A possible new direction for Amtrak Long Distance

Trains Magazine Passenger
1

This post is making the assumption that the new Pullman Chicago - New Orleans service will be successful and will continue.

So, could Amtrak long distance trains be made self supporting with the following:

Amtrak provides only a basic but comfortable, clean, and on-time coach service. I never did ride overnight in a Superliner or Horizon coach, and I don’t really know how comfortable it would be. I did have an LA - Chicago trip on the old El Capitan, and enjoyed it. Also, a number of overnight trips in the Juniata-buitl PRR 44-passenger coaches (Trail Blazer, Jeffersonian, Red Arrow, JU\uniata), which were just as comfortable, even though the low-qaulity steel the PRR used in their construction caused preamature rusting, and they were scrapped after about 10-15 yeas of use, with their easy riding trucks used on rebuilt P-70’s. Meals would be handled with catering by the best of those that provide airline meals and would be included in the price of the ticket when the travel time exceeds two or three hours and covers meal hours, served at seat. No Amtrak diners or sleepers.

Sleepers and dining cars would be added to Amtrak trains where and when the private operator(s) would find them profitable, and would provide a level of service that Pullman provided. In certain cases the private operator would permit coach passengers to use the dining car, and the meal charges would be high enough so the added meals would be worth serving. Otherwise, again, for the 1st class passenger, meals would be included although the specific fare and meal arrangements would be ujp to the private operator(s). However, Amtrak would contiue to be responsible for the mechanical maintenance and repair of the cars.

I think such a division of responsibility would improve Amtrak’s bottom line, possibly to the point where lD trains could break even overall.

2

Although I am probably in a minority for saying this. I think Amtrak undercharges for sleeping car space. The charge also appears to be based on mileage traveled in the sleeper or inventory available. Not the difference in prices between Chicago to DC between the Capital Limited and Cardinal for example…even a year out there is a difference in price so I am not sure it is yield management. My guess is Amtrak came up with a base per mile charge based on their equipment charter rates and that forms the base of the sleeper charge. Just a guess though.

Anyways back to sleeper service. I am pretty confident the Pullman service using private railway cars from the AAPRCO pool will charge a significant premium over Amtrak because those railway car owners have to cover all costs or they lose the ability of the car to travel on the rail system.

Amtrak should upgrade it’s vacation packages as well as it’s sleeper car fees to cater to a more upscale clientele as well as the average passenger. I mentioned before that private railroads used to do this but I have not seen Amtrak do it. One size fits all for Amtrak passengers, everyone is middle class in this country and are all in the same boat…thats Amtraks approach. Their charges for business class or the Bedroom vs roomette…the spread isn’t that great. In fact it is just a marginal increase in cost, IMHO.

3

I’m pessimistic about the success of the first-class Chicago-New Orleans service, basing this on the record of American European Express, both when it was five cars attached to the “Capitol Ltd” and later as a separate operation.

That being said, I’m not sure that there is that much of a market for long-haul sleeping car service that charges enough to be profitable with the labor-intensive level of service implied by daveklepper’s proposal. As far as dining-car service, that has customarily been viewed as a loss leader even with the relatively steep prices charged so I doubt that contracting out the service would change anything.

Also, existing labor contracts would have to be considered so this proposal may not even get off the ground without contract buyouts.

4

As I say, I am assuming the Chi - NO service will be successful. If it is not, than my proposal does not have merit.

5

Dave,

I think you mean that Amtrak would contract with a third party to provide its sleeping car service (both the cars and the personnel) in the same way that private railroad companies once did. The sleeping car service provider would set the price for the sleeping car accommodation and Amtrak would charge for transportation.

Today it is quite popular for government agencies to contract out certain services. The advantage is generally that the private contractor offers lower salaries and less expensive benefits and can therefore perform the service more cheaply than government does. Also, Amtrak would not have the capital investment in sleeping cars it has now. The disadvantage is that Amtrak would have less control over the quality of the service or the quality of the equipment.

P. S. Most Pullman cars were open sleepers. Amtrak does not use open sleepers although other railroads do including VIA Rail.

I can only offer an intuitive response. If I could raise the capital to set up such a business I would be reluctant to do so. Supposing I invested in sleeping cars and Congress suddenly decided to either cut out long distance routes or all Amtrak trains together. What then do I do with my sleeping cars? Sell them to railroads in other countries? I just don’t think Amtrak’s future is secure enough to make the investment.

6

Rail and sleeping car fares probably are a function of demand, space availability, and mileage. Sleeping car charges probably are also influenced by time on the train inasmuch as first class passengers have the cost of meals baked into their fares.

I did a comparison of the fares from Chicago to New York for the Lake Shore Limited, Cardinal, and Capitol Limited. Travel is for one person in a roomette on December 8th, which is a Saturday. It was chosen arbitrarily. Fares for other travel dates will vary widely.

The rail fare on all three routes is $97. However, the room charges vary significantly, from a low of $141 on the Capitol Limited to $266 on the Lake Shore Limited and $467 on the Cardinal. In addition, a passenger choosing the Capitol Limited and wanting business class from Washington to New York on a NE Regional would have to pay an extra $41. The total fares would be $279 on the Capitol, $363 on the Lake Shore Limited, and $564 on the Cardinal.

