Will full service dining ever return to the Western trains?

[jruff001]

By the way, I’m not arguing against taxpayer money going to rail transportation, I think it should. But saying that the NEC is profitable and that long-distance travel loses money is misleading.

If either were truly "profitable" we probably wouldn't be having this conversation because we wouldn't need Amtrak - private businesses would be competing to operate the services and enjoy the profits, right?

Of course when talking about capital / infrastructure costs on the NEC it cannot be "profitable" any more than a stretch of (toll-free) highway can. But do "we" (meaning according to the general consensus of this board) at least agree that on an *operational earnings* basis, the NEC is profitable but the LD trains are not?

It seems to me that that is indeed the case (see the Amtrak financials Nick Farr linked to upthread) but if you do not, what is your reasoning and support? (And this is not specifically targeted to you, c-z; it is for the board in general. I just happen to be bootstrapping this question onto your post.)

 

[Nick Farr]

But I'd like to think that Amtrak's management would be smart enough to realize that good food is essential attracting and retaining customers for its long-distance trains.

Please bear in mind that the current law says Amtrak cannot lose money on food service.

Congress complaining about the $16 hamburger is why we have flex dining.

 

[Nick Farr]

I cited numbers in the same financial report.

You cited one number out of context and even that number had no bearing on the NEC profitability, as I showed you.

By any metric the NEC for FY19 was profitable. It brought in half a billion in passenger *operating profit*. If it were depreciating its capital spend over the useful life of that capital, it would still be profitable.

FY20 is going to be different, but I don't think any national network of travel will be profitable in FY20.

The true question is, will the passenger dollar to Federal taxpayer subsidy of the NEC come anywhere close to the National Network subsidy of $1.07 for every passenger dollar earned?

 

[Nick Farr]

But saying that the NEC is profitable and that long-distance travel loses money is misleading. You didn't start that, Amtrak leadership did.

But at the same time, you cannot argue these facts:

* The NEC has higher passenger numbers than any other mode of transit (including air travel) across its largest city pairs. The national network comes in last in all but a few city pairs between MSAs where another service is offered.

* In FY19, the NEC was subsidized to the tune of $0.37 for every dollar of ticket revenue. The national network (where Amtrak doesn't own rail) was subsidized to the tune of $1.07 for every dollar of ticket revenue--this isn't even counting state-level subsidies.

 

[tonys96]

A couple of thoughts on food service. First, if we can save the trains, better food service will return. That will happen when Amtrak management gets serious about running the railroad. Second, improved food service will follow commitment to the long distance trains. Third, it will, like everything in Amtrak’s history, be driven by congressional mandate. Food service must be of a high quality, and be available to all passengers, coach or sleeper.

Your post assumes too much. Way too much.

 

[jruff001]

Third, it will, like everything in Amtrak’s history, be driven by congressional mandate. Food service must be of a high quality, and be available to all passengers, coach or sleeper.

Part of me hopes that Congress has more important things to worry about than micromanaging what Amtrak serves in its dining cars.

Plus, if they do, I think there is a very good chance you might not like what the mandate is. It probably won't be to spend more money.

 

[tgstubbs1]

Didn't they use to have a special lounge car that had an outdoor section? Plus a glass lounge for smokers.

Maybe people could eat outside, like they they do on the sidewalks in NY.

 

[crescent-zephyr]

But do "we" (meaning according to the general consensus of this board) at least agree that on an *operational earnings* basis, the NEC is profitable but the LD trains are not?

It seems to me that that is indeed the case (see the Amtrak financials Nick Farr linked to upthread) but if you do not, what is your reasoning and support?

The auto train, silvers, and Lake Shore NYC section should be profitable as well as the crescent NYC-Atlanta, and that's profitable by the true sense of the word.

Amtrak does not provide us with the numbers we would need to be able to tell what routes are profitable or not. If you take out the host railroad fees, I imagine many if not most LD routes are profitable operationally.

 

[Nick Farr]

The auto train, silvers and Lake Shore NYC section should be profitable as well as the crescent nyc-Atlanta.

None of them are, per FY19 figures.

The Auto train brings in the most of any of the lines, with $78.1 in revenue and $84.8 in expenses. So from an operating standpoint, the Auto Train relies on about 8 cents of operating subsidy for every earned dollar.

I'm not sure what you meant by the "Lake Shore NYC" section, but the LSL relies on about $1.04 in operating subsidies for every earned dollar. I'm pretty sure you could not twist the numbers to make the NY State section show a profit.

The Crescent is running at $1.07 in subsidies for every earned dollar.

The Sunset limited is the worst at $2.63 in subsidies for every earned dollar.

My personal favorite, the CZ runs at a $1.01 subsidy for every earned dollar.

By comparison on the NEC:
The Acela shows an operating profit of $0.51 for every earned dollar
The Regional Trains show an operating profit of $0.34 for every earned dollar





https://www.amtrak.com/content/dam/...k-Monthly-Performance-Report-FY2019-Final.pdf

 

[crescent-zephyr]

My personal favorite, the CZ

We agree on one thing!!!

If the trains that I named are not profitable that is Amtrak’s fault for not pricing them correctly. There is enough demand for those routes to price them so they run at a profit.

 

[jruff001]

Amtrak does not provide us with the numbers we would need to be able to tell what routes are profitable or not. If you take out the host railroad fees, I imagine many if not most LD routes are profitable operationally.

Yes it does. See Page 8 of the link to the financials (which Nick also just cut & pasted into a post).

If the trains that I named are not profitable that is Amtrak’s fault for not pricing them correctly. There is enough demand for those routes to price them so they run at a profit.

