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A note on the airlines’ free rides & subsidies  

   The airlines do take a BIG hit for both cancellations & delays. After all possibilities are exhausted and we have to cancel, there’s up to 180 hotel rooms (on my plane) to be purchased if it’s a maintenance related problem.  If it’s weather related, no hotels, but the ripple affect of people not getting to where they’re going is present for days...I always feel like a target with the uniform on.
  A big factor for us is on time performance.  The DOT monitors our out and in times, and levies fines for repeat offenders.
  I get the unique pleasure of visiting my chief pilot if I’m ONE minute late leaving, and the DOT records it.  If I’m more than fourteen minutes late arriving, again the DOT records it.  This is why the forty minute flight from JFK to DCA is blocked for two hours...              

And don’t even get me started on the “tarmac delay” ruling from a few years ago, that states a HUGE payout is due to every passenger affected.  Now we just cancel, blame the weather, and everyone gets screwed...but it avoids the fines.  

  Lastly,

   The airlines pay a LOT of money in landing and gate & parking rental/fees at every airport we operate to.  Updating and maintaining their respective terminals, etc.  The major metropolitan cities have eye watering levels of fees associated with operations   Then there’s the ‘slots’ available for departures & arrivals to/from that airport that are both limited, and expensive to maintain.  This is a big reason the smaller airlines (Southwest or Spirit) can usually only operate in smaller cities  

  While the technically ‘free’ FAA is a taxpayer burden, their role in the airline’s operations are limited.  The FAA’s purpose is everyone’s safety.  From the manufactures, to the airports, ATC, and qualifications/standards for everyone involved.  Even the guy outside raking his leaves under the approach path in to the airport.  Don’t believe me?  Look at some underdeveloped nations & their safety records.  

Not a rant, just my .02

Tom

Ok, Amtrak is a money-losing proposition.

There is some new thinking on national debt vs. GDP.  The thought is that the old ratios, which predicted immenent financial collapses, the collapses never occurred. The current US national debt to annual GDP ratio is 102%, according to the WSJ  Sept 2, 2020. Japan's ratio is 230%, has been for maybe 30 years, and they still have not collapsed.  Much of our debt is held by China, the UK, and Japan, as opposed to the WWII era, when almost all debt was held by US citizens. Guess the thought is that we could welch on our debts, and it wouldn't hurt America. Plus we control our currency and can produce new currency as needed.  Believe all of this falls into "Modern Monetary Theory".  See "US debt at a record high,  but the risk calculus is changing", by Jo Craven McGinty, in todays WSJ.   Other commentators have said "this will work.......until it doesn't" !!      I am only an observer, biting my nails.

The USA has military personnel and bases in 160 countries, of the 195 named countries on earth.  We spend $760B directly  on our military, additional sums for the CIA, which is a closely aligned activity to our military plus we provide military aid to a fair number of countries. It all totals around $1T per year. Perhaps that is an area of expenditure worth scrutinizing. All the while we are building bombs and weapons, waging utterly pointless wars around the world and there are members of our political class and commentariat who are thumping the tub for a military confrontation with China over Taiwan, and Russia over Ukraine........all the while, China is building roads, hospitals, ports and railroads all over the world. The Chinese just opened a 7500 mile railroad to the UK, linking Europe directly to China for trade. We are rapidly heading to the dustbin of history.

Think Amtrak is the least of our problems.

In 2020 we had the outbreak of the pandemic and forced closures to deal with it.  The panic in Washington and in the corporate press came not with the small business closures,  the 47,000 infected citizens, rising death, and historic job losses.  The panic came when the stock market closed more than 35 percent off its peak, continuing an epic slide that had started a month earlier.

The Federal Reserve announced on March 23 that it would start direct purchases of corporate debt  an unprecedented rescue of corporate America and Washington passed the "Cares" Act to bail out the investor class instead of the citizens.

Between March 23 and April 30, the Dow skyrocketed nearly 6,000 points, a jump of nearly 31 percent, creating over $7 trillion in capital wealth.  The April gains were the largest one month jump since 1987.

