Passenger Trains > Amtrak....Could it be done?

I've been reading plenty for years about Amtrak and it's inability to turn a profit. Forgive me for asking ( I don't come to this part of T.O. very often ) but is there any possible way Amtrak could finally be turned around, start making a profit every year and no longer need government funding? Would anyone here like to share their ideas or thoughts on how they'd go about making it finally work and could start making money and increasing ridership if in charge?

No government service makes a profit that I know of: Amtrak, military, education, post office, airports and flight governance, city transit systems, highways, police and fire protection, etc. Why would anyone expect Amtrak to be different? It is a public service that relieves highway and airport traffic in urban areas (Blue States) and often provides the only transport available in very rural areas (Red States). Hence, in spite of the perennial cussing in Congress, it usually gets at least the minimum funding. Wasn't it LBJ who said: "Don't spit in the soup, because we all have to eat?"



Edited 4 time(s). Last edit at 03/06/15 12:36 by railwaybaron.

apollo17 Wrote:
-------------------------------------------------------
> I've been reading plenty for years about Amtrak
> and it's inability to turn a profit. Forgive me
> for asking ( I don't come to this part of T.O.
> very often ) but is there any possible way Amtrak
> could finally be turned around, start making a
> profit every year and no longer need government
> funding? Would anyone here like to share their
> ideas or thoughts on how they'd go about making it
> finally work and could start making money and
> increasing ridership if in charge?

No !!! not possible ... too many variables ... the biggest being they don't own the RofWs they operate over having to make operating payments to host railroads

Posted from Android

railwaybaron Wrote:
-------------------------------------------------------
> No government program makes a profit that I know
> of: Amtrak, military, education, post office,
> airports and flight governance, city transit
> systems, highways, police and fire protection,
> etc. Why would anyone expect Amtrak to be
> different? It is a public service that relieves
> highway and airport traffic in urban areas (Blue
> States) and often provides the only transport
> available in very rural areas (Red States). Hence,
> in spite of the perennial cussing in Congress, it
> usually at least the minimum funding. Wasn't it
> LBJ who said: "Don't spit in the soup, because we
> all have to eat?"

Actually, the post office reported profitability in the early 2000s which was a big mistake. A law was passed few years later to siphon that money, the retirement overfunding you might have heard on the news recently. That profitability was achieved as a result of Marvin Runyon running the organization from 1992-1998. He removed 23,000 management positions, but it wasn't a blind cost cutting maneuver, since he had assembly plant operation experience in the private sector.

If managers are competent, they can function with fewer people since they don't need to build a moat around them ("kiss-ass yes men") to hide their incompetence.

Nope, Joe Boardman does not have Runyon's talent, so Amtrak will not be able to achieve a similar government agency success story while he's in charge. Profitability can only be achieved if organization is effective in achieving its missions, right? Otherwise, it's useless to ask the profitability question.



Edited 1 time(s). Last edit at 03/06/15 10:36 by cchan006.

No. The term 'profitability' has been used by its critics as a way to eliminate any investment in Amtrak. It is a false exercise to try and obtain profitability for a national rail passenger company.

Amtrak management hasn't helped in any effort to quiet its critics, but even a well run, and forward thinking Amtrak would have difficulty trying to operate without any annual investment.

Out_Of_Service Wrote:

> No !!! not possible ... too many variables ... the
> biggest being they don't own the RofWs they
> operate over having to make operating payments to
> host railroads


Sorry, but that doesn't wash. Amtrak can't make a profit on THEIR OWN RAILROAD
(any claims to the contrary are lies).

apollo17 Wrote:
-------------------------------------------------------
> I've been reading plenty for years about Amtrak
> and it's inability to turn a profit. Forgive me
> for asking ( I don't come to this part of T.O.
> very often ) but is there any possible way Amtrak
> could finally be turned around, start making a
> profit every year and no longer need government
> funding? Would anyone here like to share their
> ideas or thoughts on how they'd go about making it
> finally work and could start making money and
> increasing ridership if in charge?

In the early 1990s, Argentine privatized railroads.

This morning, I read an article about Argentina nationalizing railroads. They found that private industry increased cost and reduced service, which is not surprising since the goal of a business is to maximize profit, generally by minimizing service. Argentina expects nationalization to correct that.