Based on the financials, LD revenue would half to roughly double to match operating expenses. Do you really think it is as simple as Amtrak just doubling average ticket prices (and other revenue sources) tomorrow? If so, why hasn't Amtrak done that already?

 

[Qapla]

The problem is, unlike other Gov't sponsored services, like highways, people expect Amtrak to "make a profit" while not expecting the same thing from other services. The "profit" comes with driving the economy in the areas where transportation methods take people so they can spend money. People accept this with road construction costs but ignore it when it comes to passenger rail.

 

[tgstubbs1]

None of them are, per FY19 figures.

The Auto train brings in the most of any of the lines, with $78.1 in revenue and $84.8 in expenses. So from an operating standpoint, the Auto Train relies on about 8 cents of operating subsidy for every earned dollar.

View attachment 19048

https://www.amtrak.com/content/dam/...k-Monthly-Performance-Report-FY2019-Final.pdf

This is probably why they kept the Auto Train on schedule.

They should add Auto carriers to more of the LD trains. It's kind of a niche market but it would be a great service and nobody else could do it.

Environmentalists should be behind it.

 

[crescent-zephyr]

Yes it does. See Page 8 of the link to the financials (which Nick also just cut & pasted into a post).

Are those numbers before or after they pay the host railroads?

 

[Nick Farr]

Based on the financials, LD revenue would half to roughly double to match operating expenses. Do you really think it is as simple as Amtrak just doubling average ticket prices (and other revenue sources) tomorrow? If so, why hasn't Amtrak done that already?

Here's where we get into Revenue Management which Amtrak does not do very well at all.

The Bucket Charts that you see here every so often are a reflection of archaic practices in the industry, partially due to regulatory burden and partially due to a lack of investment in revenue management.

If you were to double prices, you'd probably outright kill utilization. What Amtrak should be doing is experimenting with raising prices on selected routes/configuations based on internet searches, interest, booking patterns, etc. Right now the buckets are (presumably) set somewhat manually and in advance. There's a certain number of low bucket seats, then once those are sold they roll to the next bucket, etc. Looking at the bucket charts, you can see these are being adjusted periodically.

However, airlines do this algorithmically. Airlines will, upon sensing more interest in a route (say because of some conference announced somewhere), will immediately raise prices to whatever they think someone will pay for the seat.

Airlines also aggressively discount open seats to fill planes, as well as have good data to predict when people will purchase last minute seats. Amtrak does not.

Airlines will also offer seat upgrades when available. Amtrak does not (at least not widely in practice. Guest rewards members have upgrade coupons, but I'm not seeing where they'll offer discount roomettes to coach passengers or offer to upgrade roomette passengers to bedrooms to increase revenue.)

Amtrak also has the problem of many connection options that it has not learned to optimize. On the CZ for example, you can get a roomette from Denver to Granby. However, that might prevent someone from buying a roomette from Chicago to Emeryville.

The cost of just adding another sleeper car is also not feasible on LD routes under the current rules. If there's more demand between Denver and Salt Lake for the holidays, a train still has to lug the car and SCA from Chicago to Emeryville and back.

The idea of 3x weekly service is to cut operating expenses to meet passenger load.

 

[crescent-zephyr]

The idea of 3x weekly service is to cut operating expenses to meet passenger load.

Which Amtrak has proven does not work. Ridership decreases with less than daily service.

 

[Nick Farr]

Are those numbers before or after they pay the host railroads?

After.

Operating Loss is defined as GAAP Net Loss excluding non-cash pension costs and other retirement employment benefits, state capital payment amortization and income statement items reported with capital or debt results or other grants.

 

[crescent-zephyr]

After.

Operating Loss is defined as GAAP Net Loss excluding non-cash pension costs and other retirement employment benefits, state capital payment amortization and income statement items reported with capital or debt results or other grants.

Exactly. And what is Amtrak paying to use the northeast corridor?

 

[jruff001]

Are those numbers before or after they pay the host railroads?

Not sure what you mean by "before or after," but host RR payments are included in train operating expenses.

 

[Nick Farr]

Which Amtrak has proven does not work. Ridership decreases with less than daily service.

True, but will ridership revenue drop by 57%? We really won't know until the October results are in.

My hunch, given the COVID numbers is that the passenger revenue will stay relatively steady after the drop in service, given the customer base already using the trains.

 

[Exvalley]

The study that argued that less than daily service costs Amtrak money in the long run was based on pre-Covid ridership numbers. It is not relevant in a post-Covid world.

 

[Nick Farr]

Exactly. And what is Amtrak paying to use the northeast corridor?

Amtrak owns most of the NEC and leases part of it out, providing a revenue stream for the usage of its assets.

Given that Amtrak inherited most of the below-the-wheels assets of the NEC and gets grains to improve that infrastructure (just like freight railroads get occasional grants to improve their infrastructure), the cost of what Amtrak pays to use/maintain its own infrastructure is very hard to quantify given Amtrak's present arrangement.

That being said, from an operating standpoint, the NEC runs at a surplus from which it can improve its own infrastructure.

The costs that the LD trains pay to use host railroads are roughly equivalent to fuel costs, and each of those costs separately run at roughly 14% on average of what labor costs are on those lines.

 

[crescent-zephyr]

the cost of what Amtrak pays to use/maintain its own infrastructure is very hard to quantify given Amtrak's present arrangement.

Exactly. For example... Acela should be paying 100% for everything that Amtrak is paying to operate over 125 mph trains.

 

[jruff001]

The hatred for the NEC on this site is . . . weird.

 

[crescent-zephyr]

The hatred for the NEC on this site is . . . weird.

Who’s hating?