Watchhttp://washingtonexaminer.com/amtrak-lost-800m-on-cheeseburgers-and-soda/article/2503832
Amtrak lost $800M on cheeseburgers and soda
Taxpayers lost $833 million over the last decade on the food and beverages supplied by Amtrak, which managed to spend $1.70 for every dollar that received in revenue.
“Over the last ten years, these losses have amounted to a staggering $833.8 million,” said Rep.John Mica, R-Fla., in a statement previewing a House hearing today. “It costs passengers $9.50 to buy a cheeseburger on Amtrak, but the cost to taxpayers is $16.15. Riders pay $2.00 for a Pepsi, but each of these sodas costs the U.S. Treasury $3.40.”
"Amazon.com is currently selling 24-packs of 12 ounce Pepsi cans for $8.94 -- which averages to about 75 cents per can."
Amtrak President Joe Boardman tried encourage House investigators by telling them that last year's losses represent an improvement over previous years. "Our ongoing programs have certainly delivered measurable financial efficiencies," Boardman told Congress in his written testimony today. "In 2006, our food and beverage service recovered 49 percent of their costs. In 2011, these services recovered 59 percent of their costs," he testified.
The food service is legally obligated to break even, but Amtrak lost $84 million just last year. “The rail service’s food and beverage operation has 1,234 employees, and taking into account Amtrak’s $84.5 million loss last year, that’s $68, 476 per employee," Mica said.
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The real question is how other countries' governments run their rail programs so much better than we do. All of Europe has vastly better GOVERNMENT RUN rail systems than we do.
Hell, even Canada has much better rail service.
They're not privatized, they're just better.
I suspect that the auto, oil, and highway construction industries make sure that our passenger rail system sucks.
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Someone is stealing from the coffers. Follow the money.
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zzyzzx says
How about:
"Taxpayers lost Billions on subsidizing the airline and car industries, which makes rail non-competitive."
Without the government paying for airports, air traffic controllers, airport security, and all kinds of write off and subsidies for the airlines, I wouldn't be surprised if Delta lost $2 on every headset they sold.
If trucks and cars paid all the costs of roads and traffic patrols, I wonder how much vehicles would really cost to own and operate?
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How is it that Government can't make money off of a $2 soda and other people can charge less and still make money?
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Rails cannot be operated as a purely private, for profit endeavor due to property ownership and other real world constraints. Not everything can or should be privatized. Those who promote those kind of solutions fall into the Libertarian ideologue category and would be well served to actually go read the works from which their ideology was founded.
The cross-subsidization issues, as thunderlips11 referred to, are the reason rails are a loss-loss proposition. The government should have divested from passenger rail altogether and held onto the right-of-way corridor rights so they could reactivate the system if necessary later.
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Randy H says
$9.50 cheeseburger, $2.00 pepsi - and still in the red? Any large fast food player would be ecstatic to take over, food logistics are largely orthogonal to government support of competing industries. It would affect scale, but scale is not the issue here.
At these prices, you just can't explain negative margines by greater support for alternative transportations. You really need to work hard on screwing it up.
I'll remember it next time I hear how railroads suffer because government supports airlines more.
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lenar says
I can blow any profit the railroad makes, and so can you, not a problem. My point is that I think someone actually is working really hard on screwing up Amtrack.
Business in America has much less to do with creating a good product than with getting the government to eliminate your competition for you, so that the public just doesn't have a choice.
Like Randy says, government is supposed to be the one thing more powerful than the corporations. Once the government gets corrupted by business lobbyists, there is nothing protecting us anymore.
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You know, I cannot think of a single right wing argument whose entire basis doesn't crumble when this or that major factor, that literally hinges the issue, is taken into account. Amtrak sucks because America made up its mind in the 1940-50s that Railroads suck and petroleum will be cheap and plentiful forever.
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Patrick says
Not true - socialism works about the same throughout. Greek Finance minister not too long ago made the following statement: "it would be cheaper to put all passengers in Taxi instead of using our rail system".
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Patrick says
I suspect that things like unions and minority procurement requirements makes ours expensive.
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LIke I said, if the US government is going to continue to choose to favor automobile and air transportation then it should put rails on mothballs and quit investing there too. But selling it off to private owners would be the worst outcome of all. Just put it on mothballs. In fact, that *would* be running it like a business. Businesses tend to hold onto cash flow positive assets, and the rail corridor real estate is certainly not what's causing the losses.
I disagree about European rail being run *well*. It is run *better* in many countries, but none of them are run all that well. And they're pretty much all operating at a huge loss.
The difference between us and them is they recognize that certain things aren't profitable even though they are desirable. Infrastructure often falls into that category because the benefits are reaped by other endeavors that rely upon that infrastructure, but the infrastructure itself is a cost center.
The US highway system, for example, runs at billions upon billions of "loss" per year, but the economic activity it supports far outweighs those losses in terms of aggregate benefit. But left to private companies, we'd have no highway system.
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lenar says
Cops more powerful than robbers? Yes, it does indeed happen, and it is the normal state of things. Corporate charters are granted by government and can be revoked by government.
Ruki says
I often wonder why it isn't that way. Seems like a good idea, just like airports don't own the airplanes.
You could even take it further and allow individuals to own rail cars that they drive across the country.
One huge advantage over air travel is that the train stations are generally in the center of town rather than way the hell out in some far suburb like airports are.
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leoj707 says
Ah. China. The one that went from total control, which stomped the entire country into poverty, to relative liberalization of capital. I'd think it's an example of the opposite.
Notwithstanding that an average chinese mainlander lives a pretty miserable life, by Western standards. Just less miserable than before.
P.S. Interesting fact. Most politicians in China have engineering rather than legal/liberal background. That could also explain a thing or two.
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Patrick says
The US rail system is privatized. It is very profitable and successful at squeezing money out of captive freight customers. So while the system is antiquated and unsafe, it is very profitable for its owners.
Freight doesn't complain if it moves around at 30mph and stops for an hour or two while some piece of track is repaired. Shareholders are happy if they see decent profits this quarter, even if the management is failing to invest in maintaining infrastructure.
It is a classic case of making good short term profits at the expense of customer and long term stakeholders interest. American railroads are pure Merican capitalism.
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http://www.usatoday.com/news/washington/story/2012-08-02/amtrak-congress-food-beverage-losses/56719770/1?csp=34news
Congress examines Amtrak's food and beverage losses
Possible solutions include using café cars instead of dining cars on long-distance routes, replacing the food and beverage service with vending machines or food service carts, and contracting out the service to the lowest bidder.
It's that last one that's going to work. Laying off expensive union thugs is the answer. No reason why a dining car employee should earn a gold plated pension at taxpayers expense, for flipping burgers when a private employer can come in and pay market wages.
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leoj707 says
Wow Leo, you show your true colors. As much as America sucks, I don't really look to China as an example of how to do things.
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So why should the defenseless taxpayer be continually raped by their benevolent politicians? People have a hard enough time making ends meet as it is PLUS they have to throw their money down a black hole and subsidize a losing enterprise because their "wise" leaders say they should?
Run it like a business for god sakes. Don't keep sticking it to the taxpayer.
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Patrick says
There is a bleeding gap in the base of this observation (not that the observation itself is incorrect). The more powerful government is, the more it's a desirable goal for corruption. It stops being that when business and government become one (fascism is one example) - then corruption gets redefined.
Government more powerful than business, yet uncorrupted? Doesn't happen.
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Funny that people on the right complain about gubbermint' and spending then go on to wail when "Other" forms of government spending are cut. Its called a double standard.
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lenar says
Business more powerful that government, yet uncorrupted? Doesn't happen.