Can Canada Teach Us How to Hold The Line on Amtrak
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haolerider
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I haven't had the time to read the entire article, but the portion reagarding airlines is almost laughable. The author cites the changes they have made to adapt to the changing times since 9/11, however he doesn't discuss the huge Federal grants/loan guarantees and outright gifts they were given by the government. Just check Delta's latest financial report and you can see how much they have lost and will continue to lose...........same thing with United, who is looking for loan guarantees.
Granted, Amtrak does need to look at renogotion of labor contracts to bring the company in line with the real world, but the author conveniently ignores the elimination of management jobs and instead focuses on what are obviously Rail Sale prices for very limited numbers of seats on specific long distance trains.
I will be interested in other observations.
Granted, Amtrak does need to look at renogotion of labor contracts to bring the company in line with the real world, but the author conveniently ignores the elimination of management jobs and instead focuses on what are obviously Rail Sale prices for very limited numbers of seats on specific long distance trains.
I will be interested in other observations.
I love that the author dose not consider other fact that allow via in some casses to have improved revenue with higher passanger loads. For example via charges $2000 for a double bedroom one way on the canadian with an advanced booking. Amtrak on a route similar in length, the sunset charges $900 for a booking about a year off. Via is able to have higher fares because of more demand due to advertisement. What if Amtrak had that ability to charge 4 to 5 thousand dollars for a deluxe bedroom a week before travel (if any were available). So the government needs to look at where a train travels and the population centers to determine if amtrak is using the right forumula. Amtrak want to allow anyone to travel in a sleeper, while via is more for the tourism crowd.
Save Our Trains Michigan
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The guy is an IDIOT that said all this stuff
Save Our Trains Michigan
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You can't make the employees have lower pay the pay is what you should make working for the RR's.
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FYI: Only two major airlines, America West and US Airways, were granted loan guarantees. Those two major carrier loans, plus a couple of small loans to regional carriers, totaled about $1.6 billion (of the $10 billion available). The other $8.4 billion in guarantees were never granted. United's application for a loan guarantee was rejected three times and is now dead. No other major carriers have applied for loans.haolerider said:
I have often heard Amtrak supporters begrudge the grants given to the airlines following 9-11. As a fan of both rail and aviation, that particular argument frosts me. The airlines received government grants for the simple reason that they were among those directly attacked. Four planes, four crews, and four sets of innocent passengers were slaughtered. People were scared to fly and the entire industry, which moves fifty times the passengers and nearly 100 times the revenue passenger miles of Amtrak, was facing disaster. I am certain that Amtrak would not have wished to exchange places with the airlines on 9-11 even if it meant higher subsidy.
Today the fact is that pure market pressures, not 9-11, are forcing fundamental changes in the way airlines operate. The growth of low cost carriers is requiring the established legacy airlines to either adapt or die. Costs have to come down and that includes labor costs. Some have done well (America West), and others have not (Delta). It is almost universally agreed that some of today's legacy carriers will not survive. Labor certainly does not like what is happening, but they are powerless to change it. Ask a ramp rat at United or a mechanic at US Airways what the last three years have done to them and their life. But, it is a fact of life. If Delta does not cut costs, including labor, then Delta will cease to exist and the jobs will be gone.
Amtrak operates under the presumption that there will always be an Amtrak so “what me worry.” Simply ask for $1.8 billion, get $1.2 billion, complain that it is too little, and move on to next year. They never offer serious cost cutting to lower the required subsidy. And, heaven forbid, never ever suggest anyone take a pay cut or allow more efficient work practices to make ends meet. An Amtrak locomotive engineer has seen very little change in his or her income and working conditions over the last three years. This at the same time that his or her airline counterparts have seen massive cuts. But, it’s hard to argue that Amtrak is wrong. That tact has worked for 33 years and there is ample evidence that it will continue to be successful.
haolerider
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PRR-60: Having worked in the airline industry, it was not entirely the actions of 9/11 that caused so many problems for airline industry. I will admit it caused the traveling public to stay away from the airlines, but their own arrogance and lack of decent service has caused as many problems as 9/11.
I think if you look at the record, you will see that most of the major carriers received massive handouts from the Federal Government after 9/11 - with only a few turning down the money - AirTran Airways and Southwest.
I readily admit that Amtrak needs to carefully examine it work rules and get into the 21st Century.....which would help lower costs considerably. The decrease in management jobs at Amtrak has helped lower costs and has also increased efficiency, since there needed to be a thorough examination of how jobs were done and find better ways to produce results.
I think if you look at the record, you will see that most of the major carriers received massive handouts from the Federal Government after 9/11 - with only a few turning down the money - AirTran Airways and Southwest.
I readily admit that Amtrak needs to carefully examine it work rules and get into the 21st Century.....which would help lower costs considerably. The decrease in management jobs at Amtrak has helped lower costs and has also increased efficiency, since there needed to be a thorough examination of how jobs were done and find better ways to produce results.
What Dr. Utt also fails to mention is the billions and billions of tax dollars (federal, state, and local) which maintain the airline infrastructure - airports, navigation aids, air traffic controllers, and so on. When you start adding up all the government money that supports aviation, I am quite certain that the cost per passanger is quite high.
