Tuesday, June 07, 2011

This Week in Amtrak

Railway tracks. (NOTE: Uploader says, in uploa...Image via Wikipedia
This Week at Amtrak Vol. 8 No. 10
Volume 8, Number 10

From the Editors…

With the same assurance as the sun setting in the West, once again all of Amtrak’s perpetual financial woes are blamed on its long-distance trains.

Oh, really?

“Ducking this issue calls for real leadership.” - Springfield Mayor “Diamond” Joe Quimby, The Simpsons

Passenger rail ridership is up, of this there may be no doubt. Using the rudimentary yet flawed number of “riders,” Amtrak carried 28.7 million people in fiscal year 2010. This year should be even higher. Of course, now-a-days Amtrak never discusses “passenger miles” or “revenue per passenger mile” but this was not always the case.

Even so, when questioned by Congress as to why increasing “ridership” did not correlate to a drop in losses, the standard chestnut was brought out one more time, “It’s the long-distance trains,” said Amtrak President Joe Boardman. “They’re all unprofitable.” Oh, really? We have all heard this before, but how long will this broken record continue to play?

For many, the long-distance trains are the perceived final connection to an earlier era. Many a parent has packed up his family for an overnight trip with the proud exclamation, “We’re going to ‘Travel in Pullman Safety and Comfort’ like our grandparents did.” Obviously, there are no more open sections or drawing rooms. If there is an observation car it is privately owned. Oh, and when was the last time someone shined your shoes for you whilst you slept? Today’s long-distance train is a mere shadow of the former glory that once was the grand conveyance. Whereas average citizens could not afford fine linens, china, and silver service, these were commonplace for all who frequented the dining car; it was their chance to live like royalty, if only for a few hundred miles. Do today’s trains even come close to emulating such an emotion? Alas, such only exists for those who remember when, or who have studied the subject.

Things behind the scenes have changed, as well. Even into the early Amtrak days, long-distance reservations still used the old tried-and-true drum system. Dozens of agents sat around a rotating metal carousel with compartments containing train accommodation diagrams, while talking to customers or agents by phone. Today all of this is computerized. The ragtag collection of locomotives and rolling stock has been replaced by standard designs. Locomotive fuel economy has never been higher. Steam heating has been replaced by electric. Operating crew districts are no longer 100 miles. Bases for maintenance have been consolidated and centralized. Yet with all of these changes, which should have led to better economies, the long-distance trains still “lose money.” How can this be?

The Vision from 20 Years Ago

For Amtrak’s 20th anniversary, then-Amtrak-president Graham Claytor boasted of its cost control:

“Amtrak is determined to continue to improve bottom line through better service and controlled cost until 100 percent of operating costs are covered by earned revenues. At close to 80 percent in 1991, we are nearing that goal.” - All Aboard Amtrak 1971-1991, Railpace Publications

At no time in any of the historical records has it been found where Mr. Claytor blamed any of Amtrak’s financial woes on just the long-distance trains. Mr. Claytor was a railroad executive starting with a career at Southern Railway in 1963. He knew the numbers and, more importantly, knew what they meant:

“A year before Amtrak, railroads carried intercity passengers 4.9 billion passenger-miles and lost the 1991 equivalent of $1.5 billion doing it. In Fiscal Year 1990, Amtrak carried its 22.2 million intercity passengers 6.1 billion passenger miles and pared operating losses to about $330 million.” - All Aboard Amtrak 1971-1991, Railpace Publications

Mr. Claytor understood that the true measure of output is “passenger-miles” and revenue per passenger-mile, not the mere number of tickets sold. Tickets sold is the measure of the number of transactions, but ten $1 tickets are not as valuable as one $20 ticket. To this end, it must be noted that during the last five years the long-distance trains have averaged a growth rate of 3.7 percent, with no years of negative growth; something not even the regional or corridor trains can claim. Even more surprising is that the LD trains showed any growth at all, since they were statistically almost sold-out to begin with, and over the last 15 years (post-Claytor), their aggregate capacity (measured in “available seat miles” or even just “car miles”) has declined. This is growth in a product line defined as distance of 750 miles or greater on trains that have not seen any additional equipment in over a decade. Even so, this growth in patronage should correlate to higher revenue. What went wrong?

Since the passing of Mr. Claytor, there has not been a seasoned railroad executive at the helm of Amtrak. As a result Amtrak, a ward of the state, has reverted to a function of government; a workfare/basic transportation/federal entity charged with placating the public while twisting in the political winds. As a result it finds itself stuck between the dichotomous mandates of affordable transit and covering debts. The July/August 1974 edition of the Official Railway Guide lists the one-way coach fare between Chicago and Los Angeles at $113.50; corrected to 2011 dollars, this would be $514.47. Today's fare is one-half to one-third the inflation-corrected fare. After checking coach fares between numerous city pairs, today’s fare is one-half or less than that of 35 years ago (when corrected for inflation). Remarkably, sleeper fares are on par to then, when correlated. The result of this has, in effect, reduced Amtrak’s trains (long distance in particular) to Greyhound buses on rails. Was this always the plan? Not according to Mr. Claytor:

