why are LD trains such heavy money losses?

[MIrailfan]

only partially false - Amtrak is supposed to be gov't funded ... it is part of the Gov't, not a private business. Are you sure the CDC does not compete with any other research/medical labs?

if they charge fares they are not fulloy government.

 

[jis]

only partially false - Amtrak is supposed to be gov't funded ... it is part of the Gov't, not a private business. Are you sure the CDC does not compete with any other research/medical labs?

Amtrak is owned by the government but is not really part of it in the sense that the Department of Transportation is. It is only partially funded by the federal government. A vast majority of it is really funded by its users and state governments. The chartering instrument of Amtrak explicitly says that it should be run as a for profit business, which contrary to the best wishes and fantasies of some railfans, sounds way more like a private business than a government department.

 

[Qapla]

Interesting read ... https://www.railpassengers.org/happening-now/news/blog/no-amtrak-does-not-have-to-make-a-profit/

“... the 1970 law that created Amtrak says it’s supposed to operate like a for-profit company,” you say. Yes, it did say that. But at the time, the folks who wrote that measure acknowledged that it was more aspirational than anything else. And in 1978, lawmakers recognized their error. And they changed the law.
Section 301 of the Rail Passengers Service Act, which was amended to insert the words “operated and managed as” to introduce the term “a for profit corporation.” You’ll find that clause in the Amtrak Improvement Act of 1978. This wording was deliberate, and intended to recognize the reality that the objective was for Amtrak to do its best to run a tight ship, but not necessarily to make a profit.
“Section 9 amends section 301 of the RPSA…to conform the law to reality, providing that Amtrak shall be ‘operated and managed as’ a for-profit corporation. This amendment recognizes that Amtrak is not a for-profit corporation.”
... since 1978, Congress has not required Amtrak to make a profit

I guess there is a difference in a business that runs "as" a "for profit" business and one that "is" a "for profit" business ... In any event, since, as I understand it, the Gov't is not allowed to be "in business" - how can they "own" an actual "for profit" business. If they cannot ... then Amtrak is a Gov't "agency" with a "business name".


No matter how you look at it .... a simple answer as to why "LD trains have such heavy money losses" is Mismanagement - no real mystery in that.

 

[PerRock]

if they charge fares they are not fulloy government.

The National Parks, and US Forest Service charge fares, are they not part of the government? The TSA charges a fee (which is paid thru your airfare), are they not part of the Government?

peter

 

[jis]

as I understand it, the Gov't is not allowed to be "in business"

I don't know what the phrase "in business" might mean. But the USG is able to own corporations, and has done so for over a hundred years, each created by an act of Congress, and in said act Congress can stipulate that it be for profit, if it so chooses. Conrail was created in that form too. Amtrak is one of the current 17 such entities.

A pretty comprehensive discussion of this matter can be found in this document, including the ambiguities, controversies etc. associated with the concept:

https://www.everycrsreport.com/reports/RL30365.html

 

[crescent-zephyr]

I'll take the bait. The Interstates lose money because they don't charge tolls. The toll roads are profitable.

I’m actually all for interstates being toll roads. Where toll roads are more of the norm (north east, Chicago, etc.) there seems to be a lot more Rail traiffic too.

If all interstates charged tolls that actually covered the entire expense, I think we’d see a lot more public transit operations.

 

[Amtrakfflyer]

Then you have the whole can of worms of highways being privatized. Mike Pence privatized Indiana’s toll roads an Australian company runs it now in some round about way. Here’s the result.

https://m.yelp.com/biz/indiana-toll...=yelp_feed&utm_medium=feed_v2&utm_source=bing

 

[MARC Rider]

Amtrak is owned by the government but is not really part of it in the sense that the Department of Transportation is. It is only partially funded by the federal government. A vast majority of it is really funded by its users and state governments. The chartering instrument of Amtrak explicitly says that it should be run as a for profit business, which contrary to the best wishes and fantasies of some railfans, sounds way more like a private business than a government department.

"For profit" can mean a lot of things. For example, it could simply mean that the Amtrak's revenues should exceed its expenses only to the point that no further taxpayer subsidy is needed, which is I think is what Congress was thinking when they created the company in the first place. Or it could mean that it should be managed to infinitely maximize its profit and value to the shareholders, as most private corporations do nowadays.

