United Rail Passenger Alliance

Volume 3 Number 45

1. Amtrak, perhaps more so than most entities, is governed by politics. This week, the political winds in Washington brought a sharp change to the landscape, and many will be wondering how Amtrak will be affected. Probably, not much.For the past several years, Amtrak has become mostly a bipartisan issue, especially when it comes to funding. Amtrak has consistently had most of its budget requests met by Congress (about as well as any other program requesting money from Washington, on a percentage basis), so there is not likely to be much change on that front.Also in the past, Amtrak, during its more naughty management times, had consistently submarined Congress, which brought about much needed oversight, even to an unnecessary point of micro-managing the company’s affairs. The unnecessary micro-managing may change, but not necessarily immediately, at least until Amtrak proves it can be trusted to do the right thing in everyone’s mind.

   From the standpoint of appointments to Amtrak’s board of directors, those will be controlled by the White House. Considering the current Senate’s complete lack of enthusiasm for approving any board member’s nominations, there may be some improvement in that respect, but one has to always consider Amtrak’s board needs are pretty low on anybody’s calendar for urgent action.

   All in all, those hoping and praying for a change in Congressional leadership that may help Amtrak will probably be disappointed. The Congressional change has occurred, but since Amtrak was mostly a bipartisan issue, and considering the company has been receiving record high amounts of free federal monies, things will probably stay pretty close to the same as they are today.

2. The Wave of the Future by Dennis Larson, Vice President, Minnesota Association of Rail PassengersAmtrak’s new CEO, Alex Kummant, has already jumped on the 30-year-old “corridors are the future” bandwagon in his initial public statements. Not a good start for a supposed reformer. Let’s look at two of these bright beacons, one urban, one rural.In Pennsylvania, Amtrak has just finished putting $140 million of federal money into the Philadelphia – Harrisburg “Keystone Corridor,” bragging along the way about the 110 mph service, the federal funding partnership (never once using the word “subsidy”), and the prospects for growth.

   There is a lot a room for growth, because something else they never say is what this corridor is actually turning out: The $140 million track upgrade to the Keystone Corridor is nice, but I just could not help but notice that the trains there are carrying only 88 passengers on average, at a 38% load factor. This is the “fast growing” corridor service that never gets mentioned regarding operating loss.

   So if this semi-urban short corridor can’t compete with the expressway, what about rural service in New England, competing with I-89? The Vermont services are supposed to be the trains of the future, that is replacing the so-called obsolete long distance services. They have what the politicians want, ridership numbers, but unfortunately they also have relatively steep fares as compared to the perceived cost of driving which keeps the masses away.

   The Vermonter carries about 106 passengers per mile for an average trip of 178 miles, at a 34% load factor; the Ethan Allen carries 94 on average for an average trip of 147 miles, at a 29% load factor, nearly identical to the so-called successful corridor services elsewhere. These are distances that are also in the comfortable driving range for the private auto/truck/SUV.

   The Coast Starlight, a so-called obsolete long distance passenger service and in the process of being downgraded by Amtrak managers, has 211 people on average that fill the Starlight’s seats at a 62% load factor for average trips of 576 miles, which is outside the comfortable driving range.

   What makes the most sense in Vermont would be extending the Silver Star to Montreal. Ridership on the Connecticut River Line went in the tank when the Montrealer was discontinued several years ago.

   It used to be possible to take a train on Friday night from New York City to Waterbury, Vermont, get off Saturday morning and ski in nearby Stowe, and come back Sunday night getting to New York City in time for work on Monday morning. The Vermonter as it stands is pretty useless for anything other than seeing the Connecticut River scenery.

   The proposed, efficient Rail Diesel Car concept makes sense in this market as a secondary train. An RDC running from Springfield to White River Junction to Burlington to Rutland to Saratoga Springs to Albany would be a useful service. Hopefully you could find a way to connect to something on both ends. Then, the Silver Star becomes the primary overnight train on the route.

