should long distance trains be cut or fares raised

[Ryan]

Airlines sometimes, when they're not purging their debts in bankruptcy and using airports and an ATC system that they don't fully pay for.

Freight isn't people and therefore irrelevant in this context.

 

[ainamkartma]

the freights do and the airlines as well.

Since deregulation in 1978, the airline industry in the US has made a net profit of minus 60 billion dollars.

Linky:

http://freakonomics.com/2011/06/24/why-do-airlines-always-lose-money-hint-its-not-due-to-taxes-or-fuel-costs/

Cheers,

ainamkartma

 

[west point]

IMHO the premises in this thread's title is incorrect. A quick consult of bookings for this month show most trains close to or sold out. Even the C Starlight new business class is selling out with very short notice. What is needed is more equipment on existing LD trains to reduce the losses. The Meteor is an example that has reduced its loss by adding a sleeper and coach.

Persons who cannot get accommodations during heavy traffic periods may not try to ride in off period times.

 

[SurebetVA]

On the LD routes a lot of the stations are in small towns that need this transportation. Currently the government spends around $250 million on essential air service to small towns in rural areas that would not otherwise have air service. This is on top of all of the grants they spend on upgrading airports that these services use. One small town I know of on the CZ line receives $2 million on Essential Air Services supplements a year. The only problem is the airline doesn't have enough qualified pilots now and have cut back to one flight a day Monday thru Friday using a 19 seat Beachcraft 1900.

The CZ stops in Denver and there is public transportation to the airport. I think it is important that this is not just a question of funding long distance rail but in the bigger context it is a discussion of whether we should invest money in transportation to Rural America. If the answer is yes then we need to decide how are we going to make that investment. In some areas Essential Air Service makes more sense - but in others rail service is the better alternative. With Essential Air Service from this small town you can only fly to Denver. With Amtrak you have a choice of going to Denver downtown, connecting to the Denver Airport from there, Going to Omaha, Chicago, Lincoln or several other points along the line. The number of people using the airport versus using Amtrak in this town during 2014 was essentially the same. Since there isn't any bus service these are the only two options for residents of this town other than driving. Driving to is subsidized with miles and miles of paved highways with very few people along the way.

I think it is unrealistic to think of Long Distance Trains as profit opportunities. Rather we need to look at them as an investment in our transportation system and decide if they are competitive with what taxpayers are paying for roads, airports/flights and other means of transportation. The gas tax is not the only tax money used to build and maintain our roads so we need to sit down and do a comparison. That comparison should be inclusive of the benefits to the community, environment, etc. such as providing much needed transportation to the elderly/young who don't like to or can't drive.

My long winded way of saying we need LD rail. We need to invest in our transportation infrastructure including LD rail which is more than a vacation train through nice scenery for a lot of people.

 

[crescent2]

No and no.

 

[Mystic River Dragon]

On the LD routes a lot of the stations are in small towns that need this transportation. Currently the government spends around $250 million on essential air service to small towns in rural areas that would not otherwise have air service. This is on top of all of the grants they spend on upgrading airports that these services use. One small town I know of on the CZ line receives $2 million on Essential Air Services supplements a year. The only problem is the airline doesn't have enough qualified pilots now and have cut back to one flight a day Monday thru Friday using a 19 seat Beachcraft 1900.

The CZ stops in Denver and there is public transportation to the airport. I think it is important that this is not just a question of funding long distance rail but in the bigger context it is a discussion of whether we should invest money in transportation to Rural America. If the answer is yes then we need to decide how are we going to make that investment. In some areas Essential Air Service makes more sense - but in others rail service is the better alternative. With Essential Air Service from this small town you can only fly to Denver. With Amtrak you have a choice of going to Denver downtown, connecting to the Denver Airport from there, Going to Omaha, Chicago, Lincoln or several other points along the line. The number of people using the airport versus using Amtrak in this town during 2014 was essentially the same. Since there isn't any bus service these are the only two options for residents of this town other than driving. Driving to is subsidized with miles and miles of paved highways with very few people along the way.

