In the wake of two fatal incidents only a few weeks apart involving Amtrak trains, the NTSB probed leaders at Amtrak, CSX, the FRA, BNSF Railway and European rail agencies on how U.S. railroading is embracing long-overdue changes in safety culture, operating rules and equipment.
Following the recent service changes from Amtrak, the New Jersey Association of Railroad Passengers sent letters to Amtrak Chair Anthony Coscia and New Jersey Congressman Rodney Frelinghuysen and called for Amtrak CEO Richard Anderson to be dismissed. The association also demanded legislative “guardrails” to prevent Amtrak from dismantling routes, abolishing station agent positions or downgrading on-board service.
Also in this week’s Hotline, the U.S. DOT has delayed the review of New Jersey’s request to fund the replacement of the 100-year-old Portal Bridge; the City of Mobile has approved funding for the design of a new train station; SEPTA performed an inaugural run of its new locomotive; and the Dallas-Fort Worth Regional Transportation Council (RTC) is interested in moving forward with hyperloop technology.
Have a great weekend.
Jim Mathews – President and CEO, Rail Passengers Association
HUTCHINSON, Kan. — There is not a lot of news coming from Washington legislators, or even area ones, regarding the recent indications from Amtrak that it is about to cut long distance rail service from Dodge City to Albuquerque and bus passengers between the two points. It also includes the reneging of $3 million in matching funds from a TIGER grant that was approved in New Mexico for renovation of the Southwest Chief line.
In May, legislators met with Amtrak and asked for a better explanation of why service was being eliminated, a move many see as the eventual discontinuance of service entirely. Hutchinson City Manager John Deardoff says he hasn’t heard much since the meeting with Amtrak in May.
Several legislators in Washington, including U.S. Senator Jerry Moran, are blocking the nominations of two Amtrak Board of Directors and have been working through the Senate Appropriations process to require greater transparency and accountability from Amtrak when proposing changes in service. The proposal from Amtrak comes after the company threatened to move the Chief off of the line unless states chipped in to renovate the BNSF line that only Amtrak uses. States and cities along the route secured three grants and invested large sums of money to make the needed repairs. Now, Amtrak says it’s not enough.
Amtrak says a drop in ridership is the reason for eliminating a part of the Chief route, although ridership fell by just 2,000 last year to 363,000 passengers.
Several months ago we wrote about prognostications of a bad future for Amtrak’s long-distance trains. Now there are new signs that some of these fears may be coming true.
Amtrak’s Southwest Chief follows the route of the historic Santa Fe wagon trail through the Raton Pass, near the Colorado-New Mexico Border. The railroad through the pass has been there since the late 19th century, and it was once an important transcontinental link. Because of steep grades and sharp curves, heavy freight trains avoid the Raton Pass, making the Southwest Chief the only regular train over the rails. (The photo is from the nearby Raton, NM station, where masses of Boy Scouts rely on the trian.)
Over the past few years, a coalition of state and local officials worked tirelessly to put together the funding necessary for BNSF, the owner of the Raton route, to maintain the tracks for the Chief. Thanks to a combination of two TIGER grants and matching funds from Amtrak, BNSF and local governments, the route has received $46 million of investment in upgraded track and signals.
A third TIGER grant and matching funds would supply an additional $25 million, but a sudden reversal by new Amtrak management, led by CEO Richard Anderson, threatens to derail this long-fought effort. Amtrak is reneging on its agreement to contribute $3 million in matching funds, and is instead proposing to replace train service over the route with a bus. This would effectively split the Southwest Chief into three parts: one train from Los Angeles to Albuquerque, one from Chicago to the Kansas-Colorado border, and bus in between.
Splitting up the Chief could cost more than it would save. It would certainly reduce both ridership and revenue, especially by driving away high-dollar sleeping car passengers. Amtrak’s own numbers indicate that 20% of the train’s riders are going all the way from eastern portion of the route to the western one, or vice-versa. (Our last blog on this topic describes how this one train route serves 528 city pairs, as many as an entire airline network.)
Amtrak management seems to be focusing so much on serving short corridors that they’ve blinded themselves to the bigger picture. They must create new service in addition to the existing national network, not instead of it. Amtrak must strengthen its nationwide web, make it more extensive and robust, not cut holes in it. Removing a portion of the Southwest Chief will not only hurt ridership and revenue on that route, but also on other points in the network it touches.
What’s worse, abandoning this stretch of track would seriously endanger efforts already underway to create new service. One planned service, Colorado’s Front Range, would run through the growing Denver megaregion. Beyond offering a local alternative to congestion on I-25, it would create a new connection in the national network between the Chief and the California Zephyr to the north. This route already has the support of Colorado, New Mexico and Wyoming, but it would need to use some of the same tracks the Chief does. Abandoning those tracks could effectively kill this effort.
