Report-FY2023-Grant-Request.pdf
Incidentally, the article spends a lot of time criticizing the changes that were made to the Mission statement to enable growth of passenger service instead of its perpetual starvation. So I suggest people cannot have their cake and eat it too. Either you can have a zero subsidy goal or you can have a reasonably growing passenger service with reasonable customer service goal but accept a certain level of subsidy. You can't have both until an appropriate tooth fairy is found. If such a tooth fairy existed there would be no Amtrak since one would not have been needed in the first place

Furthermore, if such a tooth fairy could be found then it could also be applied to the airways and highways funding to reduce the overall subsidy for transportation too

 

[Amtrakfflyer]

They anticipate losses for long distance trains will double by 2027. Are they even trying anymore?

 

[jis]

They anticipate losses for long distance trains will double by 2027. Are they even trying anymore?

Depends on what they will do with it. If they are going to use it to run several additional and more marginal routes such as ones that are being discussed then I am all for it. Afterall just because they reintroduce North Coast Hiawatha or Pioneer, they won't suddenly become anymore cash cows than they ever were no matter which way you count money. The operational cost shortfalls will have to be covered from somewhere. Without further details it is hard to jump onto the criticism bandwagon, unless of course one was already firmly sitting on it In which case of course there is nothing further to be said

 

[Amtrakfflyer]

Let’s use the SWC example, per passenger subsidy will rise from $237 in 2022 to $352 in 2027. Does that make sense, honest question? The $614/514 loss per passenger on the SL, at the minimum says it needs daily service.

After many talks with staffers involved in the fight to save the SWC a few years I am firmly of the mindset Gardner is a weasel. No one has kind words for him. It’s going to be an interesting few years..

 

[jis]

Let’s use the SWC example, per passenger subsidy will rise from $237 in 2022 to $352 in 2027. Does that make sense, honest question? The $614/514 loss per passenger on the SL, at the minimum says it needs daily service.

After many talks with staffers involved in the fight to save the SWC a few years I am firmly of the mindset Gardner is a weasel. No one has kind words for him. It’s going to be an interesting few years..

One can believe whatever one wants, but this problem predates Gardner by a few decades. It is the idiotic accounting that Volpe Center came up with that produces these numbers and they are required to be presented by regulation attached to budget requests. Oddly enough Gardner is the first CEO who has actually published the marginal cost and revenue numbers per train as required in PRIIA 2008, which at least gives us something more reasonable to talk about. That does not make Gardner a hero or anything but at least things are a little bit more aligned with the regulations governing Amtrak now that it was three years back.

Personally I would like to see Gardner and Coscia replaced for reasons I have mentioned before. But frankly repeating the "Gardener is Devil" mantra on ones prayer beads or wheel (specially on multiple AU threads) is not going to fix the core problem no matter how fast one spins the wheel or beads. It could be personally therapeutic for some though

 

[johnmiller]

If Amtrak could deliver a good product they could get more of us railfans to ride them more often. My trip on them from Memphis to Chicago then on to San Francisco last November had lots of problems and I honestly have to say I have no wish to ride Amtrak again until I know that things have changed.

 

[neroden]

These are mostly fake numbers, and we all know it. Ignore anything which says "fully allocated".

The way it actually works, and the way it's worked for DECADES, is that it costs $1 billion / year to "keep the lights on" at Amtrak. That's the prerequisite for having any trains -- Acela, Southwest Chief, Downeaster, doesn't matter, you want to run one train, that's what it costs.

Then the individual trains: the long-distance trains are mostly slightly profitable, the state-sponsored trains mostly not but the state payments usually cover them or close, and the NEC trains are slightly more profitable. But the sum of these profits doesn't cover the "keeping the lights on" cost; it's an order of magnitude smaller. And they certainly don't cover capital costs or the infrastructure backlog on the NEC.

We could quadruple the size of the Amtrak system with more trains, those trains would generally break even or be slightly profitable, and it would... still be $1 billion / year to keep the lights on, probably slightly less because there would be a little more profit to defray overhead costs. Plus capital costs.

