Wednesday, September 30, 2009
This Week in Amtrak
A weekly digest of events, opinions, and forecasts from
United Rail Passenger Alliance, Inc.
America’s foremost passenger rail policy institute
1526 University Boulevard, West, PMB 203 • Jacksonville, Florida 32217-2006 USA
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Volume 6, Number 40
Founded over three decades ago in 1976, URPA is a nationally known policy institute which focuses on solutions and plans for passenger rail systems in North America. Headquartered in Jacksonville, Florida, URPA has professional associates in Minnesota, California, Arizona, New Mexico, the District of Columbia, Texas, New York, and other cities. For more detailed information, along with a variety of position papers and other documents, visit the URPA web site at http://www.unitedrail.org.
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1) Now, there is no doubt. Amtrak doesn’t want to be in the passenger railroad business. Last week Amtrak released a requested study on Ohio’s “3 C” corridor, which runs from Cleveland to Cincinnati via Columbus and Dayton. And, Amtrak released a preliminary draft for discussion for the much-awaited Pioneer route restoration between (Chicago), Denver, and the Pacific Northwest. The part of the route from Chicago to Denver would travel over the existing California Zephyr route, but from Denver westward it would be a restored route.
We will examine each proposal, with the Ohio examination coming in the next issue of This Week at Amtrak, but it’s clear Amtrak is pricing the costs of these routes so high it’s trying to discourage backers and political entities along the route it really doesn’t want to create or restore either of these routes, much in the vein it did with the previous Gulf Coast report earlier this summer.
Yes, of course, any good businessman makes a presentation which is conservative on sales projections, and high on costs. That way, when things work out like they are supposed to beyond the projections, there are no nasty little surprises. But, Amtrak has gone to such extremes in both of these instances, one can only begin to guess at the metrics Amtrak used to create these studies. Good business sense certainly never came into play when putting these studies together.
One consistent component of these two studies and the previous Gulf Coast study is Amtrak expects individual states to pony up money for these trains, and doesn’t seem to assume any responsibility for being a national passenger train operator, which transcends state boundaries.
2) To read the Pioneer preliminary report asking for comment before final submission to Congress on October 15th is to truly understand corporate shallowness.
For years, Amtrak has gotten away with running the Empire Builder with a Portland, Oregon section separate from the Seattle section by splitting and joining the train in Spokane, Washington. Just as Amtrak does also with the Boston section of the Lake Shore Limited separate from the New York City section, nearly a complete train is operated, minus a dining car. Both of these operations miss a huge revenue producing opportunity for a full, second frequency to operate over the majority of the route.
Time and again, we know a second frequency on any route not only boosts ridership, revenues, and revenue passenger miles significantly, but it also spreads the infrastructure costs such as stations over two trains instead of one.
The Silver Meteor and Silver Star on the Right Coast travel nearly identical routes between New York City and Miami, with the Star diverting from the Meteor’s route to traverse the old Seaboard Air Line Railroad route via Raleigh, North Carolina and Columbia, South Carolina, and also call at Tampa, Florida. Less than four hours is added to the running time of the Star versus the Meteor, and the payback for that is reflected in two million additional revenue passenger miles generated for the Star over the Meteor’s performance.
The Silver Meteor generated in Fiscal Year 2008 $30,538,800 in revenue, 194,454,000 revenue passenger miles, and carried 319,800 souls an average length of trip of 608 miles. The Silver Star generated $28,111,900 in revenue, 196,924,000 revenue passenger miles, and carried 367,100 passengers an average length of trip of 536 miles.
The Empire Builder generated $59,389,600 in revenue, 409,480,000 revenue passenger miles, and carried 554,300 passengers an average length of trip of 739 miles. The Lake Shore Limited generated $24,212,000 in revenue, 152,329,000 revenue passenger miles, and carried 345,600 passengers an average length of trip of 441 miles.
You can easily see the strength of both the Silver Meteor and Silver Star, and it’s also easy to imagine if the Portland section of the Empire Builder became the Western Star as its own, second frequency all the way to Chicago how much fiscal strength and transportation output it would generate, as would a second frequency of the Lake Shore Limited into Boston serving the same purpose.
