The Cliff Notes™ Approach to Amtrak Marketing: The Airline-Style Seating Proposal

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Why Amtrak Refuses to Know Its Market Position and to Learn from New Coke and Other Market Failures

By M.E. Singer

Amtrak Marketing In The Vacuum Of A Cul De Sac

Thankfully, the advocates and customers of Amtrak passenger trains can rely upon the commitment of U.S. Senator Charles Schumer (D-NY) to quickly size-up and critically admonish Amtrak’s recent marketing lunges at innovating increased revenue opportunities.  So desperately seeking to increase revenues, without rationally understanding their product within their market position, is like watching Amtrak Marketing enact Don Quote attacking the windmills. The virtual lack of any definition and explanation of what is proposed with airline-style seats, on what trains and corridors, and time of introduction evidences how Amtrak Marketing is still going by the book–the abbreviated version of Marketing by Cliff Notes™ Although Amtrak senior leadership is undergoing another passing of the baton, where is the stewardship of the Board of Directors to provide their requisite check-and-balance before allowing such a concept to be floated in the media? Just as Senator Schumer so quickly called out how the imposition of airline-style seating would be the antithesis of Amtrak’s position in the market, the fallibility of the airline-seat proposal should have triggered within the Board, or FRA, the urge to dissect this tendency of the repetition compulsion for Amtrak to fail in its Marketing ventures.

From the 1950s into the mid-1960s, the Santa Fe Railway continued to advertise its fleet of “Chiefs” on the evening CBS News TV broadcast in Chicago. Not simply relying on flim, the Santa fe also displayed on the set actual coach seats from the “El Capitan” (Chicago-Los Angeles, extra-fare, all hi-level coach train). Clearly, the Santa Fe understood the unique assets in its market position and how to promote its brand. Contrary to that clear vision of the Santa Fe, Amtrak continues to ignore the French marketing expression, cherchez le creneau–“to look for the hole;” meaning, what gap in the transportation industry could Amtrak position within? Believing that initially the Northeast Corridor is being targeted for the airline-style seats, Amtrak has failed to define the market how and with what product(s) its “Northeast Regionals,” will compete. Their is no product positioning nor any attributes of the “Northeast Regionals” identified to define its product(s); therefore its position remains nebulous in the market.

Assuming the contemplated airline-style seats are intended for the “Northeast Regionals,” Amtrak has yet to identify what positioning gaps exist that Amtrak could “own” on that route. Unlike the Santa Fe, Amtrak has not embraced its unique product that differentiates its competitive position in the Northeast Corridor market-“the largest, most comfortable coach seats offering the most legroom©.” Consequently, the inability of Amtrak to define the gap in the market to stakeout its ownership has created a competitive opportunity for the “Limoliner,” a limited business class seating, multiple bus frequency scheduled between midtown Boston-New York offering meals, WiFi, and seat selection. Amtrak has already forfeited to simply observe the gutting of its low-end budget market by failing to counter for years growing inroads by the curbside and other bus firms (e.g., Megabus, Bolt, Peter Pan, Greyhound, Chinatown-Fung Wah, Lucky Star, et al). Compounding Amtrak’s failure to understand and successfully pivot on its unique product advantage of the coach seat; as well as Amtrak’s inability to protect that market position from inroads by both luxury and budget bus firms, Amtrak Marketing has also unsuccessfully differentiated its Northeast Corridor service in the mind of the customer by not pivoting off its other unique strength–the multiple market en route segments that are not served by air or bus competitors, e.g., Stamford-New London.

How Amtrak Marketing Must Appreciate The Death Throes of Line Extension

In reaction to the initial proposal for airline-style seating, given the understanding how a typical Amfleet coach will be sub-divided into a separate section for budget passengers, marketing proponents understand how onerous the task is for one product to be associated with multiple levels of branding. The concept of a “step-down line extension” is typically at the cost of weakening the higher brand. Indeed, this is what the CATO Institute report stated in its 18 July 2017 response to the proposed airline seating, (aside from its typical anti-Amtrak diatribe) how Amtrak would be “drawing most of its economy customers away from its own regularly priced trains, not from the bus companies. Thus, economy seating would minimally lower costs but significantly reduce revenues.”

Into this unknown market segment that Amtrak has not achieved in before, i.e., no slumbercoaches, no coffee shop/grills, etc., Marketing must tread lightly here.  Valuable lessons can be learned from prior marketing fiascos that endeavored to revamp and re-define their market position, including:

New Coke: Considered “the biggest marketing blunder of all time.” Why? Coke tried to fix something not broken.

Edsel: “The Edsel was a classic case of the wrong car for the wrong market at the wrong time. It was also a prime example of the limitations of market research…”

Aerotrain: Short-haul or long-haul service, Aerotrain was unacceptable. “The ride was uncomfortable, particularly at high speeds.” The engines could not get up hills, grades, and passes without helpers. So much for the lightweight, low gravity, cheaper to operate concepts to save the passenger train from GM, Talgo-ACF, Pullman, and Budd.

Market-Oriented Revenue Building Solutions

Before Amtrak destroys the uniqueness of its product that it will not be able to restore, Amtrak must recognize its own failings not to seize the ever-present opportunities to initiate revenue-building concepts that for too long have simply been ignored; its persistent unwillingness to benchmark to successful concepts–just in the railroad industry, including:

Seat Reservations:
Specific seat assignments by car would abide by the recent OIG report criticizing Amtrak’s boarding process by eliminating the unpredictability, stress, and given the sense of conductors unable to manage the passenger flow, the impression of hostility by the crew. To further respect the passenger as customer, platforms should be clearly marked where each class and car number is located and stops.  Just like in Europe; even with first and business cars marked with explicit color and number/logo. Trains throughout Europe carrying far more passengers in longer, more frequent schedules have  experienced no problem with the reservation concept.  Such reservations can also be procured same day from the automatic ticket machines. Even VIA Rail denotes car and seat diagrams for reservations. A recent article noted how the “Dutch rail company NS is working on an expansion for its Travel Planner-app that will tell train passengers where to find empty seats in crowded trains.” Until their end in 1971, the major railroads continued to require reservations on their passenger trains; accomplished this before  computers. So, what continues to stymie Amtrak from taking this common sense approach?

Upgrade Food/Beverage Services On-Board
Why does Amtrak continue with such a begrudging attitude towards on-board food service for coach and business classes on the “Northeast Regionals” (and other corridor services)? It is simply a waste of a car-and LSA-to be operated in the ex-Penn Central fashion–stock-outs, booths cluttered with boxes or conductors gear; most importantly, the denial of significantly increased revenues because the Cafe LSA is not trained as a bartender; insufficient liquor kit, condiments, and tools for creating cocktails. Does anybody at Amtrak, particularly in  catering, or, if their is even a Customer Experience Department, know the history of how the former New Haven Railroad’s bar cars were so profitable? What is the excuse; the reluctance not to maximize revenues?

First Class; Improved Business Class:
As already indicated, one key aspect of the market position of the “Northeast Regionals,”  persistently ignored in promoting, is its competitive advantage in serving multiple market segments.  As many of these markets are not served by the Acela, it is difficult to believe their is no market for first class for the many business travelers relying on this route. At the same time, Amtrak needs to revamp its Business Class, which is currently nothing more than a coach car behind the motor, and inconveniently several  cars from the cafe.

Charter/Special Trains:
Although VIA Rail unabashedly promotes its ability to operate charter/special trains along its corridors, it appears to be a secret that Amtrak is reluctant to promote. As a potential source of newfound revenues, why is this ignored?

Selden Research:
In respect to the eye-opening research conducted by Mr. Andrew Selden and explained in the publication of RailPAC, why is the response from Amtrak stone silence; not acted upon?  Mr. Selden has amply illustrated how the major traffic along the Northeast Corridor is principally commuter between New Haven-NYC and Philadelphia-NYC. It is this commuter-type traffic that crowds the Amtrak trains. Given this analysis, the answer also appears reasonable–for Amtrak to acknowledge this market as it is, and designate one class  specific trains, perhaps utilizing the lower comfort level Horizon cars, to operate exclusively between these two commuter zones.  Consequently, this would dramatically free up space along the entire Northeast Corridor.

T Class (Tourist):
If after all of the above revenue-producing concepts are implemented, only than should Amtrak contemplate appealing to the budget-minded elderly and college student traveler. To gain their patronage without depreciating Amtrak’s “image,” just as is done during Thanksgiving, perhaps Amtrak can lease a bi-level commuter car from an east coast commuter line; to provide the strip-down  environment now sought by Amtrak as its panacea for not understanding and serving its market with an acceptable, unique product to compete-and profitably.

Frankly, I would think these issues and solutions would be forthcoming if the multiple management and leaderships levels of Amtrak got out of their offices for a regular pattern of MBWA–“Management By Walking Around.” The lack of on-site, on-board management is a contributing factor to the inconsistent customer  experience provided by OBS.  As well, the employee with the right idea has nobody on the spot to communicate with his idea.

In the end, Amtrak must recognize that “the perception is the reality” in the minds of their customers.
 

How To Make Money With Passenger Trains: Real Estate. Photos by author

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By Noel T. Braymer

Transportation has always been central to land development. Major cities are always near transportation at harbors, rivers, the base of mountain passes and highway junctions. When new towns were being created in the 19th century in the United States, getting a railroad to put a station in at a town was the difference between thriving or seeing grass grow in the streets. The city of Los Angeles in the 1870’s was dead set on getting the new Southern Pacific Railroad to serve it. The Southern Pacific was laying track south from Sacramento through the Tehachapi mountains on its way to New Orleans. Los Angeles wanted the Southern Pacific to continue south down the Antelope and San Fernando Valleys to Los Angeles before heading  east to Yuma where the best crossing on the Colorado River was to New Orleans. The Southern Pacific wanted the cheaper and shorter route to Yuma by heading east at what is now Palmdale and dropping down the Cajon Pass to Colton before turning east to Yuma. In a likely attempt to discourage the city of Los Angeles from asking for rail service, the Southern Pacific gave the city a bill for what it would cost to build the railroad to Los Angeles. The city leaders were shocked and angry at this quote, but raised the money to pay to extend the railroad which forced the Southern Pacific to go to Los Angeles. For years afterwords people in Los Angeles grumbled about the greedy so and so’s at the Southern Pacific. For the Southern Pacific it was over 90 years later in 1966 that they finished their preferred route between Palmdale and Colton.

