Quick Note: Zombie Myths About Amtrak And Profitability

Greater Greater Washington has a post up invoking almost every myth Amtrak and its backers use to argue that the National Railroad Passenger Corporation is actually doing okay. Of those, the single worst is about finances: “Amtrak nevertheless covers over 80% of its total costs through revenue from passengers, whereas most of the world’s passenger train operators fall in the 50% to 60% range.” The link sends us to an Amtrak page that states revenue and expense numbers leading to a 67% operating ratio and contains the following lie:

In FY 2010, Amtrak earned approximately $2.51 billion in revenue and incurred approximately $3.74 billion in expense. No country in the world operates a passenger rail system without some form of public support for capital costs and/or operating expenses.

Until Japan, Hong Kong, and Singapore are erased from the face of the Earth, this statement is trivially false even in its weakest reasonable form; in those countries the government constructs many lines but then charges the private operators market rent. The JRs get no slack from the government: recall that the notion that the government wiped their Shinkansen construction debt is a myth. But even in Europe, intercity rail is profitable. Those profits are net profits, counting depreciation and interest on capital (often obliquely, e.g. SNCF’s LGV construction interest shows up as tolls to infrastructure owner RFF), which Amtrak prefers not to in order to boost its farebox recovery numbers.

The GGW post has worse whoppers than the Amtrak page does, but the one about profitability is the worst: not even Amtrak dares claim it has better finances than the world’s major passenger railroads. But there are others. One is about seat occupancy: the blog claims “Amtrak still manages to fill most of the seats it carries between Washington, New York, and Boston on both on Acela Express and Northeast Regional services”; in reality, while Acela seat occupancy is 60-65%, Regional seat occupancy is about 45%, both figures coming from comparing per-passenger-mile and per-seat-mile finances in Amtrak’s monthly reports. Another is a general claim that Amtrak is at capacity because Penn Station is; in fact, Penn Station itself has ample unused capacity, and even the North River Tunnels could support a few more trains per hour with better signaling.

The only myth missing from the post is the one that states Amtrak has majority share of travel in the Northeast Corridor; in fact, Amtrak only has majority share of the air/rail market, and its Vision claims 89% of present travel is by road. This myth I believe is a product of honest confusion; it’s simply easier to talk about mode share without specifying that it’s just air/rail, and there’s much more literature about air-rail competition than competition with roads, leading people to conflate the two. Here Amtrak is actually more honest than JR Central, which only states air/rail shares and ignores highways. My own preference is to make it clear which share I’m talking about, to prevent such misunderstanding.

8 comments

  1. Joseph E

    “while Acela seat occupancy is 60-65%.”
    Are you referring to maximum seat occupancy, or average seat occupancy, on each train?
    If 100% of the seats are full in the middle of the line, but people get on and off about equally at each station, only a small fraction of seats will be full at each end of the line. But if everyone wants to go to the middle (i.e. New York), that 100% seat occupancy at one point in the line is an important consideration.

    BTW, I’ve been rechecking every few minutes in anticipation of a new post. A consistent daily posting schedule is very addicting.

    • Alon Levy

      Average, i.e. total passenger-miles divided by seat miles.

      The issue with 100% of the seats being full in the middle isn’t too applicable to either half of the NEC, because the largest markets tend to be end-to-end. On the northern half, NY-Boston is the dominant market, followed by NY-Route 128 and NY-Providence, so most ridership is end-to-end or close to it; on the southern half, NY-DC is the largest market, NY-Philly is a very close second, and Philly-DC is a distant third, but don’t forget that there are fewer seats south of Philly than north of it because of the Keystone trains.

      • Joseph E

        If most trips are going to or from New York, then I would expect there to be more empty seats heading out of New York in the morning, and heading back in the evening. Even though intercity trips are more bidirectional than local transit, there is still some effect by time of day, which will tend to make the trains most full on one side of the main trip generator (i.e. New York), which can quickly lead to 50% of seats being empty even though there is no room in the popular direction.

        But even if that isn’t happening, we still expect half the seats to be empty on average. In a situation where every station has an equal number of trips to every other, the trains will always be almost empty near the each end of the line when they are full at the middle. Having strong destinations at each end (e.g. DC and Boston) helps, but if the biggest destination is in the middle (New York) you will still get this effect.

        As you said yourself, Japan’s Shinkansen has about the same load characteristics, with 45% of seats occupied on average, and it’s a profitable, market-based service.

        To know if the NE corridor trains really are “full”, we need to know the max seat occupancy, not just the average. If that’s less than 100% at peak hours, then you are right, there is room to grow (without buying more trains). Is there any way to get that information, by looking at boardings at each station perhaps, or is the data not available from Amtrak?

        • Alon Levy

          Well, the 45% full Shinkansen services are not those that are at capacity; the services generally considered to have maxed out, the Tokaido Shinkansen and the TGVs using the LGV Sud-Est, are at 70%. The existence of 70% occupancy on Tokyo-Shin-Osaka, which has a clear big dog in Tokyo and a strong morning peak toward Tokyo, suggests that more than 45% is possible. Of course, it doesn’t mean 45% is necessarily unprofitable – my point is that “Amtrak fills most seats” is wrong.

          Naturally, the above paragraph is just speculation. One reason I suspect there’s not a big peak is that there aren’t additional runs in the peak on the Regional – the densest service frequency is trains leaving DC between 3 and 4 pm – whereas there are many peak-only Kodama runs. Amtrak prices commuters out, whereas the Shinkansen makes lower fares available with unreserved seats. Trenton-New York is $1,008 a month, and $56 one-way walk-up in the peak; the distance falls between Odawara-Tokyo ($31.30 one-way unreserved, $38.40 reserved, $705.70 monthly) and Atami-Tokyo ($35.70, $42.80, $830.40, respectively). In addition, when I just now checked schedules and fares for Amtrak trains tomorrow, none was sold out.

  2. anonymouse

    Well, I can tell you why the load factors on the Regional are the way they are: because service on Monday-Thursday is almost exactly the same as on Friday, both in terms of level of service and train consists. If they ran fewer trains on those days, they’d have higher load factors, but probably lose ridership. And I guess they don’t really care to re-form the trains twice a week. But there’s nothing wrong with relatively low load factors on trains: it means that if there’s a large group that wants to travel, they can easily fit on most trains, and if a train gets cancelled, the passengers can easily fit on the next train. Unlike a bus, it’s relatively hard to run an extra train, or even to couple on more cars to a train, especially on short notice.

    • Alon Levy

      Look, I’m not saying it’s a horrible thing that the load factor is 45%. It’s the same load factor as that of THSR and the Shinkansen lines other than Tokaido, and marginally lower than the ICE’s 50%. All I’m saying is that people should not say Amtrak fills most seats on the Regional.

      For purposes of group travel, last-day premium-fare business travel, and so on, SNCF prices TGV tickets to keep the load factor at 70%. SNCF has more service for the weekend peak than on weekdays, but not by a huge amount; a check of Paris-Marseille schedules shows 19 vs. 17 trains.

  3. Stewart Clamen

    Quick comment from a Alon Levy fanboy: Love how your “Quick Notes” run 500 words.

  4. Pingback: Quick Note: Amtrak’s Rolling Stock Shortage | Pedestrian Observations

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