TAW

P Wrote:
-------------------------------------------------------
> No. The term 'profitability' has been used by its
> critics as a way to eliminate any investment in
> Amtrak. It is a false exercise to try and obtain
> profitability for a national rail passenger
> company.
>
> Amtrak management hasn't helped in any effort to
> quiet its critics, but even a well run, and
> forward thinking Amtrak would have difficulty
> trying to operate without any annual investment.

Or if it's not used to eliminate funding for Amtrak, it's cracking of the whip to squeeze more revenue out of a government agency to siphon off for other uses. Even highway money is not immune to this shell game.

The grandstanding we witnessed (McClintock) demonstrates that critics actually need Amtrak to exist in order to justify themselves. I dare them to follow through with their threats to eliminate Amtrak.



Edited 1 time(s). Last edit at 03/06/15 11:36 by cchan006.

No, Amtrak cannot possibly be profitable. When the freight roads ran passenger service they ALL LOST MONEY and gobs of it. That's why Amtrak was created, the railroads wanted out of passenger service and Amtrak was how it was done. If Amtrak had a modern, high speed ROW along the NE corridor it might be able to make a profit (the Japanese manage to). But, instead they are hobbled by a 100+ year old ROW. Regularly scheduled long distance passenger service will never be profitable, period.

The Post Office would be an exception - except that it isn't. The Post Office is not managed by the US Government (hasn't been since 1971 - it is now an independent agency of the US Federal Government. To those who think this is a difference without a distinction have never worked in such a situation.

Amtrak is also not managed by the government, and is an independent agency. It is a publicly funded railroad service operated and managed as a for-profit corporation.

And there in lies the problem and the answer. It is incredibly naive to think that as set up, Amtrak could ever turn a profit. Aside from all the accounting rules set up, it is - or should be - evident that a company that was saddled with assets that were already almost 100 years old - could not make a profit from fares.

The question is not unusual, it is painful to see politicians, supposedly knowledgeable in such things, think that. But then, it is just as painful to see politicians and pundits think government can be run like a business. It can't be. To think otherwise is to not be very experienced in the real world (as opposed to the business world - two VERY different things). And this question, is an example of such thinking.

You can answer it yourself, if you (or the pols and pundits) ever thought about it for more than a sound bite. Make a list with three columns. One side, put all the "assets". Another with the costs. And the third with income. Now, in theory, to be profitable, that third column should be more than the first two columns (when the second is subtracted from the first). Is it? Think hard now, take a few seconds. Can it EVER? Come on now...take a minute...maybe two.

Just look at the NEC. Figure out that all that infrastructure is going to have to be replaced - much of it very soon. Think of other "assets" - like Chicago Union Station. It is requiring $12M (which is, in truth, laughably low) for emergency repairs. SOME people think Amtrak can purchase new equipment instead. Laughable again - Amtrak has responsibilities as a landlord. Can not (legally) get out of as things are set up. The lists go on. See all those locomotives in that first column? Yeah, you know, all the ones sitting in shops, in dead lines, etc. (Amtrak gets more utilization out of its fleet (those that actually run)) than any other railroad). Now, slide that figure you have as assets, after multiplying it by a factor of, say 3 - over to the liabilities column. Because, in order to list them as assets, you have to be able to use them, and many need complete rebuilding. OK, now the passenger cars. How many of THOSE need rebuilding? Hmm? Yeah, let's say 10% per year - another liability. When you add it up - and it really shouldn't take more than a few minutes to do this - you SHOULD see that that third column can NEVER be anywhere near to being in the plus when set against the first two. If you can't figure this out, your household budget is a real mess because you never include car maintenance, house maintenance, and other such things - like insurance.

Now...I know politicians can't figure this out. Most pundits could - especially those "business" types that think they know how to run businesses (and yet the two biggest in terms of mouth have led several business into bankruptcy) - figure this out, but it's inconvenient to do so. But people who have actually set up a household budget should be able to to this little exercise. There's no hope for politicians, they're hired for looks and personality - not brains. But, come on man, think it through!

In truth, Amtrak can not be profitable, to think otherwise is ..well...not thinking. And, Boardman, for all the bricks I throw at him - is in an impossible situation. All he can do, realistically, is what he is - collect a pay check, and do everything he can to ensure that paycheck keeps coming. While it's the only thing HE can do, it shows a discernible lack of leadership - a quality missing in all too many such situations.

