Passenger Trains > Passenger train big lie debunked - twice, now

There are now two credible news stories from Europe reporting ongoing passenger train profitability. The Amtrak Big Lie that no passenger train in the world can/does make money is outed.

Germany: http://ccrail.com/more-passenger-train-profitability-german-passenger-train-operator-deutsche-bahn-back-in-the-black/

Sweden: http://ccrail.com/in-sweden-passenger-train-net-profits-soar-38-services-expanding/

Not only are the services profitable, they are expanding.
 

Yeah, well, don't know about Sweden, but here in Germany, the 'profit' is more propaganda than truth.
Let's look at DB German railways:
The net profit of about 0.7 bn Euros has to be compared to the payments that they receive from the German states for keeping up the regional and commuter transit. These amount to nearly 10bn per year, about one quarter of the total turnaround of the company. Additionally, they receive funds for infrastructure maintenance. So, viewed impartially, there's no profit and I don't think there's going to be one in the forseeable future. The truth is that German railways are completely dependent on state and federal funds. That's just a fact and I don't do a judgement here.

Best
Hartmut

Posted from Android

sys3175 Wrote:
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> Yeah, well, don't know about Sweden, but here in
> Germany, the 'profit' is more propaganda than
> truth.
> Let's look at DB German railways:
> The net profit of about 0.7 bn Euros has to be
> compared to the payments that they receive from
> the German states for keeping up the regional and
> commuter transit. These amount to nearly 10bn per
> year, about one quarter of the total turnaround of
> the company. Additionally, they receive funds for
> infrastructure maintenance. So, viewed
> impartially, there's no profit and I don't think
> there's going to be one in the forseeable future.
> The truth is that German railways are completely
> dependent on state and federal funds. That's just
> a fact and I don't do a judgement here.
>
> Best
> Hartmut
>
> Posted from Android
In Sweden the government owns the infrastructure and three freight and four passenger operators utilize the tracks, There  are European Union and local subsidy payments as well. Customer passenger rail satisfaction ratings are in the sixties so obviously SJ (Swedish passenger rail operator) has room for improvement.It is clear that passenger rail in Sweden is not profitable without subsidies and state intervention. 

ALL transportation is subsidized in one waqy or another and there is nothing "wrong" with that....

Bill Deaver
Tehachapi, CA

The reason so many groups want to invest in passenger rail in the USA is because it is so profitable and easy to operate, right?  Always follow the logic.  Capital will be attracted where there is a possibility of earning a return.


Norm 

Norman Orfall
Helendale, CA
TIOGA PASS, a private railcar

Let's talk some real world accounting for a moment.

1) Traditional railroad accounting was designed to assign profits and losses to specific parts of the railroad business, while at the same time sharing the costs of company wide overhead such as headquarters costs, maintenance of way, property taxes, etc.

2) Pre-Amtrak, when passenger trains were operated by the now-freight-only railroads, the passenger trains were judged by the amount of revenue they generated versus the amount of costs they consumed. They were allocated PARTS of the cost of maintenance of way, dispatching, general overhead, risk insurance, etc. They were NEVER judged or held accountable only for things beyond the allocated costs. Now, keep in mind the ICC required many non-commuter passenger trains to be operated as a public utility, which drove up costs against only marginal revenues on many of the branch lines or trains with low load factors which did not serve major markets. The most recent example of the result of this was Amtrak Day, May 1, 1971, where much of the passenger train system disappeared because the Amtrak system designers looked at numbers under a formula set down by Congress as to what routes were allegedly viable, and which routes were not, but had been maintained because of ICC regulations. Before Amtrak, too much government regulation was the primary culprit in killing passenger trains, providing railroad managers with excuses to show why their trains were not profitable. This did NOT mean all passenger trains of a railroad were not profitable, just some of them which dragged down the revenues from others. Also, those were the days of much more difficult union contracts for the railroads, where modernization of contracts was necessary, but it was understandable the unions wanted to protect the jobs and benefits of members. It was a fight with many difficult choices on every side.

3) Suburban/urban commuter services have just about always been subsidized. There is little similarity between running a commuter service and a long distance passenger train service. Commuter services again come more under the heading of a public utility versus a private enterprise. This is true anywhere in the world. No surprise there is some sort of government subsidy. But, again, that has little to do with long distance, intercity trains, other than as a convenient feeder system at some stations and terminals.

4) The rail systems in Europe, such as in Germany and Sweden, may have various subsidies for various things such as commuter service or to assist with track maintenance from the European Union, but, again, in real world accounting things are compartmentalized. It is not possible to say a passenger service is profitable just by making generalized statements. If the accounting system is a true, best-practices system, then EVERYTHING has been taken into consideration before profitability reports are issued.