Gunn and Amtrak have done a remarkable job in the last couple of years. The trains are filling up - some are running full. (Hey Dr. Utt, more people would be riding if there were more cars available). There is still ample room for improvement, but denying full funding is not very likely to fill seats and improve service and on-time performance.
FYI - Other airlines with loan guarantees are American Trans Air, Aloha, Frontier, and World. Evergreen International has been conditionally approved. Only Frontier has paid back the entire loan.
Gunn and Amtrak have done a remarkable job in the last couple of years. The trains are filling up - some are running full. (Hey Dr. Utt, more people would be riding if there were more cars available). There is still ample room for improvement, but denying full funding is not very likely to fill seats and improve service and on-time performance.
FYI - Other airlines with loan guarantees are American Trans Air, Aloha, Frontier, and World. Evergreen International has been conditionally approved. Only Frontier has paid back the entire loan.
Well he doesn't mention it, because it's not true. When I last researched this, I think it was the 2003 budget, the Feds only gave the industry a little over 1 Billion dollars. That number includes the FRA, FAA, airport improvement projects, ATC, and so on.whc6 said:
So a billion dollars divided amoungst all those air passengers isn't really a lot of money per person, sadly unlike Amtrak.
The rest of the budget for that type of stuff comes from the monies collected every time you buy an airplane ticket, those so-called airport fees & taxes. So that doesn't count as a general subsidy, since only those flying are paying for the system.
Now yes the Feds helped air service out with some help after 9/11, in part because our countries economy would have collapsed right along with the airlines had they not. On the other hand I have mixed feelings about that, since it was the airlines lax security which contributed to the disaster.
The Feds also indirectly still help the airlines out, since most plane technology was developed by the military, probably at least 1/2 to 2/3 rd's of the pilots were trained by the military. So that does help to keep some expenses down.
But in the final analysis, in today's world the federal subsidy of airlines really isn't that huge. Especially on a per passenger basis.
I did a little research - here's one of the articles:
==================
Vol. VII No. 23 June 7, 2002
BIG AIRLINES BENEFIT FROM BAILOUT BILL
Airline lobbyists' dreams came true last fall when Congress hastily passed the $15 billion airline bailout bill authorizing $5 billion in direct compensation and another $10 billion in loan guarantees. Sadly, this legislation provides billions to a small number of large airlines that were bleeding red ink long before Sept. 11th.
In deciding who gets how much, the biggest carriers walked away with the lion's share of the cash, while many small carriers did not receive enough to cover the costs of being grounded for two days. The formula for dispensing the money benefited the biggest fliers by multiplying the number of seats by the total miles flown by an airline and eligibility for compensation was not limited to losses incurred in the days following Sept. 11 when all flights were grounded. Any airline could apply for compensation for losses suffered as a result of a downturn in business between September 11 and December 31 of last year.
Since enactment of the law, more than 380 airlines have received $3.94 billion in direct assistance from the federal government. A review of the payouts shows that 80% have gone to the nine largest commercial carriers with United Airlines receiving the biggest slice of the pie - $644 million.
The biggest airlines essentially got everything they asked for, and responded by laying off thousands of employees and drastically reducing service. More than 70,000 workers were fired and hundreds of flights were canceled after the bailout was signed into law last fall.
In comparison, one small carrier, Larry's Flying Service received $6,000 from the government despite the fact that the company estimated that they lost nearly $14,000 just from the two days when there were no flights. Papillon Grand Canyon Helicopters received the least amount of money in the first round of handouts - $340.
All in all, the airline industry got more than triple what the shutdown of air travel actually cost them. The industry testified that the grounding cost $340 million per day in lost revenues for four days, for a total of $1.36 billion - far less than the $5 billion in cash compensation they received.
If the bailout wasn't enough to quench the airlines' thirst for taxpayer-financed subsidies, the economic stimulus bill passed by Congress in March also allowed companies to file amended tax returns and receive refunds on taxes paid in past years for losses incurred in 2002 and 2001. United Airlines received a $464 million tax refund, bringing their total compensation to over $1 billion. American Airlines and Delta, the number one and three carriers respectively, also stand to benefit from the refunds.
--------------------------
So, we have direct subsidies, loan guarantees, and tax reductions, just from this one source.
==========================
Now, let's see - what other money paid to the airlines amounts to a direct subsidy? :
Vol. IX No. 23
June 10, 2004
TICKETGATE
If we told you that the Pentagon is wasting $100 million, you might think, "Jeez, that's peanuts for the Pentagon." But, it should send shivers down your spine that this amount was wasted on unused airplanes tickets, many of which were fully refundable first or business class tickets.
Most Americans have the common sense to search the best prices available on Orbitz or Expedia and to seek reimbursement for their ticket when they cancel their trip. But, the Department of Defense's common sense seems to have flown the coop. A new report released by the taxpayer protectors over at the General Accounting Office (GAO) yesterday has found that the Pentagon has thrown $100 million away on partially used, totally unused, and fraudulently purchased airline tickets.
-----------------------------------------------------
The other thing I found was lots and lots of government contracts to design and build airplanes, in dollar amounts that make what Amtrak is asking for seem like pocket change. So truly the taxpayers are paying for the design engineering, and indirectly for the physical plants and a lot of the employee infrastructure at the major airplane manufacturers, so the airlines don't have to do that...
