This Week at Amtrak 2006-01-23
Volume 3 Number 4
- As said before, those who don’t know history are doomed to repeat it. Read what URPA Vice President and guiding light Andrew Selden has to say about Amtrak’s latest misadventure regarding dining car service on long distance trains.
By Andrew Selden
Amtrak is about to embark on another doomed project. The company in the past has often tried to starve itself into prosperity by cutting costs without sufficient regard to the adverse effect on revenues (Tri-weekly trains, limited advertising, closed stations, and elimination of checked baggage service, all come to mind.). This time, in a troubling innovation, Amtrak plans to starve not itself, but its customers in its quest for prosperity.
As famous historian and philosopher George Santayana observed nearly a hundred years ago, “Those who cannot remember the past are condemned to repeat it.”
Amtrak has been down this road before. It didn’t work then. It won’t work this time, either.
In 1980, Amtrak was reeling from Congress’ refusal two years earlier to allow its annual subsidy to creep up over a billion dollars. In 1979, it had tried to “cut costs” by eliminating five entire routes, but to no avail – the annual losses continued their inexorable climb. By 1980, attention focused on Amtrak’s onboard food and beverage services, a perennial favorite target of critics ignorant of the nature of Amtrak’s business.
The dining cars are labor-intensive operations with a sharply limited revenue potential because of the limited number of passengers able to use any given train (Because management also tried to “control costs” by limiting the number of cars operated on the trains, hence the number of seats and berths that could be sold on any given trip.). Diners and lounge cars are, nevertheless, an indispensable element of the backbone of Amtrak’s key business, the long distance trains, for this simple reason (which the critics, often government accountants, have never grasped): the typical, average journey on an Amtrak long distance train is more than 600 miles, and in the west more than 800 miles. That trip spans 11 to 18 hours, which encompasses two, three or even four meal periods. Many trips are even longer, during which the passenger is utterly dependent upon Amtrak for all of her and her family’s sustenance over periods of up to three days. Take away the food, or reduce it to inedibility, and the passenger will respond in the only rational manner possible: she won’t come back for a second trip.
For discretionary passengers (And, everyone has a choice: to travel by Amtrak, or another mode, or to forgo a trip), there can be little appeal to a trip spanning one to three days with no serious meals. Indeed, attractive dining service is often cited as a principal attractant to travel by rail.
This is much less of a concern with Amtrak’s many short corridor markets, where the average trip length is just one to two hours, and providing more than a snack and beverage service is superfluous. But for the long distance trains, which produce about half of all of Amtrak’s transportation output and ticket revenue (on about one fifth of the annual subsidy), attractive meal service is a vital necessity.
In 1981, Amtrak challenged these truths with a scheme championed by one Rima Parkhurst, the hapless Vice President of Customer Service at the time, to feed long distance passengers by serving reheated, preplated tray meals. Pay in advance, wait for the food tray to show up. Ms. Parkhurst promised the quality of “airline First Class standard” meals. She was wrong. The food was awful. The service was awful. Dining car employees were totally embarrassed and dispirited. Tips vanished. Soon, the passengers started to vanish, as well – it didn’t happen overnight, because long distance trips are infrequent enough for most passengers that the experience of the micro-waved airline-style meals had to wait for the next trip after the experiment was launched. But it took only one trip, and even rail loyalists started staying away, in droves. Word of mouth, the most powerful of all consumer education channels, was devastating.
Within less than a year, Ms. Parkhurst was gone, and so were the tray meals. A compromised level of real meals, with real food cooked on board (if not always cooked to order), was reinstituted, and traffic began a slow rebound.
The failed point of this was to get the cost of the diner down by slashing staff on Superliner diners from 11 people to three people, and single level diners from eight employees to three. After the disaster was reversed, the staff was rebuilt up to a level of five to nine, depending on the dining car.