I think it is unrealistic to think of Long Distance Trains as profit opportunities. Rather we need to look at them as an investment in our transportation system and decide if they are competitive with what taxpayers are paying for roads, airports/flights and other means of transportation. The gas tax is not the only tax money used to build and maintain our roads so we need to sit down and do a comparison. That comparison should be inclusive of the benefits to the community, environment, etc. such as providing much needed transportation to the elderly/young who don't like to or can't drive.

My long winded way of saying we need LD rail. We need to invest in our transportation infrastructure including LD rail which is more than a vacation train through nice scenery for a lot of people.

Very nicely put. I encourage you to send a letter with these points to your senators and congressperson, and maybe even to your governor. Letters do make a difference.

 

[cirdan]

Passenger rail can make a profit. For example highly priced land cruises. However these normally operate irregularly and thus provide little benefit to actual transportation needs (as opposed to entertainment needs). In some niche applications trains also turn a profit. I visited Switzerland's Brig Visp Zermatt Bahn some years ago (this was before the merger to form Matterhorn Gotthard Bahn). I was given a tour by one of the managers and he told me that the shuttle trains to Zermatt are definitely profitable. This is of course a niche application as you cannot drive your own car into Zermatt so people who come by car park it and ride into Zermatt by train The only alternative is to hike (actually not as far or as difficult as it sounds) fly by helicopter or have one of the (extremely rare) special exceptions.

 

[WoodyinNYC]

Another way to look at the need for LD trains.

How about Amtrak as a national insurance?

Imagine another terrorist attack on air travel. It could happen, or why are our genitals studied when we pass thru security? If an armed vehicle breaks thru airport perimeter, or a flock of armed drones swoops in, and half a dozen airliners lined up for takeoff take off for Heaven, expect a change. Many people will refuse to fly; the economy will take a shock. Congress will call Boardman to testify and ask, "How much will it cost and how fast can you triple, quadruple, or more the nationwide Amtrak system?

To carry that sad fantasy another step, Amtrak is in far, far better shape to respond now than it was when Boardman took over: Already assembly plants are building new single-level bag cars, diners, and sleepers in Upstate New York and new electric locomotives in California, and are almost ready to build bi-level coaches in Illinois, new diesel locomotives also in Illinois, and soon, for All Aboard Florida, single-level cars in California. Factories have been built or expanded, managers and workers have gained experience, suppliers have been lined up. With very few tweaks to the designs, mostly from corridor car to LD configurations, we have, or will soon have, the capacity to build 200+ new cars a year, compared to zero (0) production capacity before the Stimulus. It would be easier to ramp up production from this new base than to start from the dead stop where we were just 6 years ago.

Some Stimulus investment in infrastructure will soon help in a few places, mostly in the Midwest, in Cali and Washington State, North Carolina and New England. That ain't much.

But apparently some planning work continues. If Congress made the work an urgent priority, more upgrades could be done or at least well begun within a few years: double-tracking most of the St Louis-Chicago corridor to double the frequencies, extending the Vermonter to Montreal, upgrading D.C.-Richmond, rebuilding the short cut Richmond-Petersburg-Raleigh, a handful more CREATE projects in Chicagoland, a Phase 2 for the Cascades Seattle-Portland and then 110-mph upgrades Portland-Eugene, the South of the Lake project to double capacity for the Michigan services and improve reliability and trip times for the Capitol and the Lake Shore Ltd., a new faster route Chicago-Quad Cities-Des Moines-Omaha, lots of little things on Cali's Capitol Corridor/Pacific Surfliner/San Joaquin/Coast Daylight/Coachella Valley/Redding routes, some new bridges on the NEC, and not to forget CAHSR (tho it is not necessarily to be an Amtrak-operated route). And a new fleet of faster, higher-capacity Acelas.