From the late 19th to the early 20th Century wealthy speculators would often buy large parcels of cheap undeveloped land. Usually the first thing they would do is build a railroad to connect their property to other railroads to bring people to the property to buy lots for homes, farms and businesses. There are 2 major examples of such men in Southern California at this time. John D. Spreckels was the son of Claus Spreckels who made his fortune making sugar from sugar beets in Northern California. Before this Claus Spreckels also helped build the railroad in the San Joaquin Valley now owned by the BNSF. John D. Spreckels after moving to San Diego soon went to to work developing San Diego, starting with creating today’s downtown San Diego next to San Diego’s harbor. The original San Diego was 3 miles to the north along the banks of the San Diego River and the area now called Mission Valley near the first Spanish Mission in California. During this time Spreckels built the San Diego Streetcar system. He also owned ferry services and shipping companies in San Diego. But his biggest project was building a rail connection for the port of San Diego to the Southern Pacific which met it at El Centro. The Southern Pacific helped pay for the construction of this railroad called by many “The Impossible Railroad”. It wasn’t as successful as hoped and the cost of maintaining it wiped out most potential profits. Spreckels’ interest went beyond transportation in San Diego. He also helped build a water system for San Diego which was central to attracting people to move there. He was a major supporter of the 1915 Panama-California Exposition which celebrated the opening of the Panama Canal. It also brought many visitors to San Diego. Many of the buildings at Balboa Park today were built for the 1915 Exposition, as well as the current Santa Fe Depot in downtown San Diego which is still the train station for  downtown San Diego.

An even better known local California businessman was Henry E. Huntington. He was the nephew of Collis P. Huntington, one of the “Big Four” of the Southern Pacific. Henry E. Huntington is best known for owning the Pacific Electric Interurban railroad which connected most of Los Angeles County to parts of Orange, San Bernardino and Riverside Counties. I once bought a reproduction of a Pacific Electric magazine at the Orange Empire Museum at Perris. What I remember most about this publication were the many ads of land for sale near stations of the Pacific Electric Railroad. The Pacific Electric Railroad never made much money carrying passengers. Most of what money the Pacific Electric made was carrying freight. It usually lost money. But Huntington, like Spreckels invested and controlled many other businesses besides railroads. More important to Huntington was that he owned what is now the Southern California Edison Company. Some of the first electric generators installed in Southern California were placed in Long Beach to power the Pacific Electric trains. But more than that, as they electrified the railroad, the Edison Company also electrified miles of open land near the Pacific Electric to provide electricity to the new homes and businesses on the lots people bought after traveling on the Pacific Electric to find their dream property.

The transit company in Hong Kong makes money, it has for years going back to the days of British rule. Would the reason be because of the high population density of Hong Kong? Or the difficulty of trying to drive in Hong Kong with few roads or places to park? The main reason the transit company (it is and always had been a privately owned company) is profitable is because it owns developed land next to the stations of its transit services. The rents of buildings on the land owned by the transit company is the reason why the transit company makes money. But this land wouldn’t be nearly so valuable without the transit service bringing people to or from the properties owned by the transit company.

This summer will see the start up of a new, privately owned passenger railroad in Florida called Brightline. It will start between Miami and West Palm Beach and later will be extended to Orlando. It is being built for the Florida East Coast Industries company which is a land development company founded by Henry M  Flagler. Flagler was also owner of the Florida East Coast Railway. Mr. Flagler was primarily in the land development business responsible for development of Miami Beach, West Palm Beach and St. Augustine in the late 19th and early 20th Centuries. The Florida East Coast Industries company has always been a land development company which also owned a railroad. The railroad was central to developing land in Florida, but the real money was made developing the land, not running the railroad. Now the new Brightline railroad is expected to operate at a profit which is normal for most intercity rail passenger services. There is interest in other places having Brightline create and operate other start up rail passenger services on other corridors outside of Florida. But the main interest of the Florida East Coast Industries company in building Brightline is from the money made building at and around the stations on land they already own. In downtown Miami Brightline is building a new train station. But the Miami Central Station is being build not just for Brightline, but also for the regional Tri-Rail train service and transit connections at the new station to Miami’s Metrorail, Metrobus and Metromover, the last of which is a free elevated People Mover circulator service for downtown Miami.

What is being seen in Southern California since the State of California started supporting rail passenger service between Los Angeles and San Diego in the mid 1970’s is major development around many of the stations. One problem in the past to riding trains in Southern California was that the locations of the stations were generally not in a part of town people wanted to go too. Most of the old Santa Fe Stations in Southern California were in industrial or warehouse districts of towns and cities. The primary business of the Santa Fe was freight, and businesses using the Santa Fe for freight were often close to the tracks. The stations also worked for the freight as well as the passenger side of the business. In the case of Oceanside before 1984 the station was also the site of a railroad freight yard. Services such as hotels, restaurants, parking or transit were also limited at many of the stations. Many places had little or no population before World War II. But by the 1970’s were major population centers but with no nearby train stations. The first major turnaround when it came to stations started with the opening of the new Oceanside Transit Center in 1984 as one of the first new train station in the US since World War II.

This is a view north of the Oceanside Transit Center looking south in the summer of 1991, seven years after it opened. I was taking these pictures to document the problem of trespassers on the railroad. In front of the train station is the Mission Blvd grade crossing. There is a red vehicle seen clearing the crossing in the background of this photo

Around 1970, a recently returned reserve Marine Major from a one year tour in Vietnam started thinking about what could be done with the old train station in Oceanside. After his return he bought a doughnut shop to go into business for himself in Oceanside and joined the Chamber of Commerce. He started talking about his ideas to other members of the Chamber. His basic plan was to create a multi-modal station. That meant combining as many “modes” of transportation as possible in one place. This would make it easier for passengers to travel by allowing passengers to make transfers in one place. This was common in many places in the world, but largely unknown in this country in 1984  1w. This would no longer be just a train station, but also the station for Greyhound and Trailways buses and for the transit buses in Oceanside to layover and make transferring between bus lines or to trains easier. Byron Nordberg was the reserve Marine Officer who planned the Oceanside Transit Center which opened in 1984. Central to his plan was replacing the old 1943 “temporary” Santa Fe wood and stucco station building with a new facility. Also critical was moving the freight yard out of downtown Oceanside. The station area was in the center of downtown Oceanside near the beach and pier. The area in the 1980’s was also seedy and rundown. These changes and improved transportation would encourage new construction in downtown with the plan to attract resort hotels to serve the nearby beach. What sold the members of the Chamber of Commerce was the new construction and broader tax base that this new transportation center could bring to Oceanside.

This is the view in the summer of 2017 at the Oceanside Transit Center next to the Mission Blvd crossing. At the left hand side are new apartments under construction . In the background are more apartments with retail services on the ground floor. On the right is the Oceanside Marriott SpringHill Suites resort hotel next to the station and tracks.

It wasn’t long after the Oceanside Transit Center opened that other cities in California started plans to copy many of the same ideas used in Oceanside. Over the years the rate of development around the stations has increased. In 1981 San Diego opened the San Diego Trolley light rail service. It used part of the old railroad built by John D. Spreckels to get to the Southern Pacific at El Centro. The Trolley first ran between the Mexican Border and the Santa Fe Depot in downtown San Diego. Several of the transit planners in San Diego thought it was a waste of money to extend the Trolley to the Santa Fe Depot. It soon became the busiest stop for the Trolley. Today there is much more Amtrak, Trolley and now Coaster commuter train service at the Santa Fe Depot. What is equally amazing is all the new construction in mostly the last 20 years around the tracks and Santa Fe Station in San Diego. Many of the buildings are hi-rise apartments and condos. There are million dollar high rise condos along the tracks now in downtown San Diego what not long ago was a run down part of town.

This is a view of the area around the Santa Fe Depot in downtown San Diego around 1990. This picture shows show new tracks built to extend the San Diego Trolley to the Depot which latter were extended further north to Old Town.

This is a picture from the summer of 2016 along the same trolley tracks of some of the development around the station today.

Perhaps what is most amazing is the rapid change around downtown Los Angeles. A major problem trying to build in Los Angeles County, particularly new housing is because of opposition to new development by local residents. Their main complaint is fear of more traffic because of higher housing density. About the only place that is seeing  major new construction including housing is in downtown Los Angeles. Much of this new construction is in older parts of downtown and the old warehouse and industrial parts by the river and railroad tracks. In 2011 LA Metro which controls transportation in Los Angeles County bought Los Angles Union Station. Their plan is to transform this iconic part of Los Angeles into the surface transportation hub of Southern California. This will include a new concourse which will reduce overcrowding at the station and make it easier to connect to other trains and rail transit. It will also include more retail and food services. A critical part of the remaking of Los Angeles Union Station will be new platforms and tracks for run through service for High Speed Rail, Metrolink and Pacific Surfliner trains. There are also plans to build a major hotel at Union Station and new commercial high rises around the station. LA Metro is also overseeing getting new housing and retail construction built near its rail transit stations. Hopefully several of these developments will also improve the revenues of LA Metro.

This is the view from the train in downtown Los Angeles. This is along the river and is also the site of the maintenance yard for the Red and Purple lines of LA Metro rail service. The long rows of white buildings behind LA Metro’s rail yard are fairly new high density housing. Such construction was possible in this industrial area because few people were in the area to complain. Now that LA Metro is planning to expand their yard to handle more railcars for the extension under construction of the Red line to Westwood, their new neighbors in the white buildings are complaining about LA Metro’s construction plans.

So often the critics of rail passenger service cry about it loses so much money and so claim it is worthless. What is often forgotten by these folks is the role of transportation, particularly rail service to a healthy growing economy. If you want a see a place that is poor and rundown, its usually where roads are empty, rundown, potholed and go nowhere. To me, trains are a form of horizontal elevators. I mean has anyone ever complained that elevators don’t make money? Even if you tried to charge people to ride the elevators the cost of collecting fares would likely be more than any income they might generate. But owners of large buildings know that without fast and reliable elevators, they won’t keep tenants willing to pay rent for using their buildings. Charging people to ride trains does makes more sense than for elevators. But the real money to be made is not from running trains. Its from the economic growth made possible with rapid and efficient rail transportation.

This is the masterplan for development at Los Angeles Union Station. This is the view looking east and north is on the left hand side. The new tall building along the west side of the tracks at the north end of the station is the site for a proposed new hotel at LAUS. At the east end of the tracks on the south side are some of the new high rise office buildings proposed for LAUS. The new run-through tracks of the station can be seen at the right south end of the station turning east to connect with tracks along the LA River running north/south.

“The Public Be Damned!”

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By Noel T. Braymer

I was thinking about this famous quote recently which I knew was from a 19th century railroad baron. With help from Wikipedia I discovered it was a quote from the Chicago Daily News in 1883 from an interview by reporter John Dickerson Sherman with the then president of the New York Central Railroad William Henry Vanderbilt. The question to Mr. Vanderbilt was “Do your limited express trains pay or do you run them for the accommodation of the public?”. Vanderbilt replied, “Accommodation of the public? The public be damned! We run them because we have to. They do not pay. We have tried again and again to get the different roads to give them up; but they will run them and, of course, as long as they run them we must do the same.” Well this was an honest answer but in today’s parlance a PR disaster. But this was true in the “golden days” of American rail passenger service and is still true today with American railroads. The American railroads have long had to subsidized rail passenger service and they didn’t like it. As Mr Vanderbilt said in a follow up interview to the Chicago Daily News in an attempt to repair the damage from the first interview: “Railroads are not run for the public benefit, but to pay. Incidentally, we may benefit humanity, but the aim is to earn a dividend.” This is still the philosophy of most corporate executives today.