Because (as far as I know) Amtrak is owned 100% by the U.S. government, and its not traded on any stock market anyway, "maximizing its value" seems to be sort of silly, unless the government want to sell it for a short term cash windfall. (But every instance I've heard about when the government sells a public asset, they usually sell it cheap to a politically well-connected buyer, and the government doesn't make the financial windfall it should get.) "Maximizing profit" might be more reasonable, because the company could use that to expand service. Of course, most private companies are managed today to spend as little as possible on making the product or service they sell, and the maximized profit, if it is realized, is disproportionately distributed to the top executives and shareholders, and many times, the shareholders get screwed, too.

I think that the authorizing legislation and amended charter of Amtrak should be more explicit about the reason for Amtrak's existence, and why it needs to be a government company rather than a purely private company. I would think this would take the form of a finding that a passenger rail system is a national need for reasons of:

Removing cars from the highways (reducing both traffic congestion and petroleum consumption, and greenhouse gas emissions);
Enabling denser, walkable development of towns and cities (reducing auto traffic and thus traffic congestion, petroleum consumption and greenhouse gas emissions);
Providing alternative mobility for people in rural towns, especially for people who can't or won't drive their own cars;
Providing alternative mobility for the significant minority of the population who can't or won't drive for medical or other reasons;
etc.

The mission of the company should thus be to maximize ridership and areal coverage of the service and increase revenue, yet keep the cost related to the revenue low enough that government subsidies aren't needed. That's what "profitable" should mean.

 

[west point]

Cannot believe how many Govt corporations I"ve used. TVA, FDIC - saved my bacon, PBCG, post office, Amtrak and others.

 

[Philly Amtrak Fan]

That's the thing ...

• The Secret Service does not make a profit
• The Military does not make a profit
• The US Highway System does not make a profit
• The Senate does not make a profit
• Congress does not make a profit
• The White House does not make a profit
• Many Government Programs (like those for the poor) do not make a profit

Why are the Post Office and Amtrak singled out and expected to make a profit when they are also Government Services?

Those other services serve (or supposedly) serve everybody in the US. The US Highway System serves a much larger % of the country than Amtrak does (Columbus? Las Vegas? Nashville?) When a service doesn't serve many people at all and doesn't serve many others except for graveyard shift service, people don't want to pay taxes for it so other people can get it and they can't.

 

[DonNewcomb]

Is there anywhere in the world where passenger rail service doesn't require a subsidy? (Aside from excursion rail, like Mt. Washington)

 

[jis]

Is there anywhere in the world where passenger rail service doesn't require a subsidy? (Aside from excursion rail, like Mt. Washington)

There are specific classes of passenger rail systems that do not require subsidy. They are mostly high end parts of larger systems. But the same systems quite often also run a lot of, so called, "social service" trains, which are explicitly subsidized to keep fares lower - sometimes much lower, than would be required for them to be self standing profitable.

Places that try to have a rational basis for subsidizing generally tend to take into account the additional economic activity and consequent tax intake that is produced by the existence of those services. Once that is done generally altogether the services pay for themselves and then some overall.

 

[RichieRich]

Is there anywhere in the world where passenger rail service doesn't require a subsidy? (Aside from excursion rail, like Mt. Washington)

I used to take the American-European Express pulled by Amtrak DC-Chicago. At the cost, I assumed IT wasn't subsidized (?). After morphing a few times, went OOB in 2008.

 

[railiner]

Brightline seems like a profitable company, AFAIK....or why would they bother?

 

[jis]

Brightline seems like a profitable company, AFAIK....or why would they bother?

They intend to be profitable. They certainly are not at present.

 

[MARC Rider]

Brightline seems like a profitable company, AFAIK....or why would they bother?

Brightline (Virgin USA, or whatever they brand themselves now) hopes to be a profitable company, but I don't think it is right now, and probably has no chance of being so until they start running trains to Orlando, at least. Of course, the investors realize that, so they're patient right now, but eventually they will want to see a return for their investment.

Remember, though, that part of the business model of Brightline/Virgin is making money from real estate development near the stations. It will be interesting in the long run to see what happens after they're up and running full scale and have made their bundle in real estate whether operating the trains continues to be profitable. This will be especially true in a few decades when they will need to spend big bucks to refurbish their infrastructure and buy new rolling stock. I will not be surprised (if I'm still alive) that the company might try to unload operation of the trains or responsibility for the infrastructure off to the public sector at that point.

 

[Qapla]

which is I think is what Congress was thinking when they created the company in the first place.

My understanding was that Amtrak was "created" to allow passenger rail to "die a slow, graceful death" ... they never intended for it to succeed - let alone turn a profit

When a service doesn't serve many people at all and doesn't serve many others except for graveyard shift service, people don't want to pay taxes for it so other people can get it and they can't.

