Passenger Trains > $2.45B Loan To NEC

The loan, which the White House says is the largest in the history of the Department of Transportation, will be used to buy 28 new trainsets and to improve rails and stations along the Northeast Corridor, according to an announcement from Biden’s office.

http://thehill.com/blogs/blog-briefing-room/news/293515-biden-reveals-245-billion-loan-to-amtrak

Interesting that all this money will go only to the NEC (aka Nothing Else Counts) within "Amtrak"....Boardman's final tip of the scale.



Edited 1 time(s). Last edit at 08/26/16 16:38 by hazegray.

I know that periods and other punctuation are banned in URL but it would be great to see a "245 billion dollar" loan to Amtrak.  (The URL mentioned a 245-billion- loan)

Could probably buy a few superliners with it, some new engines,  maybe introduce incentive payments for high quality work. Maybe even finish the Chicago to St Louis work, but that might break the bank...

Oh it's another "great day for Amtrak".... in the northeast, at least. Yawn. How much could be done for the national system for $2 billion? Do we really need any more high speed trainsets? What's the point? It's not like they're going to go faster than Acela....which has never reached its top designed speed for that matter. Are we going to rebuild the entire NEC to support them? How much more money is THAT going to cost?

IIRC Amtrak has the option to buy 150 Siemens Charger diesels designed for long-distance service. There seems to be a lot of feet dragging because there's "not enough money". Yet the money it would cost to buy all 150 diesels wouldn't even amount to half of this loan! So while the NEC gets new high-speed trainsets that it doesn't really need, the national system languishes with aging Genesis diesels, with more and more instances of "state of good repair" breakdowns and delays. This isn't even mentioning the lack of funding for new passenger cars.

How can you get a loan for something that loses money? Yes, I realize that the NEC is still unprofitable once you account for maintenance, but the Acelas cover their operating costs and then some already, and Amtrak has specifically noted already that the the loan will be repaid through increased revenue, which doesn't strike me as unrealistic based on the trends. But long distance trains still don't come anywhere near to covering their costs. As I recall, the California Zephyr for example loses something like $60 million a year. How does that loss vanish by throwing new equipment at it? Do a dozen new Chargers for $80 million stop the bleeding by saving a few en route failures a year? I don't see that happening.

I'm not saying the long distance trains should be left to wither and die, but the decision is not entirely Amtrak's to make. There has to be some direct money from the government, whether you call it a subsidy or a grant or whatever. Loans aren't going to cut it. The RRIF financing is a competitive program. If they apply for a loan to get new Superliners the person who reviews it will laugh and throw the document in the shredder. Could Amtrak be doing a better job advocating for the LD trains, probably. But I don't see how anyone can say that the Acela order is cannibalizing other parts of the system.

keelhauled Wrote:
-------------------------------------------------------
>As I recall, the California Zephyr for example loses something like $60 million a
> year.

=================================================================

That should be "As I recall, Amtrak claims the California Zephyr for example
loses something like $60 million a year."

There is a difference.  Boardman, with his head in the Northeastern sand, knows that
but his Propagandists have made the most of both this "factoid" and the "Northeast
Corridor is profitable" one.



Edited 2 time(s). Last edit at 08/26/16 17:39 by GenePoon.

It's a loan!  It has to be repaid!  That will impact the bottom line, even if it is at a low interest rate.
New cars for the long distance trains are sorely needed.  Amtrak is literally leaving millions on the table
because they don't have the capacity to meet peak demand.  Yes, there are some costs involved
with the LD trains, labor especially, but they are absolute cash cows for the corporate bottom line.

With the absence of meaningful numbers, it's tough to assert that anything makes or loses money. Certainly not with any credibility.

There was a proposal in the early 2000s that the Acela should be leased out to private operators.  There were expressions of interest, but Amtrak quickly dropped the idea.  Some observers believed that it was a first step toward carving out the NEC which would leave the long distance trains starving. Others saw it as a divide and conquer strategy.