The same month, 20.5 million Americans lost their jobs.

Since then, the stock market has risen over 30 percent, corporate bond funds have recovered, and companies have saved tens of billions in borrowing costs. Thanks to this massive government subsidy, large companies like Boeing, Delta Airlines, and Carnival Cruises were able to avoid taking money directly — and sidestep requirements to keep employees on — by instead issuing bonds.

One year into the pandemic, it's not clear whether the $54 billion the U.S. Treasury used to prop up airlines during the pandemic was the right move, or just an expensive gift to a politically favored industry.

The British tried this.  It hasn't worked out.  Maintenance by the government was just as bad as most infrastructure projects are.  This is the reason we have bad roads and other infrastructure.  Governments worldwide don't do maintenance well because it isn't a priority for voters.  

The private trains that run on the government tracks in Britain are also bad.  You can look online at all the complaints about poor service from the various British railroad companies.  NH Joe

It isn't just governments.  Many private companies looking to cut expenses to boost the bottom line will cut maintenance as well.  How many times have we recently seen comments about railroads cutting maintenance costs on this forum.  (rhetorical)  It is a long standing problem.  There are complaints about the effects of railroads failing to adequately maintain their lines from the 1800s.  There are similar complaints from private toll road companies.

@mark s posted:
Much of our debt is held by China, the UK, and Japan, as opposed to the WWII era, when almost all debt was held by US citizens.

The public holds over $21 trillion, or almost 78%, of the national debt.

Foreign governments hold about a third of the public debt, while the rest is owned by U.S. banks and investors, the Federal Reserve, state and local governments, mutual funds, and pensions funds, insurance companies, and savings bonds.
John

Well, I never expected my post to draw such interest! Thank you all for a wonderful discussion. My point really was: can't Amtrak simply put that "penalty" into a travel bank for use on a future trip? Living here in DE, the NEC is practically in my back yard and I have taken the Acela on many occaisions. That would be a perfect place to use a "credit," especially as the railroad is trying to entice passengeres to return.  But for those who still think about the comforts and ease of the train ride, consider this: on my many Acela trips from Wilmington to New Haven, why should the bathrooms on a train that has originated in DC and stopped only once in Baltimore be so filthy and smelly in Wilmington? It brings me to think of the old Yiddish adage that trying to make Amtrak "work" is about as useful as cupping a corpse. Of course, I have two senators and now a president who think Amtrak is more important than a Tastykake French Apple Pie!

@bigkid I basically agree with you. but let's not tread into the political. I don't want to see this thread get yanked. And that goes doubly for you @mark s. We can all agree that everything the gov spends money on doesn't have to turn a profit and leave it at that.

To return to the topic, looking at the map Amtrak released, from where I am sitting in NE PA, the lines from Scranton and the Lehigh Valley to NYC look like a no brainer (to me) for a relatively small investment. There have been plans, proposals and studies for bringing rail service back to the area almost from the day they ripped up the tracks on the Lackawanna cut off in about 1985. And yet nothing gets done. Right now it is a bus or a drive to Dover or taking in your car. The bus is basically an monopoly and expensive and its far cheaper for one person to drive to Dover and take the train than drive in. The problem is it takes forever.

Since this crosses three states, maybe this is the perfect route for Amtrak (ie. the fed gov) to get involved in. Personally I am obviously rooting for this.

Last edited by Will
@Bill N posted:

It isn't just governments.  Many private companies looking to cut expenses to boost the bottom line will cut maintenance as well.  How many times have we recently seen comments about railroads cutting maintenance costs on this forum.  (rhetorical)  It is a long standing problem.  There are complaints about the effects of railroads failing to adequately maintain their lines from the 1800s.  There are similar complaints from private toll road companies.