The Capitol is equipped with Superliner cars, which can carry a maximum load of 44 passengers. The other two trains are equipped with Viewliner cars, which can carry a maximum load of 30 passengers. I am not sure how many sleepers are assigned to each train, but when I rode the Capitol Limited several years ago it had two sleepers and a transition sleeper. I also rode the Lake Shore Limited approximately five years ago; it had three sleepers. I have never taken the Cardinal, but I have seen it pulling into Chicago. It had one sleeper. Perhaps someone can comment on the number of sleepers assigned to each train.

If my count of the sleepers is correct, the Capitol can book 88 passengers in the two regular sleepers and 16 overflow passengers in the transition sleeper for a total of 104 first class passengers. The Lake Shore Limited can accommodate approximately 82 first class passengers, depending on the number of rooms that have to be blocked to accommodate the crew. The Cardi

7

As currently opperated it seems the sleeping car itself costs a bit more than $3/mile to operate, inclusive of capital. The question is always how to cover the base train operation costs. you need a long train to do so.

8

I have never taken the Cardinal, but I have seen it pulling into Chicago. It had one sleeper. Perhaps someone can comment on the number of sleepers assigned to each train.

When I rode in October a few weeks ago the Cardinal had one Viewliner Sleeper. The crew used 4 rooms as I recall.

If the true cost to operate a sleeping car is $3-$4 per mile then divided by an occupancy of 20-50 is a marketable rate per mile based on 100% occupancy

Politically it seems a winner. Congress has always felt uncomfortable operating a business but has seemed willing to offer coach service as a social need.

I am not sure I would let the government off the hook on the dining service.

As to the investment risk I would have the government guarantee the loans to purchase the sleepers. If Amtrak discontinues Long Distance Service just as there would be a lobor buyout so there would be a settlement for sleepers privately funded.

9

Dixie,

I don’t know what the union contracts with Amtrak provide. However, ordinarily if the Federal Government eliminates a position there is no obligation to buy out the person holding that position. There are bumping rights; a person whose position is eliminated has a right to other positions which he or she is qualified to do provided the person in that other position has less seniority. And a person who is a Federal Employee and is laid off when a position is abolished has a right to return if a new position opens within his or her qualifications. Finally, Amtrak could arrange with a new private sleeping car operator to give Amtrak employees jobs to the extent that jobs are available and the laid off employees want them.

There are times when the Federal Government has a reduction in force (RIF) and suddenly hundreds of Federal employees lose their jobs.

10

According to the DOT Inspector General’s Report on Analysis of Cost Savings on Amtrak’s Long-Distance Services dated July 22, 2005, elimination of sleeping cars, dinning cars, and lounge cars would reduce but not eliminate the losses associated with the long distance trains.

The DOT analysis was focused on reducing the losses associated with the long distance trains. It assumed that the 2004 routes would be retained. It did not propose eliminating them altogether.

If the aforementioned services were dropped from the long distance trains, leaving coach only services with minimum on-board food options, i.e. box lunches, carts, etc., Amtrak could save approximately $75 to $158 million annually. It would also save an estimated $79 million per year in planned capital expenditures. These estimates are in 2004 dollars. When adjusted for inflation using the Bureau of Labor Statistics CPI calculator, which is a rough estimate, the amounts would be $89.3 to $188.1 and $94.1 million in 2011 dollars.

In FY11 the long distance trains had an operating loss of $615.4 million before allocation of depreciation, interest, and miscellaneous charges. If the maximum savings were realized, Amtrak would still have had an operating loss of $437.3 million on its long distances trains.

Elimination of the capital spend for new sleepers, dinning cars, and lounge cars would reduce the depreciation charges in future years and, therefore, could result in a further reduction of the operating loss. If the lounge car was retained, the savings as per above would be reduced by $52.4 to $$39.3 million in 2011 dollars.

With numbers like these, even when adjusted for the fact that they are getting a bit long in the tooth, it is difficult to see how Amtrak could break even on any of its long distance services without a significant change in its business model, i.e. drop the sleepers and dinning cars as well as institute other significant cost saving strategies, i.e. elimination of checked baggage, etc.

11

sam – link to report ?

12

This IG’s report has been around for a long time. It can be found at: www.oig.dot.gov/sites/dot/files/pdfdocs/CR-2005-068.pdf. Other sources include the BLS calculators. The calculations are my own.

13

The DOT IG report also showed the investor railroads paying Amtrak to use their trackage rights. In other words an obvious error in accounting. There were a few more errors I can’t recall right off hand.

It also assumed no more checked baggage for any passenger or more than one engine per train which is often not allowed per agreement with the host RR. NARP has a pretty good rebuke to the report.

Check your private messages.

14

I used data from the IG’s report to make two key points. Outsourcing the sleeping and dinning car services would still leave Amtrak’s long distance trains with a substantial operating loss. Equally important, given the then subsidies required for sleeping car passengers vs. coach passengers, it is difficult to see how a private operator could cover the costs and earn a return on its invested capital, which would be the only motivate for someone to take over the sleeping and dinning cars on Amtrak’s long distance trains. Admittedly, the subsidy ratios may have changed between 2004 and today, but I suspect that the subsidies for sleeping car passengers are still greater than the subsidy for coach passengers.