3. DOT Admits Long Hauls Subsidize Corridors

   by Andrew C. Selden

   If we ever needed a final proof from a high federal official that the long distance trains are being used to cross-subsidize the Northeast Corridor, and that the national system is being methodically cannibalized to prop up the failing NEC, here it is, quoted by Amtrak itself, from a new report from the United States Department of Transportation’s Inspector General:

   “Incremental operating savings over the next five or six years will not be sufficient to fund the significant increases in capital investment required to return the system to a state of good repair and promote corridor development.”

   Let’s ask these questions: in what segments of its operations is Amtrak pursuing incremental operating savings and where is it planning to make significant increases in capital investment?

   Well, thanks to the I.G. himself, we know where the operating savings are coming from: The I.G.’s report points to “? sustained reform, ? in the areas of food and beverage service, sleeper car service, route restructuring, state payments, and labor contracts.” That spells “long distance” and “national system” because that is where (and only where) Amtrak is slashing route, food service and sleeper service, and on-board staffing.

   And as to where the dollars from these avoided costs will be redirected, the I.G. himself points to the only application where significant increases in capital investment can be expected: “? return[ing] the system to a state of good repair and promot[ing] corridor development.” The only place we know that is happening is in the dilapidated environs of the NEC.

4. Last week we talked about how URPA receives lots and lots of mail. Well, we also receive mail about the mail we talk about. Here’s an insightful e-mail that arrived last week.
   

   It was interesting reading some of the comments of your readers. I realize this can not be a feature every issue, but it was an informative interlude this time. In regards to the east coast fellow who apparently is a regular user of corridor service … he spoke well of the concept of long distance service, but fell into the same trap most east coast people do, whether they be for, or against rail passenger service, be it Amtrak or whatever other operator you can name. He, and they, compare “end point to end point” service with air service. Why even get into the silly game of trying to compare on time New York City to Los Angles train service with air? Obviously air is faster. I know you and other insiders at URPA know the biggest value of long-distance trains lies in their intermediate stop service, not their end point to end point service. We here in La Crosse, Wisconsin for the most part “don’t care” about the Empire Builder west of the Twin Cities, because most riders to/from La Crosse are bound to Chicago-Twin Cities-Milwaukee, in that order …With Whitefish, Montana a strong contender also … oops … now we are west of the Cities … but what of those going to Fargo … or Winona, Minnesota to Spokane. You know the argument … but even the east coast supporters of long distance trains must be reminded that we here in the “Great Flyover” are real people too, and have real life things we do … sometime we even travel for non-business purposes We actually have lives in La Crosse and Red Wing we consider every bit as important as those who have lives in New York and Los Angles.

   Good thoughts like these were just too much for one of URPA’s analysts to pass up.

   The gentleman from Wisconsin makes some good points and here are a few numbers to go with it.

   In 2004, 2.7 million passengers, (inbound plus outbound) used air service between all New York airports and all Los Angeles airports out of about 700 million airline trips total. While air trips carry about one-half of their passengers for business reasons, only about 16 percent of all trips on all modes are for business reasons. Personal business accounts for 12 percent and those who travel for leisure purposes account for 56 percent.

   In the New York City to Los Angeles travel market, nearly all travel is by air and only a handful of people use the surface transportation modes. But the highways in between these markets are crowded and so are the trains with average loads heavier than the airlines and rail corridor services. The New York City to California trains, the Lakeshore Limited and Southwest Chief, averaged 186 and 179 passengers per mile versus 144 passengers per mile for Amtrak’s best service between New York and Washington. The airlines average just over 100 passengers per mile.

   While airlines get nearly all the mega-length trips, the average airline trip length is now 1,100 miles, just slightly higher than that of a rail passenger on a long-distance train.

   The airlines serve two travel markets, east and westbound only, and the long distance rail routes serve 2,550 city pairs between NYC and Los Angeles.

   In the transcontinental markets, and even in the interregional sub-markets, a long distance train like the Southwest Chief or Sunset Limited acts just like an interstate highway.

