1 September 2017
President and CEO
60 Massachusetts Avenue, NE
Washington, DC 20002
Dear Mr. Anderson:
As a published pundit critically analyzing Amtrak over the years, I wish to share with you a synopsis of what I have identified as the salient issues, with a suggested course of action, to enable Amtrak to become more efficient and effective. Such action is relevant in following through on how Mr. Moorman has endeavored to re-build the respect and integrity of Amtrak, in order that it may move forward internally, with Congress, and in the public’s eye. The length of this open letter is parallel to the extent of the issues requiring resolution.
CUSTOMER EXPERIENCE: (The “Master Key” to Unlocking Acceptance/Revenues)
In respect to Mr. Moorman’s decree “to run Amtrak as a business,” there is a need to acknowledge that the only consistency in Amtrak’s customer service delivery is the inconsistency of performance; barely offering a bland, sterile, standardized service concept. Amtrak does not understand it is in the travel+hospitality business; therefore, operating without such critical knowledge, 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. Such an oblivious attitude consequently has produced the end result internally of being a comfortable monopoly mindset vs. competitive force such as Richard Branson’s Virgin Rail against so many other private operators.
In response, I would recommend, just as a start:
Establish “A” teams of OBS to work trains together so managers can focus on the 20% problem cases to bring them up to par, or cut them loose.
Hold Food & Beverage responsible for stock-outs.
Hold Maintenance responsible for unsatisfactory yard services to inspect, repair, re-stock, and turnaround consists.
ORGANIZATIONAL STRUCTURE/CUSTOMER EXPERIENCE:
The key to making Customer Experience work, as discovered by the air and cruise lines, requires a singular team approach to identify, competently explain internally, and ensure that customer expectations criteria are achieved. This requires that all consumer-facing operations and services should be under one senior officer for the new, all encompassing area of “Customer Experience.” This includes: Catering, OBS, OBS Training, depot services; with a solid line to Operations (Route Directors, Train Managers) and Product Development.
It is obvious that the success of Customer Experience is dependent upon an actively involved, “hands-on” CEO to prevent the historical “fire-walling” and pulling in opposite directions between Finance, Marketing and Operations; resulting in making conflicting decisions negatively impacting Customer Experience. To ensure the full support of management from top to bottom, the Board of Directors committees must be re-structured to ensure management accountability in the critical areas of Customer Experience.
Frankly, the new CEO with the Board, must seriously contemplate and proforma how Amtrak would benefit from separating and distinguishing its operation by outsourcing its entire first and business class operations, including their food & beverage services, OBS, equipment, etc. Concomitantly, remembering how Mr. Claytor’s pet “Auto Train” quickly eliminated outsourcing the F&B to Marriott, Amtrak should also proforma how much Amtrak would save if it ceased outsourcing its commissary operations to Aramark, and ran them itself, in accordance with the projected categories of savings in developing Amtrak in 1970-1971.
Amtrak has yet to seriously focus upon the continuing issue of capturing lost revenue opportunities in Catering/Food & Beverage Services. The persistent unacceptable lack of quality in catering/food & beverage service must be confronted head-on.
In response, I would recommend:
Need to train LSAs in mixology to create cocktails; adequately stock lounges and diners with liquor, mixes, garnishments, and tools of the trade.
To serve crafted beers from kegs; to utilize interest of wineries en route to provide wine sampling and for sale.
Need to immediately implement long-delayed Point-Of-Service IT system (e.g., the Toast POS System) to operate diners as separate restaurants to control inventory pars, prevent stock-outs that stab service acceptability, and cut waste (Be sure to inquire whatever happened to the long delayed implementation of the bar code program–that never happened).
Maximize equipment and services to revamp diners (Superliners) by creating one-half of dining room and galley as a coffee shop/grill, particularly for coach passengers (to include burgers, fries, malts, etc). Historically, most western long distance trains operated with coffee shop/grill/lounge, diner, and F Class lounge.
Learn from European airlines how they established the ability for coach passengers to pre-order/pre-pay upgraded meals thru their website; limited to only cities with end point commissaries; limited selection and quantity available to maintain quality.
For sleeping car passengers, charge for meals to create improved product quality and choices.