The fact there seemed to be interested parties suggests somebody sees value in the short haul densely populated market with $1.50 to $2 a mile fares.

No matter how much you may wish to trash Amtrak's accounting methods, its pretty clear that LD is a huge money loser when compared to Acela.  Last year 20 Acela trainsets accounted for $535M in revenue, that's $26.5M per set.  The replacements number 28 and will have 30% more capacity.  If that results in 20% more revenue per train set it equates to $32M per trainset.  In comparison, the SWC generated a TOTAL of $50M last year and required something like the equivalent of 8 or more trainsets. 

This ahould about cover the Portal, Susquhanna, and Conn river bridge replacements and not much else.

I believe if you run the numbers, you'll see that the Southwest Chief requires 5 trainsets, which is still a lot of equipment with not a lot of revenue.  But the SW Chief requires very little capital money for infrastructure.

That's where the NEC becomes nearly a bottomless pit.  Yes, Acela Express generates revenues of $1 per mile or sometimes even $2 per mile per passenger, which is far more than a long-distance train generates.  But it also requires the fully allocated costs of stations, catenary, tunnels, bridges, drawbridges, rail, ties, ballast, all built to 135 or 150 mph standards, and all of that is very expensive.  The capital costs of the NEC are enormous.

Yes, the NEC Regionals and Acela cover their operating costs.  But I believe that Amtrak gets something like $400 or $500 million from Congress (which means "us") each year in NEC capital spending.  That's the argument that off-Corridor people are making, that while the off-Corridor long-distance trains and short-distance corridor trains don't generate the revenue that the NEC trains do, they don't have nearly as high the capital costs that the NEC does.



Edited 1 time(s). Last edit at 08/26/16 18:50 by knotch8.

wtsherman100 Wrote:
-------------------------------------------------------
> No matter how much you may wish to trash Amtrak's
> accounting methods, its pretty clear that LD is a
> huge money loser when compared to Acela.  Last
> year 20 Acela trainsets accounted for $535M in
> revenue, that's $26.5M per set.  The replacements
> number 28 and will have 30% more capacity.  If
> that results in 20% more revenue per train set it
> equates to $32M per trainset.  In comparison, the
> SWC generated a TOTAL of $50M last year and
> required something like the equivalent of 8 or
> more trainsets. 

The TrainOrders accounting folks have made it very clear there is no such thing as opportunity cost. So, a train can use 15 superliner cars on a three day trip carrying passengers at 12 cents per mile and somehow be profitable. And a train can make three one way trips (BOS-WAS)  with passengers paying a buck and a half per mile and lose money.

Amtrak isn't organized to focus on yield for its assets. so million dollar assets are held up to save a $30 an hour maintainer's pay.  I'm always amazed at how Delta United Southwest etc keep their aircraft in their air, earning money for 15-18 hours per 24 hour interval. Get 'em in, unload, make a pretense of cleaning and restocking, fuel / load 'em up, and get 'em out earning revenue. Swarm them with mechanics and cleaners if you need to, but get them out and working...


ETA: Knotch8 made the point better than I did.  Amtrak has worked its equipment to the bone, and a lot of it is worn out. With the new state state locomotives coming on line, there will be an opportunity to rebuild old equipment. I can see Wick sending some of the GE equipment to a shop like Roanoke, where they know how to do the work, and he's comfortable with the results.



Edited 1 time(s). Last edit at 08/26/16 18:54 by Lackawanna484.

GenePoon Wrote:
-------------------------------------------------------
> keelhauled Wrote:
> --------------------------------------------------
> -----
> >As I recall, the California Zephyr for example
> loses something like $60 million a
> > year.
>
> ==================================================
> ===============
>
> That should be "As I recall, Amtrak claims the
> California Zephyr for example
> loses something like $60 million a year."
>
> There is a difference.  Boardman, with his head
> in the Northeastern sand, knows that
> but his Propagandists have made the most of both
> this "factoid" and the "Northeast
> Corridor is profitable" one.

