The successful long distance train of the future

• will look very different from today’s Amtrak long distance train.
• will look more like the successful trains of the past

Change in operational structure

• Today: A single company owns, operates, markets
• Tomorrow: Based on Franchise Structure

Franchise Structure

• Umbrella company like Amtrak for Marketing, Ticketing and Service Standards
• Other companies, acting like owners, provide capital, equipment, and operations under those Service Standards
• This is a proven model over several decades in hospitality and travel business

Thumbnail History of Passenger Transport

• Historically, Rail Passenger Service was a Successful Private Business
• Private Business could not compete after World War II due to continuing Regulation and Taxation in an era when unprecedented Government Funding was given to Roadways, Highways, and Airways
• Today, new Highway construction has nearly ceased, and Profits in the the Airline Industry are Scarce

Driven to Succeed

• All Modes — Rail, Road, Water, and Air — should benefit from Appropriate Levels of Government Involvement in Infrastructure
• The Franchise Model of Passenger Trains maintains some Government involvement in Infrastructure
• The drive and rewards of capitalism are always stronger than the drive and rewards of government control

Surprising Demographics

• A late 1990s passenger survey on one Sunset Limited train showed:
  • On board were four Ph.Ds, and a high number of American Express Gold Card holders
  • Average sleeping-car passengers were traveling for pleasure, well educated, and willing to spend money on accommodations and amenities.
  • Coach passengers tended to be younger, travel a shorter distance, and be traveling for purposes other than leisure travel.

Premium Travel Already Proven Success

• American Orient Express
• Rocky Mountaineer
• VIA Rail Canada’s trains such as the Canadian

What Makes Premium Travel Succeed?

• Why are Americans are willing to embrace long distance rail travel at what many consider to be a premium price?
• Comfortable accommodations
• Good food
• Interesting amenities
• Offerings similar to those of popular upscale cruise ships.

Amtrak In Continuing Identity Crisis

• Contradictory Goals
  • As an agency of government, Amtrak is subsidized by the government, and therefore should serve the lowest common denominator of passenger
  • Yet, high revenue first class passengers, particularly on long distance trains, pay large fares that help pay for other, low revenue services the railroad operates
• Amtrak has never been able to come to grips with these two profiles
• There has never been a consistent product that attracts repeat, high revenue passengers

Equipment Limitations Reduce Flexibility

• Historically, railroads kept a large variety of rolling stock, tailored to their routes and services
• Amtrak’s small roster of passenger cars is further diminished by a large percentage which are out of service or waiting to be repaired
• Amtrak has concentrated on a few equipment types with system-wide standard configuration, and little regional variation in services
• Lack of seats to fill demand, lack of flexibility, and limited service offerings contribute to the loss of many revenue opportunities

Concentration on First-Class

• Future passenger service will concentrate on first-class passengers
• First-class passengers generate much more revenue
• Additional expenses for added service will be met through fare structure

Three Classes of Coach Service

• Premium Long-Distance;
• Standard Long-Distance;
• Short-Distance.

Coach Services Will be Tailored to Market Segment

• Families who have needs associated with children
• Senior Citizens with more leisure time, disposable income, and who seek better comfort and service

Example Future Passenger Train

• Locomotives
• Up to fifteen or twenty Passenger Cars, comprised of:
  • Baggage Car
  • Three to ten Sleeping Cars
  • Two Dining Cars
  • One Lounge Car
  • One Recreation Car with facilities for Children and Adults, and a Gift and Sundries Shop.
  • Three to five Coaches

Comparison to Today’s Average Amtrak Train

• Typical Amtrak train today has nine cars
• Train of the future will have fifteen to twenty

Advantages of Operating Much Larger Trains

• The costs of operating a train do not double, when the length of the train doubles.
• Costs increase only incrementally
• Fixed costs (management, stations, dispatching, host railroad train-miles) change very little with added train length

Sleeping-Car Services to be Offered

• Exclusive bedroom cars, including Drawing-Rooms for three passengers. Today, similar accomodations typically sell out first.
• Combination Cars containing Bedrooms (with two beds) and Roomettes (with one bed)
• Combination Bedroom, Drawing Room and Lounge Cars
• The First-Class Lounges will provide
• Continental breakfasts
• Light refreshments during mid-morning and afternoon
• Revenue alcohol service
• Evening dessert service
• One Lounge area provided for quiet reading, with no food or beverage service
• 24-hour room service, meal and beverage service, available to all sleeping-car passengers

