Class 1 Passenger Service

[Ryan]

Or does all of that just get charged to "overhead" which you say is bloated?

ooooooooooh. Somebody is pissed. lol. I think it's your mind that is 'bloated'. Have a 'nice day'. lol I am having fun and learning something at the same time.

I guess that means you're not going to answer any of his questions?

This discussion is turning boring. I'm not going to keep argueing. I have done my calculations and stated my numbers. They may not be very accurate but that's all I can do.

Why do you feel that they're more accurate than Amtrak's numbers?

 

[Swadian Hardcore]

Why do you feel that they're more accurate than Amtrak's numbers?

I did not say if they are accurate or not. I merely said the MAY be inaccurate. Ryan, I was not agueing against you, I'm on your side!

edit: error

 

[henryj]

Well for those that are still interested, most of these numbers can be gleened from Amtrak's own reports. They have submitted PRIIA reports on many of the LD trains. Specifically the Cardinal, Capitol Limited and CZ reports listed revenues and costs in detail. Here is what the had about the Capitol(numbers are in millions). Ticket revenue 18, food and beverage 1, total 19. Expenses the largest of which are rent to the host rr, 1.6, fuel 3.0, labor 9.5, commissary 2.2, yard ops(switching) .9, maintenance 10.9 and stations 2.7 and maintenance of way .4. These make up the basic operating costs. Many of the others which I would consider 'overhead' are small and immaterial in comparison. These include commissions .5, insurance(isn't Amtrak self insured?) .7, passenger inconvenience .2 and security .6. All these only add up to 2.0. Then there are the 'bloated' categories of operations management 1.2, G&A 3.8 and Sales and Marketing 2.1(I have rarely seen any advertisement for Amtrak here in Houston). The Capitol covers about 61% of its operating costs. Other trains may cover more. Bloated overhead in this scenario is about 9.1. Overall the train loses(according to Amtrak) 21.1mil. It's fully allocated cost recovery ratio is something like 47%. Pretty poor. In every case the largest basic costs are labor, maintenance, fuel and rent. If you raise the base fare on some of these trains at least above the Greyhound level the trains do better. Op cost recovery for the Capitol for instance goes above 83%. To get them to break even you would have to increase capacity. People on this train sure eat a lot.

 

[Ryan]

If you raise the base fare on some of these trains at least above the Greyhound level the trains do better. Op cost recovery for the Capitol for instance goes above 83%. To get them to break even you would have to increase capacity.

Are you assuming perfectly inelastic demand when you make those judgements?

 

[George Harris]

If you raise the base fare on some of these trains at least above the Greyhound level the trains do better. Op cost recovery for the Capitol for instance goes above 83%. To get them to break even you would have to increase capacity.

Are you assuming perfectly inelastic demand when you make those judgements?

Greyhound has some farae games of its own, so being at or above Greyhound would not have a fixed dollar amount, either. It is not just whether to go Greyhound or go Amtrak, but also whether or not to make the trip at all.

Incidentially, and this was quite a few years back, I saw some fares that indicated that Greyhound also prices against the competition, that is charging more where Amtrak does not operate. The comparison was Memphis to Nashville versus Memphis to Jackson MS. The distances are very close, something like 220 miles for one and 210 miles for the other. Yet, the Memphis to Nashville fare was somewhere in the range or 50% to 75% higher than the Memphis to Jackson MS fare. Very simple: There was and is also a train between Memphis and Jackson MS, and there is not and has not been a train between Memphis and Nashville other than an all night mail train since 1957. (The mail train died about 1967 with the removal of mail from rail.) Therefore, Greyhound had no competition going to Nashville after Trailways folded. (Of the two, I always thought Trailways was the better.)

 

[haolerider]

Well for those that are still interested, most of these numbers can be gleened from Amtrak's own reports. They have submitted PRIIA reports on many of the LD trains. Specifically the Cardinal, Capitol Limited and CZ reports listed revenues and costs in detail. Here is what the had about the Capitol(numbers are in millions). Ticket revenue 18, food and beverage 1, total 19. Expenses the largest of which are rent to the host rr, 1.6, fuel 3.0, labor 9.5, commissary 2.2, yard ops(switching) .9, maintenance 10.9 and stations 2.7 and maintenance of way .4. These make up the basic operating costs. Many of the others which I would consider 'overhead' are small and immaterial in comparison. These include commissions .5, insurance(isn't Amtrak self insured?) .7, passenger inconvenience .2 and security .6. All these only add up to 2.0. Then there are the 'bloated' categories of operations management 1.2, G&A 3.8 and Sales and Marketing 2.1(I have rarely seen any advertisement for Amtrak here in Houston). The Capitol covers about 61% of its operating costs. Other trains may cover more. Bloated overhead in this scenario is about 9.1. Overall the train loses(according to Amtrak) 21.1mil. It's fully allocated cost recovery ratio is something like 47%. Pretty poor. In every case the largest basic costs are labor, maintenance, fuel and rent. If you raise the base fare on some of these trains at least above the Greyhound level the trains do better. Op cost recovery for the Capitol for instance goes above 83%. To get them to break even you would have to increase capacity. People on this train sure eat a lot.

When you allocate overhead, it cannot be directly attributed to individual trains. You my not see any ads in Houston, but the ads for Amtrak create business and interest for the company and nort directly for each train. Thers are shared station costs, which are spread over all trains, T& E costs, HR coats, HQs costs, and many other that you may or be considering.