It's just the fixed overhead cost.

 

[neroden]

They anticipate losses for long distance trains will double by 2027. Are they even trying anymore?

There are no losses for long-distance trains right now and they will not increase. They really need to stop using the fake numbers. This is just a scam created by "allocating" fixed overhead to the so-called long-distance trains in order to pretend that they're unprofitable.

 

[jimdex]

None of us like the fact that passenger trains lose money, but simply closing our eyes and declaring that the losses are "fake" won't get us anywhere. What we need to do is build the case that trains are needed even though they require subsidies, and that service increases can actually reduce the amount of the subsidies required.

 

[TheCrescent]

None of us like the fact that passenger trains lose money, but simply closing our eyes and declaring that the losses are "fake" won't get us anywhere. What we need to do is build the case that trains are needed even though they require subsidies, and that service increases can actually reduce the amount of the subsidies required.

Agreed but starting with a correct set of facts about which trains make money and which trains lose money, and how much, would certainly help in determining what to push for.

With Amtrak’s accounting, I don’t know if we have a correct set of facts. Maybe airlines’ accounting firms, Class Is’ accounting firms or Brightline’s accounting firm could come in and do its own audits and tell us.

 

[Rover]

How do passenger trains in Europe or Asia operate with profitability?? How much subsidy do they receive by comparison??

 

[jis]

How do passenger trains in Europe or Asia operate with profitability?? How much subsidy do they receive by comparison??

Overall, none of them operate profitably. A few select individual routes are claimed to operate profitably, but that involves allocations, and once you are in that game it can be played both ways depending on the results you wish to show

In India they first created a category of service called social service (suburban and rural slow service run using EMUs, MEMUs, and DEMUs) and yanked the costs out. Then they created a category called strategic service (in the border areas and such) and yanked those costs out. Still passenger trains in the remaining space do not break even. The only sub-sector where they break even is in a subset of the premium trains on the most premium routes. What makes money hand over fist, is of course, freight. It is expected to pay down the construction cost of the Dedicated Freight Corridors (capital cost) in about 20 or so years.

But enormous amount of new route and higher speed line construction carries on funded out of general budget under some pretext or another and also using foreign loans (e.g the JICA loans from Japan for the Mumbai - Ahmedabad HSR), just like enormous amount of new highways construction also goes on. The net new infrastructure construction is close to mind boggling and yet it does not come anywhere near Chinese scales.

So Amtrak's perpetual $1 Billion is a mere pittance compared to those.

 

[Caesar La Rock]

How do passenger trains in Europe or Asia operate with profitability?? How much subsidy do they receive by comparison??

China provides the most at 130 billion in subsidies and Europe its 73 billion Euros. In Europe, Germany is the country that provides the most subsidies at 17 billion. Probably explains all the new trains the Germans have been purchasing over the past 12 years. All of this is per Google.

 

[cirdan]

So Amtrak's perpetual $1 Billion is a mere pittance compared to those.

Overall subsidy / support is pretty meaningless without context.

It is more interesting to look at subsidy per passenger or per passenger mile.

The railroads in India and China carry many more passengers overall and thus I expect the per passenger and per passenger mile subsidy to be much smaller, even if the overall subsidy is greater.

 

[jis]

Overall subsidy / support is pretty meaningless without context.

It is more interesting to look at subsidy per passenger or per passenger mile.

The railroads in India and China carry many more passengers overall and thus I expect the per passenger and per passenger mile subsidy to be much smaller, even if the overall subsidy is greater.

That is likely, though I am not so sure if all the capital expenditure on infrastructure and electrification is included. Quite a bit of that does not appear in the rail budget but is funded out of other national development accounts.

But in any case, I was responding to a claim that passenger trains all over the world, except in the US of course and perhaps even Canada, are profitable. Which is about as far from truth as one can get. That is not to deny that if one carefully slices and dices out a portion that is profitable leaving out the rest of the system, then that carefully selected part is profitable almost as a tautology. But that of course is neither here, nor there.