Coach Services to be Offered

• Premium Long-Distance Coach
• A completely new class of coach service
• Fewer seats, in smaller groupings, for a quieter and more pleasing setting
• A small self-catering Lounge area will offer light food and beverages
• Newspapers and snacks will be provided
• Meals included in the ticket price
• Upgraded restroom facilities including a Shower will be available
• These Cars will be located directly adjacent to the Sleeping cars
• Standard Long-Distance Coach
• Similar to current offerings
• Interiors reconfigured to provide several types of seating groups
• For families with children
• For groups of three or more
• Short-Distance Coach
• Similar to current offerings
• Seating area split into two sections for lower noise level

Dining Car Services to be Offered

• One traditional diner
• White linen service
• Open continuously from 6 A.M. to 10:00 P.M.
• Primarily services Sleeping Car and Premium Coach Passengers
• Available to all passengers
• Prices and menu offerings similar to upscale restaurants
• One Mid Level diner
• Open 24 hours
• Prices and menu offerings similar to Denny’s chain
• Placemats replace tablecloths
• Counter and take-away service available

Lounge Car Services to be Offered

• Distinct from the Lounges in the First-Class Cars, this will be aimed primarily at Coach passengers
• Snack and beverage service
• Meals or sandwiches are offered in the 24-hour dining car, not the Lounge

Recreation Car Services to be Offered

• Gift and Sundries shop, as found on Cruise Ships
• A small Video Arcade
• A glass-enclosed Children’s Play Area which can be monitored by Parents

Passenger Experience Drives Return Business

• The Railway Experience begins with arrival at the station, through boarding the train, and ends only upon departure from the destination station
• From Students to Professionals to Families to Senior Citizens, the passenger train of the future has something for everyone
• Travel at High Speed is not critical; instead, the service must be well designed and executed

Moving To Successful Operations

• Today’s Long-Distance trains are successful, on the basis of actual operating costs
• Enormous corporate overhead, and maintenance of the Northeast Corridor, are added to long-distance operating costs, making them appear to lose money

These Future Trains Can Succeed Even Where Today’s Do Not

• Restructure the equipment, with accomodations better able to meet a variety of needs
• Restructure the offerings, with on-board services for a better passenger experience and more revenue opportunities
• Restructure the marketing, with fares and services to match different budgets and travel styles
• Enlarge capacity to meet demand
• Expand revenues much faster than expenses

The successful long distance train of the future will look very different from today’s Amtrak long distance train. The train of the future will look more like the successful trains of the past which made money for their owners for very specific reasons.

In the future, the overall structure of the long distance passenger train operation will be different, too. No longer will one company be responsible for ownership, operation, and marketing of trains. Instead, the future model will be based on successful franchising operations of such major corporate powers as Marriott and Hilton. While there will be an umbrella company, such as Amtrak to market the national network of trains and provide uniform reservations and ticketing, and set service standards, other companies, as owners, will provide the capital for equipment, and operations under the preset service standards. The concept has been a strong performer for decades in the hospitality and travel business; there is no reason for it not to work in the passenger rail business, too. It will help get the federal and state governments out of the business of financing what has historically been a successful private business (until the unique circumstances of post World War II America in the 1950s and 1960s). The drive and rewards of capitalism are always stronger than the drive and rewards of government control.

Today’s average long distance train passenger is not of the demographics that most people think. A passenger survey on the Sunset Limited in the late 1990s showed that on one departure there were four Ph.Ds, and a high number of American Express Gold Card holders. The average passengers were traveling for pleasure, well educated, and willing to spend money on accommodations and amenities. Coach passengers tended to skew younger, travel a shorter distance, and be traveling for purposes other than leisure travel.

The success of the American Orient Express, the Rocky Mountaineer, and VIA Rail Canada’s trains such as the Canadian continue to prove the point that Americans are willing to embrace long distance rail travel at what many consider to be a premium price when offered comfortable accommodations, good food, and interesting amenities. Within given logistics, these passenger trains offer many of the same options as found on popular upscale cruise ships.