What got me thinking about this is a recent phone interview I had with a reporter from the NBC station in New York City. I was contacted due to articles about Amtrak I had published online. The reporter was clearly covering the ongoing story of effects of years of deferred maintenance at Penn Station in New York and the effect it has on local commuter rail service. I covered for the reporter the early history of Amtrak and the fact that it was a result of the bankruptcy of the PennCentral in 1970. Amtrak was created in 1971. I pointed out in the book “The Wreck of the PennCentral ” wrote of the pressure on the then Nixon administration to do something from major share holders of the PennCentral after the bankruptcy. I was asked by the reporter: who owns Amtrak? I replied that the railroads in theory did. The railroads could get out of the intercity passenger business by joining Amtrak and were given shares in Amtrak. The original plan was for Amtrak to have little overhead and few employees. Amtrak was given rolling stock from the member railroads, but was to lease track time, stations, locomotives and road crews from the member railroads over their routes. Amtrak was forbidden from running commuter service. This was in realization that commuter rail service rarely cover their operating costs. The best hope for Amtrak to thrive was to operate at a profit and avoid major overhead costs. At the start up of Amtrak roughly half of all its trains ran on the PennCentral.

One point I made in the interview is the difference in the railroad industry between above the rail costs and below the rail costs. Above the rail costs are the operating costs of running a train. Most intercity rail passenger services operate at a profit.They generally make more money the longer distances they travel and more markets they serve. Passenger trains that generally don’t operate at a profit are urban commuter services and branch line services usually in rural areas with low population densities. Below the rail costs are the killers. This includes all the overhead costs including the biggest one: infrastructure costs of the railroad. The problem Amtrak has, isn’t that it has trains that don’t operate at a profit, but that it doesn’t have enough trains operating at a profit to cover its overhead costs. Most of the losses claimed on specific trains is based over the overhead Amtrak charges to each of its trains. But the reality is each time Amtrak has eliminated trains, its losses increased. This is because revenue was lost after the trains were discontinued, but there was no reduction in Amtrak’s overhead costs. Amtrak is admitting now that if it loses the long distance trains with the reduced subsidy funding proposed in next fiscal year’s Federal budget, it won’t be able to spend any money repairing the NEC. This is because most of the subsidy money for next fiscal year would have to go to cover the overhead spending now paid from the Long Distance trains. Where is most of Amtrak’s overhead?: the NEC.

By 1976 the Federal Railroad Administration (FRA) was planning the reorganization of the PennCentral to get it out of bankruptcy and off the government dole. It was finally decided that the only chance to make Conrail, the name for the reorganized PennCentral profitable was to take out the high overhead costs of its railroad between Washington and Boston. This was an admission that the Northeast Corridor, the NEC was a White Elephant. It was something very valuable but very expensive to own and take care of. But who to give this white elephant too? The government dumped it on Amtrak.

Around the time it got the NEC in 1976, Amtrak deficits which were modest at the start: exploded. By 1979 during the Carter Administration it was losing around a billion dollars a year. The Carter Administration demanded that Amtrak cut its losses by getting rid of its “money losing trains”. Finally 5 trains were cut and Amtrak’s deficit went up slightly not down. The reason for this was no overhead costs had been cut, but revenues streams were lost from those trains that were eliminated . A major fixation on the NEC was that High Speed Rail would save it. This started before Amtrak in the mid 1960’s with the creation of the Pennsylvania Railroad’s Metroliner. In 1964 with the opening of the Tokyo Olympics, Japan’s National Railroad introduced the first modern High Speed Train coined the bullet train by western journalist. It had the blazing at that time top speed of 125 miles per hour. It also operated on a new dedicated right of way without mixed traffic from commuter or freight trains. The response to the “Bullet Train” by the United States was the Metroliner going 160 miles per hour between Washington and New York.This was under the Johnson Administration and the beginning of government involvement for rail passenger service. By the time Metroliners first ran in 1969 it was operated by the PennCentral. It did increase ridership on the NEC, but didn’t save the PennCentral. It had many problems including rough track which made high speed operation difficult. Another major problem that slowed it down was track congestion running in mixed traffic from a few freight trains and plenty of commuter trains on the NEC.

The first substantial reduction in Amtrak’s deficit happened during the Reagan and George H.W. Bush administrations. The FRA administer under Reagan was John Riley, a fairly young lawyer from Minnesota who had a passion for trains, including passenger trains. He actively lobbied to get the job of FRA administer, then heavily recruited recently retired Southern Railway President W. Graham Claytor as Amtrak President in 1982. Claytor at first really didn’t want the job at Amtrak. Between these 2 men Amtrak went to recovering 80% of Amtrak’s cost from revenue by the time Claytor retired in 1993 a year before died. As long as Amtrak’s deficits went down the Reagan Administration was happy. Claytor predicted when he retired that Amtrak would break even by 2000 if his policies were kept. Riley and Claytor did it in part by leaving the NEC alone. That would have been walking into a political mine field to try to cut costs and service on the NEC. The main focus during the Claytor presidency was on incremental improvements mostly on the long distance trains. These included extending the Palmetto from Savannah, Georgia to Jacksonville Florida. Extending the Sunset east of New Orleans along the Gulf Coast to Orlando, Florida plus buying the Auto Train service between Virginia and Florida. Claytor with help from John Riley was able to get support to order new low level sleeping cars for the eastern long distance trains and additional Superliner cars for the western long distance trains to get more revenue for Amtrak.

By 2002, during the George W. Bush administration Amtrak instead of not needing a subsidy almost went out of business and needed billions of dollars in bailouts. Claytor’s successors had bet the farm on the Acela being the glide path to profitability. Acela was the new high speed train equipment to replace the Metroliners combined with many millions more for track improvements on the NEC to reduce running times. It was in 2000 that electrification was finished north of New Haven to Boston for the Acela service. There were problems and cost overruns with the Acela project. Amtrak sought to save money and increase income. This included cutting the Palmetto back from Jacksonville to Savannah, eliminating the Desert Wind train from Los Angeles and Pioneer train from Seattle that  both connected with the California Zephyr at Salt Lake City. At this time Amtrak reformulated the way it charged  states for subsidy to local state supported trains. For example take the then San Diegan trains between San Diego/Los Angeles with a few extended to Santa Barbara. Since about 1989 these trains according to Amtrak recovered just a little over their operating costs. In the late 90’s the San Diegans were under the new formula recovering no more than 60% or so of costs.

This article covers in more depth than what I was able to discuss in my interview with the local New York NBC reporter about Amtrak and the NEC. The last questions he asked me were about the future of Amtrak and what would be needed to improve rail service on the NEC. He also asked why was rail passenger service was so good in most developed countries and so bad here. One reason was these other railroads were often publicly owned. I pointed out that the problem in the past was American railroads were forced to subsidize the infrastructure used to operate passenger trains with their profits from freight. In the case of both the New York Central and Pennsylvania Railroads, as well other railroads on the Northeast and Midwest railroads, profits dried up after World War II in part from the drop in demand for coal being replaced with fuel oil and natural gas. The current problems around Penn Station in New York have their roots to deferred maintenance starting in the 1950’s. In the United States railroads are the only transportation service which is expected to pay the full costs of its infrastructure. Ports,waterways,Coast Guard, airports, air traffic control and roads are services or infrastructure which is paid in large part by taxpayers. Trucking companies, airlines and ship lines pay taxes and fees, but they don’t pay the full cost of the infrastructure they use that the railroads have done here since the 19th century. The railroads are thriving now in large part because since 1980 with railroad deregulation they have been able to abandon thousands of miles of lightly used secondary and branch lines. They did this to save billions over the years in reduced costs in property taxes and costs to keep and maintain rail lines that didn’t earn enough revenue to make money.

The reporter asked in effect if the Northeast would be better off without Amtrak owning the NEC. I pointed out in many places in the world the railroad infrastructure now is either owned by the government, or a non-profit company owned by the government.The train operators in Europe now are mostly for profit companies. In Europe there are efforts to encourage more competition and expanded rail passenger and freight service between European countries. An example of this are plans by German based railroad Deutsche Bahn to extend direct service to Paris and London. The best way to pay for track infrastructure is to have as many paying trains as possible to use it. A busy mainline railroad in this country or any country is profitable railroad infrastructure. I pointed out to the reporter that California publicly owns miles of railroad. I gave as an example the fact that most of the railroad between Los Angeles and San Diego is publicly owned. What I didn’t share with the reporter were my views of the chances that local government might take over ownership of the NEC. This would save Amtrak a great deal of money since they would only be paying for the infrastructure they use, not all of it. Despite this Amtrak is opposed to losing the NEC. One reason might be that a lot of Amtrak jobs and Amtrak managers work on the NEC. Where there could be even greater opposition would be from the commuter railroads once they find out how much more they would have to pay to use NEC tracks without the Federal subsidy Amtrak gets to fix and maintain it.

 

 

 

BART: What’s To Love And What’s to Hate

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By Noel T. Braymer

BART was conceived as an alternative to building freeways in San Francisco while preserving its role as the  commercial and job center of the Bay Area. It was part of the effort to stop freeway construction in San Francisco which frankly didn’t have the room to handle freeway loads of cars during the work week. The intent was to build a rail passenger service which would compete with freeway auto travel in terms of speed, cost and comfort. The BART cars were designed to be wide and roomy with air conditioning, carpeting and padded cloth seats. Even air conditioning was rare for transit and most cars in the 1950’s when BART was being planned. BART trains were expected to travel at 80 miles per hour to achieve an average speed of 55 miles per hour. Much of BART was built elevated; it was going to be a fully grade separated service with no grade crossing. To save money on construction to elevate BART, cars where built with aluminum instead of steel to make them lighter so the pillars didn’t have to be as strong as needed if the BART cars were heavier. BART also used a wider track gauge than most trains. The reason BART gave for doing this was to increase stability for the cars against crosswinds on the Golden Gate Bridge. Plans were later dropped to build service on the Golden Gate Bridge. One reason proposed unofficially was the non-standard gauge was used to discourage plans to run BART on existing railroads such as the Southern Pacific commuter rail service between San Jose and San Francisco.

BART with Muni, succeeded in centering economic growth along Market Street with joint subway services which kept downtown San Francisco as the commercial hub of the Bay Area. This also led to major changes in the skyline of San Francisco with many new hi-rise office buildings.The 1989 Loma Prieta earthquake which shutdown the Bay Bridge for a month proved the value of BART to the Bay Area and for travel to San Francisco. Even after the Bay Bridge reopened, ridership on BART remained high and crossings between Oakland and San Francisco matched or exceeded traffic over the Bay Bridge. While BART planning was different, many of its pioneering efforts didn’t pan out. It was quickly found that it was not economical to operate BART at 80 miles per hour. This put undue wear and tear on the brakes and tracks as well as increased energy consumption. Another problem with BART cars because they are unique, they cost more to replace than more conventional equipment. This could be a factor in why BART has been slow in replacing its car fleet. Since 1972 when BART first opened, BART has only had one new car order to increase its car fleet. It is now only starting to receive replacement cars for its original 45 year old cars.