There were earlier examples from which Amtrak could have learned, but did not. In the late 1950s, as part of its designed campaign to drive away passengers from a service that it wanted to eliminate, the notorious Southern Pacific Railroad replaced its dining car service on the Sunset Limited (New Orleans-Los Angeles) with lounge cars equipped with Automat-type sandwich and snack vending machines. It worked – passengers abandoned the Sunset Limited with vigor. Other railroads simply eliminated food service cars altogether. That worked, too. Costs were cut, but so was patronage and the tremendous revenue streams they represented, and soon so were the trains altogether.
None of this is to say that Amtrak should pretend that it is 1955 again (or even 1975), and try to offer a five-star fine dining experience in which its customers are plainly not interested. Most passengers today are accustomed to modern standards of what in the dining industry is referred to as “fast casual” or “casual” dining. Think of an Applebee’s, Denny’s or Olive Garden restaurant. Families are welcome and comfortable. Business travelers can get a decent meal, and at dinner enjoy it with a decent wine. Single diners are accommodated respectfully. Food is cooked to order, on site. Staff is trained to be accommodating, polite and respectful (and don’t last long if they aren’t). Customers are expected to pay a fair, but modest, price, and to leave a full tip for good service. A manager is always on site to assist service staff, greet customers, solve problems, and coordinate activities.
Of course, none of these successful restaurant chains ignores costs and cost management, but none allows itself to skimp on food, service or quality simply to “cut (or control) costs” to the point that it takes away the reason that customers patronize the restaurant in the first place.
If that is the path that Amtrak follows, the outcome is predetermined: passengers will find another way to get where they want to go, and it won’t involve trains. History teaches us that. Empirical contemporary experience in the foodservice industry teaches us that. How many times must Amtrak shoot itself in the foot with ill-conceived schemes to “cut costs” in the food service area before it learns the lesson that to accommodate passengers who contribute half the company’s revenue it must feed them in the manner the customer expects?
- You never know what’s going to come in flying over the transom when you open the URPA e-mail box. Here is a “testimonial” from a very recent Amtrak passenger.
“I just rode train # 50 (The Cardinal) between Chicago and Charlottesville, Va. That god-awful “Diner Lite” was in effect and frankly the food service stank. Same for Superliner Train # 4 (The Southwest Chief, LA to CHI). I have lodged a complaint with Amtrak. My thoughts are this ‘dumbing down’ of food service will benefit the already-awful airline industry more than Amtrak.
“On the above trains I was a First Class passenger.”
This is just one person that has been heard from. How many other disgruntled passengers are out there no one will ever hear from, again?
- Here are some samples from Amtrak’s new menu. There are four breakfast entrees, three priced at $10.00, and one at $6.75. Each entree includes juice, and coffee, tea, or milk. The entree that proves the most interesting is the Western Omelet for $10.00. Amtrak says the omelet is “draped with cheddar cheese, then topped with peppers, onion, and vegetarian ham, served with pork sausage and breakfast potatoes.” A prize is offered to all of those who immediately see the inconsistency of this offering. Ready? “Vegetarian ham” as an omelet ingredient, but “pork sausage” is served as the accompanying breakfast meat. And, what exactly is “vegetarian ham?” And, perhaps more importantly, “why” is there vegetarian ham? What is vegetarian ham made of? Do we really want to know?At lunchtime, entrees run from $7.00 to $12.00, and passengers add minestrone or chicken noodle soup to any entree for $4.00.
Dinner prices have become a bit more reasonable, with entree ranging from $11.00 to $18.00, with selections of beef, chicken, fish, cheese tortellini and a daily special. Half bottles of wine are offered for $12.00, and desserts run from $3.50 to $5.00.
You may note the great American staple of bacon is not included in the menu; when you initially look at the menu (and, there is no “mix and match), things are pretty much take it as offered, or leave it. Not much room for those with special dietary needs, or much variety if you’re on the train for more than 24 hours.
