Historical Overview Of How We Got Here: Identifying Trends-Errors, Mistakes, Bad Decisions, Inappropriate Leadership
The Second Decade-1980s
Rail Provocateur (M.E. Singer)
As with the first part to this series pertaining to the 1970s, the intent here is not to be merely list items by chronological dates, but rather, to identify and interpret by decade the issues and trends that would aggregate to explain why Amtrak is at the bumper post today.
Without question, Mr. W. Graham Claytor salvaged Amtrak, both politically and financially, in the 1980s, and into the early 1990s. Ironically, Claytor was appointed by President Reagan in 1982, despite that administration’s obsession with Amtrak’s costs and questionable utility. Claytor’s style insisted on running a finely-tuned business model, just as he had achieved previously at the Southern Railway. Claytor utilized well his prior political relationships built from the Southern and Navy Department to secure the requisite financing for Amtrak, achieving support for what would be the last new long distance service, the “Auto-Train”, in 1983. Smartly, he re-routed and re-named the Chicago-San Francisco train the “California Zephyr” when the DRG&W threw in the towel in 1983. Regrettably, with the arrival of the new Superliner diner equipment, expanded galley, and china, Claytor was forced by the powers of Washington to prevent the upgrading of meal services for several years.
Coming in at a most critical time, Claytor (and FRA John Riley) appreciated the economics of running more trains to increase revenues per train miles, enabling an increase in earnings from $428.7M in 1980 to well over $1B in 1989, (e.g., running “Desert Wind/Pioneer” with thru sleepers from Chicago on “CZ”; introduced the “Twilight Shoreliner”). Always seeking new revenue opportunities, Claytor had Amtrak expand into carrying the mail again, as well into commuter train services. Without question, Claytor’s term provided Amtrak its most profitable period, as illustrated when he came on board in 1982, Amtrak revenues covered only 53% of total operating costs; when Claytor retired in 1993, Amtrak revenues covered 79% of total operating costs. After Claytor departed, these favorable numbers quickly declined.
Intellectually, Claytor had a grasp on developing a consistent funding mechanism for Amtrak, through a 1¢ gasoline tax, referred to as the “Ampenny,” which proved to be unsuccessful with Congress.
Claytor persistently pursued viable concepts for cutting expenses to reduce the subsidy, including a facedown with the various unions to change work rules by eliminating the prior traditional 1919-era T&E districts in exchange for a 40 hour workweek. To provide continuous supervision on the overnight long distance trains, the Train Chief concept was introduced. To encourage ticket sales by travel agents, Amtrak was the first on-airline to join the ARC (Airline Reporting Corporation).
However, as Amtrak fine tuned its politics, it concomitantly lost its perspective of marketing, as indicated:
1) Marketing Myopia I: Where was the strategic foresight that failed to retain the Budd 480 HEP equipment displaced by the Superliners? Such a potential equipment pool would have enabled additional frequencies, or, even additional sections over peak travel periods; expand into new markets to serve. Why was this business model so acceptable with VIA Rail Canada, but not with Amtrak?
2) Marketing Myopia II: Why did Amtrak keep the “Auto-Train” strictly as a Florida operation through the summer months, when demand was significantly lower, and travel even discounted? Instead of storing unused excess equipment in the Sanford, FL yard, why did Amtrak lack the strategic direction to identify and improve its asset utilization by establishing a Chicago-Denver summer seasonal service that would have served the gateway to the many popular western national parks; alleviating the tedious drive for many Midwesterners? How did Amtrak fail to absorb the lessons of history, given how The Pullman Company excelled in this concept and organized itself around such asset utilization as exemplified by running the same consist during the winter as the “Orange Blossom Special” between NYC-Miami; during the summer as the “Bar Harbor Express”between Washington-Bar Harbor.
3) Given the acute shortage of 10-6 sleepers, why was a departure past midnight between NYC-Washington (“The Executive”) equipped with this sleeper (apparently for the convenience of traveling Amtrak management); yet, no overnight service was initiated on the once popular (up through 1971) GTW/CN “International Limited” route between Chicago-Toronto? The same can be said for equipping the overnight Boston- Washington train with a slumbercoach, when the “Capitol Limited” and “City of New Orleans” still operated with low level equipment.
