The Business and Politics of Passenger Rail; 2012-01-03
Volume 2, Number 1
It’s crunch time, according to the PRIIA 2008 calendar. The Passenger Rail Investment and Improvement Act, passed by Congress and signed into law by President George W. Bush put a deadline on when individual states will have to start shouldering more of the burden of costs of state passenger rail services.
No one ever took this deadline seriously (as often happens with Amtrak), and when Republicans in the United States House of Representatives churned out a budget which finally reflected this reality, everyone panicked. Amtrak True Believers were pretty sure the sky was falling and the Earth was rushing up to meet it.
It turned into a financial windfall for dentists throughout the land because so many people were gnashing their teeth over this. Nobody could actually believe the day of reckoning was at hand; everyone thought the funds for Amtrak’s budget and state department of transportation budgets grew on trees which were well fertilized and bearing fruit endlessly.
Oops! Turns out money doesn’t grow on trees, especially in recessionary times when state budgets are stretched to the limit, and the federal budget only gets by through the liberal use of borrowed money.
As with so many other things in 2011, Congress backed down at the last minute and said that really, they were just kidding about the states having to pony up more money for state corridor trains. It’s okay, and Amtrak can once again be a spigot for all sorts of money.
The True Believers sighed a sigh of relief, and got back to more important things, like arguing over what color the upholstery of coach seats was on the 1959 Santa Fe Super Chief.
But, the smart folks at various state departments of transportation took note of this, and the best ones have girded their financial loins for this fight again, soon.
They are the ones who will have state trains which will survive and prosper; they are the ones who are looking at the various member of the Association of Independent Private Rail Operators (AIPRO; www.passengerrail.org) and wondering out loud, what a post-Amtrak world will be like.
After much of Amtrak’s critical senior operating and maintenance executives took the last train to Clarksville via a hugely ill-conceived management buyout offered by Amtrak President and Chief Executive Officer Joseph Boardman at the end of 2011, and the few remaining executives are trying to figure out how to run the railroad (Amtrak’s current Acting Vice President of Operations is the simultaneously current Chief Financial Officer), there is nervousness throughout the land about the overall viability of Amtrak through the harsh winter months of 2012.
While Mr. Boardman has made a lot of noises about everything continuing as usual, and even sent out an end of the year employee advisory saying overtime for union employees would continue (but, with a cap of $35,000 per individual for a year), more and more people are placing bets on how much longer Mr. Boardman will be running the company and what can be done by his successor to save Amtrak from itself.
As state departments of transportation begin to think beyond the many restrictions of running passenger trains as imposed by the continuing narrow thinking of Amtrak through the years, here are some concepts which are likely to come to light.
Stations
Post-Amtrak operators will create more station stops for corridor trains. The whole idea of these trains is to move people efficiently from one station to another, and when you impose radical limits – as Amtrak has – on the number of station stops on any one route, you limit patronage. Amtrak often allows for a single station stop in a large urban area of multiple millions of people, citing the false belief people will drive great distances in their personal vehicles (often, backtracking from their starting point to a train station) to catch a train.
We know there is a huge need for a new assortment of suburban station stops and small town station stops. The false claim passengers won’t ride a train because it stops too often is just a repeat of the junk science of the 1950s. People care more about trains departing and arriving on a convenient and predictable schedule at accessible locations than actual transit time.
These new stations and many existing stations will also suddenly be manned by real people, not machines incapable of providing customer service. A smile from a ticket agent and a politely answered inquiry goes much further than punching buttons and jabbing at an impersonal screen on a ticket vending contraption.
New stations will be driven by local governments anxious to cash in on the many pluses of passenger trains; stations will be built and maintained by local governments in the airport model instead of the old railroad model.
No longer will there be startups such as the new service in the Commonwealth of Virginia now under construction between downtown Norfolk and the Northeast Corridor. The new service will depart Norfolk, cross a major river, go through the densely populated city of Suffolk, and continue through a series of small towns until it reaches Petersburg, without a single station stop for nearly 80 miles. While the new service is helpful for denizens of Norfolk and Virginia Beach, it does nothing for the tens of thousands of citizens in Suffolk and along the way, which can only watch a passing trains the way cows in a field do. Towns along the way have fought to have station stops, but have rebuffed to be told perhaps sometime in the murky future intermediate station stops will be allowed. In effect, not only is this saying the residents of these areas are not important, but the potential business they bring is not important, too. This is too much like a government saying it would rather spend more money for train service than allow local citizens to provide their own stations and help pay the costs. Where is the efficiency here?
Length of consists
Post-Amtrak operators will plan train consists which can carry a decent number of passengers, not the mini-trains now operated by Amtrak. You need 300-400 passengers per train for it to pay its own way; carrying a dozen passengers 50 miles smacks of horrors of the pre-Staggers Act of 1980 mandates by the Interstate Commerce Commission that railroads must operate trains whether they make money or not.