BART is typical of what is happening with infrastructure in this country. In the Post-World War II era, between roughly 1945 to the mid 1970’s the United States built lots of new roads, pipelines, power lines, aqueducts, sewage treatment plants, airports and so on. Much of this was the result of keeping after the war the tax system created during World War II that was needed to pay for the war. This included higher taxes on businesses and wealthy Americans than we have today. Tax rates before 1980 also encouraged businesses to invest in capital projects to earn tax savings. I can remember a co-owner of where I worked in the 1980’s after giving employees an end of year bonus telling us that he would rather give the employees the bonus money than spend the money on taxes. What has been happening since the late 70’s has been an increase in deferred maintenance of infrastructure in both the public and private sectors. With this we are seeing an increase in failures of this country’s infrastructure. This is not true in most developed countries which continue to maintain their infrastructure.

While maintenance has been deferred, much of the available government money for infrastructure has gone into new projects while ignoring existing projects post due for maintenance. This is particularly true of public roads and transit. BART is now extending service from Fremont to San Jose. It is also extending service from Dublin/Pleasanton to Livermore and planning a connecting service from Pittsburg /Bay Point to Antioch. These will be valuable projects. But the reality today for BART is much of its 1970’s infrastructure in falling apart. This includes the tracks, the stations, the power systems and signalling. In 1972, BART’s signalling system was computerized and hi-tech.The same signalling system is still in place, but spare parts are had to find and BART’s signaling computers are incompatible with modern computers and modern rail signalling.

Some recent BART capital projects have not done well. BART built and operates an elevated people mover to the Oakland Airport from its joint BART/Amtrak Oakland Coliseum station. This replaced a dedicated transit bus connection. BART’s expectation was this connection would pay for itself both in fares to use the airport connector as well as increased ridership on BART. Ridership on the BART Oakland Airport connector is below projections and is not paying for itself. Much the same thing has happened at Millbrae. The plan was to create a joint BART/ Caltrain station with connections for both services to nearby San Francisco International Airport. A plan was put forth to extend the planned airport people mover to the new joint BART/Caltrain station so transit bus riders as well as BART and Caltrain riders could easily connect to all of the terminals at the airport. This is done at other airports and is planned for connecting LA Metro trains and local transit to the terminals at LAX with a Peoplemover.

BART refused to have any part of it, demanding that it had to have a station inside the airport. What BART got at great expense was a station that dead ended at the edge of the international terminal which is slower and reduces train capacity compared to regular run-through service . For most BART passengers this either meant a transfer to the airport People Mover or a long walk to their terminal. Ridership on BART to the airport is below projections and ridership and transfers at Millbrae are well below projections. Only one BART Line of the 2 which serve Millbrae goes to the airport. There is little in the way of transfers between BART and Caltrain to the airport, or elsewhere. This includes all the transit services in the Bay Area. To make transfers easier in the Bay Area most agencies accept the Clipper Card. This is a prepaid debit card where card readers deduct your fare from your Clipper Card as you board a bus or train. While this makes it easier to transfer, passengers still have to pay full fare for both services to transfer between services, even if the distance is rather small. Even if the cost to transfer between BART and Caltrain just to and from the airport was a dollar, it would likely make up for the lost revenue from people who won’t pay full fare to use both services for such a short trip.

There is much BART and the Bay Area could learn from Southern California about rail service.  BART and Bay Area transit in general are classic examples of agencies acting parochially, worrying about their own turf and fighting other agencies for funding. A major reason for this is the Bay Area developed much earlier than Southern California. With this came more smaller counties and city agencies compared to Southern California were most development exploded after World War II. Just Los Angeles County has more people and greater land area than most of the Bay Area. The Los Angeles County Metropolitan Transportation Authority, also called LA Metro is in charge of transit and most transportation including roads in the county. There are several transit agencies in Los Angeles besides LA Metro. LA Metro arbitrates issues between these agencies such as routing and transfers conflicts between services. LA Metro is busy with major rail transit projects made possible by voter approved sale tax increases. But it is also using that money to maintain existing services. LA Metro is now receiving new cars for expanding service on its Gold and Expo Lines. This car order is also going towards replacing the original Blue Lines cars in service since 1990. At the same time LA Metro is doing major maintenance on the Blue and Green lines. They are also planning improvements on the Blue Line to improve reliability and reduce running times.

Metrolink trains serves Los Angeles, Orange, Riverside, San Bernardino, Ventura Counties and the city of Oceanside in San Diego County. A Metrolink ticket includes free transfers to transit in the county of the riders destination. For many that is Los Angeles County. A Metrolink ticket for Los Angeles County includes a chip so it can be used as Tap Card on the turnstiles at the LA Metrorail stations and is accepted on all LA Metro trains and most buses. Some but not all local transit bus services in Los Angeles County also honor Metrolink tickets. The LOSSAN JPA which administers Pacific Surfliner Amtrak service for the State is now offering transfers to local transit on Surfliner trains. The Coaster Trains between Oceanside and Solana Beach offer free transfers to the Sprinter Trains and North County Transit District buses. The round trip ticket for an adult between Oceanside-Solana Beach to San Diego is $11 dollars. For $12 dollars a passenger can get a Regional Day Pass good on Coaster, Sprinter and Trolley trains as well as most buses in San Diego County.

What Can Mr. Anderson Do To Turnaround Amtrak?

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By Noel T. Braymer

Richard Anderson is the former CEO of Delta Airlines who has agreed to a six month training period to learn how Amtrak is run, before he takes full control as Amtrak’s President next year. The question I have is what in Mr. Anderson’s long experience in the airline industry prepares him to make a major impact at Amtrak? The number one challenge at an airline, or any business is increasing sales, while controlling costs. At the heart of any airline is the desire to fill all the seats on a plane with paying passengers on every plane before it takes off. For airlines an empty seat on a plane when it takes off is money lost. It is akin to a store throwing out perishable goods which is a loss on the balance sheet. Not only do airlines want to fill seats on their planes, but they want to get the most money for their seats that the market will accept. But when seats are unsold, even a dollar for a seat is better than an empty seat to an airline. Amtrak has a lots of empty seats.There are times when trains are crowded. Anyone one who has been on a crowded train will remember that. But there are times on Amtrak when business is also slow.

A good example of this is on the Northeast Corridor. The trains are often crowded there. But most of the crowding is between New York and Philadelphia which is roughly 90 miles. But it is over 400 miles between Washington and Boston. An airline is much more interested in passenger miles than the number of passengers it carries. Since travel is usually charged by the mile, the greater distance a passenger travels, the more money the airlines earns. So someone from an airline is more likely to ask: how can we get more people to travel south of Philadelphia and north of New York to increase passenger miles and revenue?

One way to increase sales is by what is called Yield Management. Anyone who has made reservations online for a flight, a hotel room, a bus, rental car or Disneyland have seen yield management in action. The price for a seat on an airplane can change from day to day for a flight depending on how many seats are available. If the demand is high the price goes up and if there are extra seats the price goes down. This is central for most airlines getting the most money for seats while insuring that seats won’t go empty. This model has been embraced by almost every service industry except American rail passenger service. Most online ticketing for intercity bus service in this country uses yield management.

But there is more to filling planes or trains with just pricing. You have to get people to where and when they want to go. This is why airlines developed hub airports. If an airline flies non-stop between 2 airports it serves 1 market. In other words between points A and B. Now add one more stop which we call C and we are serving 3 markets: AB, AC, BC. Now think about what happens if we just add a fourth point, we get 6 markets AB, AC, AD, BC, BD, CD. This is why airlines depend on connections. From a hub one plane can make connections to several points allowing passengers to transfer to flights to many destinations. There are few if any flights today that don’t have connecting flights. The more markets you have connections to, the more people you will carry. One of the first things Mr Anderson and airline employees he will likely bring with him to Amtrak will be looking at is how well the stations at major cities on the Northeast Corridor are hubs to other trains. It won’t take long to discover that it isn’t very much. But Amtrak trains could carry more people if their trains connected to more trains at Washington, Philadelphia, New York and Boston. More can also be done to connect trains at Chicago and Los Angeles too.

Now these connections don’t all have to be on Amtrak trains or even trains. Airlines have agreements with other airlines to serve markets the other airline flies to and honor each others tickets. Let say you want to fly from point A to C. You get your tickets online (which is basically a bar code) with a connecting flight at point B. Point B is the hub airport where when changing flights you also change airlines. Amtrak could have interline agreements with commuter railroads. In theory Amtrak could sell Long Island Railroad tickets to connect at Penn Station in New York to Amtrak trains anywhere Amtrak goes. This may not be easy to do, at least overnight. Part of the problem would be that Amtrak and the Long Island are at different ends of Penn Station so such transfers today would be difficult. Even getting the bureaucracies of Amtrak and the Long Island to talk about interline ticketing will likely be complicated.  One place where we can see this working now is with connecting bus service to Amtrak. Amtrak has been expanding bus connection service to their trains lately because it brings in more passengers on their trains. We should be seeing more connections to Amtrak by bus in the future to places without train service.

One thing Mr Anderson will likely notice if he hasn’t already is that  Amtrak doesn’t have too many trains, but not enough to pay for Amtrak’s overhead. Amtrak needs more trains and equipment to carry more paying passengers in order to become solvent. For years the Long Distance Trains often turn away paying customers because the trains are fully booked. A simple fix to this is to add more cars, particularly sleeping cars which bring in the most revenue and demand. Before Amtrak 18 car passenger trains were common. Today Amtrak’s long distance trains rarely carry more than 10 cars. Part of the problem besides Amtrak accounting that assumes costs go up more than revenues the more equipment they run on a train, is Amtrak doesn’t have enough equipment to add more cars on most trains. A major issue Mr. Anderson will have to deal with is getting enough seats and beds to carry enough people to operate at a profit. One thing Mr. Anderson understands from the airlines is they don’t buy airplanes: they lease them. Time will tell, but it is likely that if Mr. Anderson is serious about turning Amtrak around, he will need more and more new, reliable equipment to get the kind of productivity to pump up Amtrak’s revenues. He certainly has experience getting private financing for leasing new equipment.

With more, new equipment Amtrak will be able to run new services. First thing is to run all trains at least daily. Also Amtrak should add more sections to existing trains. These could include an overnight section between Los Angeles and Oakland for the California Zephyr, a section on the Zephyr at Salt Lake City to Seattle, a section to Denver on the Southwest Chief, a section on a daily Cardinal to St Louis and Kansas City, a section on the Crescent from Meridian, Mississippi to Fort Worth, Texas and a section on the Capitol Limited from Pittsburgh to New York and Boston. What could also be done is add a second train with schedules roughly 12 hours apart on the same routes. These additional trains could include the routes for the Empire Builder, Southwest Chief, California Zephyr, Coast Starlight, Sunset Limited, City of New Orleans, Texas Eagle, Crescent, Cardinal, Capitol Limited  and Lake Shore Limited. This is not a final list and won’t happen overnight. But with more sections and extensions with these trains connecting with each other will create a network grid of rail passenger service across the country. Adding to this are connecting services by local rail and bus service. With such a network we will be able to create a viable and heavily used rail passenger service in this county.