Of course, in the emotion of the moment, certain Senators would flipflop from being anti-Amtrak to demanding more of it. In a patriotic fervor, the Union Pacific would find a slot for a daily Sunset Limited, CSX would allow the Cardinal would go daily as well, and Norfolk Southern would somehow find a couple more slots for the Pennsylvanian to run Harrisburg-Pittsburgh and beyond. LOL. The Palmetto would revert to being the Silver Palm and run down the Florida East Coast to Miami. Trains would run again from New Orleans to Florida. Oklahoma City would connect to Wichita-Kansas City-Chicago.

These and other projects would take from months to years to come on line. Not a problem, since it would take a year or two to get enuff new equipment into the fleet to expand service. But taken together, these projects with 3- to 10-year outlooks could use $20 or $30 or $50 Billion and barely double, maybe, Amtrak's capacity.

Actually, if Congress asked Boardman to more than double Amtrak's capacity, he'd have to tell them, "We'll start now to double it. To triple it or more, we may not live long enuff to see that done."

But the current national system is at least insurance against a disaster; we can build up from what we've got if we have to. Our nation's "Amtrak insurance" would also pay off against a prolonged rise in oil prices, or from a political change decision to deal with the pollution that causes climate change. Pick one. Or pick two. It could happen. That's why we need the insurance.

 

[caravanman]

At the end of the day, Amtrak's purpose is not to make a profit, or avoid a loss, but to provide a train service.

Cancelling every train and firing every employee would stop all losses... not much point in that, as a service provider.

Everyone knows that the reliability of the LD trains is mostly affected by the dispatchers inability to provide a clear run for Amtrak.

Horror story after horror story about timekeeping makes me greatful that anyone takes a train!

Invest in the service... not just new trains, but also passing places, and give passenger trains priority, levy massive fines on host railroads for delays, that would help the figures look better!

Ed.

 

[neroden]

I was given a tour by one of the managers and he told me that the shuttle trains to Zermatt are definitely profitable. This is of course a niche application as you cannot drive your own car into Zermatt so people who come by car park it and ride into Zermatt by train

Passenger trains were profitable right up until massive, government-subsidized roads were built to compete with them. Followed by massive, government-subsidized airports.

It is true that passenger trains can make a profit *if their competition isn't subsidized*. But as long as the government is pouring hundreds of billions of dollars into "free to use" roads (which it is -- it's not even gas tax money, it's property taxes, sales taxes, income taxes, etc.) -- the government should spare a few billions for the passenger railroads, too!

The fact that freight railroads make a profit even with government-subsidized trucking competition is frankly nothing short of astonishing, and shows just how cost-effective and efficient railroads are.

We need more railroads and less roads. At the moment, the subsidies for the roads are so enormous that even if we cut them quite a lot the railroads would still need subsidies.

 

[SurebetVA]

Well said neroden. Most people that are against investing in rail travel fail to understand that we already heavily subsidize road and air travel. It isn't logical to cut all transportation funding because having a good transportation system is one key to the US building the largest economy in the world in the 20th century. The lopsided funding we have now for air and road transportation compared to rail is causing us to have an inefficient and dysfunctional system that isn't going to serve us well in this century. Unfortunately we aren't getting the most return for our dollar because of this.

 

[saxman]

If I want to start an airline, I have to buy one or two planes, rent some gate space at a couple airports, get an operating certificate and bam! I can start an airline going to already built airports use a well established ATC system.,

If I want to start a bus company, I go buy a couple buses, stick a sign in a curb at a couple cities. Perhaps get some approval and bam! I have a bus company running on already built interstate highways.

If I want to start a rail company, I have to buy cars, then lots of land. Spend millions or billions laying track. Build some stations. Oh then I have to pay taxes on the land I use. This or spend millions or billions negotiating with freight companies whom will surely demand just compensation to use and/or improve capacity. Then maybe I can start running my passenger trains. Maybe I'll break even, if I'm lucky.

