Rather than looking at the monthly reports and guessing on cost shuffling between the NEC and the other business lines, I suggest that one should read the combined FY14 budget FY15 Budget justification and FY13-18 Five Year Financial Plan. The FY14 budget specifies the budgeted allocation of direct and shared costs in detail for the NEC (table Exhibit 4-2), State supported corridors (Exhibit 5-2), and the LD trains (Exhibit 6-2).
There's some very questionable allocations there. Everyone who said the LD trains were being assigned too much overhead is clearly correct.
* There is $37.5 million allocated to "MoW Support" for the long-distance trains, which have practically no right of way of their own to maintain. (Post Road Branch outside Albany, I suppose, but that cannot account for $37.5 million.) By contrast, the NEC only gets assigned $93 million, and the states (which actually have right-of-way to maintain) a mere $38 million. This is an obvious and gross misallocation.
* The LD business line is assigned $43 million for data processing services (IT), vs. $28 million for the state corridors and $25 million for the NEC, which seems obviously bogus to me.
* Likewise, the LD business line are assigned $81.2 million in "other general and administrative", vs. $64.7 million for the states and $50.3 million for the NEC, which is again obviously bogus.
* MoE Supervision Training and Overhead assigns *$114.4* million to the LD trains, versus $71.4 million to the states, and $49.9 million to the NEC. This is sort of plausible now given the wide variety of equipment (including Heritage cars) n the LD trains versus the uniform fleet on the NEC -- but it's completely unbelievable in 2018, when the Heritage cars will be gone and the state-supported fleet will be more motley than the LD fleet, and the plan continues to overload the LD division with this overhead in 2018.
There are others where I find the allocation suspicious ("Communication", "Police/Environmental and Safety"), etc., but these four, I simply don't believe at all.
At least $100 million in overhead should be reallocated away from the long-distance business line, arguably much more.
There are some reasons for this misallocation: according to the same document, the LD business line is currently assigned the job of operating major terminals outside the NEC (Chicago included), crew bases, service and inspection, etc. Clearly they are not charging the state corridor line enough for this.
It gets worse: in that document, Amtrak apparently proposes to increase the overhead artificially loaded onto the LD line by $71 million by 2018. So although the trains are projected to improve their *actual* performance by $34 million over the same period... yeah, not cool, Amtrak. My best guess there is that Amtrak didn't actually do any real projections for overhead allocation, and just used some arbitrary inflation percentage or something.
Looking at that document, it's actually even worse than I thought. While the long-distance trains were saddled with only $439.7 million in overhead in 2012, they have been artificially saddled with $507.7 million in overhead in 2014.
The people who say that Amtrak is sandbagging the long-distance trains with bad accounting are correct. This mostly hurts the eastern trains, since the western trains still require large yearly subsidies.
The 2014 overhead number (even though it was a budget estimate) allowed me to redo my spreadsheet on the long-distance trains. Assuming that this is the correct 2014 overhead number, and that the proportions allocated to each individual route have remained the same (again a dubious assumption), I find that the true profits (based on direct costs) of each route are:
Silver Star $4.8 million PROFIT
Cardinal ($2.8 million loss)
Silver Meteor $15.3 million PROFIT
Empire Builder $0.7 million PROFIT
Capitol Limited ($4.9 million loss)
California Zephyr ($16.4 million loss)
Southwest Chief ($16.9 million loss)
City of New Orleans ($6.8 million loss)
Texas Eagle ($8.1 million loss)
Sunset Limited ($16.3 million loss)
Coast Starlight ($9.4 million loss)
Lake Shore Limited $3.7 million PROFIT
Palmetto $7.2 million PROFIT
Crescent ($7.3 million loss)
Auto Train $35.5 million PROFIT
Let me make this clear again: cancelling Auto Train, LSL, Palmetto, Silver Meteor, or Silver Star would be
bad for Amtrak's bottom line. They clearly make enough to cover all the avoidable costs which are listed in "shared costs". All of these make enough to cover their yard operations, easily. The Star/Meteor/Palmetto also clearly make enough to cover the cost of the stations shared only by them, so even cancelling all three of them would be *bad for Amtrak's bottom line*. (The LSL shares most of its stations with corridor trains, and can surely cover the cost of the other 9 stations shared with the Capitol Limited, since only 3 are staffed. The Auto Train has no shared stations.)
If cancelling a train is bad for the bottom line, that train is
profitable by any sane standard.
Another way you know that the "fully allocated" numbers are bogus is that "NEC Special trains" are repeatedly listed as having a large cost per rider. Obviously Amtrak wouldn't run them at all if they weren't profitable, so they are profitable. This is just stupid overhead misallocation.
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FWIW, I anticipate an improvement of about $2.4 million each for the Star, Meteor, and LSL when they get new Viewliner sleepers (a very rough guess); about $1 million for the Crescent and about $0.8 million for the Cardinal. I have no way to estimate the reduced maintenance cost from retiring the Heritage cars, but it should be substantial, and maybe it will also reduce the amount of MoE overhead allocated to these routes. Finally, a daily Cardinal should give a boost of roughly $6.5 million, which would make the
Cardinal profitable before overhead as well.
On other points, it looks like a daily Sunset Limited would cost $14 million to run vs. $16.3 million currently for three-a-week -- it would likely do better financially than the SWC or the CZ. In short, daily service would be good for the bottom line. However, cancelling the Sunset Limited would also be good for the bottom line, so there's that.
Also, the Empire Builder appears to be doing much better financially than you'd expect (given the massive delays and crashing ridership and so forth). This is probably due to recovering substantial penalties from BNSF for the delays; it looks to me as if BNSF is actually
fully compensating Amtrak for the lost revenue, and perhaps more. This might explain why CN is the one getting the STB complaints, while Amtrak is being very polite to BNSF... the delays on the Empire Builder may actually be good for Amtrak's bottom line, while the delays on CN are bad for it.
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Regarding the capital projects allocated to the long distance business line, they're broken down by route on page 85, but the allocation is a complete head-scratcher. The largest amount is allocated to the Star ($131.1)/Meteor($135.7)/Palmetto($101.4), for a total of $368.5 million. The EB ($125.1), CZ ($126.4) and SWC ($113.3) also get large amounts. The least goes to the Cardinal, with $18.8 million, followed by the Crescent with $49.2 million. The LSL is allocated $77.2 million, the Coast Starlight $72.5 million. I don't get it at all.