Roundtrip to San Bernardino with Lunch for $17.01! (With Pictures By Author)

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By Noel T. Braymer

Now that I have my weekends free, I am taking full advantage of Metrolink’s weekend day pass. For 10 dollars anyone can travel anywhere Metrolink goes to on the weekends for a day. This includes transit transfers to the same transit services a Metrolink ticket gives you during the work week. During the 4th of July weekend I decided to go to San Bernardino to check out the route and see the finished work at the San Bernardino Station of the new run through station tracks, platforms and pedestrian bridge across the station tracks. It was a busy and very productive trip.

I caught the first weekend Metrolink train to Los Angeles out of Oceanside. I also checked out the construction work at the station. The new third track and platform is now in service. Now they are tearing out the original platform from 1984 on the east side of the station to replace it with a higher platform to make loading and unloading faster and easier. This has been done already at the new 3rd track and will likely also be done at the 2nd platform on the west side of the station. Leaving Oceanside we had a fairly good crowd of people. By the time we left Fullerton the train was almost full with few empty seats to be found. One thing about the weekend Metrolink services is there is plenty of padding in the schedules. We arrived 15 minutes early into Los Angeles.That was how much padding there was in the schedule. I believe that shorter schedules and more reliable service will go a long way to increasing ridership on Metrolink, both on the weekends and weekdays. But I realize this won’t happen overnight.

The view at the Oceanside Transit center of the 1984 platform torn up to be replaced with a higher platform to speed up loading and unloading.

My train was scheduled to arrive at 10:30 AM at Los Angeles. My connecting train to San Bernardino was scheduled to depart at 10:35 AM which could have been a tight connection if my train had been late. As it turned out I had plenty of time. One thing that concerns me is Metrolink should do more to improve connections between trains and to transit. This would increase both ridership and revenue. But it can be hard to find what is already available with Metrolink and what is available is often not promoted. Trains to San Bernardino run more often than Metrolink’s service to Oceanside. But the San Bernardino trains are shorter and had many more empty seats. I think LA/San Bernardino service has a great deal of promise, but it needs faster, more reliable service and better connections to more places.

View of the fairly empty Covina station on the San Bernardino Line with weekend service.

One problem is much of the route in Los Angeles County is single tracked. This right of way was a lightly used former Pacific Electric line bought with the help of the State from the Southern Pacific shortly before it was bought out by the Union Pacific in the 1990’s. The right of way in many places is now too narrow to easily double track. The running time is very slow in places, particularly between Union Station and the beginning of the single track on the 10 freeway, There is a very needed siding for passing on the freeway. From there at the west end of El Monte is a single tracked viaduct connection to the old SP mainline which is double tracked and used by Metrolink for a few miles. There are stations on single track at Cal State LA and Baldwin Park. I’m convinced that the future of fast service between Los Angeles and San Bernardino will lie with dedicated double tracked passenger tracks on the old SP main line. This is the only route which serves the terminals at Ontario Airport and is the only rational route that can extend high speed rail service to the Inland Empire. This can be done with blended service on dedicated  double tracks such as planned between Los Angeles and Anaheim for passenger and high speed rail service on the BNSF mainline. Much the same can be done on the broad former SP main line which is wide enough for 4 tracks and is a secondary route for the UP to the parallel Union Pacific’s historic main line.

View of how narrow the right of way is on the San Bernardino line in much of Los Angeles County. The is west of Pomona.

At Pomona at the east end of Los Angeles County, the tracks of the old SP merge with the old ATSF tracks which use to connect San Bernardino to Pasadena and Los Angeles. From Los Angeles, Pasadena to Azusa the old ATSF right of way is now the Gold Line light rail service. By 2021 with the completion of the Regional Connector tunnel in Los Angeles, the trains will be reorganized to start at Long Beach as the Blue Line, serving Union Station and on to Azusa. Even before that happens work is planned to begin to extend the current Gold Line along the old ATSF to Pomona, Claremont and Montclair. The problem will be squeezing the 4 tracks needed for both services to serve joint stations at Claremont and Montclair. This is not a problem at Pomona since the ATSF right of way is on the north side of the former ATSF station and Metrolink is on the south side. At both of the other two stations the plan is to put the light rail station on the north side tracks which is now used by Metrolink. This will likely require grade separated track crossings. It will also be difficult to squeeze 2 stations next to each other. This is particularly true at Claremont. At Montclair even though it is roughly a mile from Claremont, it is in San Bernardino, not Los Angeles County, so funding east of the county line will be San Bernardino’s responsibility.

View from the train in Pomona on the old SP Right of Way looking at the old ATSF right of way in the background to the north which will be used to extend the current Gold Line to Montclair

This is the view of the south end of the Claremont Metrolink station. The plan is for the future light rail station to have the north tracks and move Metrolink to the south. Seems like a tight fit

Once this is all worked out, both Metrolink and Light Rail will benefit with increased ridership with passengers transferring between services. As we rode through San Bernardino County I saw possibilities with available land for new housing near Metrolink Stations. San Bernardino County could use an economic stimulus. Affordable housing with access to Metrolink would be a shot in the arm for the county to say nothing about how it would help Metrolink. As we approached San Bernardino the train crossed over the BNSF mainline and yard tracks on a high flyover which gave a panoramic view of the BNSF at work. We stopped at a new platform and track at the station. The track and platform we were on was across from the run through track and platform alongside the station. There is a pedestrian bridge with stairs and elevators to serve passengers on the platform we were on. However the bridge was not opened yet to the public at this time, so passengers had a long detour supervised by station personal to cross tracks at a grade level crossing to get to the historic old station.

View from the train on the flyover, over the BNSF Mailine and San Bernardino Yard

Looking back it seems rather odd. The track and the platform alongside the station was available. So were the old stub end tracks and platforms on the westside of the station which were all empty. The only train that now goes east of the station is the daily Southwest Chief westbound in the morning and eastbound in the evening. In the near future all San Bernardino  Metrolink trains will be extended to a new station downtown which will also be a transit center.Test runs on the tracks to downtown started this April, with passenger service expected latter this year. Besides buses there will be regular Diesel Multiple Unit (DMU) rail service connecting at the Metrolink downtown San Bernardino station from Redlands by 2020. There will also be rush hour Metrolink service from Redlands as well. But my question is why didn’t my train stop at an available platform next to the station and avoid a long detour?

Arrival at San Bernardino on the center platform with 3 run through tracks for future Metrolink service to downtown San Bernardino and limited service to Redlands by 2020. The new pedestrian bridge seen in this picture has both elevators and stairway so passengers can safely reach the station. But the pedestrian bridge was not open this day.

Passenger on my train had to take a detour on a supervised grade crossing to get to the station

The old San Bernardino Station looked in fairly good shape. A major attraction at the station is, it is the home of the San Bernardino History and Railroad Museum with plenty of material on both the history of San Bernardino and railroads. Across the street from the station is a small fairly new shopping center. It included a few places to eat and it was now lunch time. I settled for the “Hong Kong Express” for Chinese food. I got a very filling meal for $7.01. The area around the station is slowly looking better with new construction.

The San Berardino History and Railroad Museum is in the historic San Bernardino station.

After lunch I planned to take the 1:05 PM departure back to Los Angeles. While I was waiting around the station I saw a Metrolink train eastbound coming to the station which had come from the south were the Colton Metrolink yards are and turned right towards the station. I knew there weren’t trains from Orange County running on the weekends in the middle of the day to San Bernardino. The train looked clean and some of the windows were wet. Well it turned out to be the 1:05 PM departure for Los Angeles. Before the train arrived in Los Angeles the conductor over the PA told the passengers to get to the exits before the train stopped because there was going to be a large crowd of people on the platform wanting to get on the train. What had happened was the train departing at 1:45 PM out of Los Angeles was cancelled due to mechanical problems. It was now around 2:45 PM and the trainset I was on was put into service to pick up the passengers who’s train was now over an hour late departing.

My train back to Los Angeles. It came right from the Colton yard to replace an out of service trainset at Los Angeles Union Station. Notice this train is on the platform next to the station and the stub end tracks used by Metrolink in the past and to store equipment.

After I was able to get past crowds of people blocking the path to the ramps to the station tunnel leaving the train, I had over an hour before the last Metrolink train to Oceanside left. I didn’t want to go to far and miss my train home, so using my Metrolink day pass I was able to catch the Gold line train to East Los Angeles. On my return leg I got off at the station just east of the Los Angeles River. I followed the Gold Line tracks in the median of 1st St down to Little Tokyo. The current tracks on 1st street have a temporary shoo-fly track to connect the Gold Line north to Union Station out to Azusa. As part of the Regional Connector project there is a new subway station being built in Little Tokyo where nearby portals will be built so future trains from Santa Monica will emerge at 1st St to East Los Angeles. There will also be a portal next to Alameda St near were the current surface Little Tokyo station is now where future Blue Line trains from Long Beach will surface on their way to Union Station and past Azusa.

View from 1st St in Los Angeles. On the right are the temporary shoo-fly tracks to connect the Gold Line to the current Little Tokyo surface station. When the Regional Connector tunnel is finished there will be portals to it on 1st St for trains between East Los Angeles to Santa Monica and on nearby Alameda St for trains from Long Beach to Azusa by 2021.

Once I left Los Angeles the train trip was rather humdrum until we were between Fullerton and Anaheim stations when the train came to a full stop for several minutes. I don’t know why. There was an announcement on the PA but I couldn’t hear it. I usually hear PA announcements on the train with no problems. But on the PA with some crews I hear sounds but can’t make out what they are saying. Finally we started moving. But lost more time as we had to wait for 2 northbound trains to clear the sidings before we could continue. We were about 7 minutes late leaving San Clemente. But because of the padding we arrived almost 10 minutes early.

This is the City of Orange Metrolink station. In the background is a new museum open to the public owned by Chapman University. The Chapman campus is near the station and the school has been buying property alongside the station to expand the school. Seems that when there is expanded rail service, development soon follows.

The good news is Metrolink have new locomotives to replace their old ones. But it will still be a few months before these new locomotives will be ready to go into service. Metrolink’s marketing is improving with a major effort to increase ridership during holidays. This is a largely untapped market of discretionary travel by rail which is outside normal commuting patterns. Metrolink is the only rail passenger service in northern Los Angeles County and most of the Inland Empire. Connecting with other regions of Southern California will open new markets for people to travel. But for this to happen there have to be trains running on time and when and where people want to travel.

‘YELLOW OVER RED SIGNAL FOR NEW AMTRAK CEO RICHARD ANDERSON” (Approach Prepared to Stop at the Next Signal Which Could be Red)

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By M.E. Singer

In respect to the signal system of America’s railroads, a “yellow over red” caveat is issued here to the incoming CEO of Amtrak, Mr. Richard Anderson, in respect to the persistence of the passenger train grunts who have not given up over the years, despite their competent input being ignored, including the well versed associations, such as RailPAC, and knowledgeable pundits, as myself.

