Which still isn't the point - if you don't understand which services are loss making, you don't know which ones to concentrate effort on. That applies equally well whether you're going to remove services, operate them more efficiently, or come up with some way to drum up business.
But lots of successful businesses have loss making activities running alongside the profitable ones. As long as the overall business/branch/region/dept/shop or whatever makes an acceptable profit (or makes an acceptable subsidy in the case of public services), the organisation doesn't need to waste a lot of resources trying to work out which bits are loss making. You have to look at the whole sometimes. There is also the challenge of choice of which costing method to adopt, i.e. marginal costing, absorption costing, standard costing, etc., to actually apportion costs - a service may be profitable on one costing method, but loss making on another - it's a managerial/strategic decision as to how to apportion costs across a large organisation/business.
As many organisations discover to their cost, just cutting some services often doesn't bring in the savings they expected - usually because the costing decisions were fundamentally flawed in the first place - the usual/lazy/uninformed option is simply (and wrongly) to take the total costs and apportion the total to services etc by way of customer numbers, number of locations, number of widgets etc. What they've failed to appreciate are two fundamental points. One being that customers of one service may also buy another, so cutting one service may mean you also lose the customer for the other profitable service. Secondly, a lot of the costs will continue unchanged even when a service/dept etc is cut, so you don't actually save anything, meaning the total costs now have to be spread over a smaller/fewer operational base, making "costs" higher for the rest of the organisation.
To do the job properly, you have to break down costs into what's fixed and what's variable, and then look for step-changes, etc. You also have to look at marginal costs, i.e. what is the "extra" cost of an activity. From what I've seen from 35 years working in management accountancy roles, very few organisations even understand the proper way of costing, let alone put it into practice, meaning stupid decisions are regularly made which damage the organisations' finances rather than improve it.
The classic example is the often trotted out example of how it costs a firm £50 to raise a purchase order, so lower ranking managers make silly decisions to buy something locally, more expensively, to "save" the £50. In reality, the marginal cost is probably less than a pound, being just the ink and paper, as the purchasing department is basically a fixed cost, i.e. premises, staff, equipment, etc., so raising "one more" costs pennies. Of course, raising a million more means bigger premises, more staff, more equipment, etc., so the "step change" from processing 1m to 2m is probably hundreds of pounds per order not just the £50 but then the "cost per order" reverts back to pennies until the next "step" is reached. It classically illustates the risk of poor decision making on flawed data.
Coming back to railways etc., surely the whole system should be working with other public transport, attractions, etc., to improve passenger numbers across the network which would be far more beneficial than just concentrating on a few poorly used lines/services. When you have the likes of the Alton Towers group, you could have combined tickets for ALL attractions within their group (all over the UK) rather than just one, or for combined tickets with buses, why not get a combined ticket option with Stagecoach or Arriva at country level for all areas rather than just for one town. By doing more widespread incentives, you'd generate more passengers all over the network which will have a knock on effect to the lesser used lines/services.
