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Long-Distance Passenger Trains Are Not Money-Losers!

Amtrak Penalizes its Long-Distance Trains Through Faulty Accounting Method.


Amtrak's accounting system biased against Intercity trains, Amtrak official says
By Doug Ohlemeier, MOKS Rail newsletter editor

OMAHA, Neb. - Amtrak's accounting system penalizes its national long-distance trains, said an Amtrak official addressing a group of National Association of Railroad Passengers meeting in Omaha.

Brian Rosenwald, Chicago, Amtrak's general manager of the Southwest Chief, California Zephyr and Empire Builder, presented a "State of Intercity" talk at the NARP Region X membership meeting.

In a discussion over so-called "money-losing" long-distance trains, Rosenwald said the $120 million that the Northeast Corridor loses a year, outside of the Acela Express, is not considered by Amtrak as critical as losses incurred by the
Intercity trains.

"The accounting system Amtrak uses is moderately distorted against the long-distance trains," Rosenwald said. "Most long-distance trains cover their direct costs of labor and fuel, etc, but that no long-distance trains cover the fully allocated costs of the entire system and overhead. The long-distance trains are not big money-losing services. If you consider all of the allocations of overhead, and that they are a worthy investment for this country."

Rosenwald added that it is a fiction that the West Coast state-supported trains make money.

"The West Coast trains look better on the accounting system because they receive state payments which go to the bottom line," he said. "If those payments are removed, then they have a significant 'loss' as well. All three of my long-distance trains perform better," Rosenwald said. "Corridor operational ratios are poorer than long-distance service."

Amtrak's fully allocated route accounting system, which includes factors such as enormous depreciation, overhead, corporate costs, support centers and retirement, "is an enormous amount of money that ends up sinking the trains," Rosenwald said

"Almost all long-distance trains, except the Cardinal and the Eagle, cover their costs," Rosenwald said.

(NOTE: the writer believes Rosenwald may have meant to say the Sunset Limited but mistakenly referred to the Eagle, due to the Eagle formerly being a tri-weekly train, like the Cardinal and Sunset.).

"Most long-distance trains cover their direct costs, involving labor, fuel, etc., but no long-distance trains cover the fully allocated costs of the entire system and overhead," he said.

"With the fully-allocated cost system, not even the Auto Train makes money," Rosenwald said. "The long-distance trains get penalized for the system's overhead. Under this system, not even the NEC spine can take the overhead and be profitable."

Regarding poor Union Pacific timekeeping and dispatching of Amtrak trains, specifically the California Zephyr, which runs through Omaha, Denver and Salt Lake City, Alan Yorker, the president of the National Association of Railroad Passengers, advised advocates to put pressure on the large corporation by writing and complaining to them about the low priority the U.P. places on passenger train handling.

Since the railroads have launched an advertising campaign to improve their image to the nation, what could be of better timeliness than to write about the carrier's poor handling of its contracted Amtrak trains.

"State how you recently rode Amtrak and how U.P. had a hard time getting the train to move," Yorker said. He said speeds in California have increased in many ways because citizens demanded timely service.

Yorker, an Atlanta psychologist, said legal action is time-consuming. Yorker recommended political pressure from congressional representatives of the states served by carriers such as U.P. might also be an avenue for improvement.

"The Union Pacific's overall operation is not responding to incentives offered by Amtrak," Yorker said. "Maybe it's time we redo the incentives by dangling more money on the high end and stiffer financial penalties on the low end."

By contrast, BNSF earned $21 million in 2001 for on-time handling of Amtrak trains, Yorker said.

In other news, Amtrak's Rosenwald said Amtrak has hired a consulting firm, McKenzie and Company, to conduct a company-wide review of performance issues.

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