Splitting the Chief would also reduce the effectiveness of a planned northern extension of Amtrak’s Heartland Flyer, which would create a link from northern Texas (and the Texas Eagle train) through Oklahoma to Kansas and the Southwest Chief.
As we said last time, Amtrak can’t cut its way to success. They need to be creating new opportunities for people to take the train, adding new nodes to the network and strengthening existing ones. They can’t do that at the expense of existing service. Carving up the Southwest Chief could put it into the classic “death spiral” of declining revenue and service until it ceases to exist. We hope that isn’t Amtrak’s intent.
Take actionAmtrak can't add new service around the country without new train equipment. Tell Congress to fund a new fleet for Amtrak!
Amtrak President and CEO Richard Anderson.
What does a deflated balloon look like? That is becoming an apt metaphor for travel on an Amtrak interregional train. The regime of CEO Richard Anderson is eliminating services and amenities as fast as they can think up items to ditch.
These services and amenities include station agents, meals in a dining car, dining cars altogether (no real dining car service is now available on the City of New Orleans, Silver Star, Lakeshore Limited and Capitol Limited), checked baggage at most stations, newspapers in the sleepers, usable connections to other trains, on-board service staff positions, printed timetables, Superliner railcars (a slowly growing number of them are rotting away at Beech Grove, Amtrak’s central maintenance facility), and—in the case of the Southwest Chief—the entire train altogether, between somewhere in western Kansas and Albuquerque, in favor of a bus.
This is no way to run a railroad.
Amtrak’s latest marketing campaign exhibits extremely peculiar behavior. The long-distance trains as a group by wide margins are Amtrak’s largest business unit, measured by their annual output of passenger transport, and its most commercially successful product, measured by load factor and market share. Financially, in FY2018, according to Amtrak itself, long-distance trains will generate a net positive operating profit of $423 million, reducing Amtrak’s subsidy need by that amount. One would think that such a business unit would be the focus of intense efforts to enhance and grow the business.
One would be mistaken. Amtrak is systematically dismantling it.
A small part of the issue is that Amtrak’s senior managers foolishly misapprehend the character of its customers on long-distance trains as consisting of “discretionary,” “leisure” or “experiential” travelers. These customers, according to Amtrak’s strategy, seemingly also are “dispensable.”
That view would be a rude surprise to management at Carnival (or a dozen other cruise operators), Rocky Mountaineer, scores of tourist railroads, or any of a dozen airlines that are growing as fast as they can finance new aircraft. All of these carriers are adding amenities, not subtracting them. They staff their stations, feed their customers, build their fleets, and haul away the money they make. But not Amtrak.
To the extent that “discretionary” and “experiential” demand exists for Amtrak’s service, stripping out the “experience” dimension of the travel experience seems a particularly counterproductive way to attract and retain customers. The successful, growing, non-subsidy-dependent purveyors of experiential travel, from the Cumbres & Toltec to Rocky Mountaineer to numerous others just in the rail sector, are not trying to starve themselves into prosperity. VIA Rail Canada has aggressively enhanced its travel experience.
Manage costs? Of course. Every business does that. But stripping out the features that make the travel experience uniquely attractive to customers, and that generate repeat business and favorable word-of- mouth marketing, is exactly the wrong way to manage the enterprise. The same thing is true in other sectors as well. All classes of service on Anderson’s previous employer, Delta Air Lines, even in domestic markets, enjoy enhanced and ever-growing amenities and features. The same is true on all cruise ship lines.
Amtrak is also dead wrong about the character of its long-distance customers. The overwhelming majority are simply people trying to get somewhere and who are willing to endure Amtrak’s increasingly parsimonious experience to do so. These people by definition are infrequent rail customers, but they make up for it with high-value purchases when they do travel. Many need help from an agent to plan their trip, to understand where the trains and connecting buses go, how to make connections, and how to deal with problems that crop up along the way. They are often elderly, or parents with children who need help to check bags. They go a long way—in the West, on average, their trip spans three to five meal periods—and they do not want to fast along the way. They are perturbed to discover that they can’t get sleeping car space (and pay hundreds or even thousands of dollars for the privilege) because the sleepers are sold out months in advance, and Amtrak refuses to lease new cars to accommodate them. Amtrak fails these travelers just as much as the summer tourist or foreign visitor, by depriving them of the very attributes of train travel that make train travel appealing in the first place. It is easy to believe that none of Amtrak’s senior managers has ever booked and taken a two- or three-night trip on their own trains.