   The Sunset Limited, trains 1 & 2 = Interstate 10. It’s that simple. The California Zephyr, trains 5 and 6 = Interstate 80. The Empire Builder, trains 7 & 8 = Interstate 90, etc. You don’t tear up the middle of I-80 in Wyoming (or close it four days a week like the Sunset Limited) just because very few people use I-80 to drive all the way from Boston to Oakland, or just because its heaviest use is around Chicago.

5. For decade after decade, Amtrak apologists and cultists, and their national organization, have desperately wanted to believe Amtrak has been receiving the fuzzy end of the lollipop in terms of free federal monies from Washington. This endless, incorrect drumbeat has been picked up by newspaper writers and editorial writers all over America, constantly chanting, “if Amtrak just had enough money, the world would be fine, and the Republic will be stronger.” Keep in mind that in the very beginning, when Amtrak was formed, United States Department of Transportation estimates predicated that with a one-time infusion of $140 million (in 1970 monies), Amtrak could begin operating in the black. Boy, were they wrong. For a number of reasons, from lousy management to completely wrong business strategies to the hurtful emphasis on short rail corridors and boards of directors that had no business experience, Amtrak has now sucked up over $25 billion in free federal monies, and still needs more.Numbers cruncher Dennis Larson recently took a look at some official federal government documents and came up with these startling results.
   

   Railfans in general are angry about the short end of the financial stick that Amtrak gets in the form of taxpayer subsidy.

   Here are federal government’s Bureau of Transportation figures averaged out from 1993 to 2002 regarding the various modes except for the airline figures which end at 2001.

   The subsidy is based on amounts received per thousand passenger miles. This may not be fair to the commuter portions of Amtrak and transit systems as they are not really into transportation but more into rides, but nevertheless here are the figures.

   Railroad	$186.35
   Transit	$118.26
   Air	$7.26
   Bus	$3.52
   Autos, Pickups and Vans	$3.52	PAID BACK *
   Highway	$1.91	PAID BACK *

   ^* does not include social costs

   General Aviation, the touch and go people you see at small airports, which amount to most general aviation air travel, is expensive at $95.24.

   The “all modes” average is just $.45, that is 45 cents.

   Amtrak has a high of $407 in 1998 when they collected the taxpayer relief funding, most going to the Northeast Corridor but the entire system diluted the subsidy per 1000 miles considerably.

   And the totals listed in their PDF document and their Excel document vary a bit as well. These figures are from the Excel document.

   For more interesting reading:

   http://www.bts.gov/programs/federal_subsidies_to_passenger_transportation/html/federal_subsidies_to_passenger_transportation.html#_ftnref5

   Now, step back and take a deep breath. For more than three decades, everyone has believed rail gets the smallest subsidy, and those mean, nasty, evil airlines and truck companies get the most. Oops! That’s just not true.

   What these numbers prove is not that Amtrak receives too little subsidy compared to others, creating false modal envy, but that if Amtrak were managed better, and invested its assets better (such as in long distance trains, and not short corridors), then Amtrak would not only be more viable and robust and a company and passenger system, but it would also need less continual federal and state money.

6. (Sigh) Here we are in Florida, preparing for a rip-roaring holiday season, very happy we’re at the end of hurricane season with hardly a storm ripple, and, yet (sigh, again), still no Sunset Limited running between New Orleans and Florida. Every day the Sunset doesn’t run east of New Orleans, is another day Amtrak has a huge hole in its route system and loses hundreds of connections in its route matrix. What is Amtrak waiting for?
7. For those in the back of the classroom who continue to nap, it’s time again to revisit the true economics of long distance trains and regional trains.
   