Oh, like the insurance program that the politicians get that we are not allowed to have ...



Actually, the idea that a service should be discontinued or have public finds removed is not confined to passenger rail. There have been some in our area that have been trying for years to either close the public library or remove their funding because "no one uses the library anymore". Of course, those who say that have never tried to find a parking space at any of the public library lots ...

 

[neroden]

Because (as far as I know) Amtrak is owned 100% by the U.S. government, and its not traded on any stock market anyway, "maximizing its value" seems to be sort of silly, unless the government want to sell it for a short term cash windfall. (But every instance I've heard about when the government sells a public asset, they usually sell it cheap to a politically well-connected buyer, and the government doesn't make the financial windfall it should get.)

To pile onto that point, I would like to use the example of Conrail, which was privatized on the cheap to the benefit of privateers and at a cost to the public purse. We should have kept it public.

But the Republican Party has as an article of doctrine "All profits must be diverted into the hands of private billionaires; the government must never make a profit", so Conrail was privatized. It's called "lemon socialism" -- privatize the profits, socialize the losses. It's one of the reasons I detest the Republican Party.

 

[railiner]

I was one of those that benefited, by jumping on Conrail when the government did the IPO. So I am grateful for that, but sad that it was split up later between NS and CSX. But IIRC, didn't the government do pretty well, more than recovering its investment? Similar to what it did when it bailed out GM and Chrysler?
And the way things are going, it may soon find itself doing it again with Boeing....

 

[neroden]

The government did OK financially on Conrail but they could have done much, much better financially by hanging onto Conrail. And more importantly, *Conrail provided better public service than CSX or NS* -- they were more respectful to shippers and handled passenger trains better. So the giveaway of future profits to private interests *simultaneously* made things worse for passengers and freight shippers.

Of course, if you managed to profiteer from it, good for you -- if the government is going to corruptly give profits away to the private sector, better to be one of the people getting the profits than not, that's my philosophy.

I hate the situation where something is failing, the government takes it over and fixes it, and then gives it away to private interests. The government should be *permitted to succeed*. If Conrail is doing well and making a regular yearly profit, *the government should collect that profit* -- I'm sure there are lots of things it could be used for, from cutting taxes to supporting schools. Why give it away to speculators?

If Amtrak ever reports a profit, we will face these damn privateers campaigning to privatize it. And we should fight them. If Amtrak is profitable, let the money go to expanding train service, and if we ever have more of that than we need (I wish!) let it go to some other useful governmental program. There is just no reason to privatize a profitable government-owned company other than corrupt greed.

 

[RSG]

If all interstates charged tolls that actually covered the entire expense, I think we’d see a lot more public transit operations.

Meh. I live in a rural state with three Interstate highways. There is no public transit (outside of a few municipalities which sponsor very limited bus service) and you'd see torches and pitchforks when the legislature is in session protesting tolls before you'd see support for any reliable transit option, even if fully funded by a non-state entity.

The last Republican governor happily signed a 20-cent/gallon fuel tax increase in order to fund the backlog for highway reconstruction. Yet, people won't see any observable benefit for years because of the backlog, and by that time, construction costs will have risen to the point where I expect another fuel tax increase will become necessary, all at the same time fuel consumption is decreasing overall. So it's a constant Catch-22 situation.

At the same time, Interstate 80 [the USA's only coast-to-coast continuous highway] is heavily traveled with cross-country traffic, mostly commercial trucks (and pharmaceutical couriers), and proposals have been floated to add a toll on a portion of that Interstate in order to 'make the trucks pay for the wear and tear they do'. But it has run into legal and logistical obstacles (as well as heavy lobbying by the trucking industry) and so it's just easier to increase the fuel tax and make everyone suffer and cross fingers that long distance trucks will stop and buy fuel in-state.

There is no magic bullet to keeping the vast national highway system maintained and in proper working order. It may be time to reevaluate the value of the network in a cost-benefit analysis manner and make some adjustments. However, like many other elements of modern-day life, any changes that prevent the average citizen from seeing the USA in their Chevrolet will be met with heavy resistance.