So, Amtrak’s plan for the possibility of a restored Pioneer to is add three cars to the California Zephyr between Chicago and Denver, consisting of a coach, coach/baggage, and sleeper. In Denver, a dedicated diner/lounge and separate locomotive would be added to the minuscule consist and form the Pioneer to the Pacific Northwest, terminating in either Portland or Seattle (Seattle being the better option of the two.).
Amtrak projected ridership and revenue for the Pioneer is too small, too. As said above, while being conservative in projections is the best method, Amtrak projections tend more to fatalism than objectivity.
Amtrak has produced four options for restored Pioneer service, Option 1 being a Salt Lake City-Seattle choice, with 102,000 passengers and $11.6 million in revenue projected.
Option 2 is a Denver-Seattle choice, with 111,000 passengers and $13.1 million in revenue projected.
Option 3 is a Salt Lake City-Portland choice, with 82,000 passengers and $7.6 million in revenue, and Option 4 is a Denver-Portland option with 95,000 passengers and $9.2 million in revenue projected.
Option 2 is consistently the best choice, even though through Amtrak’s projections it also has the greatest cost. Option 2 restores service over Union Pacific’s fabled Overland Route through Wyoming, which would bring service to another state currently without passenger rail benefits.
Much of Amtrak’s projections are based on ridership and revenues from the former Pioneer, which ceased operations in 1997. In FY 1992, Pioneer ridership peaked at 156,000 passengers a year. Amtrak states in its preliminary report it expects lower ridership because of stiffer airline competition in the region. Amtrak likes to sell itself short with silly statements like this; it never seems to understand the uniqueness of its own product and the desirability of its product among all classes of travelers.
Amtrak is projecting per mile passenger revenue of 12.2 cents, which would place it only above the Sunset Limited, with revenue of 12.1 cents per passenger mile. It’s a mystery why Amtrak would use this number, since the California Zephyr generates 14.5 cents per passenger mile, the Southwest Chief 13.3 cents per passenger mile, and the Empire Builder 14.5 cents. Why there is any presumption of such a low passenger mile figure can only be explained that Amtrak doesn’t want this train to come back.
The 111,000 figure for ridership is easily low by 25,000 passengers, but, if a second frequency all the way from Chicago to Denver and then a single frequency to Seattle was used because it is a better choice, then a ridership figure of 250,000 to 300,000 is more likely. Yes, this would require more equipment, but, that’s the cost of having the burden of meeting consumer demand.
When you couple realistic passenger mile revenue of 14.5 cents per passenger mile as is found on the California Zephyr with the ridership of a second frequency, suddenly the Pioneer is not only a good idea, but a great idea. Perhaps Amtrak doesn’t want to do this because it is afraid of a new service being successful? After all, it’s very difficult for Amtrak today to hide the outright success of its long distance trains, so adding another train would just add to Amtrak’s problems of explaining why long distance trains always work better than state supported corridor trains with greater transportation output and greater efficiencies in every area.
Training and personnel preparation is another area where Amtrak’s proposal seems to be from outer space. Amtrak wants to budget $6.6 million for crew training for Option 2. Why? Perhaps, Amtrak is considering taking kindergarten students and paying for their entire education (including advanced university graduate studies degrees) and, a lifetime later, making them train and engine crew members. The Pioneer is proposed to operate over a route that is already a freight railroad route; there is no blazing of trails going on here. Between Portland and Seattle, the route is an existing Amtrak route, so it’s just a matter of adding more crew to the crew base, not creating an whole new cadre of employees. As far as the portion of the route between Denver and Portland, it is not rocket science to recruit and train railroad employees. Amtrak has obviously based its numbers of taking raw employees off the street and turning them into railroaders, and then doubling that cost for a final project figure. In the real world, that is not only unrealistic, but just silly.