The states will come to embrace the California model where the state figured out decades ago it couldn’t trust Amtrak to market any state supported trains, so the state took it upon itself to market the trains beyond Amtrak’s efforts. For years, the state has spent much, much less on advertising in-state passenger trains than it would paying higher rates to Amtrak to make up the difference between the cost of the trains and the revenue generated by ticket sales. This model has worked well in Virginia with the relatively new Lynchburg to the Northeast Corridor service, which in the entire time of its existence has yet to cost the commonwealth a penny in state support to Amtrak because passenger revenue has exceeded expectations from Day One.
At the beginning, refurbished equipment – gutted and rebuilt to current specs so the age of the equipment is effectively zero – will be chosen for service. There is a large pool of sturdy, mostly Budd-built equipment which can withstand many more decades of the rigors of passenger train service (See: VIA Rail Canada and its Budd fleet, all over a half a century old) while new equipment is built and put into service. The states, not Amtrak, will own and operate through contractors and maintain this equipment for their advantage.
Onboard services
Onboard services will again flourish, and the only consistent aspect will be the inconsistency between services as states decide how they wish to best present passenger train service. No more “one size fits all,” and no more automatic “no” to any new and innovative idea.
Corridor trains will all have at least two levels of service, if not three. A standard coach service will be available, and a business class service will be available. For those states really wishing to recapture as much of the passenger rail service as possible, an executive class service will also be available, with private rooms, small onboard conference rooms, and business amenities such as printers, copiers, and simple bindery services.
All seating, from coaches to first class services, will have a different look. No longer will there be long tubes sporting two-by-two seating. Coaches and other cars will be broken into sections for noise abatement and to instigate creative seating patterns. Those wishing for a solitary single seat will have one; those traveling in groups or as families will have seating clusters. The occasional table and refreshment centers will be scattered about, with passengers having access to hot and cold potable water as well as coffee and tea.
The first class services will have a single shower and changing area in those cars, allowing passengers traveling to business meetings to board a train casually and step off a train ready for negotiations.
Wi-fi and power outlets will be available for every seat in all levels of service.
Food service will instantly gravitate away from what is now essentially vending machine food served by a service attendant. The junk science of the 1950s will again be ignored, and full service dining cars, such as on the level of a Denny’s, will be offered, providing reliable meals at a reasonable, non-hostage price. The old canard about dining cars always losing money will be quickly banished, and between modern food service techniques for freshly prepared food and modern efficiencies of ordering and service, dining cars will again become rampant. Dining cars will be open from terminal to terminal; if passengers are on the train, they will have the ability to eat and drink.
Lounge cars will be radically different from the bland environments of today. True analysis of costs and passenger needs will redefine lounge car services, and, with a full service dining car open the entire length of the trip, the lounge car will cease to be a primary food source and revert to its original intent of being a place of quiet recreation and conversation, beverages, snacks, and convenient sundries and other items for purchase.
Good onboard services only come from well-trained and well-motived onboard services employees. Employees simultaneously handling several cars are incapable of providing meticulous service. More OBS employees will be needed to fully staff each train so each route can reach its full potential.
You can get there from here
Connectivity, creating a good route and city pair matrix in each corridor will be critical to overall success.
Currently, Amtrak often offers service in single directions, from some sort of hub, but is oblivious to service needs or potential ridership needs beyond defined areas such as state borders. We know travelers have no concerns for state borders; they are only invisible lines on a map.
The State of North Carolina recognizes this, and sponsors the Carolinian, a train which begins in Charlotte, North Carolina and finishes it daily run in New York City. North Carolina allows its citizens and visitors full access to other cities along the way, including stops in Virginia, Washington, Maryland, Delaware, Pennsylvania, and New Jersey before reaching the terminal in New York City.
The new thinking will go beyond this.
As an example, the Commonwealth of Virginia has three current state sponsored routes, with a fourth under construction.
The westernmost route follows the long distance route of the Crescent, with a second state sponsored train along part of that route originating in Lynchburg, and continuing north to Charlottesville, Culpeper, Manassas, Burke Centre, Alexandria, and Washington, and further north along the NEC to Boston.
The next route slices through the heart of the commonwealth, with a straight north/south run from Washington south to Alexandria, Quantico, Fredericksburg, Richmond, and Petersburg, then down to North Carolina. This is the route of the Silver Meteor, Silver Star, Carolinian, and Palmetto. The state sponsored part of the route is from Richmond to Washington.
The third route follows the same route to Richmond, then veers southeast to Williamsburg and Newport News, the terminal point for Hampton Roads and the greater Norfolk/Virginia Beach area.
The new fourth route will run north from downtown Norfolk on a more westerly route than the Newport News service, and connect to the rest of the Virginia route in Petersburg and continue up to Boston.
Here’s the problem: every one of these routes is essentially a north/south route, with no east/west connections. You can’t get from Newport News or will be able to get from Norfolk to Charlottesville or Lynchburg, both important cities in the commonwealth unless you ride an Amtrak Thruway bus connection from Richmond. It’s at least a two-seat, if not a three-seat ride, and schedules are not very well coordinated.