---------------------------------------------
The U.S Gov't bought tickets, and didn't use them? That's a direct gov't subsidy, whether intended as such or not.
Another $100 Million.
This wasn't isolated, wasn't a single-year event:
---------------------------------------------
Reports dating back to 1984 cited that several federal agencies between 1975 and 1981 had failed to seek reimbursement from Northwest Airlines. Again, the government had purchased millions of dollars worth of airline tickets, didn't use them, and then failed to seek the reimbursements entitled to them by law.
--------------------------------------------
So apparently this sort of thing has been ongoing, and amounts to direct subsidies, year after year, to the airlines.
=======================
Anyway, there's something more here, perhaps, than what we originally appreciated. I wonder what we'd find if we really fine-tooth-comb'ed the budgets for the past 20 years or so. One problem is that congress so frequently buries things to the point that you have to read through 20,000 pages of congressional bills to find a two-line special appropriation for something like an airport, or a new runway, or new special radars to find wind-shear near runway thresholds, or whatever, all of which would be like rebuilding a few hundred miles of UP or CSX or Amtrak roadbed and rails, or perhaps rebuilding the signal systems. United doesn't have to buy the flight path their airplanes fly through, or pay Fed-Ex for the privilege of using it, or wait until the Fed-Ex dispatcher decides to allow United's planes to fly the ILS 36R approach into MCO.
==================
Vol. VII No. 23 June 7, 2002
BIG AIRLINES BENEFIT FROM BAILOUT BILL
Airline lobbyists' dreams came true last fall when Congress hastily passed the $15 billion airline bailout bill authorizing $5 billion in direct compensation and another $10 billion in loan guarantees. Sadly, this legislation provides billions to a small number of large airlines that were bleeding red ink long before Sept. 11th.
In deciding who gets how much, the biggest carriers walked away with the lion's share of the cash, while many small carriers did not receive enough to cover the costs of being grounded for two days. The formula for dispensing the money benefited the biggest fliers by multiplying the number of seats by the total miles flown by an airline and eligibility for compensation was not limited to losses incurred in the days following Sept. 11 when all flights were grounded. Any airline could apply for compensation for losses suffered as a result of a downturn in business between September 11 and December 31 of last year.
Since enactment of the law, more than 380 airlines have received $3.94 billion in direct assistance from the federal government. A review of the payouts shows that 80% have gone to the nine largest commercial carriers with United Airlines receiving the biggest slice of the pie - $644 million.
The biggest airlines essentially got everything they asked for, and responded by laying off thousands of employees and drastically reducing service. More than 70,000 workers were fired and hundreds of flights were canceled after the bailout was signed into law last fall.
In comparison, one small carrier, Larry's Flying Service received $6,000 from the government despite the fact that the company estimated that they lost nearly $14,000 just from the two days when there were no flights. Papillon Grand Canyon Helicopters received the least amount of money in the first round of handouts - $340.
All in all, the airline industry got more than triple what the shutdown of air travel actually cost them. The industry testified that the grounding cost $340 million per day in lost revenues for four days, for a total of $1.36 billion - far less than the $5 billion in cash compensation they received.
If the bailout wasn't enough to quench the airlines' thirst for taxpayer-financed subsidies, the economic stimulus bill passed by Congress in March also allowed companies to file amended tax returns and receive refunds on taxes paid in past years for losses incurred in 2002 and 2001. United Airlines received a $464 million tax refund, bringing their total compensation to over $1 billion. American Airlines and Delta, the number one and three carriers respectively, also stand to benefit from the refunds.
--------------------------
So, we have direct subsidies, loan guarantees, and tax reductions, just from this one source.
==========================
Now, let's see - what other money paid to the airlines amounts to a direct subsidy? :
Vol. IX No. 23
June 10, 2004
TICKETGATE
If we told you that the Pentagon is wasting $100 million, you might think, "Jeez, that's peanuts for the Pentagon." But, it should send shivers down your spine that this amount was wasted on unused airplanes tickets, many of which were fully refundable first or business class tickets.
Most Americans have the common sense to search the best prices available on Orbitz or Expedia and to seek reimbursement for their ticket when they cancel their trip. But, the Department of Defense's common sense seems to have flown the coop. A new report released by the taxpayer protectors over at the General Accounting Office (GAO) yesterday has found that the Pentagon has thrown $100 million away on partially used, totally unused, and fraudulently purchased airline tickets.
-----------------------------------------------------
The other thing I found was lots and lots of government contracts to design and build airplanes, in dollar amounts that make what Amtrak is asking for seem like pocket change. So truly the taxpayers are paying for the design engineering, and indirectly for the physical plants and a lot of the employee infrastructure at the major airplane manufacturers, so the airlines don't have to do that...
---------------------------------------------
The U.S Gov't bought tickets, and didn't use them? That's a direct gov't subsidy, whether intended as such or not.
Another $100 Million.
This wasn't isolated, wasn't a single-year event:
---------------------------------------------
Reports dating back to 1984 cited that several federal agencies between 1975 and 1981 had failed to seek reimbursement from Northwest Airlines. Again, the government had purchased millions of dollars worth of airline tickets, didn't use them, and then failed to seek the reimbursements entitled to them by law.