For Amtrak to have a glimmer of hope, the CEO position requires a full-time officer, providing long-term stability and leadership to avoid merely keeping the seat warm for the next “Friend of the Potomac seeking temporary shelter; which by default, allows subordinate “lifer” levels of management to make, or avoid, decisions, based upon whose patronage appointee or protege they represent.

As CEO, you must tamp down and take with a grain of salt the internal political and institutional biases that have only achieved the potential dismemberment of Amtrak. When in doubt, refer to Plato who stated, “a good decision is based on knowledge and not on numbers.” From your own experience, you come prepared with the knowledge of how the ‘bread and butter’ of Northwest, and later Delta, were the flights between Minneapolis-Spokane, almost exclusively serving North Dakota and Montana (e.g., Fargo, Missoula, Bozeman, Butte, Billings, and Great Falls). You did not tolerate the politicalization of business decisions by your Board to forgo such contributions to revenue merely to focus on the Delta Shuttle in the Northeast. With this background, you have a greater appreciation for the opportunities of the long distance routes that have been deliberately dis-invested and laid fallow at the orchestration of Amtrak’s leadership marching in tune to the Northeastern-focused Board of Directors. Important to appreciate Amtrak’s perpetual history of how it was a Board with such a slant to the Northeast that not only accepted the Northeast Corridor (NEC) in 1976 with no consistent funding to alleviate the deferred maintenance, but also, re-negotiated a sweetheart lease at NYC’s Penn Station in 1988 with the MTA/NJT without building in any profit or ROI.

In view of this reference to such overt tilting against business opportunities across the national system in order to subsidize the Northeast Corridor, as CEO, you would be wise to remember the admonition of Lord Salisbury (UK PM, 1895-1902): “The commonest error in politics is sticking to the carcass of dead policies.” As a former CEO of public airline companies, you know how strict the SEC views dis-information to falsely inflate or smoke screen financials. Ideally, to know what you are actually walking into, it behooves you to view the different set of accounting books proclaiming the Northeast Corridor to be “profitable,” despite the GAAP requirement to include capital infrastructure costs before determining profitability.  On that scale, you will want to determine how corporate and NEC overhead costs, as well as NEC infrastructure costs, are overly allocated against the long distance and state-supported sectors; ensuring a more positive financial image of the NEC. To spark your motivation to uncover and repair this legacy of false accounting, I would refer you to The Wall Street Journal of 26 June 2017, “SEC Tells American Airlines to Rein in Praise of its Non-GAAP Metrics.” In essence, the SEC demanded the reining in of “the use of accounting figures that deviate from U.S. Generally Accepted Accounting Principles, as companies often use non-GAAP figures to give a rosier account of performance, and the regulator has been concerned the practice could mislead investors.” As stakeholders in Amtrak, the taxpayers and Congress are entitled to have GAAP respected when presenting the financial condition of the NEC. Following such a true course of transparency may actually level the track for the long distance and state-supported routes.

As you dig into the organization to learn how it has stymied over the years, beyond being saddled with political appointments as CEO between 2005-2016, including two commuter administrators back-to-back, followed by an FRA administrator, you will find Amtrak’s structure is stilted with the legacy of long-term, unproductive corporate sectors apparently continuing to exist with a sense of protection from change, or, performance requirements.  The following sectors stand-out as requiring intervention to achieve purposeful change:

PASSENGER EXPERIENCE/SERVICE (What airlines refer to as “Customer Experience;” the lack of in Amtrak):

Despite Wick Moorman’s decree to run Amtrak as a business, their is a need to frankly acknowledge what hinders evidencing such a desired business mindset. The obvious is that the only consistency in customer service delivery is the inconsistency of performance; barely offering a bland, sterile, standardized service concept. Amtrak simply does not understand it is in the travel+hospitality business; therefore, without that acknowledgement, it does not even bother to ‘own the brand.’ Amtrak is oblivious to how its customers desire a consistent, positive experience; particularly the new millennial traveler; consequently, Amtrak succeeds in producing the self-destructive end result of being a comfortable monopoly mindset vs. competing with other franchises or open access. Frankly, changing this comfort zone to the detriment of Amtrak’s financial performance and public image should be accomplished by opening the NEC to franchises, or, just an open access concept.

MARKETING (Indefinitely undefined; non-existent. If the Queen Mary as a troop ship in WWII was known as the “Grey Ghost,” Amtrak marketing is known as the “Silver Ghost”):

Brand Marketing: 
How does Amtrak approach branding?  Cruises offer branding as an experience served up, or, as a brand customers can belong to (e.g., Viking). Amtrak brand remains undefined, unsupported; injured by failed customer experience; dysfunctional as aligned towards so many divergent sub-brands (e.g., Acela, NE Regional, Silver Service, Auto Train, Wolverines, Lincolns, long distance western/southern routes, Pacific Surfliners, Corridor Capitols, San Joaquins).
Market Segmentation:
Lack of route operational marketing expertise to connect corridors into regional service; failure to identify revenue opportunities by fulfilling traffic demand surges; inability to create head-on competition to prevent traffic depreciation; no persistent special train efforts (e.g., Saturday college football, Sunday pro football, baseball, hockey, play-offs, seasonal, e.g., Holland, MI Tulip Festival). Their is a continuing unmet need to fulfill market demand and achieve increased revenues by providing additional First Class space on Acelas, particularly between WAS-NYC, during weekday rush hours. (Need to revamp rigid consist preventing some Acelas from offering more than just one First Class car.)
Unresolved perpetual marketing myopia refusing to acknowledge and compete against  the curbside buses on the NEC and Midwest Corridors. This could be achieved by developing a stripped down T Class (Tourist) to attract college students and the elderly. NEC marketing myopia also includes lack of First Class on NE Regionals despite given the numerous en route multi-market segments only served conveniently by this train for business travelers. Also, to what extent are fixed consists and inability to expand to meet market demand shunning co-marketing opportunities, e.g., cruise lines/cruise ports reached by train, etc?
Market Positioning:
How is the new demand for “mobility” served throughout the entire national system, as SNCF’s new TGV line between Paris-Bordeaux now allows for people to live in Bordeaux and commute to Paris? In the Midwest, increased frequencies between Galesburg, IL-Chicago facilitated commuters from Mendota and Princeton to work in Chicago. Where else has the new mobility been identified, defined, and researched by Amtrak? Their is a profound need to provide the requisite leadership to push to identify new opportunities; produce proformas for seasonal, weekend, special, and expanded route train services so Congress can gain an appreciation for what can be done with appropriate investment, instead of just a status quo mentality.

HUMAN RESOURCES/TALENT ACQUISITION (An unfathomable Quasar-like “black hole” lacking oversight and direction; inability to “think out of the box”):

Despite being the front portal to the world for Amtrak, HR is dis-connected and evidences antiquated attitudes contrary to proven 21st century concepts.  HR discourages external management candidates below C-Suite level, contrary to position advertising in Linkedin, Indeed, etc. Never mind that the CEO of Florida’s Brightline was hired from New York as a sports event operator skilled in customer experience. Like a horse with blinders cantering only in one direction, HR does not possess the intellectual capacity to appreciate the relevance of transferable experience. Instead, by not appreciating the skills acquired in today’s world, HR conveniently dismisses such translatable experience, falling into the old trap of how Amtrak is so “unique.” Thus, HR condemns the organization to continue following a course of repetition compulsion to internally reenforce limited, narrow vision; preventing new blood, fresh ideas, open eyes. It is incredible for a company of Amtrak’s size and revenues to see the plethora of confusing, complex job titles (non-agreement); how many floors of HR does that require to administer?

Ironically, this is in direct contrast to the position of Tom Pendergast, recently retired CEO of the NY MTA, voted Railway Age “Railroader of the Year-2016,” who directly expressed his appreciation for the value of a fresh pair of eyes and bold ideas: “because if you see the same thing from a different perspective, you may have a fuller picture of it. That’s good because they will ask the question, why?  If you matriculate up in the organization, sometimes you don’t ask that question.” By overtly favoring only internal promotions, Amtrak perpetually fails to understand what leaders in this industry have already learned and professed. When you view the perpetual inability of HR to learn how the world now works, I strongly recommend to Mr. Anderson to embrace author Robert Townsend who wrote Up the Organization in 1970, based on his turnaround experience of Avis, where he succinctly explained to close HR (nee Personnel), because “Personnel screens out the best candidates, as it does not know what management wants in a candidate.” 

In essence, their is nothing unique to Amtrak’s management requirements, as we have obviously experienced year-after-year as the organization has struggled to gain traction (particularly with the loss of key people after Mr. David Gunn received his Potomac kiss good-bye from the Board at that time.) Mr. Anderson should critically determine that the only way to drive transformation of Amtrak’s culture will be from the outside in. Accordingly, Amtrak under Mr. Anderson should be actively recruiting seasoned, external management with the background and proven competency to correctly evaluate and fix a broken situation, by cutting  costs and maximizing revenues concomitantly to building a better product and a consistent, meaningful, and acceptable brand.

In parallel to the stifling closed culture to external management candidates, Mr. Anderson will find how the inconsistency in customer experience starts at the recruitment level. To what extent is the perpetuation of the problem of inconsistency in OBS due to HR (nee TA) itself by excessively hanging onto the candidate before releasing to the hiring manager?  As such, how does Amtrak hold the manager responsible for the appropriate recruitment, successful orientation, and correct training, as well as discipline and turnover, if not immediately bringing the manager into the hiring process. To the same extent, over the past 10+ years, when was the last time any union work agreement was re-opened and negotiated, let alone to require appreciation for the brand, evidence all encompassing concept of customer experience; acknowledgement that promotion, and the job itself, are most certainly not based just upon seniority, but predicated upon embracing a company designated culture to achieve consistently acceptable customer experience? As part of that, to shorten the length of disciplinary process to achieve termination?

With these unacceptable stodgy concepts inhibiting Amtrak, Mr. Anderson should also be quite interested to learn the details of what, if any, explicit, successful role has HR achieved in the work environment to “tune-up” the culture and ensure relevant communication to re-build morale? What role has HR endeavored to play, and how successfully to prevent timecard fraud, company credit card theft, and vendor abuse? Where has HR been to prevent a Wells Fargo syndrome encouraging management to manipulate financials and other metrics to set their bonus? What has HR achieved to clearly identify the process preventing retaliation by managers against employees identifying problems, e.g., safety, theft, vendor payoffs, etc?
FINANCE (Although siloed from Operations and Marketing; but who leads?):

Revenue Enhancement and Maximization (opportunities denied in food/beverage services)
Why does Amtrak continue to not focus on resolving the perpetual lost revenues by creating opportunities to capture in catering//food & beverage services?  Why does it take forever to select and implement a Point-of-Service computer program (remember bar codes?) to operate diners and cafes as separate restaurants to control inventory pars, prevent stock-outs that stab service acceptability, and cut waste? Why is their such a lethargic approach to increasing bar sales by actually training LSAs in mixology as bartenders to create cocktails; adequately stock lounges and diners with liquor, mixes, garnishments, and tools of the trade? What has prevented serving regionally crafted beers in kegs and sampling/selling regional wines? Why are the cafes tolerated as a step-up from a Penn Central food service car, and diners barely at a truck stop level, when product quality and selection could be vastly improved by charging sleeper class for their meals, instead of just using sleeper fares to bury diner costs? Why has the ability to benchmark been lost to learn how European airlines established ability for coach passengers to pre-order/pre-pay upgraded meals thru their website; limited to only cities with end point commissaries? On that topic, where is the impetus to achieve cash controls aboard trains by enabling passengers to purchase pre-paid card for all food/beverage items aboard trains? (How much does Amtrak spend, i.e., waste, on LSA and accounting salaries counting change and reconciling receipts at end of trip?) What will spark the motivation to determine opportunity of increased revenues by improving utilization of diner and galley as a partial coffee shop/grill?

