Could the "Lynchburger" End?

[The Davy Crockett]

A very good 'opinion' piece about the threats to state supported pax service.

From Lynchburg's "The News and Advance":

http://www2.newsadvance.com/news/2012/mar/11/community-viewpoint-lynchburg-amtrak-backers-still-ar-1753854/?referer=http://www.bing.com/search?q=amtrak+&qs=n&form=QBLH&pq=amtrak+&sc=8-7&sp=-1&sk=&shorturl=http://bit.ly/zMuDoQ

 

[jis]

It seems that the $305 million in ten years includes a bit more than one Lynchburger and one or two Norfolk trains + Richmond trains.

Of course the final STB formula for state charge calculation for regional service is yet to be published so we will never know for sure, until that happens.

But it appears that NY State is budgeting something between $40 million and $60 million for Empire Service, Adirondack and Maple Leaf + any growth. In New York it is quite hard to tell the exact amount since the legislature appropriates a lump sum for non-New York City Rail and the executive branch then makes the final determination of how that money is actually spent. So you can only get a vague idea of the ballpark.

 

[Anderson]

The calculations interest me quite a bit. (particularly the "surprise" recalculation on the Lynchburger's costs)...but at the same time, I'm wondering how close to that new figure the train will come if we get one or two more years of 10%+ growth in ridership alongside at least some marginal fare increases. I'm also wondering if there's not going to be some room for Virginia to contest the calculations/formulas, considering the size of the surplus the train is posting in Amtrak's budget projections. And, of course, there's the fact that if Amtrak is posting a large internal surplus on the route, I can sense some odd fights going on over those costs and discontinuation (i.e. If Amtrak is showing a profit on their books, then I don't see why they would need more than a "what if" allocation that could be set aside from the surplus to cover potential losses).

As to the $305 million, if I understand correctly, that covers:

-5 trains WAS-RVR/NPN[/NFK]

-1 train WAS-LYH

Assuming that ten years of operation are considered, that's six daily trains for $30 million per year. Frankly, I disagree with the calculations (I suspect that the ridership projections are coming in a bit too conservatively), but the cost numbers are fairly low. Mind you, that's half of the net cost for the Empire Service...let's just say that it feels high, but I suspect that it is using lowballed ridership estimates.

 

[jis]

BTW, this is another reason why support from the likes of LU in Lynchburg could prove crucial to get the money needed to continue service in Virginia.

 

[George Harris]

I would be very skeptical of the numbers here. Recall that for several years the LA to San Diego trains generated a net profit. Then Amtrak change the calculations. Can't have a state supported service that needs no support, can we?

 

[trainviews]

The calculations interest me quite a bit. (particularly the "surprise" recalculation on the Lynchburger's costs)...but at the same time, I'm wondering how close to that new figure the train will come if we get one or two more years of 10%+ growth in ridership alongside at least some marginal fare increases. I'm also wondering if there's not going to be some room for Virginia to contest the calculations/formulas, considering the size of the surplus the train is posting in Amtrak's budget projections. And, of course, there's the fact that if Amtrak is posting a large internal surplus on the route, I can sense some odd fights going on over those costs and discontinuation (i.e. If Amtrak is showing a profit on their books, then I don't see why they would need more than a "what if" allocation that could be set aside from the surplus to cover potential losses).

Actually as it is now revenue made on the NEC is allotted to the Lynchburg service. Nearly all the revenue of passengers originating south of WAS is allotted to the train, including the part of the journey made on the NEC.

There were good reasons to choose to do it that way. It helped get the service going even with the much lesser ridership that was projected as it limited the bill to Virginia and Amtrak didn't really loose anything as it was either new passengers filling otherwise empty seats on the regional or passengers that would have taken up a seat on the Crescent, where they are in short supply and more revenue could be made on selling them to passengers travelling to Atlanta or other distances further south.

But in terms of fairness Amtrak could just as well had demanded a share of the revenue generated in Virginia for "delivering" passengers from the NEC, and thus boosting ridership much more than a stand alone corridor would generate. It would just have been stupid policy that would have prevented the service from ever happening.

As I understand it, it is also not Amtrak but PRIIA demanding that this way of allotting the revenue must be changed (though it does make some sense, as there is at least anecdotal evidence that the heavy ridership from Virginia combined with growth on the NEC is getting the trains to sold out status on parts of the NEC, so other passengers are turned away, where the full revenue would be allotted directly to Amtrak).

PRIIA demands two things as I have understood the legislation 1) that short distance corridors are paid for by the states and not by federal subsidy, and 2) that a uniform way of allotting the costs and revenues are found for all the corridors.