- Here’s some great news: CSX has reopened its Gulf Coast line for local traffic only, which was devastated by Hurricane Katrina. This will eventually allow two good things to happen when the line soon starts accepting through traffic. The Norfolk Southern main line from Atlanta to New Orleans has been clogged by the railroad’s own heavy traffic to New Orleans, plus it has been helping CSX by operating detour trains over the same line, causing massive congestion, and making the Crescent perpetually late all along its route. By soon eliminating the CSX detour trains, Norfolk Southern, even with its own heavy capacity, should be able to operate the Crescent in a more timely manner.And, with the CSX Gulf Coast line soon to host through traffic, how long will it take to restore the beleaguered Sunset Limited to its full route of Los Angeles to Orlando, via New Orleans and the Gulf Coast line? Amtrak, we’re watching and waiting for the earliest possible moment that CSX has the line in good enough shape to host the Sunset.
One item not mentioned in the press release – CSX and its insurance carrier that handles catastrophic events ponied up $250 million in a combination of lost business and replacement costs to get this line running again, without whimpering about the need for free federal money from the government treasury. That’s what private enterprise is all about; CSX had a problem, not of its own making, but it took care of what needed to be taken care of to get back in business.
- Progressive Railroading magazine has reported that the executive search firm of Heidrick & Struggles Inc. (No jokes, please, that really is the name.) has been hired by the Amtrak Board of Directors to help conduct a nationwide search for a new president and chief executive officer. The company has more than half a century of experiencing placing top executives in both domestic and international firms.
- Amtrak’s Southern Division is being naughty, again. Apparently no one in Jacksonville got the memo about now providing alternate transportation when trains are either annulled or truncated. Unlike the Pacific Division in the Pacific Northwest (directed by Jon Tainow, the corporate interim Vice President, Transportation) which provided alternate transportation due to mudslides in Washington State, the Southern Division seems to be doing things the same shameful way as before. This includes last week, when the Crescent was annulled west of Atlanta due to a fiery two train collision on the Norfolk Southern main line to New Orleans, and no alternate transportation was provided then, either.We had thought this non-friendly passenger service had ended. Who’s not paying attention at the division office in Jacksonville (or elsewhere)?
Here is the info, from the Amtrak computerized reservations system:
CATEGORY-MGC SUBJECT-JAN ... 19JAN06 01 CSX TRACKWORK IN FEBRUARY 02 03 CSX WILL BE CARRYING OUT TRACKWORK BETWEEN ROCKY MOUNT, NC 04 AND FLORENCE, SC IN FEBRUARY, AFFECTING AMTRAK SERVICE: 05 06 FEBRUARY 6-9, 2006 ONLY: 07 - TRAIN 79 WILL OPERATE NYP-RVR ONLY, AND BETWEEN RGH-CLT 08 ONLY (AS TRAIN 1079). NO ALTERNATE TRANSPORTATION RVR-RGH. 09 - TRAIN 80 WILL OPERATE CLT-RGH ONLY; NO ALTERNATE 10 TRANSPORTATION RGH-NYP. 11 - TRAIN 89 IS CANCELLED; NO ALTERNATE TRANSPORTATION. 12 PASSENGERS MAY USE TRAINS 79, 91 OR 97. 13 - TRAIN 90 WILL OPERATE RVR-NYP ONLY; NO ALTERNATE 14 TRANSPORTATION SAV-RVR. 15 16 FOR THE ENTIRE PERIOD FEBRUARY 6-23, 2006: 17 - TRAINS 89 (FEB. 10 AND AFTER), 91, 53 AND 97 WILL BE 18 DELAYED 30-45 MINUTES DUE TO SLOW ORDERS AND TRAFFIC 19 CONGESTION. 20
CATEGORY-MGC SUBJECT-JAN ... 20JAN06 01 CSX TRACKWORK IN VIRGINIA 02 03 CSX TRANSPORTATION WILL CARRY OUT RAIL AND TIE REPLACEMENT 04 WORK IN VIRGINIA MONDAYS THROUGH THURSDAYS, FEBRUARY 6 05 THROUGH MARCH 2, 2006, AFFECTING AMTRAK SERVICE AS FOLLOWS: 06 07 - TR 67 ORIGINATING DAILY, FEB 5 THROUGH MARCH 1, OPERATES 08 BOS-WAS ONLY. NO ALTERNATE TRANSPORTATION WAS-NPN-VAB. 09 - TR 66 ORIGINATING DAILY, FEB. 6 THROUGH MARCH 2, OPERATES 10 WAS-BOS ONLY. NO ALTERNATE TRANSPORTATION VAB-NPN-WAS. 11 - TR 1094 MONDAYS-THURSDAYS, FEB. 6 THROUGH MAR. 2, DEPARTS 12 NPN AT 710A, TWO HOURS EARLIER THAN TR 94, TO BOSTON. 13 - TR 176 MONDAYS-THURSDAYS, FEB. 6 THROUGH MAR. 2, CANCELLED. 14 TRAIN 1094 PROTECTS ITS SCHEDULE WAS-BOS. 15 - TR 94 MONDAYS-THURSDAYS, FEB. 6, THROUGH MAR. 2, OPERATES 16 WAS-BOS ONLY, ON ITS NORMAL SCHEDULE. 17 18 TRAINS (EXCEPT 66/67) OPERATE NORMALLY MONDAY, FEBRUARY 20.