I know you said it was rhetorical, but I'll answer anyway.  It's not maintenance based, but right here in South Florida, privately run Brightline suspended service once the pandemic hit and has yet to resume service a year plus later, constantly pushing back the re-start dates.  Publicly run Tri-Rail stopped service then resumed service like all other transit providers.  Transporting people no matter the cost is doing a public good.  Closing up shop because of an economic downturn is what private companies do because profit is the only motive.  Some folks here have soured on Brightline because of this and wondering if in the future they plan on stopping service whenever things turn bad.  Same thing applies to bus lines.  If a certain route provides a critical service to its users, a publicly run transit agency runs the route.  If the ridership doesn't reach a certain level, a privately run company will be quick to cancel the route faster than a public company would.  Note, public transit bus routes do get pulled up.

A note on the airlines’ free rides & subsidies  

   The airlines do take a BIG hit for both cancellations & delays. After all possibilities are exhausted and we have to cancel, there’s up to 180 hotel rooms (on my plane) to be purchased if it’s a maintenance related problem.  If it’s weather related, no hotels, but the ripple affect of people not getting to where they’re going is present for days...I always feel like a target with the uniform on.
  A big factor for us is on time performance.  The DOT monitors our out and in times, and levies fines for repeat offenders.
  I get the unique pleasure of visiting my chief pilot if I’m ONE minute late leaving, and the DOT records it.  If I’m more than fourteen minutes late arriving, again the DOT records it.  This is why the forty minute flight from JFK to DCA is blocked for two hours...              

And don’t even get me started on the “tarmac delay” ruling from a few years ago, that states a HUGE payout is due to every passenger affected.  Now we just cancel, blame the weather, and everyone gets screwed...but it avoids the fines.  

  Lastly,

   The airlines pay a LOT of money in landing and gate & parking rental/fees at every airport we operate to.  Updating and maintaining their respective terminals, etc.  The major metropolitan cities have eye watering levels of fees associated with operations   Then there’s the ‘slots’ available for departures & arrivals to/from that airport that are both limited, and expensive to maintain.  This is a big reason the smaller airlines (Southwest or Spirit) can usually only operate in smaller cities  

  While the technically ‘free’ FAA is a taxpayer burden, their role in the airline’s operations are limited.  The FAA’s purpose is everyone’s safety.  From the manufactures, to the airports, ATC, and qualifications/standards for everyone involved.  Even the guy outside raking his leaves under the approach path in to the airport.  Don’t believe me?  Look at some underdeveloped nations & their safety records.  

Not a rant, just my .02

Tom

The FAA's role in airline operations is not limited, in the sense that they are involved in deciding things like how far apart planes can take off and land, the density in an air traffic corridor that directly affect operations. They are responsible for auditing airlines maintainence and safety protocols, they also are responsible for certifying aircraft for flight readiness. The FAA also runs the air traffic control system which is pretty expensive, in terms of personnel and the equipment itself, and airline fees and whatnot don't even begin to cover the cost of this. Not saying it isn't as it should be, just want people to be aware of the hidden subsidies that could directly be charged. Same way with landing fees and the gate fees and the like, they don't cover the full cost of operations at the airports, as expensive as it may seem. It is much like the trucking industry, the amount of wear and tear they cause to the roads, the cost of maintainence associated with them, is way, way more than the fees paid through diesel taxes and road use taxes (put it this way, take a look sometime at roads that only allow car traffic, like the parkways in NYC, and compare that to roads that allow trucks...it is visually easy to see, not to mention the constant road repair on roads that handle trucks...not surprising, given a fully loaded truck is 40 tons and a typical car is 1.4-2 tons.

Again, doesn't mean I think the airlines should be paying more or paying for the full cost of the FAA, just saying that it enjoys subsidies, and the public enjoys airfares that are relatively cheap because of it.

@mark s posted:

Ok, Amtrak is a money-losing proposition.

There is some new thinking on national debt vs. GDP.  The thought is that the old ratios, which predicted immenent financial collapses, the collapses never occurred. The current US national debt to annual GDP ratio is 102%, according to the WSJ  Sept 2, 2020. Japan's ratio is 230%, has been for maybe 30 years, and they still have not collapsed.  Much of our debt is held by China, the UK, and Japan, as opposed to the WWII era, when almost all debt was held by US citizens. Guess the thought is that we could welch on our debts, and it wouldn't hurt America. Plus we control our currency and can produce new currency as needed.  Believe all of this falls into "Modern Monetary Theory".  See "US debt at a record high,  but the risk calculus is changing", by Jo Craven McGinty, in todays WSJ.   Other commentators have said "this will work.......until it doesn't" !!      I am only an observer, biting my nails.

