Why doesn't Amtrak charge what it costs to provide it's service

Please remember that not a single passenger caring rail system in the world, outside of tourist lines, could ever make a profit by solely hauling passengers.  They are ALL subsidized by their respective governments, in order to provide AFFORDABLE transportation for the public. If Amtrak charged their customers the TRUE COSTS, there would be not a single person able to afford such ticket prices. 

Posted by Hot Water:

 

Please remember that not a single passenger caring rail system in the world, outside of tourist lines, could ever make a profit by solely hauling passengers.  They are ALL subsidized by their respective governments, in order to provide AFFORDABLE transportation for the public. If Amtrak charged their customers the TRUE COSTS, there would be not a single person able to afford such ticket prices. 

You are quite correct in the above statement Hot Water.  But, I would add the same thing applies to Airlines and Passenger cars.  These are all highly subsidized services by every government.  We would not be able to afford Airline tickets if we had to pay the cost of building the airports or paying for the FAA. The same applies to driving our automobiles on the vast government supported highway system.

Now we do pay for these items in our taxes but we don't think about it as a direct cost of our driving or flying.  The railroads started out building and paying for their own infrastructure and it has been a bane to its current existence.  Only in these last few years has the federal government attempted to up the investment in rail service because some politicians believe it is for the betterment of our well being and future.  That effort has been widely attacked and the budgets have been very badly slashed. 

Not to mention that all forms of commercial transport are subsidized, don't let anyone fool you. The airlines operate both with direct and indirect subsidies, for example, if the airlines had to pay for the FAA and the air traffic control network, the cost of flying would be a lot more then it is now. Likewise, most airports are operated by government agencies, and the amount the airlines pay for the right to have gates at an airport cover only a portion of the costs (for example, in the NYC area, the airports are operated by the Port Authority,and much of the money to operate the airports comes from other revenue , mostly tolls on its bridges and such, plus there are government subsidies).  

Buses likewise are subsidized, if they were charged road use taxes based on the damage they cause roads (much like trucks), buses would be a lot more expensive, and their use of bus terminals is likewise subsidized, and bus routes often have direct subsidies as well (for example, the commuter bus I ride is private, but they are paid by NJ transit to run the routes). 

It would be a lot more than 20%, one figure I read said last year Amtrak took in 1.9 billion in ticket sales, 1.4 billion in subsidies, and still lost 1 billion...which means its total costs were 4.3 billion, so less then half its revenue came from ticket sales, so if we are going to balance the books, ticket prices would need to double and still wouldn't quite balance. 

I have read the critics of rail travel, some of it is right spot on, some of it misses the point. Part of the problem is that we maintain rail service that makes no sense financially, long distance rail travel may make no sense compared to flying, but on shorter journeys I would argue differently. Sure, intercity highway traffic is generally not bad, but when you are travelling from NY to Boston, there is traffic at both ends to worry about, then parking, and so forth. Likewise, saying 'flying is faster' is kind of a misnomer, when you take an airplane you have to get there 2 hours early for security, get through the lines, probably leave home at least an hour earlier (now three hours with security time), then when you get to where you are have to either arrange ground transportation to the city. If you take a train, you are going city center to city center, and the total time is going to be much less. 

The real problem with Amtrak is that it is not really its own railroad, it depends on the trackage of freight railroads, and for many of its routes it probably doesn't pay to try and build new infrastructure. For long distance train travel to work, you would need the Chinese bullet trains, which again raises questions about cost versus benefit. They probably would be better getting rid of the long distance routes that stop at every little town, and concentrate on profitable intercity routes, but not likely to happen, many of those who complain about Amtrak will be the same people whining when their town no longer has train access *shrug*. If the rail was on key intercity routes, where the total time for airline versus train might be competitive, and the trains had decent infrastructure, it might work, and might even be better run privately with some subsidies, but it is not likely to happen. I will add that taking a train is distinctly more human then airline travel, unless you are rich enough to afford first class, airline travel resembles a third world bus route, perhaps without the chickens and goats on board. 

To all above  ,,  great posts,  thanks for the insight.

I read that airlines are subsidized to fly to remote cities such as Ely, Nevada.  The yearly subsidy is about $1,000 per passenger.  Ely is in the home state of the Senate Majority Leader.  Other states have the equivalent airline subsidies.  Nearly every Congress person who complains about a subsidy has one in his or her own backyard.  

Joe 

Originally posted by bigkid:

 

airline travel resembles a third world bus route, perhaps without the chickens and goats on board. 

I have sat on a tarmac for 4 hours and today I sat on a delayed train for 4 hours.  I had no goats sitting on the train but after that 4 hours on the plane it was filled with chickens and mostly goats.....  Best statement of the thread.

Why doesn't Amtrak charge what it costs??

Simple. (I'm actually surprised you had to ask this, assuming you're not a 17 year old):

Because people WON'T PAY THAT PRICE.

I mean...really? You couldn't figure out the answer on your own?

