Facts and Fictions about C&TS Outlook

I just posted the following on the Ashpit as part of a thread John West initiated, and thought it might be of broader interest here.
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Well, the guys on the Gote are continuing to run true to form and are seeing disaster for the C&TS around every bend in the track. Not to be bothered by the facts on the ground, indulging in character assassination is much easier for them and a lot more fun.

In point of fact the C&TS has never been in better shape, both in terms of its physical facilities and equipment and in terms of its finances. All this creates real problems for those on the Gote who are irrevocably committed to the fiction that the railroad is about to fail under the current management. By the way, this is the same management (Commission and CTSMC) that deserves direct credit for so much of the solid and observable accomplishments of the past several years -- but delusion can be a powerful thing, especially in an echo chamber like the Gote.

If there is any criticism to be leveled at the Commission and CTSMC it is that ridership continues to be anemic. The railroad has been unable to attract more riders and thus help the local economies more. There are some real paradoxes here. Last year again demonstrated solid demand for the railroad's premium services which produce higher margins than coach fares. As a consequence, the railroad is able to break-even operationally at 40,000 or so riders (as long as the Commission-mandated expense budget is not exceeded by CTSMC). Comparatively speaking, demand for the lower-margin, lower-fare, coach services has not been as great. Behind all of this is the simple reality that the recession and 9%-10% unemployment are the fundamental causes of low ridership -- all tourist attractions are being affected mightily.

So when the Commission sets a 40,000-rider budget, what is being said is that the C&TS can break-even operationally at that low a level. That does not mean the goal is not to have more riders. Since so much of the expenses of running the railroad are fixed and vary little with ridership, break-even at 40,000 riders is damn impressive, and the upside quite attractive. All this means the railroad is on pretty solid financial ground, even though it spends $10 in marketing for every projected rider (marketing budget, not including payroll, is $400,000) -- far more per rider than outfits like the D&S.

Perhaps spending more on marketing might help, but the Commissioners are understandably reluctant to bet on the come (and they control the purse, make no mistake about that). Remember, the Commission's purse is shallow, and, if the Commission runs an operating deficit, it has nowhere to turn for funding quickly because the states's appropriation processes are agonizingly slow and problematic at best.

There does not appear to be an easy way out of this box because the downside risks of either (a) cutting fares in the hope of making up the lost revenue by increasing sales volume or (b) upping the marketing budget to unsustainable levels are real and persuasive.