Unless you mean to tell me that Amtrak has managed to secretly do what no railroad has done since at least World War II and is in fact operating a consistently profitable network of long distance passenger trains, the exact figures are academic.  The fact remains that no one will loan a consistently money losing business cash merely to maintain unprofitable operations.

Lackawanna484 and I will start a mutual-admiration group.

He's exactly right about the utilization of airplanes vs. Amtrak's utilization of its equipment.  If there's a plane that's not in the air by 8 am, there's something wrong.  It's out there flying all day, making 30-minute or 1-hr turns, and not seeing servicing until night.  Amtrak is completely the opposite.  I've been told by friends that routine preventive maintenance is performed during the day, not getting a jump on it by working on it at night.  We saw someone else on here say that when the Capitol Limited arrives in Washington in the early afternoon, it's not worked until the morning shift the next day, so that anything serious that's wrong usually can't be fixed, and the outbound train goes short a car or it waits for that day's inbound Capitol Limited to arrived in Washington, switch a car out of it, and have a late outbound.  Today's Silver Meteor arrives in New York at 11 am and doesn't depart until the next day.  Under private railroads, it turned in New York in 4 1/2 hours.  Even under Amtrak, it turned same-day in 5 or 6 hours, but no longer.  No one seems to think that a set of equipment has value. Everyone only looks at the costs of things - the inspectors, the cleaners, the bare-bones commissary staffing - and no one looks at the value of the equipment and the revenue it could generate if it was operated more efficiently.

>  The fact remains that no one will loan a
> consistently money losing business cash merely to
> maintain unprofitable operations.

Of course someone will.  The FRA/US Government will.  

"Loan."  Yeah, right.  I'll wait here on Trainorders for the notification that the loan has been paid off.  Why don't we all just admit the obvious that it's an investment in Northeast transportation?  That's what it is, and that's fine.  The Northeast needs it.  But what's different recently is that the Northeast is getting its funding while the rest of the country is being stiffed.  It used to be that the Northeast got its big-ticket funding for infrastructure and equipment, and the long-distance and local corridor trains got some money, and everybody was happy with what they got, more or less.  But PRIIA, largely written by Amtrak for FRA and Congress, changed all of that, so that the off-Corridor states have to pay complete costs for trains in their areas, while the NEC states continue to get a free ride.  It doesn't seem right.



Edited 1 time(s). Last edit at 08/26/16 19:11 by knotch8.

keelhauled Wrote:
-------------------------------------------------------
> Unless you mean to tell me that Amtrak has managed
> to secretly do what no railroad has done since at
> least World War II and is in fact operating a
> consistently profitable network of long distance
> passenger trains, the exact figures are academic.
>  The fact remains that no one will loan a
> consistently money losing business cash merely to
> maintain unprofitable operations.

The NRPC is the national rail system for the United States of America. It is a public good. Full Stop. Its purpose is not to be profitable. Its purpose is to provide a public, nationwide service to America. Just like the Interstate System. And our canals and harbors. And the FAA (whose existence makes airline profitability possible at all). Shall we go on?

So let's drop this nonsense about Amtrak "profitability" and LDT "profitability." It is misguided, disingenuous, and shows a fundamental lack of understanding about Amtrak's role in America. 



Edited 1 time(s). Last edit at 08/26/16 19:28 by ColdRainAndSnow.

ColdRainAndSnow Wrote:
-------------------------------------------------------
> keelhauled Wrote:
> --------------------------------------------------
> -----
> > Unless you mean to tell me that Amtrak has
> managed
> > to secretly do what no railroad has done since
> at
> > least World War II and is in fact operating a
> > consistently profitable network of long
> distance
> > passenger trains, the exact figures are
> academic.
> >  The fact remains that no one will loan a
> > consistently money losing business cash merely
> to
> > maintain unprofitable operations.
>
> The NRPC is the national rail system for the
> United States of America. It is a public good.
> Full Stop. Its purpose is not to be profitable.
> Its purpose is to provide a public, nationwide
> service to America. Just like the Interstate
> System. And our canals and harbors. And the FAA
> (whose existence makes airline profitability
> possible at all). Shall we go on?
>
> So let's drop this nonsense about Amtrak
> "profitability" and LDT "profitability." It is
> misguided, disingenuous, and shows a fundamental
> lack of understanding about Amtrak's role in
> America. 