The USA has military personnel and bases in 160 countries, of the 195 named countries on earth.  We spend $760B directly  on our military, additional sums for the CIA, which is a closely aligned activity to our military plus we provide military aid to a fair number of countries. It all totals around $1T per year. Perhaps that is an area of expenditure worth scrutinizing. All the while we are building bombs and weapons, waging utterly pointless wars around the world and there are members of our political class and commentariat who are thumping the tub for a military confrontation with China over Taiwan, and Russia over Ukraine........all the while, China is building roads, hospitals, ports and railroads all over the world. The Chinese just opened a 7500 mile railroad to the UK, linking Europe directly to China for trade. We are rapidly heading to the dustbin of history.

Think Amtrak is the least of our problems.

That was true, and China and the Saudis do hold a lot of US debt, but by far the biggest holder of Treasury debt is the social security administration. SS is not a locked box, it isn't a trust fund per se anymore. Back in the early 80's they increased SS contribution rates on businesses and individuals, to create a 'buffer' in the fund for when the boomer generation started retiring, basically taking in a lot more than they needed. What happened was when the government started running large budget deficits in the 80's onward (to give you an idea, in 1980 the budget deficit was like 50 billion), in a couple of years from then it was like 250 B). What happened was the government used excess funds in SS to cover for the deficit (so remember when I said the deficit was 250m? More like 300M, but the 50m or whatever they borrowed from SS masked the deficit), they actually count SS funds they 'borrow' as tax revenue. So every time they took the excess, they left treasury notes as an IOU. The T notes pay interest, which goes to SS, but if that was excess, got siphoned off. It is why SS owns so much debt.

@mark s posted:

Plus we control our currency and can produce new currency as needed.  Believe all of this falls into "Modern Monetary Theory".  See "US debt at a record high,  but the risk calculus is changing", by Jo Craven McGinty, in todays WSJ.   Other commentators have said "this will work.......until it doesn't" !!      I am only an observer, biting my nails.



There are essentially 3 ways for a nation to approach debt: 1 reduce fiscal deficits; 2 achieve higher economic growth (i.e., GDP outpaces debt); and 3 using central banks to print money and monetize debt (MMT proponents likes to focus here).

The funny thing about theories like MMT, is that it fails to take into account historic realities of attempts to print away debt and how citizens and businesses react when in an overly indebted nation.  Austria, Hungary, Poland, and Germany tried to print their way out of debt post World War I and it ended in epic hyperinflation.   At a certain point, a nation's debt is no longer attractive at near zero interest rates and investor's (creditors) require higher rates of return - which becomes a higher and higher annual expenditure.  Raising taxes beyond a competitive level causes those with means and corporations to flee to lower tax jurisdictions (at least under current tax law) - i.e., smaller tax base.  A long but interesting read: https://www.nationalaffairs.co...dern-monetary-theory

The current Treasury Secretary, Janet Yellen, has been quoted saying, “The U.S. debt path is completely unsustainable under current tax and spending plans,” and that it is “something that most people don’t understand and I see very little evidence of concern about it.”

I don't think the US is at risk today, but it's definitely moving in the wrong direction and unsustainable if it continues.  Maybe Amtrak/HSR isn't a hill to die on, but what I am saying is we should demand more from our government spending (across the board) because it does matter in the long-run.  One of my economics professors used to say, "In the long-run, we're all dead," which is true, but hopefully we can be good stewards of the greatest nation the world has ever known so we can pass it on to the next generation.