--------------------------------------------
So apparently this sort of thing has been ongoing, and amounts to direct subsidies, year after year, to the airlines.
=======================
Anyway, there's something more here, perhaps, than what we originally appreciated. I wonder what we'd find if we really fine-tooth-comb'ed the budgets for the past 20 years or so. One problem is that congress so frequently buries things to the point that you have to read through 20,000 pages of congressional bills to find a two-line special appropriation for something like an airport, or a new runway, or new special radars to find wind-shear near runway thresholds, or whatever, all of which would be like rebuilding a few hundred miles of UP or CSX or Amtrak roadbed and rails, or perhaps rebuilding the signal systems. United doesn't have to buy the flight path their airplanes fly through, or pay Fed-Ex for the privilege of using it, or wait until the Fed-Ex dispatcher decides to allow United's planes to fly the ILS 36R approach into MCO.
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A total of just under $1.56 billion in loan guarantees have been issued by the Air Transportation Stabilization Board. Two majors, US Airways and America West, received loan guarantees. These two guarantees totaled $1.28 billion. The US Airways loan was restructured in March and $250 million was repaid.whc6 said:
The remaining $280 million in guarantees was split between smaller carriers ATA ($149m), Frontier ($63m), Aloha ($41m), and World ($27m). Evergreen International’s $90m request was conditionally approved, but the application was withdrawn in June, 2003. No other applications are pending. So, of the often mentioned $10 billion in loan guarantees, $1.56 billion has been issued.
R
railman
Guest
These debates are so illogical and infuriating! First, you want Amtrak to come into the 21st century with it's infrastructure and equipment. Well, guess what! That takes some serious money for system programming, replacement of worn and outdated hardware and more cabagge on R&D for the new age of equipment.
It also requires working folks - programmers, database managers, customer service personnel and mechincal and operation people - who are paid what they are worth. Amtrak employees are already paid far below the industry standards. If you cut anything from those folks' wages you'll drive the decent ones away and be left with the 'best you can get' with a paltry salary....
After you all blast Amtrak for bing antiquated and obsolete in its operation and equipment you then all "about face" and demand that Amtrak costs be slashed at every turn! Well, where do you begin to cut?!?! Everyone on the cut cost bandwagon cites salaries. Find another whipping boy - salaries are far from any problem at Amtrak. Union employees have only gotten token COLAs in recent years, and they were embarassingly overdue. Management folks have had no salary increases of ANY kind in 8 years!! Yet the numbers of employees are continually shrinking. A huge majority of Amtrak employees are becoming eligible for retirement. That will be a devastating loss of a corporate knowledge-base.
Figure out what you want - a lean, mean Amtrak that stays mired in the 19th century or an up-to-date railroad that manages its resources wisely!
It also requires working folks - programmers, database managers, customer service personnel and mechincal and operation people - who are paid what they are worth. Amtrak employees are already paid far below the industry standards. If you cut anything from those folks' wages you'll drive the decent ones away and be left with the 'best you can get' with a paltry salary....
After you all blast Amtrak for bing antiquated and obsolete in its operation and equipment you then all "about face" and demand that Amtrak costs be slashed at every turn! Well, where do you begin to cut?!?! Everyone on the cut cost bandwagon cites salaries. Find another whipping boy - salaries are far from any problem at Amtrak. Union employees have only gotten token COLAs in recent years, and they were embarassingly overdue. Management folks have had no salary increases of ANY kind in 8 years!! Yet the numbers of employees are continually shrinking. A huge majority of Amtrak employees are becoming eligible for retirement. That will be a devastating loss of a corporate knowledge-base.
Figure out what you want - a lean, mean Amtrak that stays mired in the 19th century or an up-to-date railroad that manages its resources wisely!
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FYI: Larry's Flying Service received a Stabilization Grant of $109,478.70. Grand Canyon Helicopters received $453,588.90. The info in that article is old, old, old.AmtrakWPK said:
Of course it is, but it DOES show gov't money being spent on air transport stuff, and not JUST on big airlines. And the fact that the final numbers are hugely bigger is just reinforcement to the position. And I also found several other areas where the airlines are receiving U.S. Gov't subsidies (that's functionally what they are, even if they were not the result of legislation - like the hundreds of millions paid by gov't for airline tickets that weren't used and weren't refunded, etc.) And things like airports, runways, radar systems, ATC, commo systems, etc., for the air transport infrastructure, also paid for by the U.S. Gov't, which does NOT buy and install the CSX/UP/BNSF/AMTRAK/whoever else's signal systems, or track, or right-of-way, roadbed, or bridges...
Norman Mineta in Charlotte last August:
On behalf of President Bush and Vice President Cheney, to support the continuing growth and improvement of Charlotte/Douglas International Airport, I am pleased to deliver two checks totaling almost $37 million.
When Congress returns to Washington next month, one of the first bills I hope it will take up is the legislation that authorizes $60 billion for our Nation's air transportation system over the next four years.
This important bill funds much needed initiatives in safety, security, environmental research, and airport grants such as the one we are giving today.