On the subject of equipment, Amtrak says it doesn’t have enough equipment on the wreck line it could fix, or other cars in storage to get this service moving. It wants (like in the Gulf Coast report) up to four years to develop and build new equipment, at a cost of $123 million for an expected need (for the too short consist) of 27 cars and locomotives, total. That breaks down to over $4,500,000 for each piece of equipment. Perhaps they are projecting all of this equipment will be made of gold and platinum? This figure is way too high, plus, a few pieces of equipment could come from Amtrak’s wreck line at a much lower price for rehabilitation instead of new build. Amtrak says it needs to buy four new locomotives in this equipment group, but it has seven wrecked P42s in its inactive fleet, plus 30 stored P40s, and nine stored F40s. There are other bits and pieces of Superliner equipment Amtrak has that could easily supplement this equipment request without having to buy everything new.
The report goes on and on in this vain vein. Probably, the numbers Union Pacific Railroad have submitted for track upgrades are a good starting point for a wish list, and it would help all parties concerned for some infrastructure improvement on the line.
As far as station costs are concerned, Amtrak worries greatly about taking some existing buildings and having to upgrade them for Americans With Disabilities Act compliance. While this has great merit, it always seems to be Amtrak’s default position on any new project; it doesn’t have the money to spend for ADA compliance. After over a decade without service, many of the route stations have either been removed or converted to other purposes. There will be a great need for new station facilities. However, this is a reasonable expense for cities and towns that wish to have passenger rail service to share the expenses. If they want passenger rail service, provide the portal for that, just like for airlines.
Amtrak says it will need $469,800,000 to restart Pioneer service, with Denver as the jumping off point. The majority of that is $324,100,000 for track and signals, including the coming need for Positive Train Control.
An educated guess says this cost is $150,000,000 too high, including unrealistic training, equipment, and new station costs. By the time a realistic number is agreed upon between Amtrak and the Union Pacific Railroad, that $469 million should be closer to $320,000,000.
Ridership, revenue, and revenue passenger mile projections are tremendously under-represented, and operating expenses are tremendously over-represented. When the true figures meet in the middle, farebox recovery should be in the 50% or higher range (As opposed to Amtrak’s guess of 28%).
So, at this point, if you’re an elected official of any of the states hoping for a restored Pioneer, what do you do? Amtrak wants $469 million in start-up costs, and then it expects ongoing subsidies to run a train that is positioned in the most expensive way it can be to drain government treasuries.
Here’s an idea. Let Amtrak submit its grossly flawed report, with all of the figures as gospel. Then, spend some more money and some more time (After all, Amtrak wants four years or more to restore this service, so to them time is not a factor.), and find a credible passenger rail consulting firm to create a real route analysis, using real world numbers, and then take that report and beat Amtrak over the head with it until it comes to its senses and becomes realistic on what it will take to restore the Pioneer as part of its long distance system.
3) Here is the most compelling part of the Amtrak Pioneer report.
These projections reflect the fact that all or virtually all of the equipment required for Pioneer restoration would have to be purchased new. Despite growing ridership, Amtrak’s long distance equipment fleet is smaller now than it was when the Pioneer operated. Due to funding constraints, Amtrak has not ordered any new long distance equipment since the early 1990s, and most of the “Heritage” cars built for other railroads that Amtrak acquired at its formation have been retired due to age. Amtrak’s existing fleet of bi-level Superliner cars is insufficient to meet equipment requirements on the nine long distance trains that currently use Superliner equipment, and Amtrak has only a small number of repairable “wreck status” Superliner cars. In addition, if Amtrak is to continue to provide existing services on long distance routes, it must in the very near future replace nearly 100 remaining “Heritage” cars that are now more than half a century old.
Amtrak has recently issued a request for proposals for the acquisition of 130 single-level long distance cars, primarily to replace the remaining Heritage cars (although funding for this purchase has not yet been identified). Purchasing additional single-level cars to equip a restored Pioneer would not be an optimal solution. Single level cars would accommodate fewer passengers, and operation of single-level Pioneer cars to/from Chicago on the bi-level California Zephyr would trigger a need for additional Superliner “transition” cars (which are in particularly short supply) equipped with a high-level door one end and a single-level door on the other.