Amtrak has often found itself in an identity crisis. On the one hand, there has been a corporate sentiment that Amtrak is an agency of government, subsidized by government, and therefore should serve the lowest common denominator of passenger. At times, on the other hand, Amtrak’s managers have realized that high revenue first class passengers, particularly on long distance trains, bring in enough profits that help pay for other, low revenue services the railroad operates. Amtrak has never been able to come to grips with these two profiles, and, as a result, has never really offered a consistent product that attracts repeat, high revenue passengers.

Amtrak has also, out of necessity because of a lack of equipment, limited itself to very few types of equipment, focusing on uniformity and the presumption that “one size fits all” for both sleeping car and coach passengers. As a result of this, many profitable revenue opportunities have been lost through the lack of ability to adapt and change to meet passenger demand.

The long distance passenger train of the future will concentrate on first class passengers, which generate the most revenue. While these passengers also require the highest level of passenger service, the cost of those services will be built into the fare structure. Coach passengers will be divided into three categories: premium long distance coach service, standard long distance coach service, and short distance coach service. All classes and levels of service will be “family friendly.” Much attention will also be paid to senior citizens traveling for leisure, a growing population which has time, disposable income, and who seek a high level of comfort and service.

A typical single level long distance passenger train will have a baggage car, three to 10 sleeping cars, two dining cars, one lounge car, one recreation car for children and adults that also has an onboard gift and sundries shop, and three to five coaches. Today, Amtrak often operates nine car trains. The long distance passenger train of the future will probably run 15 to 20 cars. The costs of operating a train do not double when the length of the train doubles. The costs only increase incrementally because fixed costs such as management, stations, dispatching, and host railroad train miles costs do not change because of train length.

Amongst the sleeping cars will be cars that are exclusive bedroom cars which today sell out first (including drawing rooms for three passengers), combination bedroom and roomette cars, and combination bedroom, drawing room and lounge cars. The lounge areas will provide revenue alcohol service, a continental breakfast for those passengers seeking a light morning meal, and an evening dessert service. At least one smaller lounge area will be available as a quiet reading area, without food or beverage services. All sleeping car passengers will have available 24 hour room service for meals and beverage services. The lounge areas will provide sleeping car passengers with onboard destinations away from their accommodations.

The top class of coach passenger, in premium long distance coach service, will travel in a coach unlike any one today. There will be fewer seats, broken into small areas to reduce the noise level. The seats will be larger (three across seating instead of four across seating). A small lounge will be at one point in the car adjacent to a serve-yourself food service area offering continuous coffee, tea, and soft drinks. Other standard amenities such as newspapers and snacks will be provided. Perhaps the two best amenities will be a shower service in the car, and all meals will be included in the price of the accommodations ticket. These cars will be placed in the train’s consist directly adjacent to the sleeping cars, adding to the exclusive experience of the premium long distance coach service.

Standard long distance coach service will be much as it is today, but with reconfigured cars which offer different grouping of seating to accommodate families traveling with children or groups of more than two.

Short distance coach service, designed to carry passengers distances of less than three hours travel, will be a standard coach as found today, but split into two sections to reduce noise levels.

Of the two dining cars, one will be a traditional diner with white linen service, open continuously from 6 A.M. to 10:00 P.M. This car will primarily serve the sleeping car and premium coach passengers, but also be available to other coach passengers who are willing to pay upscale restaurant prices for a meal. The second dining car will be open 24 hours a day, and offer a menu similar to what may be found in the popular Denny’s restaurant chain, with placemats replacing tablecloths, and a part of the car devoted to both counter and takeout service.

The lounge car, aimed primarily at coach passengers, will offer snack and beverage services, but will not offer take out meals such as sandwiches which are offered today, because these services will be available in the 24 hour dining car.

The recreation car for children and adults will have three primary components. A gift and sundries shop, such as found on cruise ships, a small video arcade, and a glass enclosed children’s play area that can be monitored by parents will become a centerpiece of the long distance train.

Why will this type of train succeed where today’s long distance passenger train is not considered successful?

First, today’s long distance trains are successful from a basis of actual costs of operating the trains. It is the enormous corporate overhead and cost of maintaining the Northeast Corridor which is shoveled into the costs of the long distance trains which cause them to look like money losers.

By restructuring the long distance trains (and the accompanying marketing programs) to provide a combination of accommodations and services the public seeks and expects, the trains can become successful.