Alan, you are a bit off on this one. Billions and billions are pumped by our government into aviation each year. Much of it is well spent. People need to realize that we spend exponentially more on aviation than rail. Both lose money. Both will continue to lose money. However, it is important for the nation that we have a viable aviation and rail system. Amtrak deserves the 1.8 billion and then some.
On behalf of President Bush and Vice President Cheney, to support the continuing growth and improvement of Charlotte/Douglas International Airport, I am pleased to deliver two checks totaling almost $37 million.
When Congress returns to Washington next month, one of the first bills I hope it will take up is the legislation that authorizes $60 billion for our Nation's air transportation system over the next four years.
This important bill funds much needed initiatives in safety, security, environmental research, and airport grants such as the one we are giving today.
Alan, you are a bit off on this one. Billions and billions are pumped by our government into aviation each year. Much of it is well spent. People need to realize that we spend exponentially more on aviation than rail. Both lose money. Both will continue to lose money. However, it is important for the nation that we have a viable aviation and rail system. Amtrak deserves the 1.8 billion and then some.
Sorry, but no I'm not off on this one. I did the research about 6 to 9 months ago when challenged by another member of this forum for saying something very similar to what you said today.whc6 said:
Thanks to PRR60, I went looking through the FAA's budget documents and the evidence is all there. Most of the anual money comes from ticket fees, not from direct subsidies.
By the way, while I didn't actually go and look for the info on that 37M for Charlotte, I'm betting that it still is coming out of the FAA's budget for the year in question. Yes Mineta, in conjuction with Bush/Chaney may have ordered that the 37M be spent in Charlotte, but it's highly unlikely that they actually gave pure government monies to Charlotte.
Since the Pres controls the FAA to some extent, he can dictate where their budget gets spent. However their budget is still largely made up of funds collected from ticket fees, not income tax monies.
I'm also not suggesting that Amtrak isn't deserving of more money by the way. Aviation reached the point where ticket fees & taxes basically keeps things going simply because, years ago government did invest & subsidize aviation.
One other point that should be made here, is that Amtrak gets money for both operations & capital expenses. More than half the money that Amtrak receives is for capital expenses, something that the airlines have less of. They only have to pay for airplanes as their capital expense, by and large. Amtrak has to buy cars, replace track, build bridges, repair & build stations, and repair & replace signals.
One distinction that the author of that article didn't make when he said that VIA gets a small subsidy is that, Canada has invested billions in station repairs, new cars, and track repairs. Yet that is not considered as a subsidy to VIA. Only the monies for operational expenses is considered a subsidy.
Early on in Amtrak's history, we used to seperate Capital from operational monies that Amtrak received from the Fed. These days, any money given to Amtrak is considered a subsidy. Even money for safety & security that has been given to Amtrak is considered a subsidy. That I don't consider to be fair.
Yes the FAA may be paying for the new airport security with ticket fees, but the airlines are not paying for security at this point. This despite the fact that it was their failure to provide adequate security that contributed to the 9/11 disaster. I don't care where the money is coming from, but increased security should not be Amtrak's burden nor should it be considered a subsidy.
It's the governments job to provide that.
I have found that there IS, in fact, an airline subsidy, to allow smaller cities and communities to continue to have airline service:
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In 1978, the Airline Deregulation Act was enacted. This law phased out economic regulation of the airline industry. It permitted airlines to decide which routes to fly and, except as described below, to terminate service at airports without seeking government approval. The rationale was that reliance on free market forces would be the best way to ensure an efficient air transportation system.
However, it was recognized that market forces alone would not ensure air service to many small communities since some do not produce enough passenger traffic to support profitable air service. Accordingly, the Deregulation Act included a provision, known as the Essential Air Service (EAS) program, to guarantee a minimum level of air service to small communities. The program was originally authorized for 10 years and was later made permanent.
Under the EAS program, DOT establishes a minimum level of air service for each of the eligible airports. The minimum level is usually about two round‑trips per day to a medium or large hub airport using 15‑seat or larger aircraft. Eligible airports are those that were listed on an airline's certificate when the Deregulation Act was passed. There are about 550. Tying eligibility to the old certificates ensures that airports that had service before deregulation will continue to receive it.
If an airline serving an eligible airport wants to terminate service, which would reduce air service below the level that DOT deemed essential, it must notify DOT and the community 90 days before the termination or reduction would take effect. DOT then attempts to find a replacement airline. It must prohibit the service termination until a replacement is found. If no airline is willing to provide the service on its own, DOT must offer a subsidy to attract a carrier to provide the essential air service.
The cost of the EAS program has grown dramatically over the past few years, from $30 million to $115 million in FY2002. $50 million of this subsidy is guaranteed. It is derived from overflight fees or FAA’s budget.
About 120 airports benefit from the EAS subsidies, including about 30 in Alaska.
----------------------------------------------
So there IS a direct precedent for an Amtrak subsidy to continue to provide service to the smaller towns and cities along it's rural routes, to maintain rail passenger service to those places.
----------------------------------------------------------
In 1978, the Airline Deregulation Act was enacted. This law phased out economic regulation of the airline industry. It permitted airlines to decide which routes to fly and, except as described below, to terminate service at airports without seeking government approval. The rationale was that reliance on free market forces would be the best way to ensure an efficient air transportation system.