+1       

​However, there are those that are changing Amtrak's role.  How far have they gotten?  Well, any interstate train under 750 miles must now be paid for by the states.  That flies in the face of a connected, national network.  Where is this going?  And how to we stop it?

Lackawanna484 Wrote:
-------------------------------------------------------
> Maybe even finish the Chicago to St Louis work, but that might break the bank...

Well, the State of Illinois needs a bailout very badly.  I'm sure our politicians could divert to other things such a substantial portion of even a $245 billion loan (using methods they have perfected over the years), that too little would be left over to actually finish the railroad.

More seriously, though, the thread has drifted a bit, and we seem to be back to the problem that no one has decided whether Amtrak is "America's Intercity Public Transit Agency" or a Travel Industry company like American Airlines or Princess Cruises.  This is even seen in the choice of Amtrak's presidents, some of whom are ex-Public Transit people, and some of whom are ex-company executives.  In the NEC, of course, it is also an infrastructure provider (like Network Rail in Britain), further confusing the issue as illustrated by the comparisons with the FAA and the Interstate Highway System, supra.

What we really need is a profitable Pennsylvania Railroad to run the whole NEC, providing infrastructure, equipment, freight trains, intercity passenger trains and commuter trains alike, like in the 1920s but with today's technology, and with scant taxpayer support.  Solves a lot of our problems, doesn't it?  I bet they'd have built more tunnels under the North River by now, too.

 

ColdRainAndSnow Wrote:
-------------------------------------------------------
> keelhauled Wrote:
> --------------------------------------------------
> -----
> > Unless you mean to tell me that Amtrak has
> managed
> > to secretly do what no railroad has done since
> at
> > least World War II and is in fact operating a
> > consistently profitable network of long
> distance
> > passenger trains, the exact figures are
> academic.
> >  The fact remains that no one will loan a
> > consistently money losing business cash merely
> to
> > maintain unprofitable operations.
>
> The NRPC is the national rail system for the
> United States of America. It is a public good.
> Full Stop. Its purpose is not to be profitable.
> Its purpose is to provide a public, nationwide
> service to America. Just like the Interstate
> System. And our canals and harbors. And the FAA
> (whose existence makes airline profitability
> possible at all). Shall we go on?
>
> So let's drop this nonsense about Amtrak
> "profitability" and LDT "profitability." It is
> misguided, disingenuous, and shows a fundamental
> lack of understanding about Amtrak's role in
> America. 

I don't dispute any particular point. In fact I expect we agree that Amtrak shouldn't even be forced to resort to taking out loans for major infrastructure projects at all.  But the point I was trying to make is that so long as Amtrak doesn't have a capital budget several times larger than what it is currently, it is likely that financing improvements via debt is all we can expect for now, and in this particular world some projects are more feasible than others.  And I don't buy for a minute that improvements in one part of the country should be contingent on similar investments in the rest.  Something is always better than nothing.

The NRPC is an acronym that stands for the National Railroad Passenger Corporation. We seem to have some very confused people out there that think the N stands for NEC rather than NATIONAL. Those of us in the West insist that these people smarten up, and smarten up quickly. Investments are badly needed off the corridor too. Right now.

With the exception of some state funded corridors like in California, you could do away with the national system today and the overall affect on road traffic would be negligible or nil.  

You do away with the NEC and the traffic nightmares at the airports and on the roads would be momunental.  

As much as I like a national netowrk, I do understnad the historical differences in infrastructure that led to the NEC being indespensible.  And the long distance trains, while important to some communities, could and have gone away and while missed by the riders they ahve do not change the poverall travel picture.  

I doubt that the loss of the Desert Wind, for example, was even measureable in Vegas.