 

[dlagrua]

The fundamental argument has to do with why government is there and what its role is for the American people. We should expect and have every right to deserve good rail transportation in return for sending $4 trillion of our tax money to Washington every year. No department of government turns a profit and Amtrak represents about 3% of the annual transportation budget. The highways, bridges, tunnels, roads, AIRPORTS and state governments receive the 97%. . Amtrak fares seem to go up every year. Roomettes can cost 100's for one overnight trip and bedrooms can cost over $1000. To raise the prices much higher would be to price the service out of the affordability range of the average passenger. Over 30 million people ride Amtrak each year. The service is vital to the well being of our nation and more ridership needs be encouraged.

 

[crescent2]

Well said, diagrua.

 

[Devil's Advocate]

Theaters don't make money from showing movies, either. They rely on the sale of ancillary businesses like popcorn, soda and candy. So, yes, you can parse profitability however you wish, but diversification is a strategy most businesses use to mitigate their losses.

You seem to be intentionally leaving out the part where the original JR system went bankrupt and was then privatized without the crippling debt. This is the same kind of sleigh of hand that results in claims that airlines are profitable or that nuclear power is cheap. In nearly every case somebody had to go bankrupt first before fake profits could be claimed by the inheriting party.

the freights do and the airlines as well.

I don't mind contrarian views, in fact I support them as much as possible, but your casually flippant posts are both insulting and trollish. It's quite obvious that you haven't reasoned yourself into whatever arbitrary position you're still struggling to articulate so I see little point of trying to reason you out of it. To the rest of the forum, please stop feeding the troll.

 

[WoodyinNYC]

"Don't feed the trolls"? Wait, I wasn't finished. Just that my life interfered. LOL.

Another way to look at the need for LD trains.

How about Amtrak as a national insurance?

Imagine another Oil Shock. It could happen. There are many wonderful people in the Middle East -- and my heart goes out to them, because many people there are full of anger and hate. If the wrong people "lob one into the men's room" at the biggest facility on the Persian Gulf, well . . . gasoline for $6 a gallon? Or more?

Congress will say it's all Obama's fault, but that won't cut it with people paying $6 or $8 or $10 a gallon. So there'd be a big rush to Do Something, and one thing would be to expand Amtrak.

So again consider my list of projects to double Amtrak in a 5-year period. And add the Hoosier State route, where a couple of sidings north of Indianapolis and this and that would cut half an hour out of the trip, for about $200 million. Add the 3-Cs, Cincinnati-Columbus-Cleveland (wonder if the year's worth of planning work was hidden in a closet behind the brooms and mops, or all destroyed by the haters?) Add the extension of the Hiawatha trains Milwaukee-Madison. And for Heaven's sake, build a 110-mph route from South of the Lake to Toledo-Cleveland-Pittsburgh/Buffalo-Albany-NYC. In a real emergency, the Lake Shore route could start to feel as needed as the NEC.

Building on the national system we have, most of the many projects on the wish list could be done in a hurry. If gasoline hits $10 a barrel, we could see new tracks thru the Indiana Dunes National Park, thru wetlands and Indian mounds, run close to schools, and never mind the environmental impact statements, we're in a hurry!

Here I'm talking about insurance against an Oil Shock, due to war or another boycott, whatever. It would apply almost as quickly if "peak oil" actually arrives and oil prices start going up and just don't come down.

If we've shut down the LD lines when the Oil Shock hits, we'll regret it very much.

 

[WoodyinNYC]

Another way to look at the need for LD trains.

Airfares have been creeping steadily upwards. Could it have anything to do with the shrinking number of competing airlines in the U.S.? Lessee, it's Delta, United, American, and Southwest dominating the business. Niche players like Alaska Airlines, JetBlue, Virgin, and a bunch of small players get the scraps.

We know from economics -- or is it from economic history -- that when only two or three players dominate a market, they tend to collude to reduce competition and raise prices.