However, it was recognized that market forces alone would not ensure air service to many small communities since some do not produce enough passenger traffic to support profitable air service. Accordingly, the Deregulation Act included a provision, known as the Essential Air Service (EAS) program, to guarantee a minimum level of air service to small communities. The program was originally authorized for 10 years and was later made permanent.
Under the EAS program, DOT establishes a minimum level of air service for each of the eligible airports. The minimum level is usually about two round‑trips per day to a medium or large hub airport using 15‑seat or larger aircraft. Eligible airports are those that were listed on an airline's certificate when the Deregulation Act was passed. There are about 550. Tying eligibility to the old certificates ensures that airports that had service before deregulation will continue to receive it.
If an airline serving an eligible airport wants to terminate service, which would reduce air service below the level that DOT deemed essential, it must notify DOT and the community 90 days before the termination or reduction would take effect. DOT then attempts to find a replacement airline. It must prohibit the service termination until a replacement is found. If no airline is willing to provide the service on its own, DOT must offer a subsidy to attract a carrier to provide the essential air service.
The cost of the EAS program has grown dramatically over the past few years, from $30 million to $115 million in FY2002. $50 million of this subsidy is guaranteed. It is derived from overflight fees or FAA’s budget.
About 120 airports benefit from the EAS subsidies, including about 30 in Alaska.
----------------------------------------------
So there IS a direct precedent for an Amtrak subsidy to continue to provide service to the smaller towns and cities along it's rural routes, to maintain rail passenger service to those places.
While it's late here on the east coast, I'll say two quick things for now.AmtrakWPK said:
1) Note that the EAS program, as mentioned in your post, is paid for by overflight fees or out of the FAA's budget. As I've already mentioned probably close to 90% of the FAA's budget is not direct tax payer money. The budget is largely made up of fees charged on tickets and overflight fees.
So it is not a subsidy in the sense that Amtrak is. Amtrak is funded by monies from all tax payers in the US through our income taxes. The FAA by and large is not funded with tax payer monies. It is funded only by those who actually fly. So if you only travel by boat, car, and/or train, then you are not paying for EAS.
2) Note the dollars in question here. The maximum amount is 115M. Amtrak is looking for 1.8 Billion, nearly 15 times that amount. Yet Amtrak carries less than 1% of the US population.
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Alan is correct. The vast majority of federal grants for aviation comes from two dedicated sources: the Airport and Airway Trust Fund and Passenger Facility Charges. Both of these accounts are funded entirely by a slew of various airline ticket taxes, fees, aviation fuel taxes, taxes on air freight waybills, and even taxes on frequent flyer miles. In 2003 over $10 billion was paid by airline passengers and airlines into these two funds.
Federal airport grants, ATC expansions and improvements, and even federal aid for ancillary projects like the Newark Airport Station on the NEC and AirTrain at JFK come from these funds. When Charlotte got that $37 million grant, it came from the AATF not from general taxes. If a new runway is built or a terminal is expanded, all the federal money comes from the these funds. Even a major portion of the day-to-day operation of the ATC system is paid by the AATF.
General tax fund contribution to aviation, what is truly a subsidy, is quite small and, on a per passenger or per passenger mile basis, Amtrak by comparison does very well. Just about the last thing an Amtrak supporter should ask for is parity with aviation. The result would be a major cut in Amtrak funding to get down to the general tax subsidy level of aviation.
Federal airport grants, ATC expansions and improvements, and even federal aid for ancillary projects like the Newark Airport Station on the NEC and AirTrain at JFK come from these funds. When Charlotte got that $37 million grant, it came from the AATF not from general taxes. If a new runway is built or a terminal is expanded, all the federal money comes from the these funds. Even a major portion of the day-to-day operation of the ATC system is paid by the AATF.
General tax fund contribution to aviation, what is truly a subsidy, is quite small and, on a per passenger or per passenger mile basis, Amtrak by comparison does very well. Just about the last thing an Amtrak supporter should ask for is parity with aviation. The result would be a major cut in Amtrak funding to get down to the general tax subsidy level of aviation.
National Limited
Service Attendant
This is all great information and I find it fascinating to read contributions demonstrating various members extensive knowledge and passionate interest, but it seems to be so much information that my simple mind can't get a grasp of it all. Knowing there will be a flury of "we already answered that" jestures in the air at reading this, and running the risk of soiling the name of the great train "The National Limited," let me ask for a simple answer to a simple (yes, I know it isn't simple) question: If the airlines had to pay for the same type of things (terminals, capital, infrustructure) that Amtrak has to pay for how would they be doing financially? Can someone just say "they would be coing ok" or "they would not be doing ok" to that question?
Secondly, I would be the LAST person to wish the demise of Amtrak but you have to realize that the majority of taxpaying citizens of this beloved country choose air transportation over rail. In fact, I wouldn't be suprised if a good percentage of Americans don't even know that we have passanger rail service. Just look at the Tonight Show, when Jay polls people on the street and asks simple questions like "who is the vice-president," and listen to some of the answers. It is scarry when you think that those people who don't know who the vice president is may be registered to vote! Now, we could make very convincing arguments that the lack of frequency and ready availability of rail travel and the seeming omnipresent of air travel is part of the reason so many choose air travel (that and the fact that it takes hours to cross the country by plane and days by train, the fact that so much federal money was and is poured into interstate highway system and avaition at the expense of the already existing rail system, the emergance of America as a super power, cheap gas, etc, etc, etc). The government has created, built, and maintains a dependance on avaition and highways and this reality is so big that most Americans can't understand the transportation industry in any other way.
