How full does a LD train have to be to be profitable?

[Cal]

I'm curious, Amtrak loses, according to them, millions upon millions each year from the LD trains.

So, how full do they have to be to make a profit?

And how often are they this full? Or, how often do they make a profit? I assume all/most trains in the summer do..

 

[crescent-zephyr]

I'm curious, Amtrak loses, according to them, millions upon millions each year from the LD trains.

So, how full do they have to be to make a profit?

And how often are they this full? Or, how often do they make a profit? I assume all/most trains in the summer do..

There’s no simple answer. Something to consider is a trains like the Crescent that
has to take on the cost of a station like Atlanta GA which staffs and maintains a station for only the Crescent. The property tax, insurance, maintenance, electric, janitorial services, probably 5 full time employees... it all adds up.

That’s why having more frequent services is important... it helps spread the costs out.

 

[Cal]

There’s no simple answer. Something to consider is a trains like the Crescent that
has to take on the cost of a station like Atlanta GA which staffs and maintains a station for only the Crescent. The property tax, insurance, maintenance, electric, janitorial services, probably 5 full time employees... it all adds up.

That’s why having more frequent services is important... it helps spread the costs out.

That would qualify for basically all Amtrak LD trains then...

Basically all of them go to stations only they do.

 

[me_little_me]

That would qualify for basically all Amtrak LD trains then...

Basically all of them go to stations only they do.

For most stations along the route, yes. And it gets worse when they don't go daily as the costs hardly go down, if at all. And they don't go up proportionally if there are more trains.

 

[crescent-zephyr]

That would qualify for basically all Amtrak LD trains then...

Basically all of them go to stations only they do.

Exactly. And each route is different. For the Crescent, they share station costs in New Orleans, several stops in North Carolina, and north of Lynchburg.

So each train will be a little different.

The three trains serving New Orleans have to support a large station infrustructure that includes a small yard and switching operation, crew base, commissary, etc. The Capitol Limited is sharing costs at DC and Chicago in a completely different way.

 

[MikefromCrete]

Given Amtrak's mysterious accounting system, it is probably impossible to answer this question. It all depends on how overhead costs are allocated to each train. Some people on this board have argued that the eastern long distance trains do make a profit based on "above the rail" costs. There are those who contend that the Northeast Corridor trains, or at least the Accelas, are profitable, but those figures usually ignore the high cost of maintaining the corridor. At some point Amtrak management needs to shine light on the company's accounting practices.

 

[Qapla]

It comes down to this ... for any particular train to be profitable - you need to know what the actual cost for that train is to run from end-to-end and how much money it takes in to do so.

By factoring in the shared costs of other trains on the same route and spreading costs that may not apply to a particular train does not make that possible.

At this point, I doubt Amtrak even knows how full any particular train needs to be for that particular train to be profitable

 

[Cal]

At this point, I doubt Amtrak even knows how full any particular train needs to be for that particular train to be profitable

You know, I wasn't sure what I was expecting. But not this.

Amtrak needs to get their act together.

 

[crescent-zephyr]

You know, I wasn't sure what I was expecting. But not this.

Amtrak needs to get their act together.

Either Amtrak knows and they are hiding the facts. (Deceptive).

Or they don’t know. (Incompetent).

Take your pick! haha

 

[Cal]

Either Amtrak knows and they are hiding the facts. (Deceptive).

Or they don’t know. (Incompetent).

Take your pick! haha

I feel like it's a little bit of both...

 

[west point]

The Silvers, Auto train, and Palmetto certainly share many facilities as well they also do Richmond north with the regional trains.

 

[neroden]

Yep. Trains are an economies-of-scale business. Lots of fixed costs, not that many variable costs.

Amtrak uses an arbitrary and dishonest method of "allocating" fixed overhead costs.

Due to the economies of scale, it's easier to make a profit running two trains a day on the same route than running one, and far easier to make a profit running one train a day than running only three a week. Amtrak's dishonest accounting system does its best to obfusticate this (this is not the only reason it's dishonest).

So this is the underlying truth behind the campaign for "corridors" -- many trains a day is more financially efficient than one. This applies to New York to Chicago (the LSL) just as well as it does to a shorter corridor, however.

