Two coaches and one locomotive are required as reserves to protect the train operation from breakdowns and during repairs, etc. Figure 13 shows the financial breakdown of what happens when a second and a third train are added to this small, one-route system. Operating Economies of Scale, Hypothetical Case. This example shows that while direct costs increase in a linear progression proportional to train miles, the increase in indirect costs is at a much lower rate. The example assumes an operating schedule of 50 miles per hour and a trip time of 6 hours.
Economies of scale are obvious in increased frequencies of service.
They are further enhanced by higher speeds that allow for more effective utilization of equipment. On the revenue side it is very likely that per train revenues will increase somewhat as the second and third trains are added because greater opportunity exists for cutting deeper into the travel market. This contention is supported by the previously mentioned case of the Los Angeles-San Diego corridor. The strategy to attain a profit as outlined in Amtrak 90 is to generate revenue faster than common costs rise. When additional trains are placed in service using the same physical facilities, then the ratio of indirect costs to total costs will drop.