It reminds me of a party I once threw. A good friend and I rented a house together (right out of college, no money, etc). We decided to have some friends over, wound up being about 30 people or so. Both of us invited people, made purchases for the event, etc. I had a friend I invited (note that it was MY friend not roommate's friend) who came to me at the party and said "your roommate throws a great party." I thought she was kidding at first. I was a little hurt that she didn't recognize that I had invited her and I was also responsible for the event as well so I told her "we both did this together." She didn't get it. I tried to explain to her again. She still didn't get it. She could not understand that I had as much involvement in the party as my roommate did. It really made me mad. She could not undertand or learn to understand that there might be another way to look at the situation.
I think our American perspective on rail is the same way. We as rail fans hear of politicians making what we think are, at best, uninformed comments about Amtrak because they can't see anything other than AVAIATION since it is the dominant mode of transportaiton. And because, like most politicians, there is a good bit of ego involved in their public statements they truly believe that what they say is not only true but the only way it can be. So instead of saying "maybe there is something I can learn about rail in order to make an informed decision or statement" they assume to have all the information they need. I'm sure the same can be said of pro-rail politicians--but I don't want to hear it! ;-)
The rail problem is not an Amtrak problem (as golden or tarnished as it may be). It is much bigger than that. It is a perception problem on the part of American citizens perpetuated by a government that has historically favored other modes of transportation. This is not a Rebublican or Democratic issue (although the fringe elements of our happy group would say that it is--interesting Gunn's statement about funding during Clinton and Bush administrations) but rather is EVERYONE'S problem equally sholdered by Democrats and Republicans. We all created this mess. Now, what can we do about it?
What we need is a third party--an Amtrak party!
Venting over. Return to normal programing.
Secondly, I would be the LAST person to wish the demise of Amtrak but you have to realize that the majority of taxpaying citizens of this beloved country choose air transportation over rail. In fact, I wouldn't be suprised if a good percentage of Americans don't even know that we have passanger rail service. Just look at the Tonight Show, when Jay polls people on the street and asks simple questions like "who is the vice-president," and listen to some of the answers. It is scarry when you think that those people who don't know who the vice president is may be registered to vote! Now, we could make very convincing arguments that the lack of frequency and ready availability of rail travel and the seeming omnipresent of air travel is part of the reason so many choose air travel (that and the fact that it takes hours to cross the country by plane and days by train, the fact that so much federal money was and is poured into interstate highway system and avaition at the expense of the already existing rail system, the emergance of America as a super power, cheap gas, etc, etc, etc). The government has created, built, and maintains a dependance on avaition and highways and this reality is so big that most Americans can't understand the transportation industry in any other way.
It reminds me of a party I once threw. A good friend and I rented a house together (right out of college, no money, etc). We decided to have some friends over, wound up being about 30 people or so. Both of us invited people, made purchases for the event, etc. I had a friend I invited (note that it was MY friend not roommate's friend) who came to me at the party and said "your roommate throws a great party." I thought she was kidding at first. I was a little hurt that she didn't recognize that I had invited her and I was also responsible for the event as well so I told her "we both did this together." She didn't get it. I tried to explain to her again. She still didn't get it. She could not understand that I had as much involvement in the party as my roommate did. It really made me mad. She could not undertand or learn to understand that there might be another way to look at the situation.
I think our American perspective on rail is the same way. We as rail fans hear of politicians making what we think are, at best, uninformed comments about Amtrak because they can't see anything other than AVAIATION since it is the dominant mode of transportaiton. And because, like most politicians, there is a good bit of ego involved in their public statements they truly believe that what they say is not only true but the only way it can be. So instead of saying "maybe there is something I can learn about rail in order to make an informed decision or statement" they assume to have all the information they need. I'm sure the same can be said of pro-rail politicians--but I don't want to hear it! ;-)
The rail problem is not an Amtrak problem (as golden or tarnished as it may be). It is much bigger than that. It is a perception problem on the part of American citizens perpetuated by a government that has historically favored other modes of transportation. This is not a Rebublican or Democratic issue (although the fringe elements of our happy group would say that it is--interesting Gunn's statement about funding during Clinton and Bush administrations) but rather is EVERYONE'S problem equally sholdered by Democrats and Republicans. We all created this mess. Now, what can we do about it?
What we need is a third party--an Amtrak party!
Venting over. Return to normal programing.
NL,
Most airlines are barely breaking even right now, and in fact a few will probably go belly up before the year is over.
If ticket fees, taxes, and other charges were eliminated one of two things would happen. Either the prices of airline tickets would rise considerably, which would of course force people to turn to Amtrak, buses, and/or their cars. Or most airlines would simply go out of business.
On a seperate note, most Americans when polled do think that Amtrak and long distance trains should continue. Sadly most don't back up their votes by riding Amtrak.
I'm not so sure that I'd trust Jay Leno's informal polls though.
Most airlines are barely breaking even right now, and in fact a few will probably go belly up before the year is over.