If you look only at variable costs -- which Amtrak does its best to conceal, but published at least once, and you can attempt to estimate them -- the eastern long-distance trains nearly all make a profit in non-Covid times. (The Capitol Limited and the Cardinal are the questionable ones; in the case of the Cardinal, this is only because it isn't running daily and it would certainly be profitable if daily. The Silver Meteor, Silver Star, Crescent, and LSL definitely make a profit. There's something weak about the Capitol Limited's route.)

If you "allocate" fixed costs, you can financially engineer a profit or a loss on any train you like using accounting shenanigans, but it's phony.

Most of the Transcontinental trains seem to suffer from not having enough demand to run more than daily, at least part of the year. (Empire Builder might have enough demand for two a day; also California Zephyr from the ski areas through Denver to Chicago.) The Eastern trains definitely could all fill multiple trains per day, and so could the Coast Starlight.

The only cure for Amtrak's financial situation is more Amtrak. More economies of scale. There's a reason almost all countries have national train systems and it is that trains depend on economies of scale.

 

[cirdan]

The allocation of costs is often a question of personal opinion and there are always different ways to look at it.

On the NEC you have different tiers of Amtrak service plus various commuter railroads sharing the same infrastructure. If you take out any of these players, the infrastructure costs will have to be shared between the others and thus be higher. It may thus make economic sense to continue a service even if it appears to be raking in a loss or appears to be of limited utility.

At the end of the day, what really matters is the profitability of the system as a whole. You can move money from your left pocket to your right pocket as much as you want to make your pet train appear profitable. And there will always be somebody who finds a reason to justify that and somebody else who says it's dishonest. But on the level of the system as a whole you cannot magically find money to make it appear profitable. And Amtrak as a whole is clearly not profitable.

But then why stop the argument there. What happens if you don't just look at the book level losses but at the value of the benefits that Amtrak provides to the communities it serves? This can include anything from reducing road congestion to bringing in additional tourists to making a given city attractive for business investments. The value of these benefits can sometimes be difficult to put a precise figure to as you can't always measure the precise benefit or predict what people would be doing and how the would be spending their money in an alternative scenario.

In other words, we are dealing with high levels of imprecision.

 

[railiner]

The allocation of costs is often a question of personal opinion and there are always different ways to look at it.

On the NEC you have different tiers of Amtrak service plus various commuter railroads sharing the same infrastructure. If you take out any of these players, the infrastructure costs will have to be shared between the others and thus be higher. It may thus make economic sense to continue a service even if it appears to be raking in a loss or appears to be of limited utility.

At the end of the day, what really matters is the profitability of the system as a whole. You can move money from your left pocket to your right pocket as much as you want to make your pet train appear profitable. And there will always be somebody who finds a reason to justify that and somebody else who says it's dishonest. But on the level of the system as a whole you cannot magically find money to make it appear profitable. And Amtrak as a whole is clearly not profitable.

But then why stop the argument there. What happens if you don't just look at the book level losses but at the value of the benefits that Amtrak provides to the communities it serves? This can include anything from reducing road congestion to bringing in additional tourists to making a given city attractive for business investments. The value of these benefits can sometimes be difficult to put a precise figure to as you can't always measure the precise benefit or predict what people would be doing and how the would be spending their money in an alternative scenario.

In other words, we are dealing with high levels of imprecision.

Good points. You can add to the benefits that Amtrak provides to certain communities, in the matter of employment at staffed stations, and even more so at crew bases or maintenance bases...and the spending by those employees...

 

[Larry H.]

The important long distance routes pre Amtrak often ran 5 sleepers, four coaches, a first and coach glass lounge and diner. So Amtrak tires to run them now with about a third the cars, now wonder when you want a reservation for sleeper there often saying sold out. A train should only be sold out when it running the maximum amount of cars.. The Canadian National when we took it just prior to Amtrak being announced had 22 cars when we got to Vancouver. I thought that was alot, and for the most part it was sold out. However a photo in a Trains Magazine showed a combined "Cities" train somewhere out west and I counted 38 passenger and baggage cars. When you look at a freight train of hundreds of cars now it is obvious the limit to how many cars is pretty large. I have been on trains that had to make two stops at the same station in order to let passengers off at the platform. I know I read its a looser to add sleepers but when you add up the fares a full sleeper has it seems pretty strange to say there loosing money on it. And the more of them the more the train would take in.