4) What did Marketing miss when analyzing the viability (short-term) of the “New England Metroliner” between Boston-NYC and the “San Diego Metroliner” (also short-term) between LA-San Diego? How did they not understand that the non-stop “Metroliner” market between Washington-NYC could not be successfully replicated in these other markets? Low traffic on these routes indicated express non-stop trains only interfered with the potential en route markets between stops, as they were not as business-oriented as the NYC-Washington market.
5) Was their even a proforma supporting this venture, as how did marketing totally miss the actual bus-oriented, senior citizen market for the new Atlantic City? As a result, Amtrak wasted a $30M investment in a ⅓ stake of a $90M project re-building the line between Philadelphia-Atlantic City for its dedicated regional trains that were soon eliminated in favor of NJT commuter trains. Also, the Atlantic City depot was far from the Boardwalk attractions.
6) Given Amtrak’s on-going issues with the Administration and its own operations, what prompted Amtrak to lay claim to all potential high-speed rail proposals evolving at that time on the basis of claiming exclusivity for operating on all freight lines? (It would be like a developer pointing to a phone directory and claiming an exclusive on everybody listed).
Personal Reflections on the 1980s
I learned from a very vivid personal experience how Amtrak instituted the very concept of a monopolist not to be challenged:
1) I learned Amtrak adhered to the “Animal Farm” concept of how it treated Special Train operators. Although the Special Train tariff required a $500 non-refundable deposit for reviewing and approving each and every Special Train operation, Amtrak waived this requirement for the “Reno Fun Train,” relying upon only a rolling $500 deposit for the season.
2) Amtrak revoked the ARC when it felt threatened and tried to derail competition between Chicago-New Orleans for the 1986 Super Bowl; forcing me to come up with approximately $100,000 in cash to run a Special Train.
3) The illegal monopolist maneuvers by Amtrak also included the concept of “vertical tying,” whereby Amtrak would not dry lease a cafe or Superliner Sightseer Lounge, despite the operator evidencing public health certificates, liquor licenses for states to operate within, as well as “Dram Shop” insurance. Instead, if a Special Train operator desired a food/bar service car, Amtrak required only a wet lease requiring the operator to pay the higher costs for the LSA and Amtrak product, with Amtrak retaining the sales of those products.
4) Providing such monopolist actions to attorneys in Washington proved we had a case to pierce Amtrak’s monopoly. Unfortunately when this local firm was sold to an international firm, we were required to drop our case and not proceed.
Consulting with the Pennsylvania High Speed Rail Association, I learned their was sufficient legal interpretation to prevent Amtrak from ever claiming first nation rights to prevent any HSR line, or, require payment to Amtrak.
Waiting in 1980 for the “Broadway” at North Philadelphia was like a scene from “Fort Apache,” despite the parade of Amtrak trains and ex-PRR signage from a very long ago past directing passengers to westbound trains to Pittsburgh, Chicago, and St. Louis. No lounge until Harrisburg when combined with “Capitol Limited;” so, a vendor operation set-up in coach selling drinks.
With my work in Harrisburg, PA, I traveled frequently in a roomette or Slumbercoach double room on the “Broadway Limited” between 1984-1986. Also, between Chicago-Paoli, PA in 1987 (no diner in either direction, as post season and being shopped.)
Traveled in roomette on “Lake Shore Limited” Chicago-Boston; on same trip, “New England Metroliner” Boston-NYC; “Metroliner” NYC-Washington. Beautiful scenery through the Berkshires; could only lament over the missing and faster “New England States” from Chicago direct to Boston.
Several Deluxe Bedroom trips between Chicago-LA on “Desert Wind” and “Southwest Chief.” Frankly, the “Chief” had a rhythm to it that could not be repeated on the “Wind.” Found it very interesting how Amtrak did not understand that the primary attraction of serving Las Vegas was from Chicago; not LA.
During World’s Fair in New Orleans, traveled in double bedroom on “City of New Orleans” from Chicago, utilizing dome attached from KC at Carbondale. Even then, schedule elongated from former IC days.