“They [fares] are going to increase just as fast as competitive factors permit… Because our service has been improving, and more and more people have been willing to ride, and as long as more and more people are willing to ride, and pay higher fares, the fares are going up. This is not new. This is the policy that we have been following for at least 10 years.” - Interview with Graham Claytor, Trains magazine, June 1991

Today there appear to be “more and more people willing to ride,” yet in the last 20 years Amtrak ticket sales have gone from 22.2 million to 28.7 million. Just 6.5 million more riders per year in 20 years? This is hardly anything to crow about. During the same period, as aggregate intercity travel has increased (and air traffic has quadrupled), Amtrak’s aggregate national market share has declined. How, after all this time, could ridership remain so paltry? Perhaps no one at Amtrak knows how to grow ridership and increase output. Mr. Claytor knew how to do both. When asked about service expansion and the goal of full cost recovery:

“That is one of the ways we hope to reach it and to get additional equipment in order to increase our revenues faster than our costs. That spread is what counts. With the new order for locomotives already in [to General Electric], and with the orders for new Superliner cars we hope to make this year, these would give us the additional capacity to increase our revenues. We are up against the stops on many ways, because many times of the year we can’t carry more people. We have more people wanting to go than we can carry, because we do not have the capacity. The first priority is to get more capacity on the routes we serve. The second priority will be to start new routes that we think have a good possibility of working.” - Interview with Graham Claytor, Trains magazine, June 1991

Mr. Claytor’s “first priority” fell by the wayside after his passing. Instead, focus shifted and intensified on the corporation-owned Northeast Corridor (NEC). This would culminate in the extension of electrification from New Haven, Connecticut to Boston and the notorious Acela trainsets. While these are demonstrative improvements in infrastructure and passenger amenities, it is still a short corridor, and as such offers limited potential for passenger-mile revenue growth. While total NEC ridership has grown, Amtrak’s overall market share has declined sharply, and is less than 1.5%; all of this is hardly enough to offset the costs of infrastructure maintenance, and the high maintenance and power consumption of the Acela trainsets.

Ultimately, passenger railroading in America has been held hostage by misconceptions. In the 1950s, hucksters such as Robert Young convinced people that the only future for passenger rail was the short-haul train; conveniently, short-haul trainsets were what he was attempting to sell. The outcome of a 1958 Interstate Commerce Commission investigation has been dubbed the “Hosmer Report,” after ICC examiner Howard Hosmer, wherein:

“This examiner’s proposed report included an oft-quoted speculative conclusion that railway passenger coaches would likely soon become museum pieces along with stagecoaches, sidewheelers, and steam locomotives. Such language was not adopted in the subsequent formal ICC decision.” - Amtrak’s Long-Distance Service, Can it be Made Viable?, Gordon Gill

Today’s weary chant of “the long-distance passenger trains are a money drain” is nothing more than a continuation of the "junk science" formulated over 50 years ago by those lobbying for their own agendas. The public at large blithely accepted that junk science as fact, since passenger trains, for the most part, were not germane to everyday life. As growth in passenger rail with long-distance trains, in particular, has shown, junk science no longer cuts the mustard for today's savvy travelers. Amtrak had better find a new mantra.

Past is Prologue

Recently, someone was nice enough to publicly post a picture of a train gate at Chicago Union Station from 1964, showing the makeup of that day’s South Wind: http://www.rrpicturearchives.net/showPicture.aspx?id=2487104 Even at this late date, seven years before Amtrak, notice there are eight sleeping cars assigned to this train along with five coaches. On today’s trains, if the number of sleepers is equal to the coaches, it is a miracle; in the East, the sleepers are outnumbered by coaches. Moreover, Amtrak does not have an adequate supply of spare equipment to increase train length to match fluctuating demand. If Amtrak had kept the proper ratio, at least the income from the First Class section of the train would still be the same as 35 years ago.

Is it rational to expect Amtrak to provide “First Class” amenities? Does Amtrak really provide a First Class Service? Is the provision of a mattress enough to be classified as “First Class?” If so, try to remember that, the next time Motel 6 leaves the light on for you.

Even though Graham Claytor believed it was possible, perhaps Amtrak is not capable of providing the equipment, let alone the proper business acumen/model for overnight service. It should be remembered that for most of the history of American passenger railroading, overnight rolling stock, sleepers, and diners were provided by a third party: The Pullman Company. Pullman was a private enterprise employed by the private railroads to provide a service. For most of its life, Pullman made money. Relieving Amtrak of this chore should allow it to concentrate on its core business; the equivalent of buses on rails.
Enhanced by Zemanta

1 comment:

Anonymous said...

I love the modern trains that I rode in Europe, and I would like to see a lot more investment in high speed intercity rail in the US. And I would also expect to see greatly improved service (perhaps faster, more reliably on-time, and more frequent) as a result of greater investment. Luxurious or not, I think that increasingly useful trains could compete better with airlines for trips lasting up to ~5 hours. Faster trains would mean covering greater distances in that time. For longer distances, then yes, I think you may be looking at a certain segment of riders who care less about time, and more about the experience. But I wouldn't focus exclusively on luxury.