Managers intent on making passenger trains viable instead of taxpayer dependent will look at a map of the Old Dominion and discover the former C&O east/west main line between Doswell, Virginia – just north of Richmond – and Charlottesville. This is primarily a route which for many years has hosted long trains of empty coal cars. Yet, it connects with the other former C&O route which today hosts the tri-weekly Cardinal through Charlottesville, just north of the Charlottesville station which also serves the Crescent and Lynchburg servce. Scheduling trains from either Norfolk or Newport News to Richmond, Charlottesville, and Lynchburg, or beyond to Roanoke would open up tremendous connectivity opportunities for Virginia travelers which do not exist today. If you want an all-train route from Williamsburg to anywhere on the Cardinal route in West Virginia, unless you want the discomfort of the Thruway bus, you must travel all the way north to Washington to go back southwest to West Virginia.
A connection such as this would not only be a huge boost to the state sponsored trains, but also a great gift for connectivity for the six Amtrak long distance trains involved in these routes, too. Everybody wins, nobody loses in this scenario.
Many other corridors with state sponsored routes have such simple opportunities to greatly expand the potential of their routes, reestablish connectivity with Amtrak long distance trains, and provide popular travel options for passengers – which is really what all of this is about.
It’s good to have reservations
Amtrak’s current reservations system skews heavily towards coach travel; some people are not even aware many Amtrak trains offer business class or sleeping car services. Some live reservations agents act as if they are loathe to talk about anything other than coach seats.
This problem will be solved by contracting with professionally operated reservations services as the airlines and hotel chains do today. Everything can and should still interface with Amtrak’s reservations system, but each state will either want their own reservations system or be a part of a pool system with nearby states for maximum efficiency.
How much will all of this cost?
All of this will cost money, but, when you base the cost of ongoing service with a new, efficient operator versus the continuing cost of the consistently highest cost operator (Amtrak) then all of this becomes not only affordable, but in the long run healthy.
Remember, Amtrak accounting is based on losses per passenger. Forever we have heard the more passengers Amtrak carries, the more it loses. There is never any calculations made for efficiencies of volume or quantity – only higher losses because of higher ridership.
In the real world of AIPRO members, high volume efficiencies do count, and count a lot. Plus, none of the new services will have the crippling headquarters overhead Amtrak continually has as a boat anchor around its corporate neck, nor will any of these new operators be saddled with expenses of the NEC which somehow always seem to be spread throughout Amtrak instead of isolated where they belong.
In short, small and efficient operations, similar to those of short line railroad management will be put into effect, eliminating all of the corporate overhead waste which has been a part of Amtrak for decades. Before long, the new operators will have more frequent, longer and better trains, and at a lower cost.
Beyond just train service
Many other revenue generating opportunities will be present, as well. Each corridor will be a good candidate for onboard publications such as magazines and route guides, all which can be advertising based.
Seat-back video services can be offered on demand and as pay-ver-view for movies and games, and these same video screens can be used to promote dining and lounge car services as well as upgrades to first class services and other routes. Advertising can be sold to outside parties who will be happy to have captive audiences.
Reservations systems can offer services beyond train tickets; rental car, hotel reservations, even theatre and event tickets can all be offered on a single reservations system with commission fees flowing to the system owner.
Onboard sponsorships can provide revenues; how many coffee or tea makers would like to be known as the exclusive provider of their wares, as well as specialty desserts in the dining car and specialty drinks in the lounge car?
A properly motivated and fully staffed marketing department, beyond standard advertising media efforts, can stimulate group travel (Such as theatre group travel to shows in larger cities; this type of trip would be possible because of most likely increased frequencies by better operators.) or join with organizations such as credit unions to promote passenger rail travel through credit card deals or inhouse promotions for discounts.
The only restriction on other potential revenue related to corridor passenger train service is the restriction on one’s imagination and business savvy.
In the end
The Great Recession and its lingering effects are going to be positive catalysts for corridor passenger train travel because Amtrak’s inability to operate efficiently and in the best interests of its largest customers – state departments of transportation – will force the self-interest of the stewardship of state budgets to look beyond Amtrak to a much brighter future.
Gil Carmichael, former FRA Administrator during the Bush I years, and former Chairman of the Amtrak Reform Council, as well as the Founding Chairman of the Board of Directors of the Intermodal Transportation Institute at the University of Denver has started a new series of reports, entitled the Gil Carmichael Report, Investing in Interstate 2.0. The reports are free, informative, and a must read for anyone serious about the future of railroads in the United States. Contact the report distributor at geoff@jdmandassociates.com for your very own copy.
J. Craig Thorpe, noted Amtrak and railroad illustrator is available for all railroads, railroad-related companies, and organizations for his dramatic illustrations on a custom basis. Mr. Thorpe’s impressive gallery of work and contacts for engagement may be viewed on his web site, which is listed in the Links section.