5) It is time for those who choose to support passenger trains to get off of the victimization bandwagon and look at things how they really are in the world today, and not parrot propaganda from the past from failing enterprises because of inept management or government interference. There are plenty of opinions, but only one set of numbers when calculated using GAAP (generally accepted accounting practices) best practices.
 

johnpage Wrote:
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> 3) Suburban/urban commuter services have just about always been subsidized.

Not gov't subsidized until the 1960's-70's. Before that you could say they were cross-subsidized, like the long distance trains, by freight revenues.

Well, this doesn't mean Amtrak isn't lying about SOMETHING!
SR

MojaveBill Wrote:
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> ALL transportation is subsidized in one waqy or
> another and there is nothing "wrong" with that....

​I used to ride a bicycle which is a form of transportation. I dont remember the government subsidizing my bike. In fact, I had to pay taxes on the purchase of that bike. Is their something "wrong" with that?

The government subsidized the roads, not the bike.

What about the dirt roads Ive been on? Did the government pay for them??

sys3175 Wrote:
-------------------------------------------------------
> Yeah, well, don't know about Sweden, but here in
> Germany, the 'profit' is more propaganda than
> truth.
> Let's look at DB German railways:
> The net profit of about 0.7 bn Euros has to be
> compared to the payments that they receive from
> the German states for keeping up the regional and
> commuter transit. These amount to nearly 10bn per
> year, about one quarter of the total turnaround of
> the company. Additionally, they receive funds for
> infrastructure maintenance. So, viewed
> impartially, there's no profit and I don't think
> there's going to be one in the forseeable future.
> The truth is that German railways are completely
> dependent on state and federal funds. That's just
> a fact and I don't do a judgement here.
>
> Best
> Hartmut
>
> Posted from Android

This statement is generally correct. The "profitablility" is all a matter of framing: where do you draw the lines between corporate entities, who pays how much for which services, and so forth.

Just to clarify Hartmut's picture, some explanation: the German railway system is semi-liberalized. The former state-owned and -operated federal railways of the West and East, the Deutsche Bundesbahn and Deutsche Reichsbahn, respectively, where merged together and the resulting company was semi-privatized in 1994 as the corporate entity Deutsche Bahn AG (DB AG), which was (and still is) state-owned but required to operate "independently". I use quotation marks here because obviously the owner -- the German federal government -- exercises a certain influence over the company, most formally by naming some members to its board of overseers ("Aufsichtsrat" in German, not dissimilar to the Amtrak Board). The stated intention of the privatization in 1994 was to eventually take the company public, which might have reduced this influence had the attempt to do so not been called off at the last minute after the outbreak of the financial crisis some 10 years ago.

DB AG consists of seven major subsidiaries:

• DB Netz, the owner and maintainer of the tracks (similar to Network Rail in the UK, if that helps you), which also sells train paths (slots) to train operating companies (TOCs), including DB's internal operators (see below) and dispatches the network
• DB Station&Service, which operates the stations and the passenger information systems found within them and which furthermore charges TOCs for each station stop of their trains
• DB Fernverkehr ("long-distance"), which operates all intercity trains, those primarily being the ICE and InterCity services; according to German law intercity trains may not receive a subsidy and must operate self-sufficiently
• DB Regio, which competes against other operators for public contracts to operate regional and commuter train services (to which Hartmut referred above, though the actual number is closer to 8 billion euros per year) as well as regional bus transit
• DB Cargo, which operates rail freight services in competition with other TOCs
• DB Schenker, which offers international logistics services (if you see a DB logo in the U.S., that's them)
• DB Arriva, which competes for public contracts to operate rail services outside of Germany (similar to DB Regio) and also operates a multitude of bus systems under public contract throughout Europe

DB Netz and DB Station&Service are both legally classified as "railway infrastructure companies" according to EU law and as such must offer nondiscriminatory access to their facilities (tracks and stations, respectively), for which they charge a fee according to a heavily-regulated tarif system. Their revenue comes from the the combination of the fees charged to TOCs as well as grants from (primarily) the federal government and the EU. Using this revenue, maintenance and development of the network are financed. The federal contribution to maintenance amounts to about 2.5 billion euros annually, which additional funds provided for individual expansion projects.

All TOCs (including DB Fernverkehr, DB Regio, and DB Cargo) must pay these fees in order to use the railway infrastructure in Germany. DB Fernverkehr and DB Cargo must cover all of their operating costs (rolling stock acquisition, maintenance, personnel, track/station/yard access, electricity/fuel, overhead, etc.) through their ticket/freight revenue. If their revenue exceeds the aforementioned costs, you could say they are "profitable".

