From: schuh@mdd.comm.mot.com (Michael Schuh)
Subject: Re: Vranich on Texas High-Speed Rail (aviation subsidies)
Followup-To: rec.railroad
Keywords: my sweet land of subsidy - NOT!
Organization: Motorola, Mobile Data Division - Seattle, WA
Distribution: na
Date: Fri, 20 Nov 1992 01:10:50 GMT

Follow up articles to rec.railroad, whence cometh the originals...

In article <1992Nov18.043035.15621@s1.gov>, lip@s1.gov (Loren I. Petrich) writes:
|> In article <1992Nov17.175553.19500@ntmtv> adrian@ntmtv.UUCP (Adrian Brandt) writes:
|> : Here is a press release from Joseph Vranich that I found posted
|> : on rec.railroad. ...
|> 
|> :    "Southwest Airlines owes an apology to the people of Texas, ...for its
|> : malicious campaign," said Vranich.
|> 
|> :    Vranich issued a two-pronged defense of high-speed rail.  One part
|> : consists of a lengthy research document, "An Expose of Southwest
|> : Airlines' Cunning Deceptions about High-Speed Rail," which refutes,
|> : point by point, charges that the airline has made.
|> 
|> 	It would be interesting to see what he had had to say there.
|> 
|> 	I've read his book _Supertrains_, and he reports some details
|> about Southwest Airlines' campaign against the Texas TGV.


While I have not read this book, I do know a few things about aviation.
I'm hardly an expert, but I must take exception to some of the "facts"
reported herein.


|> :    "Everyone would be shocked if Texas passed a law putting Southwest
|> : Airlines under the same laws as high-speed rail," Vranich said...
|> 
|> 	If that was done, then the airline business would sink like a
|> stone. Consider that in a recent year, the US airline industry earned
|> $1 billion, while air traffic control cost $3 billion (source: Joseph
|> Vranich)


For the first nine months of 1992, United Airlines earned about $9 billion
dollars (source: my stock broker); extrapolating this to the entire US
airline industry is left as an exercise for the reader (I didn't do it 'cuz
I didn't want to spend a lot of time on it), but the industry total is
probably near $50 billion annually - or higher.  BTW, $1 billion annually
would suggest that the average American spends just $4 a year on airline
travel... which in turn implies that my two trips this fall were enough for
400 Americans.  Stated another way, just 2.5 million round trip tickets at
$400 each were sold last year.  Clearly, the $1 billion figure is wrong.

The fiscal 1991 budget for the FAA was $7.9 billion, of which $3.1 billion
was for air traffic control (source: FAA).  The Aviation Trust Fund took in
$6.2 billion from its combined sources of fuel tax (which is paid by *all*
aviation users, including general aviation folks like me when I rent a
plane to go flying), passenger ticket tax, international departure tax,
interest, and the like.  The difference - $1.7 billion - comes from general
fund appropriations, a "subsidy" if you wish.  But this is better described
as the Department of Defense's contribution to running the air traffic
control system (they use the same facilities - same radars, same controllers,
same airspace).  In short, there really isn't that much of a national
"subsidy" for avaition.

I won't dispute that subsidies exist at local levels, but these are usually
in the form of the capital costs of building an airport, the use of which is
then charged to the airlines and general aviation.  I doubt that any
airline gets *significant* government support for its operational costs.  (I
don't want to get into a flame war here; the point is that the net cost to
the US governmet is not double the gross earnings of the US airlines, as
Loren implied.)


|> :    Most offensive of all, he said, is Southwest's campaign to incite
|> : Texas citizens to alarm against the high-speed plan by supplying them
|> : with false material.


Supporters of high-speed rail (which includes me) should also try to be
meticulous in their presentation of facts and data.  Once tainted as being
misleading or inaccurate, their entire cause can become suspect in the eyes
of others.  Never, ever try to distort information for your own ends - either
report something as it is or not at all.

If Vranich did indeed claim that the US airline industry had earnings of
$1 billion, did he mean total profits?  (This might be the case; the value
would be about right.)  If so, this is misleading: airlines don't pay for
*anything* out of profits - profits go to retained earnings or to the
stockholders.  Operating costs, taxes, use fees, capital expenditures, and
everything else are subtracted from gross earnings (the total of *all*
income) and profits are what is left, if anything.  I would humbly advise those
who would bandy about such figures to study a little micro-economics and
perhaps some basic accounting.  If they label something as "earnings"
they need to say whether they mean gross or net.


|> : [Vranich] outlined the trend of many leaders in aviation, who have begun
|> : to support high-speed rail as an attractive way to relieve airport
|> : congestion and as an alternative to flying expensive jets in
|> : short-haul markets.  Lufthansa and Alitalia airlines operate trains
|> : in Germany and Italy, and a British airline is considering a similar
|> : program.
|> 
|> 	It would be interesting to see how much of the short-haul
|> flights the trains are equivalent to, what fraction of the total.


Here in Seattle (and Washington State generally) there has been proposed a
high-speed rail line (300 mph is the usual speed mentioned) to connect Seattle
with the Moses Lake airport in Eastern Washington, about 150 miles away.  This
has been suggested as an alternative to the politically contentious proposal
of expanding the existing Sea-Tac airport, moving most of the air traffic
to Moses Lake instead.

I hope that this is not done - I`m not keen of taking a train half way across
the state to get on a plane to go somewhere.  It would add at least an hour
to my total travel time, plus a fair amount of inconvenience.  Furthermore,
the folks in Moses Lake want the State of Washington to build it using my tax
dollars to benefit them (now *there's* a subsidy for you!).

My thought has been to use the rail to replace most of the local, regional
flights - to places as far away as Spokane (300 miles), Portland (also 300
miles), and Vancouver BC (<150 miles), as well as most stops in between.
The rail would run from city center to city center, with few stops elsehwere.
This would free up airport capacity and most likely eliminate the need for
expansion (until another million $@#*&! immigrants move here, sigh).

Take this one step further and consider what it would mean up and down the Pacific
coast.  The Bay Area is about 800 miles away and a high speed train could
get there in about three hours (note: *lots* of assumptions are being made
here...), which compares quite favorably with two hours by commercial airline.


|> 	It is interesting that the airline officials the most
|> interested in high-speed rail are those in airlines with a lot of
|> long-distance business. I guess they feel that they have less to lose
|> by shifting a lot of their shorter-distance business over to rail. And
|> they would certainly gain in airport access by increasing passenger
|> rail service to airports.


I believe (and hope) that this view will prevail in the long run.  Commuter
airlines such as Southwest do indeed have concerns about competition from
high speed rail, and it should be expected that they will work against any
proposal for high speed rail.  *How* they do so might be either good or bad,
but please don't get on their case about *what* they oppose.

--
Mike Schuh * Motorola Mobile Data * Seattle | This space is blank.  Not
schuh@mdd.comm.mot.com * +1 206 487 5884    | intentionally; it's just blank.
Newsgroups: rec.railroad