 

[TheCrescent]

Sure, passenger trains lose money almost everywhere.

That shouldn’t stop us from asking: “is Amtrak giving us the best passenger service per tax dollar spent, or are other countries getting better service for their investments?”

We should be examining what other countries are doing and learn from them. Amtrak is in many ways unchanged from its 1971(or 1981 or 1991) versions, while other countries have changed their models significantly since then.

 

[toddinde]

If Amtrak could deliver a good product they could get more of us railfans to ride them more often. My trip on them from Memphis to Chicago then on to San Francisco last November had lots of problems and I honestly have to say I have no wish to ride Amtrak again until I know that things have changed.

Amtrak doesn’t exist for railfans, thankfully. That’s especially good since, in my experience, the railfans judge Amtrak against the Super Chief/20th Century Limited mythical service standards. This began when Amtrak took over the trains. Amtrak was constantly being compared to the very best of the pre-Amtrak services and the very best non-Amtrak services, frequently by naysayers that wanted to kill it. That’s 40 and 50 years ago now. Nothing is the same. Planes are frequently late, and the travel experience in coach isn’t great. Amtrak actually does a reasonably decent job. I’ve had many enjoyable trips over the last couple years. Since the railfan market is infinitesimal, it’s not a market Amtrak should chase.

 

[toddinde]

That is likely, though I am not so sure if all the capital expenditure on infrastructure and electrification is included. Quite a bit of that does not appear in the rail budget but is funded out of other national development accounts.

But in any case, I was responding to a claim that passenger trains all over the world, except in the US of course and perhaps even Canada, are profitable. Which is about as far from truth as one can get. That is not to deny that if one carefully slices and dices out a portion that is profitable leaving out the rest of the system, then that carefully selected part is profitable almost as a tautology. But that of course is neither here, nor there.

The profit chase is a fools errand. If Amtrak made money, but very few people rode it, or it had no social utility, it would be useless.

 

[TheCrescent]

The profit chase is a fools errand. If Amtrak made money, but very few people rode it, or it had no social utility, it would be useless.

Amtrak basically broke even in 2019 with a load factor of about 60%. It would be very profitable (at least operationally) if it had significantly more riders.

Given Amtrak’s overhead, profits would be tied to high ridership levels.

 

[Cal]

Wasn't Amtrak set to make a profit in 2020?

 

[TheCrescent]

Wasn't Amtrak set to make a profit in 2020?

Yes, on operations.

To be profitable, I figure that Amtrak needs to (1) scrap everything and become a larger Rocky Mountaineer, running a few luxury trains, (2) upgrade key lines to have 200 mph service, and thus becoming the default best way to get from point a to point b and being able to charge higher fares or (3) just fill more seats.

(1) and (2) aren’t going to happen to (3) is the only way.

 

[NES28]

It is important to remember that Amtrak routes fall into 3 categories. They have chosen to focus on the loss on long distance because that's the part they have to pay for. In normal times NEC breaks even on an operating basis (i.e. not including capital costs due to the extremely high fares which they can charge in this market). State-supported services also lose a huge amount of money but, since the states pay almost all of this deficit, Amtrak does need to account for this and generally doesn't care. The ConnectUS plan is totally based on increasing the amount of state supported services. That's why it includes no routes over 750 miles (perhaps, none over 500 miles).

Interestingly, the Regional Rail Plans prepared by FRA Regional Rail Planning | FRA (SW, SE, and MW) makes the point that the "Core Express" (true high-speed rail) routes make money on an operating cost basis (like NEC), as long as the investment is limited to the best routes in the country (maybe 6000 route miles). For some reason Amtrak has not made any effort to advance any HSR routes outside of the NEC.

 

[Cal]

To be profitable, I figure that Amtrak needs to (1) scrap everything and become a larger Rocky Mountaineer, running a few luxury trains, (2) upgrade key lines to have 200 mph service, and thus becoming the default best way to get from point a to point b and being able to charge higher fares or

I definitely disagree.

(3) just fill more seats.

Yes