Amtrak currently offers four types of sleeping car accommodations: The bedroom, for two adults or two adults and one small child; the roomette, designed for two very small adults or one normal sized adult; the special access bedroom designed for a special needs passenger and a companion; and in bi-level Superliner equipment, there is a family bedroom, with beds for two adults and two children. On all current equipment, two bedrooms can be arranged en suite, allowing for two adults to each have a lower level bed, or four passengers to travel in a common accommodation.

By improving on these accommodations choices, passenger satisfaction can improve and revenues can improve, too. Add to the mix the venerable drawing rooms, with two lower beds and one upper berth, allowing three passengers to travel together, or two adult passengers to both have lower berths without having to purchase two full bedrooms. Reconfigure the roomettes to be sold for one adult or one adult and one child. There is no need for an economy sleeping car accommodation if a premium long distance coach service is to be offered in tandem with sleeping cars.

Today’s sleeping cars are virtually amenity-free, other than a morning newspaper and wake up orange juice or coffee offering. By offering, among other amenities, full 24 hour room service that includes alcohol service and an afternoon and evening snack or dessert service, and audio and video entertainment in each accommodation, passengers will see an enhanced experience.

Dining car service meals must be included in the cost of accommodations for all sleeping car and premium long distance coach service passengers. This guarantees income to the dining car service, and it is irrelevant whether or not the passengers consume the food they have prepaid for in their accommodations fare. By combining the accommodations and food service costs into one fare (as is done on cruise ships) along with a given set of amenities, a higher fare can reasonably be charged without protest from passengers. The more services are prepaid, the happier the passenger will be and the company will have higher income at predetermined levels.

Amtrak today does not make a strong effort to have its passengers open their wallets while onboard long distance trains. Much of this is due to there being little choice for passengers having destinations onboard the train other than the lounge car with its limited offerings and the diner, which is open less than half of the number of hours in a day, and only for specified meal service. There are a number of ways, which are essentially self-financing with high revenue potential that will help cover other costs, to help passengers part with their discretionary travel dollars while enroute.

One offering is the implementation of the 24 hour dining car. The concept went through live test runs on the Sunset Limited in 1999 and 2000 to resounding success and high marks from both passengers and crew members. Because of the necessity of long distance train travel to pass through some major markets during overnight hours, a train of passengers and crew is never completely asleep. An open dining car every hour of the day provides opportunities for passengers to have both nocturnal snacks and odd hour daytime snacks and meals at the discretion of the passenger, not the discretion of the long distance train operating company.

A second offering is the creation of a central recreation car, similar to areas found in hotels and on cruise ships. A gift and sundries shop offers high markup goods and provides a diversion and well as an offering of reading materials and necessities for passengers who have forgotten items or urgently need something unexpected in their plans. A small video arcade offers long lasting opportunities for passengers to feed money into machines for their entertainment, with little capital cost to create the service. A children’s recreation area provides relief for passengers from children running up and down aisles to expend energy and relieve boredom, as well as a safe haven where parents can watch their children have fun.

Lounges for sleeping car passengers offer opportunities for the high profit sale of alcoholic beverages as well as selected profitable snacks not offered as part of the food service in the price of accommodations. A separate reading lounge area also provides an additional onboard destination, providing a quiet place for passengers who either wish to be alone or to have a positive reading environment.

Sleepers, coaches, diners and lounge cars can all have configurations appropriate for dome cars for routes that do not have height restrictions.

On a cruise ship, transportation is part of the vacation experience. On an airplane, transportation is often an agonizing beginning and end to a vacation that is best forgotten. On a long distance train, the train itself, such as the cruise ship, and be a memorable and desirable part of the vacation experience.

For passengers riding a long distance train, excessive speed is not a consideration. Well run trains, with a pleasant travel experience is the prime consideration. Passengers are willing to pay to see first hand scenery, passing Americana, and new sights.

The long distance passenger train of the future has higher operating costs than today’s trains, but it also has higher revenue potential, which exceed the costs of operation. Longer trains with more opportunities for onboard sales to passengers based on food and beverage service, gifts and sundries, arcade entertainment, and a better selection of accommodations that are sold with many costs already built into the fare, offer predictable, high revenue opportunities when properly supported by marketing and promotional campaigns.

The successful long distance train of the future is passenger friendly, offers a wide choice of profitable accommodations and amenities, good food service, and is itself a part of a desirable vacation experience.