Vastly improve menu selections and quality; craft menus by real chefs; convert diner to bistro-type menus; after dinner into a night club.
ENHANCING THE CUSTOMER EXPERIENCE:
To resolve the incessant, obvious issues, I would also recommend:
Explicitly identify in E-ticket what free meals are included in sleeper fare purchased.
Given current standardized menus, perhaps illustrate those meals and choice options.
Post detailed menus in end point depot lounges, major depot waiting rooms, and within each compartment on-board.
Fix broken partitions between Superliner bedrooms B-E.
Have LSA/SA identify the night before what hours breakfast will be served on day of arrival (at dinner in the diner; message card on berth made-up).
Menus should be provided in compartments and in diner to sleeper passengers without prices to eliminate confusion; as well, to identify choices per category of menu.
Identify tipping protocol; look into how the cruise industry applies per diem charges (i.e., sleeper, diner, and lounge).
Provide in each compartment route maps identifying WiFi zones; smoking stops; diner/cafe hours of operation; menu/drink selections; room service; itinerary/areas of of interest.
Each compartment should be offered ice; set-ups from cafe car; morning newspaper; individual wake-up call; re-confirmation of breakfast/last meal hours on arrival day; explanation of diner (location, meal hours) and lounge (location, hours); an indication of the quality of the roadbed during sleeping hours (e.g., CSX lines).
To reduce dwell time and boarding confusion/issues, provide coach passengers with coach reservation by car and seat number, just as offered by private railroads until 1971; now to be introduced by Brightline.
Just as the private railroads accomplished an orderly boarding process at the end point of departure, boarding gate area should display signage identifying the consist by car number and feature cars.
Departure Acela/Metropolitan Lounges should adhere to a consistent concept of service by walking passengers to the boarding gate area (unlike currently not done in Chicago).
Acela/Metropolitan Lounge staff must be fully conversant in food/beverage location and service hours within the depot, especially on major holidays.
Just like the airline clubs, Amtrak should offer a full bar operation in its lounge, as the airlines apparently have no issue with the “Dram Shop Act.”
Determine feasibility of enabling coach customers to purchase pre-paid cards at depots to eliminate cash control issue aboard trains. Also, to enable coach customers to pre-order/pre-pay for meals in advance.
MARKETING: (Indefinitely undefined; non-existent)
How does Amtrak explain its approach to branding? Cruises offer branding as an experience served up, or, as a brand customers can belong to (e.g., Viking). Frankly, the Amtrak brand remains undefined; unsupported; injured by failed customer experience; dysfunctional because of its alignment towards so many divergent sub-brands (e.g., Acela, NE Regional, Silver Service, Auto Train, Wolverines, Lincolns, Hiawathas, long distance western/southern routes, Pacific Surfliners, Capitol Capitol, San Joaquins).
There is an evidentiary lack of route operational marketing expertise to connect corridors into regional service; to identify revenue opportunity by fulfilling traffic demand surges; to create head-on competition to prevent traffic depreciation. Completing this issue is the fact how there is no persistent Special Train effort (e.g., Saturday college football, Sunday pro football, baseball, hockey, play-off games, seasonal weekend, such as Holland, MI Tulip Festival, or seasonal in a given period, such as Cape Cod).
Amtrak persistently suffers from unmet needs to fulfill market demand and achieve increased revenues by failing to provide additional F Class space on Acelas, particularly between WAS-NYC during weekday rush hours. (Important re: Alstom order should revamp rigid consist preventing some Acelas from offering more than just one F Class car.) 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?
Also, Amtrak suffers from a perpetual marketing myopia refusing to acknowledge and intensely compete against the curbside buses on the NEC and Midwest Corridors. This could be resolved by developing a stripped down T Class (Tourist) to attract the major bus market of price-sensitive college students and the elderly. NEC marketing myopia also includes lack of F Class on NE Regionals, despite given the numerous en route multi-market segments only served conveniently by this train for business travelers.
To enhance Midwest connections to the national system and increase revenues, their is an urgent need to finalize the proforma and implement the “Baby Builder” on a reverse schedule with the “Empire Builder,” #7 and #8, between Chicago-St. Paul-by scheduling morning out from Chicago; afternoon return from St. Paul. It is important for the schedule to allow for turnaround of consist in St, Paul in order to utilize one consist.