To getback to the meat of the original post, if any Class 1 railroad wanted to take over passenger servise, I can assure you that they would have accurate figures on which to make their decision. They would not be estimating costs.as you are doing. Let's let them make their decision, if they want to do that and decide that any amateur figures don't really count, whether the intent is well meaning or not. Henry, I am sure you are honest in your attempts, but not being sure of consists, guessing about OBS staffing, number of engines, etc., are not reassuring to me. Let the accounting staff at Amtrak present their numbers and if you can get overhead properly identified and discover why Amtrak allocates the overhead the way they do, then you have a better case to present. I do know that many of the overhead costs are arbitrary and that many of the operational staff do not agree, but that is he way it is and having seen the actual figures, I can assure they they are not bloated, controversial yeas but not bloated. It fyou can get the actual figures, then you may have a case, bit in my opinion, your case is not logically presented..

 

[henryj]

If you raise the base fare on some of these trains at least above the Greyhound level the trains do better. Op cost recovery for the Capitol for instance goes above 83%. To get them to break even you would have to increase capacity.

Are you assuming perfectly inelastic demand when you make those judgements?

Greyhound has some farae games of its own, so being at or above Greyhound would not have a fixed dollar amount, either. It is not just whether to go Greyhound or go Amtrak, but also whether or not to make the trip at all.

Incidentially, and this was quite a few years back, I saw some fares that indicated that Greyhound also prices against the competition, that is charging more where Amtrak does not operate. The comparison was Memphis to Nashville versus Memphis to Jackson MS. The distances are very close, something like 220 miles for one and 210 miles for the other. Yet, the Memphis to Nashville fare was somewhere in the range or 50% to 75% higher than the Memphis to Jackson MS fare. Very simple: There was and is also a train between Memphis and Jackson MS, and there is not and has not been a train between Memphis and Nashville other than an all night mail train since 1957. (The mail train died about 1967 with the removal of mail from rail.) Therefore, Greyhound had no competition going to Nashville after Trailways folded. (Of the two, I always thought Trailways was the better.)

Well George I just played with the fares and capacity to see what it would take to make some of these trains break even. I really don't have an opinion as to what Amtrak should charge. It's all government subsidized anyway. If I am a customer I want to best rate I can get. I assume they have experts that decided all that stuff. For some reason people on here seem to think I am trying to shove this stuff down their throat. I was just curious as to what it costs to run these trains and I have learned a lot about it with this exercise. As for the 'bloated' overhead controversy, I think Boardman answered that with his lay offs and reorganization. They lost that contract with Caltrain and that was a wake up call. Hey, it's a government organization. By definition it's bloated. lol.

 

[AlanB]

I was just curious as to what it costs to run these trains and I have learned a lot about it with this exercise. As for the 'bloated' overhead controversy, I think Boardman answered that with his lay offs and reorganization. They lost that contract with Caltrain and that was a wake up call. Hey, it's a government organization. By definition it's bloated. lol.

Henry,

I think that this part of your last post is the most significant thing to date that you've posted in this topic. It's clear that you've learned things that you didn't know. And it's clear that Amtrak most certainly does have problems, as evidenced by Mr. Boardman trying to reduce overhead, even though I'm not so sure that his plan worked out exactly as he'd hoped it would. That is to say that he lost some good people, as well as some of the bad people he was hoping would go away with the buyout.

And I agree, being a government entity where President's appoint the board, there is always danger of bloat.

Additionally, like any company, no matter how hard one tries or doesn't, you're going to have good people working there and you're going to have bad people working there. We see some of the good people posting here, and I named some of them in another recent topic. Steve4031 & I have talked about this very thing during some of our rides on OTOL fests and AU Gatherings. Steve's a teacher in Chicago; one of the good one's who actually cares about his students and he tried quite hard to do right by them.

But as I've said to him more than once, "could you rattle off the names of 10 teacher's who should be doing something else?" And he didn't even have to hesitate about who he thinks should be looking for a different job. By the same token, he can easily name 10 teachers whom he'll be quite sorry to see retire or burn out and decide to seek a different job.

The same is of course true at Amtrak or any large company, but especially more so when government is involved.

All that said, frankly I feel more positive about Amtrak right now than I've felt in the last 10 years. Is there a lot that still needs fixing? Absolutely! But they have also taken strides, great strides IMHO, to fix many of the things that they can fix within their budget constraints.

And while I'm sure that the LD's can never be profitable in the traditional sense, I do think that Amtrak can get them closer to breaking even on an operating basis. Of course one of the bigger things that will be needed for that, is more equipment, and that will take Federal dollars. One has to spend money to make money!

But already, Amtrak is making an operating profit on the NEC, both with Acela & the Regionals. And now, coming soon, Amtrak will incur no losses on State sponsored trains. So baring capital costs for the NEC and equipment for the entire system, Amtrak will be in the best position that its seen in its 40 years of existence. And getting to daily on all LD's, and extra frequencies on the busiest LD's, which again require more equipment, would only help things IMHO!

Hopefully Amtrak can continue to improve no matter who is at the top of the food chain, hopefully Congress will continue to see the value of Amtrak, and hopefully we can all continue to enjoy riding on Amtrak for many years to come!