DB Regio has the same costs but also receives fixed payments (connsumate with the bids submited on the contract tenders) for each train-km operated. These payments come out of the federal budget and are distributed to the states, which set the standards for regional and commuter train services -- including the schedules, square feet per passenger, number of toilets per seat, and so forth. Same goes for DB Arriva, though as mentioned above it only operates outside of Germany.

(DB Schenker is a logistics company, does not operate trains, and is therefore outside the scope of this post.)

So, what's my point? The article linked to above refers to the profitability of the holding company, Deutsche Bahn AG. This profitability includes the profit/loss of each subsidiary, which in the case of DB Netz obviously includes the public funding for infrastructure and in the case of DB Regio the funding for regional and local train operations. One could of course argue that DB Fernverkehr operates profitable trains without subsidy, but this profitability is highly dependent on the level of track access fees charged by DB Netz, for example. It's not difficult to argue that the track access fees would be higher if DB Netz did not receive public financial support for network maintenance and expansion. In other words, yes, the company is profitable, but only in relation to the artificial systems put in place in order to keep things running.

Greetings from the ICE from Berlin to Frankfurt, currently running at 156 mph!

wigwag Wrote:
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> What about the dirt roads Ive been on? Did the
> government pay for them??

Well somebody paid for them. Pretty sure it was some level of government.

And don't forget that, especially in urban areas, there are plenty of paved bicycle facilities that are supported by our tax dollars.

Everything costs something.

aronco Wrote:
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> The reason so many groups want to invest in
> passenger rail in the USA is because it is so
> profitable and easy to operate, right?  Always
> follow the logic.  Capital will be attracted
> where there is a possibility of earning a return.
>
>
> Norm 


The original Obama-era high speed corridors were set up to be privately operated under the Design-Build-Operate process. Several European rail companies expressed an interest ,the rules were tightened to assure that Amtrak and American companies could get a piece of the spending.

Posted from Android



Edited 1 time(s). Last edit at 03/24/17 12:56 by Lackawanna484.

The end result of profit or not most likely comes from a large group of people who want to show their specific answer right or wrong in order to get what ever it is they want to grow, change or go away. Like the term years ago from the play involving the 'flim- flam man' . Or shister if you prefer that term. The process has successfully grown so that you can't find the truth if you had ten people digging with shovels. And most European countries are socialist so it makes no difference anyway over there. Its a wonderful day and sky is always blue there. They do a couple of extra timez and gozentas like Jethro Bodeen that are ony necessary to get the required BS answer.

It must be the non-govt. side because you know the Govt' NEVER lies about anything.

BoilingMan Wrote:
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> Well, this doesn't mean Amtrak isn't lying about
> SOMETHING!
> SR

Oh well the same old story. Who says a passenger train must make a stand alone profit? The airlines say it, even though they get giant secret subsidies. The highway lobby says the same thing as it pockets billions in subsidies Adam Smith might have said it and POTUS may well think it--but he shows his intellectual limits with every high school-level tweet. If Amtrak helps society flow along, like the sod-house dwellers in Bismarck ND, then Amtrak is valuable--to POTUS, because they are the ones who voted for him. Amtrak has been cursed by the Republicans and praised by the Democrats for decades, but the Democrats cut more LD trains than the Republicans. Republican won't cut rual trains because they serve many districts in the hinterlands with little to show for the taxpayer's money than Post Offices. Want to save $$$?  Run one train daily from Chicago to Salt Lake, via Denver, and split it three ways to serve, Portland/SEA, San Francisco and Las Vegas/Los Angeles. BTW, I just heard that POTUS' battle against so-called Obamacare has gone down in flames--shot down by the Republicans. It is one thing to keep 24 million tax payers off health insurance but quite different thing to take insurance away from the 24 million voters who already have it. Same with the LD trains. The Republicans will huff and puff about the cost of LD trains' cost, but they better not take North Dakota's only train off or they will surly loses the sod-buster vote that sent then to a life of luxury and 100% lifetime medical care. 



Edited 1 time(s). Last edit at 03/24/17 23:45 by railwaybaron.

Your point no. 4i s difficult to comprehend . Could you please amplify point you are seeking to make ???

aronco Wrote:
-------------------------------------------------------
> The reason so many groups want to invest in
> passenger rail in the USA is because it is so
> profitable and easy to operate, right?  Always
> follow the logic.  Capital will be attracted
> where there is a possibility of earning a return.
>
>
> Norm 

Oh yeah, that's why the CA. HSR is doing such a great job on building their line and how great they'll be once the system is completed! 

If you would have posted your second post with the original you would have saved a lot of time. I'm not sure why you asked our help when you already knew how to prove yourself wrong. . .



Edited 1 time(s). Last edit at 03/25/17 20:15 by portlander.