Our Transportation Investment Priority: Volume or Revenue?

Posted on September 7, 2010. Filed under: Uncategorized |

Southwestern Connecticut’s Metro-North commuter train system has much in common with the Long Island Rail Road (LIRR) service. Both, for instance, are organized as operating divisions of the Metropolitan Transit Authority (MTA). Both focus on providing travelers with alternatives to motor vehicle transportation. And both have spent decades managing their aging infrastructures.

Recently, just months before its scheduled retirement, a LIRR central switching tower was struck by fire and knocked out of commission. Train lines were thrown into havoc, commuters were stranded for hours, and days were lost in the struggle to return to normal service.

Meanwhile, here in the Elm State, the Connecticut Rail Commuter Council focused on a very different priority: bar cars! The Council released the results of an opinion survey that emphasized our thirst for rail-based libations. It expressed support for funding bar services; some respondents even urged that seats and tables be limited in order to accommodate more patrons.

Council representatives noted that bar car sales boost MTA revenues and thus help stabilize operating budgets. And yet, like any line of business, such services demand their share of scarce investment dollars.

How should Metro-North prioritize its investment expenditures? Should it focus on modernizing its infrastructure to prevent an LIRR style meltdown in southwestern Connecticut? Or should it instead opt for improving amenities?

In accounting terms, what should be its top priority: service volume maintenance or ancillary revenue generation?

Contributed by Michael Kraten, PhD, CPA, Accounting Professor at Providence College and President of Enterprise Mgt. Corp. http://aqpq.org

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