The current accounting for the Lynchburg service fits neither. Most other services have no NEC from which "extra" revenue can be tapped if the passengers travel further (only transfers to already lossmaking LDs or other corridors), and in a sense allotting most of the NEC part of the ticket revenue from through passengers to the Virginia service can be seen as a federal subsidy. The NEC is not lossmaking but Amtrak in general is, and indirectly more revenue for Virginia will mean that the money is not available for either LD's or investments in rolling stock or infrastructure. Instead this will have to be covered by a larger federal subsidy.

I know my opinion on PRIIA (at least this part of it) is not really popular around here, but I think it is really a pretty lousy piece of legislation that will hamper corridor growth in years to come. It leaves the full bill to cash strapped states without any federal encouragement to expand or maintain services and no incentive to take the interests of the whole network into consideration either along with the parochial/intrastate interests.

 

[Anderson]

Trainviews,

I agree with your view in general. While I think that it is fair for states that had "legacy" services that were either part of the initial "national system" or that were simply never discontinued because Amtrak opted to keep the trains to have to pay something sooner or later, I also agree that blocking federal subsidies to these trains is making for a real mess. In particular, I would point out that the Feds kick in a very large share to build and maintain interstates. At the very least, it is a great shame that the limits aren't a lot lower...it's one thing for the Feds not to want to subsidize strictly intrastate trains (such as the Empire Service or the Pennsylvanian) out of the same funding pot that the LD trains are being bankrolled through, but at the other end you've got trains like the Carolinian or the Heartland Flyer (as well as some of the potential operations in the Midwest).

With respect to the situation surrounding Virginia, that's a bit more complex. On the one hand, this train is selling out and intra-Corridor passengers are likely getting crowded out. On the other hand, that brings up a response of 'Then why don't you move a few cars around and make sure that this train doesn't sell out too often?'. The fact that those trains are turning a net profit for Amtrak either way makes the situation even more frustrating because it seems pretty hard, in light of the revenue trajectory, to buy an argument that extending the train from Washington to Lynchburg isn't profitable to Amtrak. The situation on the Richmond/Newport News route is similarly frustrating...again, per Amtrak's budgeting, those trains seem to be in the black (albeit not by as much). And in both cases, both ridership and revenue are increasing rapidly on a year-over-year basis.

Part of what bugs me here is this: Yes, in some cases a train is ending up sold out and/or someone is getting crowded out by a high bucket. However, Amtrak is getting a huge amount of business that it wouldn't get otherwise (and this very likely ignores at least some interline revenue for folks transferring at WAS, PHL, or NYP). So I guess what I'd like to know is this: What was the revenue of the Lynchburger's slotted Regional before it got extended down to Lynchburg, and what was the cost of operating it? In other words, what is VA actually being billed for with these extensions?

The other question that comes to mind is this: Notwithstanding requirements to have an agreement in place for state support, is there any reason that Amtrak would have to not operate this train (or the Richmond/Newport News trains) more or less as-is even without a federal subsidy being attached? The big difference between the VA trains and, say, even the Pennsylvanian (another NEC feeder) is that the trains are actually paying for themselves and then some. It is all fine and dandy for Amtrak to simply want to take the profits off of the route to feed into new equipment (though working out a deal with Virginia to eventually equip a few trainsets the way WA, OR, CA, etc. are would seem to be a better way to go about this) and operations, but there is something that grates on me about a state being charged for having a profitable train run through it.

I don't think that it is an unfair question to ask: If Amtrak is showing a substantial profit in the VA operations net of truncating those trains at WAS (which by all signs Amtrak seems to be) and VA is unwilling to pony up another $30 million per year, does Amtrak simply leave those profits on the table and cut the trains? Not to be too blunt, but that seems stupid as hell. I can see wanting/needing VA to make up any operating difference, but I'm hard-pressed to see Amtrak not running trains that bring in net business.

 

[Sky Pilot]

I'm confused .. not for the first time I'm sure. What would change in the calculation for the Lynchburg train specifically that makes it go from being profitable to losing money for the state and requiring some portion of the ~$30 million a year mentioned above. I also don't understand why my home train, the NER from NPN to BOS is not considered a LD train when the Capitol Limited is. Admittedly the former is 650 miles whereas the latter is 700 miles but that seems like a distinction without difference.

Blue skies ..

 

[Amtrak839]

I'm confused .. not for the first time I'm sure. What would change in the calculation for the Lynchburg train specifically that makes it go from being profitable to losing money for the state and requiring some portion of the ~$30 million a year mentioned above. I also don't understand why my home train, the NER from NPN to BOS is not considered a LD train when the Capitol Limited is. Admittedly the former is 650 miles whereas the latter is 700 miles but that seems like a distinction without difference.