   By Andrew Selden

   Some of the data that no one (including Amtrak itself) seems to understand about the Empire Builder, and the interregional trains generally, includes these points:

   • The Empire Builder is, by a wide margin, the highest grossing (in ticket revenue) single train that Amtrak operates, despite being …
   • … the most geographically-isolated train in the country, and traversing the least-populated route in the country.Isn’t that remarkable? How could those two conditions co-exist?
   • The Empire Builder also generates, by a VERY wide margin, the highest output of any single train Amtrak operates. Output is measured by revenue passenger miles, not ridership. Ridership (which is a measure only of transaction volume) is almost irrelevant to any meaningful measure of performance of any passenger transportation service (except in cases like urban transit systems where fares are not variable with distance, and headcount is a valid proxy for revenue, but still not output).
   • The Empire Builder’s remarkable results come about because it has the longest average trip length of any train in the system, over 800 miles. That means that the average passenger is on board for about 18 hours. Some traverse the entire route, and some even travel beyond by connecting to or from other trains at the three end-points. This average trip length is functionally identical to the average trip length in the U.S. commercial aviation industry. Every seat and every berth on this train turns over on average two to three times every trip.
   • Calculations made by the Minnesota Association of Rail Passengers, before Amtrak stopped carrying mail and express on this train, the Empire Builder contributed from its revenues about $20,000,000 a year in free cash flow, after paying all of its direct operating expenses, towards Amtrak systemwide overhead and fixed costs.
   • The Empire Builder would do even better commercially if Amtrak would add capacity to the train. It runs with one fewer coach and sleeper lately than it used to in the 1990s. That is not because demand is lower – in fact, demand is very high and growing – but because Amtrak does not have, or chooses not to assign, additional cars to this train.
   • The Empire Builder, year in and year out, has extremely high utilization. Its load factor (the proportion of available seat miles that are occupied by paying passengers, i.e., available seat miles divided by revenue passenger miles) is in the range of about 60%. A long distance train is functionally sold out at about 65% (because of all of the many on-and-off boardings across its long itinerary), and the Builder is in fact sold out during the summer and holiday peak periods, especially in the sleepers. This compares well to the regional corridors, including the Northeast Corridor, where load factors range from the high 20% range to about 35-40%, which means Amtrak cannot sell, or even give away, well over half of its inventory in the short corridors, where it competes with private automobiles.
   • As a group, the long distance trains require (depending on whom one asks) between $100 million and $300 million a year in subsidy (at Amtrak’s current and bloated fixed costs; Amtrak refers to the $300 million figure, while a Federal Railroad Administration study a few years ago pegged the losses at under $100 million); the rest of the $1.3 billion annual subsidy goes to subsidizing the Railroad Retirement Fund and debt service (from borrowings used for the Northeast Corridor eight years ago), totaling a little over $200 million, and the rest – about $750 million a year – subsidizes Amtrak’s short distance corridor services. Of that $750 million, more than 90% goes to support the Northeast Corridor. The long distance trains collectively produce about half of Amtrak’s total output of transportation, on less than a quarter of the annual federal the subsidy, while the short distance corridors produce the other half of system output on about three quarters of the subsidy. The long distance trains are nearly full, while the short distance corridor trains, statistically speaking, are more than half empty. Which of these services is “successful”? Which has the greater growth potential? In which segment does the federal government pay more subsidy in the aggregate, or per passenger mile of output?
   • Despite the foregoing, Amtrak has always plowed, and continues to this day to plow, the vast majority (historically, nearly 95% of its available investment capital – its annual free subsidy from the federal government) into the short corridors, and 90% of that has gone into the Northeast Corridor, where over the last two decades, in purely financial terms, Amtrak has achieved a negative rate of return on invested capital – it loses more money there every year than it ever has, and the annual losses are continuing to increase.
   • In terms of capital investment, while the Northeast Corridor has received more than $20 billion over the last 25 years (which is equal to nearly $55 billion in today’s dollars), the Empire Builder has received NO net capital investment at all. Amtrak has never addressed what performance metrics the Empire Builder – and its sister trains – could achieve if they were to add carrying capacity to match latent public demand for this service, and especially if they were to be networked into reliable interconnections with other existing trains and routes to allow usage by people in still more origin-destination city pairs than can now use these once-a-day (or less) services.