 

[crescent-zephyr]

I know I read its a looser to add sleepers but when you add up the fares a full sleeper has it seems pretty strange to say there loosing money on it.

I don’t think that’s accurate. The sleepers themselves are quite profitable as far as I know.

 

[Cal]

Amtrak's financials seems to be all over the place...

 

[Qapla]

Suffice it to say that, if a LD train was "sold out" for every trip and that train was not "shortened" so that it could sell out, it should be profitable.

 

[Cal]

it should be profitable.

It should?

If it's NOT, well, Amtrak would have some serious explaining to do.

 

[crescent-zephyr]

It should?

If it's NOT, well, Amtrak would have some serious explaining to do.

I don’t think the sunset limited is profitable if it sells out every trip.

 

[Cal]

I don’t think the sunset limited is profitable if it sells out every trip.

So it's set up to fail? Why would Amtrak let that happen? Just to get rid of them?

 

[crescent-zephyr]

So it's set up to fail? Why would Amtrak let that happen? Just to get rid of them?

Amtrak has done everything it can to get rid of the sunset, so possibly.

I’m not sure if any of the 2-day western trains can break even if they sell out though. Seems doubtful.

 

[Cal]

Amtrak has done everything it can to get rid of the sunset, so possibly.

I’m not sure if any of the 2-day western trains can break even if they sell out though. Seems doubtful.

:/

 

[jiml]

So it's set up to fail? Why would Amtrak let that happen?

There's a lot of things Amtrak could do to improve the Sunset. Missing key cities (Phoenix), inhospitable hours at others and the terrible arrival and departure times in L.A. don't help. Then there's the things they can't fix - connecting points that fewer people travel between, on a route that's more "drive-able" year-round than others across the country and scenery that's nice but not spectacular. It's a lot of little things - not one thing, but daily service would be a step in the right direction.

 

[MARC Rider]

I don't think that the "normal" business definitions of "profit" and "loss" are applicable to our taxpayer-subsidized passenger rail system. If any of these trains could have been run profitably, we'd still have the private railroads running passenger trains. Of course, in today's business world, even operations that are technically "profitable" get axed by businesses if they don't meet the profit targets set by the management.

The politicians are willing to pay the subsidy to run these "unprofitable" trains because they provide useful mobility benefits to their constituents. In the case of long-distance trains, it provides public transportation service to rural areas that can't even get bus lines to come to their towns, plus it allows for mobility of those who can't fly for medical reasons, etc. Plus, the trains provide economic benefits to the rural communities they serve. It's basically a bit of low grade pork spending, which is no big deal to the politicians, because, in the scheme of a multi-billion dollar Federal budget, a billion and a half for Amtrak (of which only a fraction is for long distance trains) is "rounding error," a drop in the bucket. Thus, this basic support for Amtrak appears to continue through administrations and Congresses controlled by both parties.

However, once you start talking about expanding the system, or getting serious about making passenger rail a larger part of our transportation mix, you start talking about having to spend real money, and the opposition to such "boondoggles" increases, enough to usually kill the proposals, unless they're introduced very carefully, in piecemeal fashion.

This is nothing new in our politics. People in New York thought the Erie Canal was a waste of taxpayers' money, even if, in the end, it allowed New York to surpass Philadelphia as the main city in the country. There was certainly no immediate economic reason to build the first transcontinental railroad, the private sector had to be dragged into doing it by government loans and land grants, sweetened with some good old-fashioned corruption and crookedness. In the end, the country got good value for the money expended, I think they eventually even got the loans paid back (though the guy running Credit Mobilier went into a comfortable retirement with his ill-gotten gains).

The only problem with using taxpayer money is that there are many people if think that any public money spent that's not benefiting them in the short term is a boondoggle. "I live on the east coast. Why are we spending all that money for a naval base at Pearl Harbor?" Aside from that, the real issue isn't whether a given train is "profitable" or not, it's whether it's being run in a way that provides the most benefit, which can mean different things to different people. However, with Amtrak's opaque accounting, it's sometimes hard to figure that out.