Anderson is now reported to be exploring eliminating traditional long-distance trains in favor of short corridor trains (but only where states would pay Amtrak’s inflated fully allocated costs to run them). This approach—substituting a bus for the traditional interregional service—certainly solves the amenity/travel experience problem, because the average trip length on today’s long-distance trains exceeds by 50% the typical route length of a regional corridor, so most current long-distance customers no longer will even be able to use rail in the first place.
The consequences of Amtrak’s self-defeating strategy are inescapable. The people who have the luxury of choice—the discretionary traveler—as well as the customer who wants an enjoyable travel experience—the experiential traveler—will quickly discover that Amtrak does not cater to them, and they will take their business elsewhere. This was the result of Amtrak’s first misguided, and mercifully short-lived, attempt to “control costs” by downgrading dining car food service under former Passenger Services VP Rima Parkhurst, a lesson apparently lost on the incumbent management group. The loss of passengers from downgrading the travel experience already may have begun anew, as Amtrak just ran an unprecedented sale on sleeping car Roomettes for fall and winter travel on most routes, implying unusual softness in advance bookings.
Amtrak’s strategy suggests that its owner, the U.S. government, should promptly spin off the long-distance business to others who understand and value it, so the longer-distance rail travel market can join the ranks of everyone else in the travel business by providing an increasingly attractive product that consumers will value and return to.
Or, the owner should replace the management group leading Amtrak down the dead-end track it is on.
Anderson himself? I have heard divergent assessments from people who knew him at Northwest Airlines. Some say “smart and curious,” others “arrogant and unforgiving.”
Two things are clear to me: Anderson isn’t interested in outside perspectives, and he swallowed the idea that Amtrak Performance Tracking System (APT) reports are the same as GAAP (Generally Accepted Accounting Principles)-compliant income statements.
APT is the successor to the discredited RPS (Route Profitability System). If you trace RPS back far enough, it is the outgrowth of the old Interstate Commerce Commission Form A accounting system, which was created to allow railroads to maximize the reported costs of passenger operations by loading them up with shares of fixed costs that did not vary with the volume of passenger operations, to facilitate discontinuance petitions.
APT is a full-cost-allocation accounting system. It purports to allocate to each train or route its “fair share” of all of Amtrak’s costs, variable, semi-variable and fixed. The key word is “allocate”—APT in most instances does not trace a cost from the activity or event that incurred it and associate it with that activity. Rather, it accumulates costs in central category accounts and then allocates them back out to each train or route by application of a series of hundreds of management defined algorithms. (About 20% of costs are traced, 80% allocated.)
APT working papers (which I found on line) even admit that APT does a very poor, inadequate job of capturing and allocating “capital” costs. The implication of that is that the massive recurring costs of NEC (Northeast Corridor) fixed assets are not properly confined to NEC trains, but are allocated in part elsewhere.
APT is therefore artificial and arbitrary. It is not compliant with GAAP and is never audited.
Anderson seems not to grasp this, but APT data and the reports that contain them are emphatically not the same as an income statement presented as a component of a set of financial statements (GAAP-compliant), and they do not, therefore, represent the financial results of operations of any train or route in a stated period.
When Amtrak says that a given train or route “lost” or “earned” so much money in a stated period, they are blowing smoke. That’s not what APT does, and Amtrak has no other system that does present the financial results of operations at any level below the corporate aggregate reported in the annual audited financial statements. They don’t know and have no way of knowing if train “A” or route “B” made or lost money.
APT reports represent one of an infinite number of potential, hypothetical assessments of what a given train or route would have to accomplish in income and cost recovery in concert with all other trains and activities in order for Amtrak as a whole to break even. It cannot and does not measure or project incremental costs of any addition or subtraction of an activity or a unit of output.
As a rough analogy, imagine Railway Age wanting to add 100 copies to a monthly print run (e.g., to hand out at a conference), and analyzing the financial impact not by calculating the added cost of paper and ink and labor and electricity, but by totaling all of its costs—paper, labor, ink, G&A, rent, debt service, printing press amortization, taxes, the CPA’s bill and the editor’s salary—dividing it by the number of copies printed in the previous run, getting an average total (“fully-allocated”) cost per copy per issue, and then extending that cost on a linear basis to the extra 100 copies.
That is what Amtrak does, and it makes no sense whatsoever.
MOBILE, Ala. (WKRG) - A member of the Southern Rail Commission says he's been terminated by Alabama Gov. Kay Ivey, just one week after strongly urging the Governor to pledge funding for passenger Amtrak service between Mobile and New Orleans.