Now - throw a few tens of billions at it - then see if it can be profitable - that's a WHOLE 'Nother question and not one asked. As is, as set up, as funded - no, it can not.

Let's be fair to Amtrak President Boardman, he is not just interested in getting a paycheck each month, he also has his eyes on a chunky retirement check.

I'm going to break with the crowd and say yes it is possible....If we could roll back 100 years of government intervention. It was profitable to haul passengers way back when the railroad was the only show in town and could charge a high price for the service. Then the government came along and built roads, locks and dams, and airports. The railroads lost because no business can hope to compete when the competition is funded by any form of government. So all they have to do is stop funding the competition and Amtrak will be a money maker. Hey all you asked was it is possible. Well anything is possible....

Now to a more realistic world... To save Amtrak it doesn't have to be profitable. Not even close. All it has to be is relevant. Amtrak needs to grow and get more people. The NEC isn't profitable it never will be but what is has is relevancy. The NEC has enough concentration of ridership that every congressman in Washington would fall over themselves to keep trains running if it came down to a shutdown. That's why Amtrak is always focusing on the NEC because it will never be shut down. The same cant be said for the Long distance train. Saving a train for a couple of hundred people a day doesn't keep a congressman in office. Start talking in the thousands and they will listen.
I think Amtrak shot its self in the foot by pushing for state funding for the corridor trains. There is a chance for real growth in the corridors and as I said before all amtrak needs is more passengers and thus more votes.
Want to save the whole system start running multiple departures on the same route. Daily isn't close to enough.

The real question isnt how to be profitable. The competition doesn't have to be profitable so neither should amtrak. No the question is how to get the equipment and enough railroad to be relevant to the voters and thus congress.

Posted from iPhone

apollo17 Wrote:
-------------------------------------------------------
> is there any possible way Amtrak could finally be
> turned around, start making a profit every year
> and no longer need government funding?

Yeah, at about the same time the commercial airline industry can operate free of taxpayer subsidies and at about the same time that motorists, truckers and bus companies can start driving over roads that they have paid for one hundred percent out of their own pockets as opposed to relying on taxpayer subsidies.

In other words, when pigs fly.

For the life of me, I can't understand why Amtrak is continuously held to a different standard.

Another aspect about Amtrak not discussed is that it's one of the biggest Middle-Class-Wage employers of Black People. Amtrak began with a pact to employ Blacks as a way to get political support for the railroads dropping passenger trains. If the railroads were going to drop trains then a lot of Black porters and sleeping car attendants would be on the street. Their relatively high union pay checks would leave the Black community with a big hole in its pocket. Same today, end Amtrak and the Black community will take a big hit. The social disruption isn't worth the so-called tax "savings". As I wrote before quoting LBJ: "we all gotta eat". In a purely Ayn Rand-style capitalist economy, many, many people of all colors would go hungry because in an automated economy without "public services" they would no longer be needed. I was visiting a high school civics class when the teacher asked the question what the ultimate purpose of computers was. No one got the core answer--to eliminate jobs, so profits would be higher. I recall that the rail industry was the first to computerize--lead by SP.I think that the real Amtrak question before Congress is: at what point do we risk the smoother running of society for the sake of a few wealthy candidate contributors to become even richer? Yep, there is a great desire on everyone's part to be richer. Who said: "I have been both rich and poor and believe me it is better to be rich"? But there simply isn't that much wealth to spread around, so Congress is mandated to try to balance the opposing sides so that there isn't even more social turmoil. Hence conservative Congressmen bellow and cuss about Amtrak "welfare", but in the end they vote for another year of it. The Ferguson's we already have are more than enough, thank you. So, let's just try to IMPROVE Amtrak service, so that more citizens can benefit from the taxes that are going to be spent one way or the other.



