What Do The Long Haul Trains Really Cost?   January 14th, 2014

By Andrew Selden, President, Minnesota Rail Passenger Association

The great Amtrak myth is that long distance trains cost a ton of money (one recent report we saw, which loaded them up with shares of every cost imaginable, including NEC costs and all the non-cash ones like depreciation of fully-depreciated Superliners, alleged a net loss last year of more than $600 million).

But this persistent myth has a few issues. First, all of Amtrak’s claims are unsupported. No objective, independent, review has ever been made of Amtrak’s phony route-specific numbers. Worse, these internal profit and loss claims are NOT part of the audited annual financial statements, so they are intrinsically unreliable. Third, the costs are drawn from Amtrak’s deeply-flawed internal cost accounting system, which cannot and does not measure the costs of discrete activities but instead allocates costs out to particular activities using formulas made up by management. And, Amtrak constantly changes the accounts and the allocation rules, so the claims are not consistent or comparable from one year to another.

Independent analysis by the US DoT about ten years ago pegged the annual cash cost to the government of all of the long distance trains at about $100 million (about 10% of that year’s subsidy). Recent study by URPA pegs the current cash cost at about $200-250 million, which is consistent with the DoT analysis.

Recently, we discovered that even Amtrak doesn’t believe its own internal numbers. In a letter to a US Senator dated 8/15/11, a senior officer of Amtrak, answering a question about the financial burden of the long hauls, said: “… [T]he final net reduction in operating costs [if all the long haul trains disappeared, and after labor protection ended] would be modest due to the fact that many of the costs associated with long-distance services are shared with other parts of the national network and would remain in the absence of the long-distance services.”

“…[W]ould be modest…” is not $600 million or any other made-up big number. “Modest” suggests a cost close to our assessment that the long hauls as a group make up about 12-15% of the annual subsidy, and that the vast majority of the subsidy is used instead to prop up the NEC and some of the regional short corridors.

NOTE: This report is from the January, 2014 MinnARP News

This entry was posted on Tuesday, January 14th, 2014 at 12:39 PM and is filed under Commentary.