If ticket fees, taxes, and other charges were eliminated one of two things would happen. Either the prices of airline tickets would rise considerably, which would of course force people to turn to Amtrak, buses, and/or their cars. Or most airlines would simply go out of business.
On a seperate note, most Americans when polled do think that Amtrak and long distance trains should continue. Sadly most don't back up their votes by riding Amtrak.
I'm not so sure that I'd trust Jay Leno's informal polls though.
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Simple answer: they would be doing no worse providing their own infrastructure because, in every practical sense, they and their customers already do pay for the airports and infrastructure used by the airlines. Of course, many airlines are not doing OK right now but that has nothing to do with airport grants, ATC grants, capital or infrastructure and has everything to do with the industry cost structure and some nasty low cost carriers that are shaking things up big time.National Limited said:
But what about airports, the air traffic control system, and the other stuff that airlines use? Who really pays for all that? Well here is the longer version of the answer.
In 1970 the Airport and Airway Trust Fund was established to provide federal grants for new airports, and expansion of existing airports. In 1992 the Passenger Facility Charge was added and these funds were targeted to the land-side operation while the AATF primarily targets the air-side and ATC. All the money that goes into those two funds comes from ticket taxes, segment fees, fuel taxes, airbill taxes, and even exchange taxes on frequent flyer miles. In short, the funds are supported by the aviation industry and no one else. General tax funds are not added.
Now, of course, the airlines do not spend these funds directly, but if all those taxes and fees on the tickets were eliminated, the airlines would have an additional $10 billion plus to pay for improvements directly. That would cover every cent of the current federal grants for airports. Why not do that and eliminate the middle man? Why not let the airlines pay for the airports? Because the airlines would fund improvements only at airports important to their own business purposes. The Feds, at least in theory, spread the funds around on a need basis. That is the reason the AATF was established.
What about local funds for airports? Most come from the sale of revenue bonds and sometimes from the airlines themselves. The local bonds are repaid from airport income. Except for small cities attempting to spur economic growth, local tax money is not used for airport construction or bond repayment. Of course, airports pay no property tax, but Amtrak property is tax exempt also. And yes, airlines do sometimes pay for airport expansion directly. An example is the new Terminal A-West at Philadelphia paid for by US Airways.
What about the cost of running the airports? Support for the day-to-day operation of airports and the repayment of local bonds comes through imposition of landing fees, gates leases, concession fees, parking fees, and the like. All paid by the airlines and air travelers. Do they make end meet? With few exceptions, yes and then some. Most major airports are, in fact, money machines. Newark airport, for example, had gross revenues of $600 million in 2003 and had net income from operations of $144 million. The $61 million Newark owed on its bonds came from the $144 million plus a grant of $26 million from Newark’s PFC fund.
So, no matter how you look at it, the airlines or their customers pay for the infrastructure at the terminals, the ATC infrastructure, and even a big chunk of the ATC operation. It is a big plus that the air between airport A and airport B is free. Certainly the rails between cities are not free either to build or maintain. And therein lies an economic fact of life for rail transportation.
The point of all this is not to argue that Amtrak does not deserve federal funds. The fact is that Amtrak clearly has a vital transportation role and the economic reality of rail operation dictates that the service must be subsidized to be viable. Charge the fares needed to actual pay for everything and no one would ride. The question is not if Amtrak should be funded, but by how much and for what. And the answer to that question is all about Amtrak and rail and has absolutely nothing to do with aviation or airlines.
It is so often stated by rail supporters that airlines and aviation are on the federal gravy train that some semblance of reality had to be injected into the dialog. No, aviation is not 100% self sufficient, but it comes much, much closer than Amtrak and, by the nature of the beast, always will.
By the way, I think this has been a great thread!
National Limited
Service Attendant
Well, I think then that perhaps in my previous rant I did hit on some truth in that much of the time it is a lack of understand of how rail opperates and how avaiation opperates that creates the problems of limited understanding of the whole picture. Rail is more infrastructure dependant that avaition. If the government charged airlines for use of public air space it might be a little different. Again, as you stated PRR60, understand what makes rail travel work and understanding what makes avaition work are in many important respects two different things and thus can't be fairly compaired. Thus when someone says something similar to "airlines do it better" an more realistic response may be "airlines are able to do it differently?"
Yes, Alan B, I do understand that The Tonight Show is not the Gallop organization and the absurd answers we hear are, i'm sure, in the minority among all those participating--we only see the "good stuff." However, I do feel that there are a lot of citizens of our great country that are not as aware of the rail situation as those who have great interest in the mode of transportation and because of this lack of understanding their ability to make informed decisions/comments about rail is severely limited. Of course, anyone is free to say what ever they feel but just because we are free to do so does not mean what we say is correct, right, truth, etc.
Yes, Alan B, I do understand that The Tonight Show is not the Gallop organization and the absurd answers we hear are, i'm sure, in the minority among all those participating--we only see the "good stuff." However, I do feel that there are a lot of citizens of our great country that are not as aware of the rail situation as those who have great interest in the mode of transportation and because of this lack of understanding their ability to make informed decisions/comments about rail is severely limited. Of course, anyone is free to say what ever they feel but just because we are free to do so does not mean what we say is correct, right, truth, etc.
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