Edited 4 time(s). Last edit at 03/06/15 14:38 by railwaybaron.

howeld Wrote:
-------------------------------------------------------
> I'm going to break with the crowd and say yes it
> is possible....If we could roll back 100 years of
> government intervention. It was profitable to
> haul passengers way back when the railroad was the
> only show in town and could charge a high price
> for the service. Then the government came along
> and built roads, locks and dams, and airports.
> The railroads lost because no business can hope to
> compete when the competition is funded by any form
> of government. So all they have to do is stop
> funding the competition and Amtrak will be a money
> maker. Hey all you asked was it is possible. Well
> anything is possible....
>
> Now to a more realistic world... To save Amtrak it
> doesn't have to be profitable. Not even close. All
> it has to be is relevant. Amtrak needs to grow and
> get more people. The NEC isn't profitable it never
> will be but what is has is relevancy. The NEC has
> enough concentration of ridership that every
> congressman in Washington would fall over
> themselves to keep trains running if it came down
> to a shutdown. That's why Amtrak is always
> focusing on the NEC because it will never be shut
> down. The same cant be said for the Long distance
> train. Saving a train for a couple of hundred
> people a day doesn't keep a congressman in office.
> Start talking in the thousands and they will
> listen.
> I think Amtrak shot its self in the foot by
> pushing for state funding for the corridor trains.
> There is a chance for real growth in the corridors
> and as I said before all amtrak needs is more
> passengers and thus more votes.
> Want to save the whole system start running
> multiple departures on the same route. Daily
> isn't close to enough.
>
> The real question isnt how to be profitable. The
> competition doesn't have to be profitable so
> neither should amtrak. No the question is how to
> get the equipment and enough railroad to be
> relevant to the voters and thus congress.
>
> Posted from iPhone

First rate reply and on an iPhone no less! I can hardly type my name on my iPhone. Freight railroads are invisible to the public until there's a derailment. I don't know how it could be done, esp. with today's political climate, but a well run long distance Amtrak - say like Santa Fe in 1965 with that level of frequency of service and quality - would wake up a lot of the electorate. A pipe dream, I know, but freshmen representatives introducing bills to defund the system entirely in the third month of the new Congress is not a positive trend.

railwaybaron Wrote:
-------------------------------------------------------
> Another aspect about Amtrak not discussed is that
> it is one of the biggest Middle Class Wage
> employers of Black People. Amtrak began with a
> pact to employ Blacks as a way to get political
> support. If the railroads were going to drop all
> trains, then a lot of Black porters and sleeping
> car attendants would be on the street. The
> realatively high union pay checks would leave the
> Black community awith the

I'd be extremely surprised if this is true. My guess is that it (railroads and Pullman were among the largest employers of African American people) might have been true as late as the 1930s, but that was an exceptionally long time ago.

Does anyone have any citations on whether Amtrak is among the largest employers of Black and African American people?

Lackawanna484 Wrote:
-------------------------------------------------------
> railwaybaron Wrote:
> --------------------------------------------------
> -----
> > Another aspect about Amtrak not discussed is
> that
> > it is one of the biggest Middle Class Wage
> > employers of Black People. Amtrak began with a
> > pact to employ Blacks as a way to get political
> > support. If the railroads were going to drop
> all
> > trains, then a lot of Black porters and
> sleeping
> > car attendants would be on the street. The
> > realatively high union pay checks would leave
> the
> > Black community awith the
>
> I'd be extremely surprised if this is true. My
> guess is that it (railroads and Pullman were among
> the largest employers of African American people)
> might have been true as late as the 1930s, but
> that was an exceptionally long time ago.
>
> Does anyone have any citations on whether Amtrak
> is among the largest employers of Black and
> African American people?

You want a citation? Just ride a train. Black People make up about 11% of the population, but I have often been on a train with a near 100% Black non-operating crew.

Wowsers. Yep, THAT'S a citation for the original argument alright!! {which was this statement: Amtrak began with a
pact to employ Blacks as a way to get political support.]
-
> You want a citation? Just ride a train. Black
> People make up about 11% of the population, but I
> have often been on a train with a near 100% Black
> non-operating crew.

GenePoon Wrote:
-------------------------------------------------------
> Out_Of_Service Wrote:
>
> > No !!! not possible ... too many variables ...
> the
> > biggest being they don't own the RofWs they
> > operate over having to make operating payments
> to
> > host railroads
>
>
> Sorry, but that doesn't wash. Amtrak can't make a
> profit on THEIR OWN RAILROAD
> (any claims to the contrary are lies).

Geeno i specified ONE reason ... the factors going into NEC profit margins have way more to do than just non payments for owning their own RofW

Posted from Android

yes it could turn a profit.
first thing, advertise and advertise regularly people forget it's their.
also too many high salaries, amtrak engineers are the highest paid engineers in the country, $48hr. not to mention management salaries are thru the roof.