Fortunately, we also know that just "one more" player can restore competition and lower prices.

Amtrak provides the needed competition.

A year or two back there was discussion here (or on that other similar blog) about the impact the Lynchburger service had on airfares out of Lynchburg. Fares had indeed gone down Lynchburg-D.C./Baltimore/Philly/NYC. I wish we had someone looking at the airfares Norfolk-D.C./Baltimore/Philly/NYC, but my strong hunch is, they've also gone down.

The state of Vermont subsidizes two trains from NYC. They are a valuable service to the riders, help the environment, blah blah. But the state acts like the Ethan Allen and the Vermonter are *really* worth it, like, worth it by helping to keep down airfares to LaGuardia Airport.

And aren't we sure that airfares NYC-Albany would be higher if Amtrak didn't run Empire Service trains every two hours?

When Illinois added two more frequencies St Louis-Chicago, ridership doubled and airlines cancelled flights from Bloomington and Springfield to Chicago. They couldn't compete with the train fares. Today passengers don't fly out of Springfield to go to Chicago. Any flyers are going to O'Hare Airport, to change planes for San Diego or Stockholm, with the puddle-jumper ticket price subsumed in the airfare for the long distance flights.

Apparently Amtrak and Michigan DOT don't expect a really huge jump in ridership Detroit-Chicago when the first round upgrades are finished and knock 50 minutes out of the Wolverines trip time. Maybe a 30% increase. But I'm expecting air fares will drop South Bend-Detroit and Kalamazoo-Detroit where the time savings will kick in. (Westbound we wait for South of the Lake to cut another 50 minutes out of that segment.)

Talking LD trains, the California Zephyr competes with airlines for only a small subset of the market Chicago-San Francisco Bay Area, or, say, Omaha-Bay Area. But it does compete Omaha-Denver. Would airfares rise if Amtrak dropped out of that market? Economic theory and economic history tell us that they surely would.

So Amtrak saves flyers' money in a way we cannot see, and that no one tries to measure, by simply being that "one more" competitor in dozens (or hundreds?) of city-pair markets across the country.

 

[neroden]

You seem to be intentionally leaving out the part where the original JR system went bankrupt and was then privatized without the crippling debt. This is the same kind of sleigh of hand that results in claims that airlines are profitable or that nuclear power is cheap. In nearly every case somebody had to go bankrupt first before fake profits could be claimed by the inheriting party.

I call it 'bankruptcy financing' in the specific case of the airlines and railroads where they were built by companies which went bankrupt, and then scooped up for pennies on the dollar by later "investors". I call it 'sucker financing' in general: for the nuclear plants, the general public is the sucker, and pays through the nose for the nuclear waste cleanup after the fact. :-(
Bankruptcy financing was used to build the Chunnel, in a remarkable scam perpetrated by Margaret Thatcher against private investors. While a nice coup for the government in that case, you can't really expect to use sucker financing in general.

Though it is remarkable how many suckers have invested in airlines over the decades.

 

[VentureForth]

You seem to be intentionally leaving out the part where the original JR system went bankrupt and was then privatized without the crippling debt. This is the same kind of sleigh of hand that results in claims that airlines are profitable or that nuclear power is cheap. In nearly every case somebody had to go bankrupt first before fake profits could be claimed by the inheriting party.

I call it 'bankruptcy financing' in the specific case of the airlines and railroads where they were built by companies which went bankrupt, and then scooped up for pennies on the dollar by later "investors". I call it 'sucker financing' in general: for the nuclear plants, the general public is the sucker, and pays through the nose for the nuclear waste cleanup after the fact. :-(
Bankruptcy financing was used to build the Chunnel, in a remarkable scam perpetrated by Margaret Thatcher against private investors. While a nice coup for the government in that case, you can't really expect to use sucker financing in general.

Though it is remarkable how many suckers have invested in airlines over the decades.