Blue skies ..

The Capitol Limited is 780 miles. The line for what is long distance and what is not is usually drawn at 750.

 

[Anderson]

I'm confused .. not for the first time I'm sure. What would change in the calculation for the Lynchburg train specifically that makes it go from being profitable to losing money for the state and requiring some portion of the ~$30 million a year mentioned above. I also don't understand why my home train, the NER from NPN to BOS is not considered a LD train when the Capitol Limited is. Admittedly the former is 650 miles whereas the latter is 700 miles but that seems like a distinction without difference.

Blue skies ..

The Capitol Limited is 780 miles. The line for what is long distance and what is not is usually drawn at 750.

That's about the sum of it. As to the VA situation, I was referring to VA's Amtrak trains as a whole for the $30 million, which include the Lynchburger, 3/day that terminate in Richmond, and 2/day that terminate in Newport News. Both sets (WAS-LYH and WAS-RVR/NPN) appear to be showing profits at the present:

-Per the FY12 budget in the five-year financial plan, expected revenue on the RVR/NPN leg is to be $32.9m against expenses of $27.4m, on 549,060 riders. On the LYH leg, it's revenue of $8.9m against expenses of $5.7m on 158,067 riders. These offer per-rider profits of $10.0) AND $19.87, respectively.

-In both cases, Amtrak is running far above projections: On the RVR/NPN leg, revenue YTD is at $10.5m vs. a YTD budget of $9.8m; on the LYH leg, it's at $3.8m vs. a budget of $3.2m. Even assuming that the expense budget is lousy, there seems to be absolutely no reason that either leg should require a subsidy; though I could see one or more individual trains needing one, I'm hard-pressed to see a reasonable explanation for Amtrak demanding money to run trains that are on course to earn them roughly a net $10 million this year.

--Just to compare, this seems to be next to the DRPT getting $1.5m in surplus from the Lynchburger last year. IIRC, that means that Amtrak still got 40% of the profit when the state is assuming most or all of the risk in funding it.

And of course, the feeling that I am getting with the politicians up in Richmond is that there's a great deal of "***?!?" at the idea of being told in one sentence that the trains are doing this well and then being told that they're going to need to put money in to operate them.

Of course, I'm also trying to tease out legal tricks that could be used to deal with the dog catching the car here. For example, would it be possible for Amtrak to simply lease the equipment to Virginia and be paid to operate it (and paid for trackage fees, etc.) under some agreement (i.e. instead of being a state-sponsored Amtrak train, you'd have an Amtrak-operated state train)? Amtrak would probably make a bit more than they do now (I'm assuming that revenue from non-VA traffic would be worked out as part of the deal), but wouldn't be on the hook of the train failed to perform. VA would get any excess profits, but would be on the hook for losses should the materialize. And capacity on the NEC wouldn't be adversely affected.

Technically speaking, this would make the trains "hosted trains" on the NEC...but then again, wouldn't this just turn the trains into really long-distance versions of Amtrak's commuter contracts?

 

[trainviews]

Trainviews,

I agree with your view in general.

I think we are more or less totally in agreement

While I think that it is fair for states that had "legacy" services that were either part of the initial "national system" or that were simply never discontinued because Amtrak opted to keep the trains to have to pay something sooner or later, I also agree that blocking federal subsidies to these trains is making for a real mess.

I do think that passing part of the costs to the states is healthy to give them a stake and I also agree that the current system is totally random based on historical coincidences

In particular, I would point out that the Feds kick in a very large share to build and maintain interstates. At the very least, it is a great shame that the limits aren't a lot lower...it's one thing for the Feds not to want to subsidize strictly intrastate trains (such as the Empire Service or the Pennsylvanian) out of the same funding pot that the LD trains are being bankrolled through, but at the other end you've got trains like the Carolinian or the Heartland Flyer (as well as some of the potential operations in the Midwest).

Again, totally agree. The PRIIA provisions are way to rigid and the 750 miles all or nothing limit absurd. Some graduation based on distance, number of states covered etc. would make more sense.