Jerry Gehman says he received a letter notifying him of the decision, although he says the letter does not give a reason for the termination.
Gehman said his term on the commission was not set to expire until 2020.
News 5 checked and found Gehman has been removed from the Southern Rail Commission website.
Governor Ivey ultimately decided not to pledge the $5 million dollars needed to secure the Amtrak project.
"It has become clear to me that, though some economic benefit may be realized by new passenger rail service, such service will have an outsized detrimental impact on other types of rail service," Gov. Ivey said in a statement, referring to the commercial and freight lines that use the same tracks.
Sen. Jerry Moran (R-Kan) was excited and upbeat about the future of the Southwest Chief earlier this month. The federal government had awarded the third TIGER Grant in five years to help with improvements to the rails the long-distance train that stops in Newton uses as it crosses the western half of the country.
But then the bottom fell out of the effort — and not only had Amtrak pulled $3 million in matching funds for the grant, the CEO met with six senators on Capitol Hill to show plans of stubbing the train and replacing it with charter buses between Garden City and Albuquerque, New Mexico.
“After that moment of excitement, Amtrak announced they would not keep their commitment,” Moran said. ”... What caught my attention was Amtrak intending to renege on their commitment to contribute $3 million for a track upgrade.”
It was that reason that senators from Kansas, Colorado and New Mexico wanted to meet with Amtrak leadership. The TIGER grant involved matching funds from states, cities, BNSF and Amtrak. The city of Newton committed $12,500 to each of the TIGER grants — including the one Amtrak just pulled out of.
“No one here is not doing what they said they would do except Amtrak,” Moran said.
At that meeting, rather than negotiate with the railroad about that $3 million, senators were told that as early as Dec. 31 the railroad would stub the train. Under that plan, the westbound train would stop in Garden City and the eastbound train in Albuquerque. The plan calls for the use of charter buses for passengers traveling between those cities.
“The meeting was unsatisfactory,” Moran said. “We had six senators — two Democrats from New Mexico, two Republicans from Kansas, and a Democrat and Republican from Colorado. This was a very bipartisan effort to find out where Amtrak was coming from. ... We wanted to make it clear that from our perspective that they needed to keep their commitment. Nothing came from the meeting that said they were willing to do that. The result we were looking for did not occur.”
Amtrak does not want to take on $3 million in annual maintenance on a section of track that no longer serves freight trains, making the passenger train the only user of the track. That portion of the track is owned by BNSF. Amtrak also does not want to deal with the installation of Positive Train Control on a section of track in New Mexico, owned by the Rail Runner — a train line owned by the New Mexico Department of Transportation. In the case of PTC, host railroads are responsible for installation.
Those issues, according to documents obtained by the Newton Kansan, would not be resolved by a TIGER grant.
Senators were told that Amtrak would give a formal analysis of what needs to happen with the Southwest Chief — in the shadow of a presentation of stubbing the train.
“I am absolutely opposed to Amtrak not putting its money in and if they would dismantle or alter the Southwest Chief, as their documents show they may intend to do,” Moran said. “It would be a violation of their responsibility to provide long-distance passenger train service in the United States — the purpose for which Amtrak was created.”
This is not a move Moran will support — and he is not sitting still.
Moran said he and other senators are trying to work with their staff and Amtrak staff on the next response. In the meantime, Moran has placed a hold on two nominations for new people on the Amtrak board.
Moran and Sen. Tom Udall (D-New Mexico) have also placed language in an appropriations bill to require consultation with affected communities before Amtrak can make any changes to “terms of service.”
“In my view that, based on the conversations and where Amtrak appears to be going, we need to significantly strengthen that in the appropriations bill to be certain that Amtrak cannot walk away from the Southwest Chief as those documents suggest they may,” Moran said.
Moran said the reason Amtrak exists is to provide long-distance rail service — despite statistics showing the vast majority of tickets sold on the system are for trips of 250 miles or less. Federal funding appropriated to Amtrak, Moran said, is for long distance service.
“All of this will affect riders to Kansas, and riders from Kansas,” Moran said. ”... This is the first time we have to go beyond supporting Amtrak financially. We have to get to the point that Amtrak keeps its word and that Amtrak comes up with the money they committed. The solution is not abandoning the New Mexico part of the track. It is working with the partners, again, to provide the resources necessary. You have a solid group of members of the U.S. Senate, and the House as well, who are committed to helping. I think we have an attitude at Amtrak that long-distance service that does not make money is something they have no interest in. That defeats the purpose of the creation of Amtrak.”