I did not see any mention in the report of trackage rights. I ran a search on freight, foreign, rents, tariffs, trackage, trackage rights, and rights. The only hit I got was on rights, which was a reference to labor’s bargaining rights.

Without access to the IG’s work papers, it would be difficult to determine whether the analysis team made any serious method and application errors. As is the case with any cost study, some assumptions have to be made, and they are subject to challenge.

I noted that one of the recommendations was to eliminate checked baggage.

Whether any of the hoist railroads would object to only one engine pulling three or four coaches has not been borne out by results at least on some routes. The Texas Eagle, City of New Orleans, and Pennsylvanian, which have more than three cars, as examples, only have one engine. They are hoisted by three different railroads.

The DOT IG’s investigation was an external review of Amtrak’s long distance train operations. Most of the team members appear to have come from outside of Amtrak’s IG office and, therefore, helped ensure the independence of the analysis. They didn’t have a dog in the hunt.

NARP is an advocacy group. It slants most data to support the vi

15

I searched the internet for the 2005 report on Amtrak sleeping car service that another poster refers to but I could not find it. However, I did find a report from the National Association of Railroad Passengers which rebuts the above report. A link is below in order that all may be able to read the NARP report and draw their own conclusions:

http://www.narprail.org/resources/capitolhill/statements/339-narp-rebuttal-of-dot-inspector-general-report-on-dining-and-sleeping-cars

16

The IG’s report is relatively easy to find. I just Googled DOT IG’s report on long distance train … It popped up immediately with NARP’s response in the number two position.

To gain an understanding of the methodologies deployed by the IG, one must read the entire report, including the footnotes. Doing so is important for an understanding of how the findings were derived.

NARP is a special interest advocacy group. It does not have the staff to compete with the IG’s horsepower. Nor is it independent. Its attack on the report’s findings are heavy on opinion, light on analytics, and filled with anecdotal observations.

Here is one example: “There is no scientific way to allocate costs between coach and sleeper. Once the decision is made to run the train, any such allocation is arbitrary. Clearly, the OIG’s assignment of 100% of dining, lounge and checked baggage service costs to sleeping-car passengers is wrong.”

If NARP’s staff understood activity based cost accounting, they would know that their statement is incorrect. Activity based cost accounting is not a science in the sense that physics or math is a science. But it follows a rigorous methodology that is reviewed by independent reviewers at each key step along the way.

I did not interpret the report to say that 100 per cent of checked baggage costs are attributable to sleeping car pas

17

The problem is the DOT IG used the RPS system to account for the costs, for which it was never meant.

On Page 26, for the Sunset Limited costs, in the Direct Cost table, Payments to Host RRs is shown to be negative, aka the host railroad is paying Amtrak.

They also assumed that:

“No coach passengers would abandon Amtrak if they no longer had access to amenities such as full-service dining cars, lounge cars, and checked baggage service.” I don’t see that being the case.

It was a pretty halfhearted report overall. Almost all the saving came from eliminating any amenities, not necessarily the sleeping cars.

18

I do not believe NARP is the same as DOT or any of its parts. DOT is a Federal Government agency; NARP is a private organization.

But I do believe that information about the 2005 IG report should be on the table so anyone who wants to may read it and draw conclusions. To hide the NARP report would be a mistake.

19

On occasion an expense account will have a credit balance due to a prior period adjustment, i.e. an overpayment in the prior period is being adjusted in the current period and shows as a credit. Without access Amtrak’s accounting records, as well as the project work papers, it is impossible to know for sure.

In another audit report prepared by Amtrak’s IG on billings from and payments to hoist railroads, including incentive payments, the auditors found several errors. I don’t remember all the details nor do I intend to dig out the report, but over and under payments are common.

The accounting for the Zephyr appears to be correct, suggesting that the notion of prior period adjustment is the reason for the credit balance in the Sunset account.

When people don’t like the results of an audit or investigation, they look for any little mistake to discredit the report. When they find an error of fact or method, they generalize it to the whole report. They rarely offer any solid support for their views.

If one believes the report is flawed, as NARP did, they should show why with the same analytical rigor that appears to have been deployed by the IG. Claiming that the report was halfhearted without any solid support is not persuasive. What makes it doubly so is that no one posting to these forums, as far as I know, has or has had access to Amtrak’s accounting records. Without that access it is difficult to build a counter case against any reports issued by Amtrak or issued by independent agencies auditing or investigating Amtrak.

20

NARP is definitely not a federal government agency. It is an advocacy group pushing the perceived agenda of its members. Generally speaking it lacks the resources to mount a sophisticated counter argument to the IG or anyone else for that matter.

The IG report and NARP’s response are there for anyone who knows how to use a search engine, i.e. Google, Bing, Yahoo, etc. to find. No one is trying to hide or surpress NARP’s attack on the report. Having said that, I find NARP’s attack to lack the same robust substance contained in the IG’s report.