A purchase of new bi-level equipment for the Pioneer, which would take approximately four years for design, procurement and construction, would have to be part of a larger equipment order. The high upfront design and tooling costs associated with building passenger rail cars make it uneconomic to construct them in small quantities. Amtrak is preparing a comprehensive equipment fleet strategy that will, among other things, address the existing shortage of bi-level Superliner cars that limits capacity on Western long distance trains. An order for new bi-level equipment, which would be subject to funding availability, could provide the means to acquire additional equipment for new services such as a restored Pioneer.
What is Amtrak saying, here? Has Amtrak actually said – in writing, in an official document, no less – it has demand for long distance trains that is not being met? (Gasp!) Could this be true? Amtrak has unmet demand on trains which are not corridor trains? Could this be a whole line of revenue Amtrak is ignoring? What about taking more cars out of the wreck line and storage yard and putting them into service? Would that imperil Amtrak’s ongoing business plan which is to mainly request government subsidies instead of generating revenue inhouse?
And, take a look at the line, “Amtrak is preparing a comprehensive equipment fleet strategy that will, among other things, address the existing shortage of bi-level Superliner cars that limits capacity on Western long distance trains. An order for new bi-level equipment, which would be subject to funding availability, could provide the means to acquire additional equipment for new services as a restored Pioneer.”
(Gasp! again) NEW SERVICES? Our Amtrak? Is someone actually preparing a vision for the future for Amtrak? Inquiring minds want to know.
3) While you’re trying to wrap your mind around that concept just above, here’s an editorial which is appearing in the October 2009 issue of RAILPACE Newsmagazine, which is appearing on news stands today. This commentary is by Tom Nemeth, Editor-in-Chief of RAILPACE, and is used with his permission.
By Tom Nemeth
Amtrak: Getting the Lead Out
Now that Amtrak has adequate funding for operations and growth, while enjoying unprecedented public and political support, it is time for a management makeover. Amtrak service today, with a few exceptions on some western long-hauls and the Acelas, is beginning to look like the final days of Penn Central. While top management obsesses about photographers, on-time performance continues to lag, trains are dirty, shopworn, and overcrowded. What is the meaning of a “reserved train” when passengers are required to stand between Wilmington and Washington, as a friend did on Train 94 on a recent Friday. This editor endured a Business Class coach from Trenton to Newport News on Train 99 on March 28 with reeking toilets. A round trip on the Texas Eagle on June 15 and June 23 last year, in addition to being 8 hours late each way, revealed shopworn Superliners badly in need of a facelift. Another colleague, writing Amtrak in protest of a rather rude trainman, was advised that Amtrak management is not responsible for the behavior of its crews. Granted that working a crowded train is not easy, but there must be recognition that the company (and Federal funding) exists for the benefit of Amtrak’s customers, the riding public. In short, it appears that top management just doesn’t care.
There are other Amtrak customers too. The commuter railroads whose spine is the Northeast Corridor, are not treated any better by Amtrak’s insular management.The faulty design of the ARC rail tunnel now being built under the Hudson River, which will not connect to Penn Station in Manhattan, is partly the fault of Amtrak, which did not want a seat at the table when the project was in initial design, a fatal flaw that will haunt regional rail advocates for generations. Amtrak management just didn’t care about “NJ Transit’s tunnel.” New York’s MTA continues to struggle with Amtrak’s inability to execute its responsibility for the Long Island Rail Road East Side Access project. This represents a lack of accountability by Amtrak management, who are in a unique position to influence the outcome of these multi-billion dollar investments. Amtrak’s own engineering department continues to lack competent leadership, allowing substandard quality concrete ties onto the Northeast Corridor (now being replaced at great expense), and serious structural cracks in a bridge in Elizabeth, NJ, to go unnoticed by inadequately trained maintenance workers.