 

[Qapla]

At the same time, Interstate 80 [the USA's only coast-to-coast continuous highway] is heavily traveled with cross-country traffic

Three highways run from coast to coast: I-10, I-80, and I-90. Seven highways run from border to border: I-5, I-15, I-35, I-55, I-65, I-75, and I-95

https://www.factmonster.com/math-science/numbering-the-highway-system


Looking at the list, Florida has one coast-to-coast and two border-to-border and the gas tax reflects that ... and yet, the passenger train that used to go from JAX to NOL no longer runs ... therefore there is NO passenger service to the State Capitol

 

[Just-Thinking-51]

At the same time, Interstate 80 is heavily traveled with cross-country traffic, mostly commercial trucks, and proposals have been floated to add a toll on a portion of that Interstate in order to 'make the trucks pay for the wear and tear they do'. But it has run into legal and logistical obstacles, and so it's just easier to increase the fuel tax and make everyone suffer and cross fingers that long distance trucks will stop and buy fuel in-state.

Diesel and Gasoline can and is normally taxes at a different level. You state can raise fuel taxes on Diesel to cover more of the cost of the heavy wear from trucks, and the heavy use of rock salt we demand. (Unless your Illinois or Iowa, still trying to determine which of those state have a higher truck in the ditch rate.)

Fuel taxes are prorated on the miles driven in each state, so buying fuel in one state will be taxed by each state the truck will travel.

The argument from the Truckers is why do pay for Tolls, and have to pay the fuel taxes while travel on those roads. The state is just double dipping.

The biggest need in trucking is parking. If toll roads include more parking then I am all for it. Otherwise more rock salt used would be a close second.

 

[MARC Rider]

Meh. I live in a rural state with three Interstate highways. There is no public transit (outside of a few municipalities which sponsor very limited bus service) and you'd see torches and pitchforks when the legislature is in session protesting tolls before you'd see support for any reliable transit option, even if fully funded by a non-state entity.

The last Republican governor happily signed a 20-cent/gallon fuel tax increase in order to fund the backlog for highway reconstruction. Yet, people won't see any observable benefit for years because of the backlog, and by that time, construction costs will have risen to the point where I expect another fuel tax increase will become necessary, all at the same time fuel consumption is decreasing overall. So it's a constant Catch-22 situation.

At the same time, Interstate 80 [the USA's only coast-to-coast continuous highway] is heavily traveled with cross-country traffic, mostly commercial trucks (and pharmaceutical couriers), and proposals have been floated to add a toll on a portion of that Interstate in order to 'make the trucks pay for the wear and tear they do'. But it has run into legal and logistical obstacles (as well as heavy lobbying by the trucking industry) and so it's just easier to increase the fuel tax and make everyone suffer and cross fingers that long distance trucks will stop and buy fuel in-state.

There is no magic bullet to keeping the vast national highway system maintained and in proper working order. It may be time to reevaluate the value of the network in a cost-benefit analysis manner and make some adjustments. However, like many other elements of modern-day life, any changes that prevent the average citizen from seeing the USA in their Chevrolet will be met with heavy resistance.

I don't doubt that the locals in your state would respond with pitchforks and torches if they tried to impose tolls on the interstates, but they're not being rational. There's plenty of traffic on the toll highways in the eastern part of the country, so the tolls are obviously not so high that the average motorist is prevented from using them. And, in fact, in many of the larger metropolitan areas, the voters seem perfectly willing to accept new toll roads (see Maryland route 200).

As for using the fuel tax as the primary means of funding highway construction and repair, that is indeed a problem and will become worse when electric cars become more common. The obvious solution is to to tax vehicles by mile traveled, which I think is not too difficult to do with today's computerized and networked vehicles. I think they could even determine in which states you've driven and allocate the mileage tax accordingly. Mileage rates could be based on gross vehicle weight, so heavy trucks would pay more than cars. Another thing that could be done is establish auto insurance premiums based on the miles you drive. I believe such plans currently exist,



(I saw this during the 2018 Gathering on the platform of the Dover, NJ NJT station.)

These sorts of things could cause people to think more about the amount of driving they're doing and induce them to drive less. While this might reduce the revenue from transportation taxes, it will also reduce the number of vehicle miles traveled, reducing the amount of new roads needed and the wear and tear on existing roads.

Of course, to be really rational, all of these taxes should just go into the general Treasury fund, and the allocation to highways (or trains, or the military, of NASA, etc.) should by made by our elected representatives, whose job is to reconcile the competing demands of the citizens in a peaceful matter, providing a solution that everyone might not like, but with which they can live.

 

[west point]

Sorry MARC rider wear on the roads do not come from 4000# cars but the trucks and buses that put 4250# per tire on the roads. Our interstates around here have all the t truck lanes coming apart. The new York State parkways that ban trucks and buses o not fall apart with some that were built just after WW-2. Show me any truck accessible road that remains that pristine ? Note loads on tires wear roads by the 4th power. 4000# to the fourth power is certainly much higher than 1000# to the 4th power.s