JR never went bankrupt. Their predecessor, JNR, the Nationalized rail went bankrupt. But isn't that what Nixon did? "Buy" (or take over) the NEC and most long distance services? The infrastructure was all there before Amtrak started. It's like JR/JNR in reverse.

Interestingly, I think that the debt from JNR went into a settlement corp that then invested in JR to pay off back debt. Or something like that. It's complicated.

 

[Devil's Advocate]

You seem to be intentionally leaving out the part where the original JR system went bankrupt and was then privatized without the crippling debt. This is the same kind of sleigh of hand that results in claims that airlines are profitable or that nuclear power is cheap. In nearly every case somebody had to go bankrupt first before fake profits could be claimed by the inheriting party.

I call it 'bankruptcy financing' in the specific case of the airlines and railroads where they were built by companies which went bankrupt, and then scooped up for pennies on the dollar by later "investors". I call it 'sucker financing' in general: for the nuclear plants, the general public is the sucker, and pays through the nose for the nuclear waste cleanup after the fact. :-(
Bankruptcy financing was used to build the Chunnel, in a remarkable scam perpetrated by Margaret Thatcher against private investors. While a nice coup for the government in that case, you can't really expect to use sucker financing in general.

Though it is remarkable how many suckers have invested in airlines over the decades.

JR never went bankrupt. Their predecessor, JNR, the Nationalized rail went bankrupt. But isn't that what Nixon did? "Buy" (or take over) the NEC and most long distance services? The infrastructure was all there before Amtrak started. It's like JR/JNR in reverse.

Interestingly, I think that the debt from JNR went into a settlement corp that then invested in JR to pay off back debt. Or something like that. It's complicated.

Now you're just trying to mince words. The Japan Railway system had no chance of achieving profitability without the socialized debt relief that came with privatization. This is not a complicated tactic and is employed by numerous industries that cannot stand on their own two feet without taxpayer assistance.

 

[jis]

Considering that a lot of the US railroad system was built on various private and joint government-private scams with companies repeatedly going bankrupt for various reasons, I don't see the exact logic of complaining about similar schemes being used for airlines.

As we all implicitly seem to acknowledge - every transportation mode needs government support. The issue seems to be how that support is packaged and marketed to the public.

 

[WoodyinNYC]

Another way to look at the need for LD trains.

Airfares have been creeping steadily upwards. Could it have … to do with the shrinking number of competing airlines ...? Lessee, it's Delta, United, American, and Southwest dominating the business. ...

We know from economic theory -- or is it from economic history -- that when only two or three players dominate a market, they tend to collude to reduce competition and raise prices.

Fortunately, we also know that just "one more" player can restore competition and lower prices.

Amtrak provides the needed competition.

A year or two back there was discussion … about the impact the Lynchburger service had on airfares …. Fares had indeed gone down Lynchburg-D.C./Baltimore/Philly/NYC. ...

The state of Vermont subsidizes two trains from NYC. They are a valuable service to the rider ... blah blah. But the state acts like the Ethan Allen and the Vermonter are *really* worth it, like, worth it by helping to keep down airfares to LaGuardia Airport.

...

Talking LD trains, the California Zephyr competes with airlines for only a small subset of the market Chicago-San Francisco Bay Area, or, say, Omaha-Bay Area. But it does compete Omaha-Denver. Would airfares rise if Amtrak dropped out of that market? Economic theory and economic history tell us that they surely would.

So Amtrak saves flyers' money in a way we cannot see, and that no one tries to measure, by simply being that "one more" competitor in dozens (or hundreds?) of city-pair markets across the country.

Updated with more current news:

… The U.S. Justice Department has confirmed it is investigating whether several U.S. airlines have been colluding on expansion plans and other business activities, given concerns … that the industry is trying to control capacity to keep airfares as high as possible.

When contacted by the media, a DoJ spokeswoman said they are looking at “possible unlawful coordination” among some airlines. ...

Posted date:

July 06, 2015

http://www.valuewalk.com/2015/07/airlines-doj-collusion/