Good thread with interesting answers.  I like Amtrak though - glad we have it.

All of you have my posting wrong. I said that Amtrak should charge only the sleeping car passengers and the for the service and food cost in the dining cars what it cost to provide the service which I was told by an Amtrak manager a few years ago would add about 20% to the ticket price for a sleeping car room and for food and service in the dining car. The cost to the coach passengers and the cost for food in the lounge car would still be below cost and subsidized as it is now. According to one of my two U.S. congress persons many in congress want to do away with the sleeping and dining car service unless they can cover the cost of the service they provide. Why should taxpayers subsidize the cost of providing sleeping car and dining car service when there are coach seats and food service in the lounge cars?

As I said, my wife and I have been traveling with Amtrak and Via Rail Canada since 1978 and on all of the overnight trains we take a room in the sleeping cars and eat in the dining cars and love it but this is an option that those why don't should not have to pay for. Please respond to these two issues only. Thank you.

So, Ed .... what is your experienced opinion of present day sleeper car service on Amtrak? Its something I've always wanted to do.

My only Amtrak trips have been on the Adirondack between NYC and Montreal .... all of which I thoroughly enjoined.

I, too feel that sometimes we give up too much in our quest for rock bottom prices in America.

SMD4 Steve .... perhaps you should carefully read the OP's post before insulting people.

And, I too ... am willing to pay a little more for a different flying experience. Here I am at the gate at Newark Liberty International Airport .....

Also airline passengers who pay to fly first class more than cover the cost for the service provided to then (food and drinks, etc.) so Amtrak should charge not to do the same thing but to just break even of the cost of service and food to these who choose to use these services.

To EBT Jim:

My experience with sleeping car service the last time we traveled on our trip to   Roseville and Burbank, CA. and return to New York State in 2012 was as it has been in the past, nice as it was in the dining car also. We were on a total of 7 different trains 5 of which were 1 or 2 overnight trains. I have an Amtrak Mastercard and with the points from using the card helps cover most of the cost of our Amtrak and car rental costs.

So the railroads weren't subsidized??

From 1850-1871, the railroads received more than 175 million acres (71 million ha) of public land - an area more than one tenth of the whole United States and larger in area than Texas.

Amtrak goes no where I want to go.    I don't go to major city centers.    I go to many rural places.   I don't got at 3 am or once a day, I go when it is convenient and easy for me.   IE, I don't want the government to dictate when where I travel.

I think the subsidies for public transportation are all a disgraceful use of tax dollars.   If "public" transportation is worth anything, it worth paying for.   Let the users pay for it.   Not only sleeping cars, but coaches also and light rail and whatnot. 

This is an interesting comment.  I would, honestly, like to know what it is a waste of taxpayers dollars to fund public transporation, but not public infrastructure like roads and bridges?

Jim

Roads an bridges are used by everyone potentially.    Why should people in Iowa or Nebraska be asked to fund the traveling desires of those jaded people who want to live in NYC or LA or other huge cities.    They want the access to the bars, the nightclubs, the girlie spots and they want subsidized transportation to work and the other places they go.   Why should the rest of the country pay for it?    If you want to live in those places, fine, but why do the rest of us have to support you doing it?   If you like it, buy it, if you can't buy it, it must not be worth it to you.

I would bet that a major portion of the funding for the roads and bridges that are built in places like Iowa and Nebraska come from federal funds.  Do you consider it to be fair to the folks who live in large urban areas, like NYC and LA to have their taxes pay for the transportation needs of rural American, but not urban America?

A lot of public transportation, like commuter trains and commuter buses are funded in part, to keep additional cars off the highways, as it is often a cheaper alternative to building additional roads.

Jim

p.s.  I don't know a lot of folks in NYC or LA, but the ones I do know, use public transportation to get to work, school, doctors appointments, and other normal everyday activities, and not to just go out to bars, nightclubs, and girlie shows. 

Yep, this is what is the myth that has been propagated out there, that people in rural areas pay for everyone else, how it isn't fair that federal money is used to subsidize urban transit, how they have to pay for everything and get nothing......so many things are federally subsidized that people don't even bother to look at. 

The answer to the question is that the various subsidies are there because it benefits the entire country, or at least you hope so. The percentage of road construction and maintenance that is paid for by Uncle Sam versus the states is not uniform, federal money for roads as a percentage is higher in some states then others, because the states cannot afford to maintain the roads the way a larger, more prosperous state can.We spend 10's of billions on farm subsidies to guarantee that food is affordable (not always wisely spent, but whatever), and their is crop insurance subsidized by the federal government so farmers won't have happen what did in the dust bowl. Education spending funded by the federal government averages 9%, but some states get between 25 and 30% of their total budget from federal funding, while more well off states get a couple of percentage points. Having good highways and roads benefits people who live in rural areas, but it also means trucks have the ability to ship goods. Trucks road use taxes pay a fraction of the actual cost of them using roads, but this is done to make trucking economically viable which is considered a major need of our national economy.