Chuck Mott, President of the Board if All Aboard Arizona, thanking his committee for their support
Chuck Mott, Tony Trifiletti & George Chilson making plans for saving the Southwest Chief
Mary Jo Mott, our Secretary of the Board
All three retiree’s from Amtrak now lending their voice to the All Aboard Arizona team.
Jennifer sits on the Board
Richard Phelps (Left) Jennifer Davis Paige (Middle) Ben Coleman (Right)
Florida Gov. Rick Scott announced late last week that the Florida Department of Transportation (FDOT) and the Central Florida Expressway Authority (CFX) have begun the process to consider proposals from private operators to build and operate a high-speed rail line along state owned property between Orlando and Tampa.
FDOT kicked off the process after receiving an unsolicited proposal from private passenger-rail operator Brightline, which proposed to build and operate the line along the CFX right of way. As a result of Brightline's proposal, the FDOT has initiated an open procurement process so that any private entities may apply.
"The department is committed to creating a robust transportation system that meets Florida's current and future needs," said FDOT Secretary Mike Drew in a press release. "Privately funded passenger rail will provide residents and visitors a transportation choice for one of the busiest corridors in the state."
Scott noted that early in his tenure he sent back $2 billion in federal funds from the Obama administration that would have funded the construction of a high-speed rail line between the two cities. But that project would have had "an extremely high risk of overspending taxpayer dollars with no guarantee of economic growth," the governor said in the press release.
Brightline operates a high-speed passenger-rail service between Miami and West Palm Beach. The company plans to expand to Orlando International Airport by January 2021.
Late last week, Brightline President Patrick Goddard said in a prepared statement that the route to Tampa would be a "natural extension" for the railroad.
"Our state's residents, visitors and economy will benefit tremendously from a fully connected passenger-rail system that includes our current operations in South Florida and our future line to Orlando," said Goddard, according to TCPalm.com.
June 22, 2018Rail Passengers was able to obtain a worrying proposal for bus substitution on the Southwest Chief, and is working with Congress to ensure that train service continues for communities in New Mexico, Colorado, and Kansas.
Additionally, the New York Times offered readers an in-depth look at how the billionaire industrialists Koch Brothers supported anti-transit groups, such as the Americans for Prosperity. This one group has negatively influenced numerous transit measures over the years, including the Nashville public transit project which was ultimately voted down this May.
This story highlights the many and very real challenges that passenger rail and public transit groups face when trying to advance projects that would provide greater access for people, economic growth, stronger tourism, and retail and living development.
Also in this week’s Hotline, Alabama Governor Kay Ivey says “no” to funding for the reintroduction of Amtrak service between Mobile and New Orleans more than a decade after Hurricane Katrina struck; an early draft of a feasibility study estimates the NSRL in Boston could cost between $12 and $22 billion; New Jersey has committed up to $600 million to fund the replacement of the old Portal Bridge; a chief engineer with the California High-Speed Rail Authority says that agency’s quality assurance program is working like it should; and Denver’s RTD has received approval to begin removing flaggers at grade crossings.
In addition, Summer by Rail correspondent Jacob Wallace continues his journey to visit 19 baseball stadiums. He is now making his way through Milwaukee, LaCrosse and St. Paul. Keep up with his trip at www.summerbyrail.com or on Twitter and Instagram by following @RailPassengers.
Have a great weekend.
Jim Mathews – President and CEO, Rail Passengers Association
Connecticut Governor Dannel Malloy held a ribbon-cutting ceremony for the introduction of the Hartford Line that will run between New Haven, CT and Springfield, MA. Free rides will take place throughout the weekend, and passengers will see increased train speeds of up to 110 mph, as well as an increase in the frequency of trains - 34 per weekday. Even before opening, the Hartford Line has had a great economic influence over the communities on the route, generating more than $400 million in development on an $800 million project. So one could expect additional economic benefits to come.
Also in this week’s Hotline, at the end of last week the U.S. Senate Committee on Appropriations approved a $71.4-billion funding bill, with $1.9 billion that can be used for Amtrak in the Northeast Corridor and all on the National Network; Amtrak introduced its new cafe menu for the NEC; the San Mateo County Transit District in California has agreed to partner with Facebook and Plenary Group on passenger rail; and Massachusetts issued an RFP to find a consultant team to study the feasibility of a passenger rail line to the western half of the state.
In addition, Summer by Rail correspondent Jacob Wallace continues his journey across the U.S. to visit 19 baseball stadiums. Keep up with his trip at www.summerbyrail.com or on Twitter and Instagram by following @RailPassengers.
Have an enjoyable weekend.
Jim Mathews – President and CEO, Rail Passengers Association