With respect to the situation surrounding Virginia, that's a bit more complex. On the one hand, this train is selling out and intra-Corridor passengers are likely getting crowded out. On the other hand, that brings up a response of 'Then why don't you move a few cars around and make sure that this train doesn't sell out too often?'. The fact that those trains are turning a net profit for Amtrak either way makes the situation even more frustrating because it seems pretty hard, in light of the revenue trajectory, to buy an argument that extending the train from Washington to Lynchburg isn't profitable to Amtrak. The situation on the Richmond/Newport News route is similarly frustrating...again, per Amtrak's budgeting, those trains seem to be in the black (albeit not by as much). And in both cases, both ridership and revenue are increasing rapidly on a year-over-year basis.
Part of what bugs me here is this: Yes, in some cases a train is ending up sold out and/or someone is getting crowded out by a high bucket. However, Amtrak is getting a huge amount of business that it wouldn't get otherwise (and this very likely ignores at least some interline revenue for folks transferring at WAS, PHL, or NYP). So I guess what I'd like to know is this: What was the revenue of the Lynchburger's slotted Regional before it got extended down to Lynchburg, and what was the cost of operating it? In other words, what is VA actually being billed for with these extensions?

But the thing is that it is really not Amtrak demanding this as I understand it - it is the PRIIA legislation, as Amtrak is no longer allowed to take revenue earned north of Washington and use it to run the state supported trains south of Washington even though doing this creates more revenue north of Washington because it brings in passengers from the south :wacko: . Even if it might be time to adjust the agreements with Virginia some I am certainly not advocating to separate the train financially at WAS, but it seems to be what is required, and the Virginia legs alone do turn a deficit, that the state then has to foot. That is stupid and a reverse incentive. Again the rules are too crude, not leaving any room for Virginias special situation and opportunities.

The other question that comes to mind is this: Notwithstanding requirements to have an agreement in place for state support, is there any reason that Amtrak would have to not operate this train (or the Richmond/Newport News trains) more or less as-is even without a federal subsidy being attached? The big difference between the VA trains and, say, even the Pennsylvanian (another NEC feeder) is that the trains are actually paying for themselves and then some. It is all fine and dandy for Amtrak to simply want to take the profits off of the route to feed into new equipment (though working out a deal with Virginia to eventually equip a few trainsets the way WA, OR, CA, etc. are would seem to be a better way to go about this) and operations, but there is something that grates on me about a state being charged for having a profitable train run through it.
I don't think that it is an unfair question to ask: If Amtrak is showing a substantial profit in the VA operations net of truncating those trains at WAS (which by all signs Amtrak seems to be) and VA is unwilling to pony up another $30 million per year, does Amtrak simply leave those profits on the table and cut the trains? Not to be too blunt, but that seems stupid as hell. I can see wanting/needing VA to make up any operating difference, but I'm hard-pressed to see Amtrak not running trains that bring in net business.

Actually I think that is the solution: Officially announce the RVR/NPN and LYH routes part of the NEC, in therms of accounting. Then the trains there will be part of the profit making NEC operating budget, and the state will only be brought in for capital costs. Any way of splitting the revenue of one train into two parts is going to be more or less random. Going from one system, which probably allocated too much money to the southern part to a system which seems at least as tilted the other way just underlines the absurdity.

 

[Anderson]

Trainviews,

As I see it, there may be two problems with that:

1) The NEC Spine may be legally defined; and

2) Doing so would raise immense pressure on Amtrak from Connecticut and Pennsylvania to extend the "NEC" to cover the Keystone and Shuttle services. I believe that those were lumped in with the "extended NEC" back in the 1990s as well.

I'm wondering, though, if there's a way for Amtrak to structure an agreement moving the trains to being "entirely" VA trains (as far as I can tell, there's nothing saying that a state can't pay for a train to run up the NEC), but with VA disclaiming profits on part of the route while "renting" the "Northeast Regional" trademark for $1 or something. That would of course all be a bunch of legal tapdancing and nothing more, but I don't see why it couldn't be done. I think there's precedent, too (ACE and NJ Transit/MARC trains come to mind as things that have been run on Amtrak tracks but that someone else handles).

The other thing would be to tinker with the ticket price structure and allow VA to claim some sort of "past ALX" or "past WAS" surcharge to pick up part of the difference.

 

[Donctor]

I would be very skeptical of the numbers here. Recall that for several years the LA to San Diego trains generated a net profit. Then Amtrak change the calculations. Can't have a state supported service that needs no support, can we?

Hiawatha.

 

[Anderson]

I would be very skeptical of the numbers here. Recall that for several years the LA to San Diego trains generated a net profit. Then Amtrak change the calculations. Can't have a state supported service that needs no support, can we?

Hiawatha.

Incidentally, both of these trains are ones that IIRC were never tendered for discontinuance. I'd point out that there was a different calculation back in the mid-2000s that showed a much different picture (I think the NEC was showing something like a $200 million profit at the time).

Of course, in the case of the San Diegan, I'm left wondering...if the calculation change was too bad, could CA have just said "enough already, we want an operating contract instead of a normal state-supported train contract"?