How is the new demand for “mobility” served? SNCF’s new TGV line between Paris-Bordeaux allows for people to live in Bordeaux and commute to Paris. Similarly, already we know that in the Midwest, the increased frequencies between Chicago-Galesburg facilitated commuters from Mendota and Princeton to Chicago. Where else has the new mobility been defined, identified, researched, and produced proformas for Amtrak?
There is a long ignored, apparent need to maximize asset utilization and enhance schedule convenience to increase revenues with the elimination of awkward connections at Chicago’s Union Station. This could be achieved by operating run-thru schedules utilizing the two north-south tracks for Midwest corridor services in Michigan, Indiana, Illinois, and Wisconsin. Do need to identify potential issues resignaling and T&E between different railroads. (Note-last time run thru attempted was by Amtrak in 1972 between Milwaukee-Chicago-St. Louis).
Amtrak continues to evidence an inability to maximize asset utilization to cut costs and increase revenues. For example: Improved utilization of dedicated Auto Train equipment could be achieved by working with the growing rail enthusiastic State of Colorado to establish a summer season service from Chicago-Denver/Colorado Springs, the gateway to the western national parks (and still very popular with the Midwest.) Up through the mid-1960s, popular rail tours by Union Pacific, Burlington, Santa Fe, Great Northern, and Northern Pacific served these national parks.
Also, quite relevant in respect to the history of railroading, is how the private railroads successfully maximized the asset utilization and daily turn of one consist thru the 1960s:
Burlington-Twin Cities Zephyrs
Gulf, Mobile & Ohio- Abraham Lincoln
Illinois Central-Green Diamond; Land O’Corn
In reference to Auto Train, Silver Meteor and Silver Star, need to embrace The Pullman Company’s proven concept of seasonal consists, e.g., Orange Blossom Special (NYC-MIA) during winter; same consist during summer run as the Bar Harbor Express (NYC-Maine).
Important to thoroughly research if market demand continues to be artificially constrained by scheduling the departure of the long distance trains from Chicago to New York/Boston, Chicago-Washington, and Chicago-New Orleans late in the evening to obviously facilitate the late-arriving long distance trains from Los Angeles, San Francisco, and Seattle/Portland. Historical data should prove if these eastern/southern routes were specifically scheduled for their markets with late afternoon departures from Chicago and a morning arrival, how traffic and revenues would increase exponentially. Achieving this schedule improvement would reduce one required consist to be freed up for other routes; to increase frequencies. As well, labor and on-board costs would be reduced.
It would be interesting to learn why the Budd 480 HEP cars were not retained for extra sections, special trains, or, even route expansions. As well, has their been any determination on the feasibility of acquiring the well maintained VIA Rail equipment?
Recommend examining vendor contracts-how assured are you of competitive/best pricing; how well negotiated without conflicts? Again, how can it be a better economic deal to outsource all commissary operations to Aramark? (Why is Pepsi served over Coke products, when Coke is dominant, other than the Chairman of Aramark coming from Pepsi?) Certainly, you need to check and balance on how suppliers and supplies are sourced, selected and how contracts are negotiated. As well, to define what is the effort and frequency to renegotiate and push down pricing; to identify new sources to bid.
Frankly, Amtrak needs to re-invent the competence of a Clifford Black to assuaged the multiple GR and PR issues Amtrak faces. Since his departure when the last “railroader” (Mr. David Gunn) was lost to Amtrak’s Board of Directors in 2005, Amtrak has faltered and failed to stoke any interest in Congress re critical issues, such as:
For Congress to legislate an Amtrak ticket tax as part of a dedicated fund.
For Congress to legislate the one-cent per gallon of gasoline tax towards Amtrak.
To counter airports using their funds generated by taxes and fees to pay for the entrance and marketing of new airline services.
As I explicitly commented in the Lafayette, IN Journal & Courier in August, 2017, Amtrak must fervently educate Congress and the public by publishing the financial costs to Amtrak re each and every grade crossing incident. This should be documented per wreck, per month and annualized. As it is relevant to the fact that Amtrak self-insures to approximately $225-$250 Million, such costs incurred by Amtrak should include:
To replace motive power on designated train by leasing from the Class 1 railroad.