The area where I live in, we get back roughly 65c on the dollar we give into the federal government, which subsidizes other states and their needs, many states, especially some of the more rural ones, get close to 2 bucks back for every dollar they kick in. 

And if you want to see the difference, talk to people who live and work in the Atlanta area about the cost of no transit, my company's HQ is in Atlanta, and the workers in the office go through **** because the roads are so bad, and there is no alternative. By having good transit in NYC, for example, businesses in the city can draw on people from a large area and get the talented workers they need, and transit means it is easy for them to get to the jobs, and the amount spent on transit subsidies is probably multiplied 5 or 6 times by the added taxes from what those workers do and the taxes they generate, which also helps pay for things elsewhere. 

I heard Mitch McConnell the other day talking about people depending on the government, etc.....yet I don't hear him saying we should sell off the TVA and other federal dam projects to private power providers. Why? Because the auto manufacturing plants and other industry in his area are there in large part because TVA generates power and sells it at cost, which is less then half of what a private power provider would charge, and he knows if that happened, his area would be a lot less attractive. Farmers have power on their land and cable tv and internet hookups because the federal government subsidizes it, no power company is going to lay miles of wire or coax or fiber to support a couple of farms.....

And like I said, I bet if they rationalized Amtrak to only serve where there is significant need, which primarily would be intercity runs, you can bet a lot of people who lose service would be claiming how unfair it is when it is gone. And yep, airline travel is subsidized to guarantee service to lightly populate regions, when they deregulated the airlines, the subsidies came in the form of fixed airfares set by the government which were high enough that it subsidized being forced to cover lightly traveled areas. In theory, there are a lot of places that shouldn't have direct air service, but do, because the government subsidizes it; why should people in big cities, where airline travel is heavy and profitable, subsidize rural areas having service? Because there is an interest for the country as a whole in doing so, the economics of one place affect another, the well being of people in one place should be the concern of another, it is what is known as being a country. 

As far as going to bars, clubs and girlie shows/strip clubs, given the size of NYC there are relatively few strip clubs, I have been to places out in the heartland, the larger towns,or somewhat large towns in Texas, and they had a lot more strip clubs per capita then NYC does, you would drive down the main highway bisecting the town and you would see a bunch of strip clubs....

I said that I wanted comments the only were about Amtrak charging what it cost to provide the service for sleeping cars and dining cars not making a profit but just to cover the costs of these services. Coaches and lounge cars with the snack bars that sell sandwiches, salads, snacks, and drinks still being subsidized. Thanks to all of you for going off into different directions. I will again press Amtrak and The American Association Of Railroad Passengers for comments and maybe this time I can get the answers in an looking for.

Even with the clarification, the answer is still the same:

Because people won't pay that much for the service.

If you added even 20% to the dining car and sleeper car services, fewer people would use them. Best case scenario, 20% fewer people and it would be a wash. More likely, the number would far exceed 20%.

I know *YOU* would pay more, but not everyone shares your sense of value and/or "loyalty." Fact of the matter is an overwhelming majority will cry foul and look for cheaper alternatives over as little as $1. In other words, if they can get the end result (i.e. transit from point A to point B) cheaper another way, they will. Even if it means sacrificing quality.

I suspect that if Amtrak offered free tickets to anyone willing to ride on the roof of the car, the roofs of their cars would be packed, and the car interiors would be practically empty.

LOL, Ed, I'm not quite sure what you expected when you asked this question on a model train forum.

I have taken the Coast Starlight from Van Nuys CA 1st stop out of LA to Portland OR 6 times at Christmas. Its 29 hours but at Christmas more like 35 hours because of slow boarding and snow in the Cascades.

Its cheaper than the cheapest flight but not that much. And even for a Model Railroader 2 hours non stop or 5 hours with a stop and $50 to park I'm taking the plane even though the airport experience stress me out bad.

This is incorrect.  The people who live in urbanized areas of the US subsidize rural areas not the other way around.  What made Chris Christie so mad after Sandy were representatives from states who are net consumers of tax dollars, like most of the south and midwest voting against aid for states who are net contributors of tax dollars.  Rural areas do not pay anywhere near the cost of the services they get, like roads. 

What ticks me off in California is that the PUC requires that public utilities charge the same rates for rural areas as [sub]urban areas.  It actually costs those utilities about 10 times what it costs to provide the same service in an urban area.  If you want to live in the boondocks that fine by me, but if you want electricity and telecommunications and water (wells are becoming unsustainable in California) then you pay its cost, don't ask me to subsidize it.  So it goes both ways.

Wow,,,cheaper alternatives! Put a bed and a bar in the greyhound and I'm there.

My trip to CA this Jan is around $1800......I feel like that is enough.......and about the max I could pay being retired and fixed income. If everything else had not gone way up.....maybe......

Since I do not have a HARD schedule and could travel any day.....I could fly it in 5 hours for well under $200......but prefer to ride and support Amtrak. 

Why?  Because I said so!

your Mother