   Thus, when we see discussions along the lines of, “What is to be done with this train/these long distance trains? It/they cost(s) so much, yet seem(s) so popular,” it’s perplexing, because no one ever wants to get into the actual results of operations of the Empire Builder, which by ordinary business standards are very, very good. If Amtrak were being run like a business, instead of a subsidized public transit service for the Northeast, it would be pouring capital into the Empire Builder and the other long distance trains, rather than starving them and then wondering why they aren’t doing well, by Amtrak’s distorted measures of performance.

8. The State of New York wants train passengers to eat, even if Amtrak doesn’t. The Albany Times-Union reports that food service is planned on the new express trains that will be running between New York’s Capital Region and New York City. Amtrak stopped serving food on trains originating or terminating in Rensselaer that are part of Amtrak’s Empire Service at the end of June 2005, saying it was losing $1 million a year due to the onboard food service.The new express trains, which are already in the printed Amtrak Fall timetable, but not yet running, are being funded by the State of New York. It’s notable that only one other train in New York is funded by the state – the Adirondack – and all other New York service of all types is subsidized by free federal monies.The Empire Service route, TWA readers may recall, was the testing ground for outsourced food service provided by contract with Subway sandwich shops. That test, which was done using non-union labor, was an immediate, colossal flop, for a number of reasons.

   This time, New York is paying Amtrak to provide the food service, using Amtrak union employees, and food from Amtrak’s commissary in New York City. The new service will feature food from both a café car and a rolling food service cart.

   New York spokespersons say if the food service is successful, there is a desire on the state’s part to re-institute food service on the other Empire Service trains, too.

   The Times-Union further reported that recent ridership figures show boarding on service between Rensselaer and New York fell 1.1 percent in the fiscal year ending September 30th, even as boardings surged on other Amtrak trains passing through Rensselaer, all of which offer food service. Trip times between New York City and Rensselaer average about two and a half hours.

   As usual, the question becomes, because Amtrak didn’t use any institutional memory to understand that loss of food service also means loss of passengers, which means loss of revenues, but an increase in a need for subsidies, that yet another Amtrak experiment gone awry is another disgruntled group of Amtrak passengers that not only are no longer spending money with Amtrak, but are making sure their friends and family aren’t, too.

9. Here’s a bright spot. The Associated Press reported in The Times-Picayune in New Orleans that plans are still afoot to reconnect New Orleans and Baton Rouge, Louisiana with passenger rail service for the first time since the inception of Amtrak service, using Kansas City Southern tracks.Louisiana’s state transportation department says the service is a $60 million proposal, which could be funded out of federal monies used to help with Louisiana redevelopment after Hurricane Katrina. Many former New Orleans area residents and workers decamped to Baton Rouge due to the hurricane, and continue to live there until New Orleans is further rebuilt. The addition of daily train service would provide a long distance commuter service for those continuing to live in Baton Rouge while they help rebuild New Orleans.While it’s always difficult to become excited about new, high cost and low revenue commuter runs, this worthwhile project is part of a big picture that has a number of benefits. First, it demonstrates how rail is an important part of any domestic transportation network, even in a lower population state like Louisiana. Second, it makes economic sense from a standpoint of providing a worthwhile service over an existing railroad that provides reasonable, comfortable service for commuters helping with the enormous task of rebuilding New Orleans. And, third, if financially structured correctly, this should be an “off the books” project for Amtrak, where this service is operated as its own cost/expense center and is funded out of a special needs fund from outside of Amtrak.

   For the future, if this service proves successful and works for a well run railroad like Kansas City Southern which will be hosting the proposed trains, this could be the beginning of a much needed new route from New Orleans to Baton Rouge to Shreveport, and on to Dallas and Fort Worth. Before Hurricane Katrina, Houston-New Orleans travel was huge, both for leisure and business, despite the lackluster performance of the Sunset Limited due to its tri-weekly service and on time performance problems. New Orleans-Dallas has a huge potential, too. This may be a way of opening a new route at someone else’s expense, and turning it into an instant winner.