If ever Amtrak is privatized, the New York-Montreal route seems a likely candidate for private passenger service. Not only is this train tied for the highest occupancy rate in the Amtrak system, it has the lowest operating costs. As a result, it is one of only two trains outside the Northeast Corridor that turns an operational profit. Once depreciation and maintenance are included, all Amtrak trains lose money, but private operations could find efficiencies that elude Amtrak and make trains like the Adirondack pay.

Unlikely, unless NY State continues its subsidy. Ticket revenue is $6.3 million, and food and beverage might bring that up to $6.5 million. Meanwhile, it costs $13.6 million to operate including overhead contribution.

If Amtrak routes were determined by markets rather than politics, it would have about the same net revenues per passenger mile and about the same occupancy rates for all trains.

That isn’t correct at all. Just look at airline or bus industry pricing, because railway pricing is done the same way (both for passenger and freight). Routes with different demand and service levels get different price structures. Even on the same route, prices vary by time of day, seat location, overall demand and sales, and capacity. The goal is to charge the full and highest price the traffic is willing to bear, not a uniform per mile price. Politically determined prices would be the opposite – i.e. its always 20 cents per mile no matter where, when or how you are going.

As to costs, they vary in lumpy ways, not linearly, due to factors such as the number of cars or engines per train being a non-linear variable (i.e. one diesel engine is good for up to 6 cars, but when you hit 7 you need two, but you only need two all the way up to 12 or 14 when you need three, etc.), crew size varying in a step function with number of cars, various odd requirements by host railroads (for example, Canadian National mandates a minimum 36 axle train count – i.e. 9 locomotives and cars – for any train on its tracks), types of service offered on board (sleepers and diners vs. coach and cafe only), varying station costs depending on how many on a route must be staffed, run time vs. equipment turns forcing differing equipment requirements, etc.

Moreover, the variables are interlinked in non-linear ways, such that adding an engine to all trains, for example, can let you go much faster and might save an entire train consist of cars in the schedule for a particular line. This saves on passenger equipment costs and maintenance of passenger equipment and crew costs, but it adds costs for locomotives, fuel, track wear, and locomotive maintenance.

Because prices should be market clearing prices, and because costs are non-linear, financial results can vary wildly between lines, or between trains on a line. This is well known in the freight business, where everyone is aware of how much more money grain and chemical traffic brings vs. intermodal and aggregates. But it is also true in the passenger business.

How should Amtrak determine fares? It should charge the highest possible price which will fill as many seats as possible at a rate producing the most overall revenue on a given set of equipment assigned to operate a specific service. On the Northeast Corridor, this means very high priced peak period walk up tickets and even higher prices Acela tickets, but low price advance purchase and off-peak tickets and rock-bottom ten-trip and monthly passes. A person wanting a ticket at 5:05pm at Penn Station NY for a 5:10pm train to get home for dinner should pay a lot and is generally willing to pay a lot – often such a ticket will set one back $120 just to go 90 miles to Philadelphia. But there are not trainloads of such desperate souls, so it also pays to offer monthly passes at $29 per ride to people who are guaranteeing you a filled revenue seat every day, and $50 tickets to people who buy a week or two in advance.

Non-transportation industries work this way also. A hotel might normally charge $150 a night for a room, and $250 for the same room when a big convention is in town, but will also offer you the room at $100 a night if you are going to be in town 5 nights a week for the next 4 months on a project.

The money issue with Amtrak has always come down to high fixed costs on a skeletal network. The costs of crew, fuel, and equipment for a train is generally far less than the ticket revenue derived. On a commuter train, the break-even point can be as little as 50 passengers paying $4 each. But when you start throwing in terminal, overhead, and headquarter costs, the equation gets out of whack because although you can grow or shrink the number of trains you run by 50%, you can’t grow or shrink your accounting system or reservation system by 50%, and you can’t grow or shrink your backshop by 50% to match. Half a diesel shop, or half a ticket agent serves no purpose.

It’s all political! That’s why I don’t understand Mr. O’Toole’s confusion (more like righteous indignation) about Amtrak’s politics. Sometimes I feel like this blog is a perpetual setting up of Mr. O’Toole’s foil, but he never brings it home.

We get it, government sucks at running trains. We never go into detail (“detail” not theoretical hypotheticals) about the logistical, political, social and economic ramifications if we privatize and/or eliminate public transit operations in America.

It’s easy to bitch or get on a soap box and espouse an ideology. It’s a little harder to show how a massive shift in the American paradigm will actually work out. Needless to say, I’m waiting.

It is political, though roads, airports and ports are extremely political too!

1) Estimate short-run average costs
2) Subtract 50-70%, depending upon strength of local Congressional delegation.

Them and everybody else. This is definitely NOT something unique to Amtrak, transit or public institutions.

About 64 percent of the Acela’s seats are sold, which is above Amtrak’s average of 53 percent, while 46 percent of the Northeast regional trains sell. Since many people don’t ride the entire length from New York to Washington, it is likely that Amtrak couldn’t sell many more Acela seats.

Don’t forget that Acela also runs north of New York to South Street Station in Boston, Mass, and some Acelas run “through” from Washington to Boston.

Only two Amtrak routes–the New York-Montreal Adirondack and the New York-Charlotte Piedmont–sell much more than 70 percent of their seats, and they each, for some reason, are able to sell 81 percent.

I believe the North Carolina Department of Transportation (NCDOT) subsidizes the Piedmont (which only runs between Raleigh, N.C. and Charlotte, N.C.)? I belive NCDOT also provides some subsidy to the operate the Carolinian (which runs from Charlotte, N.C. to New York).

Perhaps Amtrak sets the fares on these trains to discourage short-distance riders.

I assume that Amtrak wants its patrons to ride to its “major” stops on the N.E. Corridor in places like Washington, D.C.; Philadelphia; New York; and Boston.

Even though Amtrak is inter-region, not intra-city or maybe inter-county, your comment above is still correct.

I’m admittedly ignorant on the subject of Amtrak, but I certainly believe that intercity bus (and air) service is a viable and cost effective alternative to Amtrak. I’m not sure how Amtrak is structured, how operations are managed or what revenue streams are used most (to be honest, I don’t really care that much), but of course politics play a large role in the determination of fares on public transit.

Amtrak plays a lot of politics to keep the money coming from Congress (both capital and operating subsidies).