Value and cost of equipment to be repaired or, totally junked.
Cost of T&E (Train & Engine) crew overtime; substitution required for timed-out crew.
Cost to provide complimentary food/beverages aboard delayed train.
Cost of lost purchases in food/beverage on delayed/cancelled train.
Cost to provide substitute transportation (bus, air); hotel accommodations; food/beverages; taxis.
Cost due to mis-connections; lost/refunded revenues; cost of business interruption and lost opportunities.
As well, what would be relevant is to identify: date, location, type of vehicle, if commercial-identify the firm, type of grade crossing, on which Class 1 accident occurred.
Amtrak should also be focusing Congress and the media on the extra costs foisted upon Amtrak by a Class 1 railroad (CSX) now owned by a hedge fund, including:
Losing the integrity of schedule reliability due to the stabbing of on-time performance; critically devastating Amtrak’s PR and Marketing.
Cost of missed connections (see above); cost of lost revenues by refunding mis-connections.
Lost revenues from on-board food/beverage services; additional cost to provide complimentary,.
Labor costs for T&E-either overtime or timed out replacement.
Despite being the front portal to the world for Amtrak, HR is disconnected and evidences antiquated attitudes contrary to proven 21st century concepts. HR discourages external management candidates below C-Suite level, despite position advertising in Linkedin, Indeed, etc. Contrary to the thinking of Amtrak’s HR, it is interesting to point out that Brightline’s new CEO was hired from New York as a sports event operator.
HR is like the hamster that cannot get off the spinning wheel to accept change, by persistently denying and dismissing how relevant, transferable experience is today. HR persistently falls into the old trap of how Amtrak is so “unique”; thus, only condemning Amtrak to continue following a course of repetition compulsion to internally re-enforce a limited, narrow vision; preventing new blood, fresh ideas. To combat this pathetic self-destructive vision, Robert Townsend, author of Up the Organization, wrote emphatically to warn American management how,”HR screens out the best candidates, as HR does not know what management wants in a candidate.”
In essence, from my own experience, discussions with others, and from the Harvard Business Review, I believe it is critical to drive the much needed transformation of Amtrak from the outside in. Tom Pendergast, recently retired CEO of the MTA, voted Railway Age “Railroader of the Year-2016,” 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.”
Amtrak should be actively recruiting seasoned, external management with the background and proven competency to correctly evaluate and fix the situation–to cut costs and maximize revenues without destroying the product or impugning the brand. Indeed, as the articles have indicated, one “Baby Boomer” is equivalent to at least two X, Y, Z, or millennial individuals (as aptly proven by Mr. Moorman). When I was involved with Arthur Bass, CEO of Midway Metrolink Airlines, to create an all Business Class carrier from a no frills operation, he informed me how the airlines for too long just re-cycled the same people, with the same failed ideas between each other; never looked “outside the box.”
Also, for a company of Amtrak’s size and revenues, the plethora of confusing, complex job titles (non-agreement) is incredible, perhaps contributing to 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? The hiring manager must be held accountable for turnover and supervisory issues by being immediately brought into the hiring process; then to be held accountable for a successful or failed hire; discipline issues, adequate supervision, and turnover.
Over the past 10+ years, when was the last time any union agreement was re-opened and negotiated to require appreciation for the brand, evidence an 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? When did HR last attempt to shorten length of disciplinary process to achieve termination? How was HR involved to review the staffing of LSA/SA crew on long distance trains, given the red ink in food/beverage?
How has the work environment/culture been “tuned-up” and communicated to re-build morale? Exactly what has HR done to prevent timecard fraud, company credit card theft, vendor abuse? How has HR moved to prevent a Wells Fargo-type syndrome encouraging management to manipulate financials and other metrics to set their bonus, manipulating the interpreration of financial results of sectors, etc? How has HR clearly identified the process to prevent retaliation by managers against employees identifying problems, e.g., safety, theft, etc?
In essence, like the slack running out on a braking freight train, each of these major areas impact each other; inhibiting the overall efficiency and effectiveness of the organization.