Ray Lombardo posted:Amtrak needs to bring their labor costs under control and until they do so the CEO will make little difference. You could put my eight year old son in charge and it would be the same. If you look at the 2015 financials, their labor and benefit costs pretty much equal ticket revenues (and more than 2/3 of total revenue is consumed by labor expenses) so the remainder of the railroad's other expenses - small minor things like capital expenditures to maintain and improve rail cars and trackage- is dependent on other revenue. This is why Penn Station is a mess, for example.
If you look at a private railroad like NS, if I recall correctly labor and benefit expenses are in the neighborhood of 2.7 billion on total revenue of 10 billion. This is how they maintain trackage and equipment withou relying on direct state support. The comparison is startling to me.
Final thought is that reporters covering businesses should know how to read a balance sheet and income statement. All of this information is free and publicly available for companies like Amtrak and NS and it yields plain insights into why Amtrak needs billions to catch up - they have neglected infrastructure for years as the railroad is run with excessively high labor costs.
But note this comment:
I don't see there being an issue with labor being so much higher than all other expenses on the balance sheet. Compared to other passenger operations in this country, Amtrak's 50% labor to all other expenses is reasonable. Here is some quick research in to the labor expense ratios for some other passenger railroads in the US: New Jersey Transit 52%, SEPTA 59%.
All Amtrak and commuter trains have multiple conductors compared to freight trains which typically have 1 conductor. Amtrak long distance trains have additional crew members for handling food service and sleeping / coach car attendants. Unlike the airline and bus industries, Amtrak's payroll includes right-of-way (track/signal/structures) maintainers, engineering, police, dispatching, etc. For airlines, dispatching/air traffic control is covered by the FAA, airports are maintained and staffed by local governmental authorities, security is provided by the Feds (TSA).
So based on the above explanation, it makes sense labor would be such a big expense. If you really think about it, moving people is very labor intensive process. Think of how many people are involved in transporting people on an airplane or a ship (cruise or ferry) let alone a train (Amtrak or commuter). It takes a lot of people.
