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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