But where IS management? Corporate culture on Norfolk Southern and other successful railroads dictates that Division Superintendents and Engineering Department officers are not to be found sitting in their offices; rather they get out and ride the trains regularly and observe the property firsthand. On Amtrak, they sequester themselves behind desks and await their long-sought retirement day.
Then there’s the issue of Amtrak operations. Shrinking consists in an era of growing ridership hardly makes sense. Amtrak’s “One Size Fits All” policy for its long-distance trainsets is also bizarre. One would expect that Western train consists would swell in the summer months, while Florida bound consists would lengthen significantly in the winter season.
Amtrak’s culture is one of meetings and seminars, and hiring consultants to produce “studies” for a laissez-faire management that doesn’t want to work to resolve the issues themselves.
Meanwhile, Amtrak’s lethargic bureaucracy continues to balloon. The agency continues to be a dumping ground for failed bureaucrats and retirees from other government agencies eagerly awaiting retirement. In fact, many already seem to be there.
This is not a Democratic or Republican partisan issue, rather, it concerns the willingness of elected officials to finally purge Amtrak’s management ranks of Bush-era minions and install new, energetic top leaders who are committed to growth and expansion; whose actions speak louder than words (and their consultants’ reports.)
Nearly a year after the U.S. election, Amtrak still does not have a corporate Strategic Plan for growth. As of this writing, management still does not have a Fleet Plan in place, nor new equipment on order. Management has become so moribund that Joe Szabo, the recently-appointed Administrator of the Federal Railroad Administration, recently had to direct Amtrak Acting President Joe Boardman to come up with a Fleet Plan. Hello.
Amtrak’s Bush-era management team has become more insular and combative, and dismissive of its long term supporters and customers; witness Amtrak’s illegal Photography Ban, perhaps the Boardman Administration’s only “accomplishment” this year. Boardman, a career bureaucrat, disdains individual discussions with media editors and freelance photojournalists concerning Amtrak’s strategic plans and initiatives, and has refused to acknowledge communications from citizens and customers regarding Amtrak’s Photo Ban.
Change must start from the top, and there are a number of great rail executives who stand ready to lead Amtrak out of its chaos this fall, when Acting President Joseph Boardman’s term is finished. These luminaries include Gene Skoropowski, managing director for California’s Capitol Corridor Joint Powers Authority, the agency responsible for intercity passenger rail service linking Sacramento with the Bay Area. Skoropowski has spearheaded growth and development of intercity and corridor passenger rail in California, including implementation of CalTrain’s “Baby Bullet” trains. Peter Cannito, former Executive Vice President of Engineering at Amtrak, and retired president of Metro North Railroad, brings a wealth of engineering expertise. Dennis F. Sullivan, former Amtrak Executive Vice President, is a seasoned Operations railroader who will bring customer focus to Amtrak. These three individuals form the backbone of a team that will inspire performance among Amtrak employees and get the company moving forward.
While politics is a necessary aspect of Amtrak’s presidency, it cannot be the only aspect. It is essential now to rebuild Amtrak’s management team, to run the company as a railroad and as a business, to achieve a vibrant and growing national system.
The U.S. had an extensive passenger rail system until the 1960s, when financial losses caused for-profit railroads to jettison their passenger services. Now that Federal and State governments have begun to accept responsibility for funding a national passenger rail system, there is growing support for breaking the 38-year old Amtrak monopoly on intercity passenger service, and allowing freight railroads and/or private operators to take over Amtrak routes, or even launch new services. This may be the Amtrak Board’s last chance to install competent, growth– and customer– oriented management, or the current groundswell of public and political support for passenger rail— and Amtrak’s monopoly of it— may soon come to an end.
Okay, Amtrak, more and more people in the non-Amworld are wondering what you’re up to; the “business as usual” status quo is no longer acceptable. Do something. The days of laying around and whining about the world being so terribly unfair are over. You’re expected to perform, just like everyone else.
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J. Bruce Richardson
United Rail Passenger Alliance, Inc.
1526 University Boulevard, West, PMB 203
Jacksonville, Florida 32217-2006 USA