Asset Utilization (seasonal services, schedules)
What has been the inability of Finance to appreciate and push to maximize asset utilization to cut costs and increase revenues? What is the rationalization that tolerates consists sitting in yards vs. in operation; how is this allowed to defy the economic principle of incremental costs vs. Amtrak’s full cost methodology?  Why has their been no effort to improve utilization of dedicated “Auto Train” equipment, instead setting off winter seasonal equipment in the Sanford, FL yard? Is their not a department in Amtrak with multiple levels that works with states/regions to prospect, identify, and proforma route expansions or new services, e.g., working with growing rail enthusiastic Colorado to establish a summer season “Auto Train” service from Chicago-Denver/Colorado Springs, the gateway to the western national parks? Up through the early 1960s, The Pullman Company had no problems fully utilizing dedicated consists between winter and summer seasonal routes. Is it feasible to determine if VIA Rail Canada has excess equipment/power to sell to operate as extra sections or seasonally, as recently experienced during a prior Thanksgiving? What about the consumption of additional consists, crews, and their related costs due to the extensive schedule padding and being artificially constrained by scheduling Chicago-New York/Boston, Chicago-Washington, and Chicago-New Orleans late in the evening to facilitate late arriving western long distance trains? Is their no market research to evidence scheduling specifically for these markets with afternoon departure and a morning arrival? How many consists could be freed up for other routes, or, even additional frequencies?

Forensic Audits (Long overdue to verify protection of taxpayers)
What has Finance done to assure the competitiveness, indeed, negotiation of “most favored nation” status of vendor contracts? What is the continuous check and balance on how suppliers are sourced, and contracts negotiated? Can Finance define what is their effort and frequency to re-negotiate and push down pricing; identify new sources to bid?
GOVERNMENT RELATIONS (What happened to such a very competent component that served Claytor/Gunn?):
As CEO, Anderson should early on establish his authority and vision. Ideally, he will waste no time to visit Congress to legislate an Amtrak ticket tax of 1¢ per gallon of gasoline for a dedicated fund. Amtrak also needs to counter the ability of airports to use their funds generated by taxes and fees to pay for the entrance of new airline services.

In respect to the above delineated issues, it is incumbent upon the new CEO Anderson to revamp the organizational structure and energize it with the outside blood, unblinded eyes, unbiased opinions of new management  that does not know, is not recruited by, and will not kowtow to the Potomac establishment, as exemplified by the current Amtrak Board of Directors. I seek to disambiguate these facts for Mr. Anderson to avoid what has consumed so many prior Amtrak CEOs; disappointing us for lack of action and interest; merely taking us on another ride ‘future back to the future.’

Another Amtrak CEO…and flyover country

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Commentary by Russ Jackson

Commerce, Oklahoma (not California) is a small town in the northeast corner of Oklahoma near the Kansas border, population 2,400 hardy souls.  This town sits astride the original Route 66 highway, several bypassed miles away from Interstate 44.  It is small town America personified, in what today is labeled “flyover country.”  Commerce is the home town of hall of fame baseball great Mickey Mantle, and it is a Mantle quote that brings us to the topic of this article.  In referring to his upbringing Mantle said, “I guess you could say I’m what this country is all about.”  Route 66 is much of what is right with America.  So is the passenger train.  The current question is, do the Congress and the Amtrak leadership understand this, or do they consider a train going through rural America to be superfluous in today’s economy?

In December another CEO will take the reins of the National Rail Passenger Corporation, aka Amtrak.  His name is Richard Anderson, and while he comes from a railroad family, his father having worked for the AT&SF in the Houston, Texas area where Richard grew up, his life has been spent in the airline industry, most recently Delta Airlines, headquartered in Atlanta like major offices of the Norfolk Southern Railway.  The current Amtrak CEO, Wick Moorman, was CEO of Norfolk Southern before taking, as he said, a temporary job heading Amtrak.  Southern boys.  Came up through the ranks.  Now comes the challenge for Moorman, to teach Anderson “the ropes” of railroading.  What will Wick tell Richard about the Amtrak long distance trains…you know, the ones that operate in and serve “flyover country”?

Will Anderson learn that the Northeast Corridor is a profit center for Amtrak?  (It isn’t.)  Will he learn that the long distance trains are “big losers,” as Wick’s predecessor allowed the world to think of them?  (They aren’t.)   Moorman has decried the Trump Administration’s 2018 budget request that eliminates money for the long distance trains.  Trump’s Budget Director has said that money for un-needed items that may have outlived their usefulness have to go.  Well, let’s see.  Amtrak’s own reports continue to show the NEC with a profit and the long distance group with a big loss, as Andrew Selden found, in the aggregate totaling several hundred million dollars.  Pete Loomis did a long division that shows the loss for the long distance trains by these figures comes to several tens of thousands of dollars of loss per tripwhich is ridiculous on its face.  No wonder the Congress and the press take the “profitable NEC” and the “loser long distance” trains to be just that, and take it as gospel, which we know it is not.  As a group the long distance trains are cash-positive.  If Amtrak insiders and too many outsiders really believe those two fake ideas, then why did Amtrak put in their own 2018 Budget Request the following?

“The Administration’s Fiscal Year 2018 budget request for the U.S. Dept. of Transportation proposes the elimination of Federal funding for Amtrak’s long distance services.  Enactment of such a proposal would drastically shrink the scope of our network, could cause major disruptions in existing services, and increase costs for the remaining services across the Amtrak system.  Amtrak’s initial projection is that eliminating long distance services would result in an additional cost of approximately $423 million in FY 2018 alone (we think it’s more than that), requiring funding from Congress and our partners rather than less.”  (emphasis mine)  So there, they said it.  Now it is buried in their budget request and will it be forever dismissed or ignored, because all that anyone has seen for years is the “profit” and “losers” idea?  But wait!  Amtrak reports that the deferred NEC maintenance is $473 million per year, so what Mr. Moorman has done for us is give us almost exactly the amount of cash the long distance trains contribute, $423 million a year, and had that maintenance not been “deferred” and properly charged to the NEC would the corporation be breaking even?  As for the “partners,” that means the state-supported train routes like the three in California.  Mr. Selden says, they “cannot lose money because states make up the difference between revenues and Amtrak’s fully-allocated costs, so they are approximately cash-neutral to Amtrak.”

Now back to flyover country.  (I hate that term, but it applies.)  In his acceptance statement press release, Richard Anderson said, “I’m passionate about building strong businesses that create the best travel experience possible for customers.”  Well, how great is it?  According to Amtrak’s financial report, since last October system Ridership is up 2.1%, Revenue up 3.0%.  Nice.  Shows growth.  And, three new real growth projects are under consideration:  1) Closing the gap between Oklahoma City and Newton, Kansas; 2) Extension of the Crescent from Meridian, Mississippi, to Dallas and Ft. Worth; and 3) Finally re-extending service across the Gulf Shore from New Orleans to Orlando, Florida.  All of these are worthy projects for the southern boys to work on, but what is the missing factor to all of them?  State support, and approval by the freight railroads:  the BNSF, the Kansas City Southern, and the CSX.  Are any of them going to get on the bandwagon?  Mr. Anderson will have a full time challenge dealing with those hard nose guys.  Speaking of the OKC gap northward, Amtrak ran a very well received test train on that route.  One of the cities that would be served is Wichita, Kansas.  Recently this writer attended an event where a young couple from Wichita told me that they hadn’t heard about the test train, but they really want a train that can take them places.  They have dropped friends off at the Newton, KS, station to ride the Southwest Chief; they know a potential candidate for Kansas Governor and after our talk will bring up Amtrak with him.  Now that’s what happens when rail is discussed out here in “flyover country.”

Two California Zephyr trains in the Colfax, CA, station at the same time! Train #6 was running 20 min late and 5 was running an hour late on Friday, June 30, 2017, when #6 arrived first and 5 arrived about the time 6 moved up for the sleeper stop. (Photo by Ralph James)

This summer has been an operating challenge for Amtrak, perhaps more-so than in some years past.  Heat, flooding, mechanical problems, and more heat have had a depressing effect on trains.  RailPAC member Ralph James, who lives up in the cool Sierra Nevada near Colfax, reports that the California Zephyr’s summer consist has “regularly been three coaches and three sleepers plus the transition dorm/sleeper, the first time he’s seen three sleepers on a regular basis in a long time.”   That shows a growth attitude exists here in the West.  But, James says,  “Timekeeping  for 5 and 6 has been sporadic at best with some three and four hour delays across the Midwest and Rockies frequently.”  A look at the Southwest Chief shows the train can run on time until it gets to northern New Mexico, and then can lose up to to four hours up there.  RailPac member Mike Palmer wrote recently that he was waiting on the Atlanta, Georgia, platform for Crescent #20:  “It is blocked a few miles away, because a (NS) freight train broke down in front of it and has been sitting at the station.”  The situation was cleared, and the Crescent finally arrived and departed two hours late.  Just a few examples, but to new CEO Richard Anderson we say, “Pay attention to what is going on in flyover country.  These passengers are your real bread and butter, so DON’T write us off and think all that matters is what happens in the Northeast despite what those politicians tell you.  If you want to know more about “us,” or even if you don’t, come talk to us out here.  We want the trains and we want them to be reliable, clean, and staffed by people who know what to do and how to make all your customers feel that they are valuable and should come back again.  Too much to ask?

 

Amtrak Admits That It Needs Long Distance Trains

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By Noel T. Braymer

An article published by a New Jersey newspaper “The Record ” on June 22, 2017 was based on an interview with Amtrak President Wick Moorman. Most of the emphasis of the article was on the problems to upgrade the infrastructure of the Northeast Corridor, mostly in the areas around New York City and New Jersey.  But the most important information in this interview was the admission by the Amtrak President that reductions in Federal Funding for Amtrak for long distance trains would make it impossible to continue work repairing the Northeast Corridor. This is from this newspaper article “The budget calls for eliminating money-losing long-distance lines on Amtrak’s national network, with funding for that line-item to be cut from $1.2 billion to $525 million. While the budget tells Amtrak to focus its efforts on the Northeast Corridor and other routes around the country that are supported by state transportation departments, eliminating the long-distance routes will increase costs for those routes. That’s because Amtrak allocates costs for shared services such as reservations and the legal department among all its lines, and more of those costs would be shifted onto the Northeast Corridor without riders on the long-distance routes sharing the load, Moorman said.”