- Meanwhile, back on the ranch in the Pacific Division, a printed Passenger Service Notice has been issued for the Cascades service, telling about temporary service delays between Seattle and Portland. Five well written, quick paragraphs tell passengers about trackwork being performed, and why that will delay trains for approximately 30 minutes, and thanking the passengers for their patience.This is absolutely making the best of an annoying situation. Regular passengers are being warned in advance of an inconvenience – and apologized to at the same time – and new passengers are being told this is an exception to the service, and not normal routine. Guys, is this such a hard concept to implement in these days of desktop publishing and quick printing? Back in the days of hot metal type and noisy mechanical printing presses, the Milwaukee Road and other commuter and regional railroads used to do this type of thing on a few hours notice for their regular riders. This is a good concept that needs to be used more often.
- Here’s a bright spot of news. Amtrak is now yield (they call it revenue) managing both Wondertrain Acela and Metroliners on the NEC. This is a good move towards both fiscal sanity and better marketing strategy. One unheralded part of this announcement is apparent confirmation the well respected Metroliner brand is not going down the track into oblivion. During last year’s brake crisis on Wondertrain Acela, the Metroliners did yeoman’s service filling in for Acelas on the NEC. This is from the Amtrak computerized reservations system:REVENUE MANAGEMENT OF NEC PREMIUM SERVICE BEGINNING JANUARY 28, 2006 FOR SALE ON OR AFTER FEBRUARY 6, 06, AMTRAK WILL REVENUE MANAGE ACELA EXPRESS AND METROLINER TRAINS IN THE NORTHEAST CORRIDOR. FIVE NEW FARE LEVELS OR “BUCKETS” WILL REPLACE “PEAK”, “SHOULDER” AND “OFF-PEAK FARES ON ACELA EXPRESS AND METROLINER SERVICE. EACH “BUCKET” WILL BE REPRESENTED BY A NEW FARE PLAN.
- In the category of starving yourself to alleged good health, Amtrak is on the warpath again, thinking of shuttering 26 stations, most on the long distance system. Looking at the internal document, the merits of the argument seems to be money; the majority of the stations are staffed by only one ticket agent. Interestingly, Meridian, Mississippi is on the list. Meridian is the home of former Amtrak Chairman of the Board John Robert Smith, and former Federal Railroad Administration Administrator Gilbert Carmichael.Here is part of the argument that is probably not being heard at all: perhaps, instead of closing viable assets such as manned train station, Amtrak should apply some basic marketing and attempt to increase business at these locations instead of writing them off? This basically comes down to squandering resources and is all about lost opportunities, not Amtrak starving itself into alleged good health. Every time the Amtrak system shrinks to save money, even by the closing of what are considered relatively small stations, what really happens is that a greater amount of revenue is lost versus savings. In the case of Meridian, total labor cost for the station is $181,875 annually. Total site sales (ticket and Package Express) is $351,805. This is a defensible savings? Hardly. When will this silliness stop?