Last edited by JD2035RR

One of the fundamental notions out there I think is that somehow government is a business, it isn't, for a lot of reasons. Businesses operate to make money for their investors and as such, are very parochial, their orbit is basically "what is good for my business ie the owners and the investors". Yeah, I studied management too, and they loftily talked about "stakeholder management", but especially these days, that is as dead as the quill pen. The government by its very nature is supposed to do things that benefit the country, state, locality, they basically are an entity with many, many stakeholders. The government example funded a lot of basic research, one that didn't have ROI built into it, something the private sector is quite loathe to do. The government can and does provide services where the private sector won't (and often attempts to privatize what had been a government service fail because of the gulf between the 2). Government wired rural areas for electricity because no utility would do it, the same way today they are paying to lay in fiber to rural areas, because the private companies would never get back the cost of wiring a farm 10 miles out of town. Sometimes the private sector works with the government to provide an essential service, the bus I rode every day is a private company but they are paid by the state to operate it, along with what I pay in fares.

Sometimes the private sector benefits from government activity. Think of Conrail, they took over bankrupt, failed railroads (and not without a lot of squawking and complaining that freight railroads in those areas weren't needed, trucks were the answer, etc). The government from what i know ultimately lost money on conrail if you factor what they sunk into it in infrastructure repairs, modernizing freight operations, dropping routes that simply made no sense, yet they ended up selling a railroad to private companies that thanks to all that spending, is profitable for them. If private companies do things better, how come they didn't buy any of the bankrupt railroads? Even assuming still going railroads had a crack in their belly and couldn't, how come businesses that were doing well couldn't do what the government did, buy the lines, invest money, and turn it into an efficient,money making operation? The answer is simple, a private company would look at the cost and say "no way I can get ROI on it". The government looked and said "trains in that region are critical infrastructure, there are people who depend on those trains to ship stuff or the people who work for the ralroad for a living", said they couldn't let it fail, and ended up leaving a working business that the private sector would buy.

So okay, what about Amtrak and passenger rail in general? It comes down to the same thing, who are the stakeholders and what is the value of keeping it versus dropping it, but more importantly, rather than look at it as it is today (kind of like Conrail c1975), looking and saying "what could it be?". The current Amtrak model in many ways is lacking, because no one as far as I know has come up with any plans for it that to me tell me they ask that question. Among politicians, some could care less, others are of the mindset that 'trains are the past, the car is freedom, airlines are the best thing since sliced bread', others quite honestly are kind of rail fans who see Amtrak as a kind of giant layout (I appreciate that thought, of course). On the one hand you do kind of have to be a dreamer to ask "what can trains do?", you have to be pragmatic and say "there are places they make no sense", and put it together, something no one has done. Envisioning a nationwide high speed rail system that can compete with airlines is pie in the sky, envisioning a rail system that fits into current and future needs , HST where practical, regular in other places, that meets needs makes sense. Eisenhower sold the interstate highway system to skeptics as a civil defense need,which shut up the crowd who said "let the states or private industry do it, it is a boondoggle", knowing full well that as a civil defense system it was bupkus, his administration knew the economic benefits of it (I am sure Charley Wilson, ex head of GM, was dreaming of scores of GM buses, cars and trucks using those roads).

@JD2035RR posted:

There are essentially 3 ways for a nation to approach debt: 1 reduce fiscal deficits; 2 achieve higher economic growth (i.e., GDP outpaces debt); and 3 using central banks to print money and monetize debt (MMT proponents likes to focus here).

The funny thing about theories like MMT, is that it fails to take into account historic realities of attempts to print away debt and how citizens and businesses react when in an overly indebted nation.  Austria, Hungary, Poland, and Germany tried to print their way out of debt post World War I and it ended in epic hyperinflation.   At a certain point, a nation's debt is no longer attractive at near zero interest rates and investor's (creditors) require higher rates of return - which becomes a higher and higher annual expenditure.  Raising taxes beyond a competitive level causes those with means and corporations to flee to lower tax jurisdictions (at least under current tax law) - i.e., smaller tax base.  A long but interesting read: https://www.nationalaffairs.co...dern-monetary-theory

The current Treasury Secretary, Janet Yellen, has been quoted saying, “The U.S. debt path is completely unsustainable under current tax and spending plans,” and that it is “something that most people don’t understand and I see very little evidence of concern about it.”