This is a major admission by Amtrak that they need the long distance trains. Going back to the late 1970’s Amtrak eliminated 5 trains in a budget exercise to “Save Money”. Four of these trains were long distance trains. All of these trains were cut because of assumed losses operating them based on the “allocated costs” assigned to them. The result of this cutback in service caused the Amtrak’s budget deficit to increase, not to be reduced as assumed by Amtrak’s accounting. Since then Amtrak has made several route reductions over the years in attempts to save money. They too have all failed to save money. Amtrak has attempted as well to increase revenues and ridership with faster service with express trains by skipping stations. In all cases express trains lost ridership and revenues and the express services were cancelled.

Without going into a long discussion of Amtrak’s allocated cost accounting, a major criticism of it is it doesn’t reflects the true cost to Amtrak of a particular train. Instead Amtrak has arbitrarily assigned the share of its total overhead to routes. This includes basing a train route overhead costs on the route’s mileage. Of course this gives long distance trains with longer routes a greater share of the overhead costs compared to short distance trains. This also doesn’t take into account how much a train uses Amtrak overhead, Much of Amtrak’s costs is centered on the Northeast Corridor between Washington, New York and Boston. Amtrak is responsible for maintaining this busy railroad which the majority of traffic isn’t Amtrak’s and  it owns most of the stations which are major costs centers. This not the case outside the Northeast where Amtrak doesn’t own most of the stations and often gets a discount rate using other railroads tracks. There has been criticism that much of the costs of the Northeast Corridor is allocated to the trains outside of the Northeast Corridor. Doing so would inflate the costs of trains outside of the Northeast while hiding the costs of the Northeast Corridor. Amtrak’s accounting has never met what are called Generally Accepted Accounting Principles or G.A.A.P. These are standardized accounting measures used to be able to compare a balance sheet of one company to another. It is also used to prevent tricks to hide problems at a business or agency.

While far short of a confession of wrong doing, this admission by Amtrak that it depends on the revenues of the long distance trains is still groundbreaking. Since the 1970’s Amtrak has played the Northeast Corridor States against the States with mostly long distance Amtrak service. Since rail passenger service is very popular with the communities that have it, any attempt to kill service usually gets a major outcry from local affected communities. This is enough for any elected official to support “their” train to avoid the anger of their constituents. Since 1979 Congress has allowed the Northeast Corridor to be funded and most of the other trains to continue to operate. But this has resulted in few improvements in long distance service since the 1990’s while billions have been spend on the NEC. The last time there has been major improvements in long distance service under Amtrak after its startup in the early 70’s was in the 80’s and early 90’s under then Amtrak President W. Graham Claytor. Under Claytor, Amtrak’s deficit declined as Claytor expanded service mostly on long distance trains. His goal was to increase revenues more than the cost of expanding service. These improvements included extending the Sunset to Orlando along the Gulf Coast and the Palmentto south of Savannah to Jacksonville. Both of these extended services were latter reversed by his successors, who also greatly increased Amtrak’s deficit. One service that Amtrak has kept started by Claytor is the Auto-Train between Virginia and Florida. But after Claytor left, the Desert Wind and Pioneer trains were also removed to “save money”. No new orders for long distance equipment to expand service has been funded since Claytor left in the early 90’s until recently. The current order of Viewliner’s is being delivered years late and will only replace existing old equipment, but not add capacity to any trains. The long distance trains are often fully booked and turn paying passengers away without extra cars that could be added if Amtrak had them to increase revenues.

This might be starting to change. Amtrak is involved with local grass roots groups to extend the City of New Orleans from Chicago to Florida along the Gulf Coast. Amtrak is also looking at extending the Heartland Flyer between Fort Worth and Oklahoma City up to Wichita and Newton, Kansas for connections to the Southwest Chief. There are also plans to extend service to Pueblo, Colorado on the Southwest Chief. Amtrak is also considering creating a section of the Crescent at Meridian, Mississippi to Fort Worth. Recently interim Amtrak President Wick Moorman announced that he had selected his successor fulling his intention to work as Amtrak President for no more than a year. His choice is Richard Anderson who is a retired Chief Executive Officer of Delta Airlines. He is a lawyers with years of experience in the airline industry. He has the reputation of “turning around” Delta and improving its profitability.

Amtrak is long overdue for ridership and passenger mile growth. It will be interesting what Mr. Anderson will propose to change Amtrak. Any growth at Amtrak will require financing for more equipment and other capital improvements. It will also be interesting what Mr. Anderson will do to reduce Amtrak’s overhead costs. He will be getting on the job training from current Amtrak President Moorman starting July 12th. At the end of this year Mr. Moorman will retire as Amtrak President but stay on as a part time consultant. Staring next year Mr Anderson will be fully in charge of Amtrak with the job of increasing sales and raising capital for expansion. No doubt the current lawsuit from Amtrak against Washington Union Station for allowing advertisements for Delta Airlines which Amtrak claimed was competition to it will be settled before long.

HOW THE PROPOSED INFRASTRUCTURE PROGRAM IS VIEWED THROUGH ROSE-TINTED GLASSES, IN LIEU OF 20/20 VISION

By M. E. Singer

Denial of economic reality persists in the formulation of the infrastructure program, with our hopes riding on a confused, diverted Congress. Why does it continue to so blatantly appear that our transportation policy is being formulated by non-transparent think tanks and their acolytes now in powerful positions to dutifully carry out these dictated, one dimensional policies? As we should have learned by now, not every program benefiting the general public can be better run in the private sector, as exemplified by the demise of the pay toilet.

How is it that this current federal government can propose to simply turning over the extensive investment by the taxpayer into the air traffic control system since 1956, gratis, to the private firm to assume that role? At least when Amtrak was formed, the private railroads were required to transfer to the new federal corporation their rolling stock, locomotives, depots, maintenance/repair shops, commissaries, etc. Amtrak was also required to honor all union agreements.

Also, I take umbrage at the statement by Secretary of Transportation Chao, who said in “Trump’s Transportation Budget Runs Into Resistance From Both Parties,  (The Hill, 15 Jun): The administration has taken a closer look at programs that may not be meeting their intended purposes, have outgrown their usefulness or could be replaced with a new initiative that will better address future transportation needs.” How can anybody in this administration rest their laurels on such an assumption, when the reality is they do not rely on intercity or commuter trains, or even airlines serving rural areas via the Essential Air Service program, to conduct their business, or, maintain personal contacts?

How does dismembering Amtrak serve within the context of re-building our infrastructure? Any competent business school faculty would point out that when a national transportation service like Amtrak is deliberately starved from a consistent level of appropriations to be able to act like a business to properly plan, budget, acquire and rehabilitate equipment, as well as to expand or reduce routes, only on the surface would it deliberately appear not to be “useful,” or, certainly “replaceable.” Persistently denied any opportunity to invest in equipment, beyond the political cartel powers of the Northeast Corridor, has only crippled Amtrak’s capacity to offer more frequent schedules, and seasonal services, which are the essence of becoming a viable option for travelers.

Properly scheduled and expanded long distance rail services would serve to link multiple regions, and to augment the state-supported services paid by all non- Northeast Corridor states. Eliminating the excessive regional political clout that dominates Amtrak’s board of directors, and throughout its relationship with Congress, would enable Amtrak to think and act like a business re routes, instead of being overly concerned with which of so many political tributaries needs to be appeased.

Apparently, the Essential Air Service program (EAS) suffers from the same political interference to cause its cost to increase annually since it was temporarily established in 1978. How far do we have to search for common sense on the Potomac to realize the extent of sheer waste subsidizing airlines for Decatur, IL when it is but 37 miles from Springfield; or to Hagerstown, WVA when the hub at Washington Dulles is 50 miles away?

Before we turn any more railway depots or rural airports into spaghetti restaurants, those seeing privatization or elimination as the ultimate, purest panacea should learn the realities of how business should be conducted beyond their view of the Potomac:
1) Given the excessive deferred maintenance just for the Northeast Corridor, estimated at $52 Billion; years of disinvestment in equipment; corridor/long distance services operating at the margins, the feds have failed to align Amtrak with the interests of any potential private acquisition, other than perhaps a Russian oligarch seeking to launder funds here. Their is a reason the private rail operators in Europe have stayed clear of America.
2) The continuous deprivation of Amtrak by the feds has not been conducive to working with the Class 1 private freight railroads or other investors seeking a real P3 opportunity. Yet, just the opposite happens when a government is fully involved and supportive, as evidenced by California and its Joint Powers Authorities managing its regional intra-state passenger rail programs; working well with the Class 1 railroads owning the infrastructure.
3) A successful infrastructure program should initially have an appreciation of history, and learn from past federal government mistakes. Federal policy has decimated our industrial base and depleted a well trained American workforce by promoting “lowest bid” mentality in railcar construction. This has only encouraged foreign firms to become Beta sites at our expense, unsuccessfully re-engineering our former firms patents. The most recent failure is Nippon Sharyo to complete a federal contract that expires September, 2017, to build bi-level intercity passenger cars for the Midwest and California corridors.
4) A real infrastructure program to re-build America would be for the feds to invest directly and secure private investments to overcome the government’s past betrayal of our former rail car builders, e.g., Budd, Pullman, American Car Foundry, and St. Louis Car. The guts of a national, and just not simply a bi-coastal, infrastructure program would be to build and rehabilitate the rail passenger car fleets and locomotives necessary for Amtrak and our commuter lines to resurrect our once vast, vibrant private passenger rail network inter-connecting to all of our regions. Such inter-regional connectivity is still required to provide the mobility necessary as the catalyst for economic development and growth.
5) EAS must be updated to reasonably raise the bar by only serving airports in the continental US that must be more than 100 miles from another airport; to lower the per passenger subsidy to $100, as people will either use it, or lose it. In lieu of EAS subsidy, to what extent can the airport utilize its fees and tax revenues to pay for such service, instead of spending to market for the benefit of the airline?
6) The ‘free ride’ for those wedded to the road must end in fairness to paying their share (‘user fees’) for a true infrastructure program. This includes for auto, bus, and truck:
a) Vehicle Mileage Tax (VMT).
b) Tolling interstates; bridges; tunnels.
c) Increasing fuel taxes, inked to the CPI.
7) Although Amtrak and commuter lines currently pay user fees to the freight railroads who own the infrastructure to provide time slots for track access and dispatching, the feds need to apply this concept as well within its infrastructure program to the barge companies using the inland waterways maintained by the Army Corps of Engineers. As well, it is high time for the airlines to pay market-based user fees for the FAA’s air traffic control system, and for take-off and landing slots; to break their hub dominance that only strangulates competition.

Without embracing these business concepts to serve all regions and establish a balanced approach to user fees and subsidies, the only response to the currently maligned approach to infrastructure will be: “fehgetabouti!”