I don't think the US is at risk today, but it's definitely moving in the wrong direction and unsustainable if it continues.  Maybe Amtrak/HSR isn't a hill to die on, but what I am saying is we should demand more from our government spending (across the board) because it does matter in the long-run.  One of my economics professors used to say, "In the long-run, we're all dead," which is true, but hopefully we can be good stewards of the greatest nation the world has ever known so we can pass it on to the next generation.

Your economics professor is a plagiarist, that quote came from John Maynard Keynes when arguing with economists who said that the great depression would end itself in the long term, so no need to go into deficit spending.....

The reason we don't have hyperinflation is because we didn't print more money, we just keep printing debt. As long as people are willing to buy that debt at a reasonable interest rate, you don't get into what is called crowding out, where to attract buyers they have to either sell the bonds at deep discount or a higher nominal rate, to bring the yield to where people will buy it. Treasury debt, because it is considered solid gold, is the base rate for any kind of debt..and you get the idea.

without getting into specifics, we will definitely need to deal with the debt and deficits in the long term. eventually if we ever equal spending to revenue with taxes, over time the debt as the economy grows will make that less and less onerous.  In the meantime, though, given the nature of the federal budget, you also can't ignore real world needs. Our infrastructure by any measure is in bad shape in this country, it is a pressing need, and what I would say to that is "if we can't afford it now, what will happen when we face bridges collapsing and roads unusable and pipelines broken and electrical grid failing, how much will it cost them?". You can always argue against something, plenty of those on the left and right called the space program a boondoggle, yet it paid off in so many ways, in ways few realize (you wanna know how much of modern tech wizardry was created by kids back then inspired by the space program? Not to mention the tremendous number of products that came right out of the space program and the research it generated?). It is kind of like saying "the car needs an oil change, but I won't use a credit card to pay for it, I'll wait until I have cash" and the engine seizes because the oil got too dirty and clogged the oil ports.

Not saying that spending a ton of money on Amtrak is that kind of spending, just saying that the notion that because of deficits you shouldn't spend money on anything is very narrow focus, we can't just strip everything to the bone so we can balance the budget and then 10 years from now say "okay, now we can spend". What I really wish is that decision making was being based on real data and real information, not on what people believe it is, any kind of policy, whether it is spending, tax revenue/revenue reduction, etc.

@bigkid posted:

Not saying that spending a ton of money on Amtrak is that kind of spending, just saying that the notion that because of deficits you shouldn't spend money on anything is very narrow focus, we can't just strip everything to the bone so we can balance the budget and then 10 years from now say "okay, now we can spend". What I really wish is that decision making was being based on real data and real information, not on what people believe it is, any kind of policy, whether it is spending, tax revenue/revenue reduction, etc.

Did you see the pie charts I posted above.   How many times does corporate owned media ever show anything like that when they invite an endless stream of talking heads arguing opposite sides of verifiable data.?  Whomever is the loudest is telling the truth.  Whomever they let have the last word is telling the truth.  "He said, but she said.............................................."  is an actual substitute for the "data and real information" you are referring to.   "We'll agree to disagree" is a substitute for data.   "Listen to what so and so said........[roll tape]". The more simplistic the story the more newsworthy.

Try this:

1.  Pick any cable news hour long show.

2.  Make two columns on a piece of paper.  Label the left column "Words, Tone, and Optics" and the right column "Substance".  Put a check mark in the appropriate column for each segment of an hour show.

3.  After the hour is over compare the two columns.

John

Last edited by Craftech

The bottom line is neither Amtrak nor the USPS will ever be profitable because Congress will not allow them to be.  Amtrak was profitable for a couple of years when they were running mixed trains but the private sector whined to Congress so they were told to stop.  My favorite Amtrak trip was and always will be on the 3 Rivers from Chicago to Philadelphia.  33 cars long (limited by the railroad) but only 4 of them carried passengers.   Shippers loved it.

And so long as the USPS has to continue rural delivery they won't be profitable either.

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