- Jul 9, 2014
This article from Railway Age takes a look at implications of such thoughts.Amtrak CEO Richard Anderson and his chief deputy, Stephen Gardner, have proposed eliminating the company’s interregional trains in favor of a scattering of discontiguous, higher frequency short corridors connecting nearby city pairs. But this reflects a deep misapprehension of the performance of the company’s three primary business groups, and a surprising emphasis on minimizing the returns on investment of the company’s capital resources.
While I encourage everyone to read the full article, please allow a few brief "fair use quotes.
This si probably true when you consider the capacity requirements. While you may have a fees for service, it can't compare to the costs of owning and being responsible for your territory. However, due to the the lack of usage, it may be easier to say these assets, which are billed to a specific train drive up the costs of that train.On each previous occasion when Amtrak eliminated interregional trains to “cut losses,” the action had the opposite result. In 1979, when the company cut four interregional routes; in the mid-1980s, when it eliminated the Pioneer and Desert Wind; and again in the early 1990s, when then-CEO Tom Downs, on the advice of Mercer Management Consulting, cut frequencies of long-distance routes, Amtrak’s corporate loss and subsidy requirement in subsequent years rose rather than fell.
More recently, when the White House budget for FY2018 proposed eliminating all interregional services because, as Amtrak often claims, they purportedly lose gobs of money and don’t serve many customers, Amtrak’s then-CEO, Wick Moorman, told Congress, in writing, that such a step would increase Amtrak’s corporate loss and subsidy requirement by $423 million. Graham Claytor once told an open meeting of the Rail Passengers Association (at the time, NARP) that the interregional trains were “operating in the black.” This has been true for decades.
This is where the economies of scale come into play. Running more service will make this asset more worthwhile since its cost isn't going to change much...particularly with agents being cut.
This is what I was referring to in theAnderson’s proposal also neglected to mention that under Amtrak’s use of the PRIIA law, Amtrak will not operate a train on a route shorter than 750 miles (except in the Northeast Corridor) unless a state (or other sponsor) pays it to do so. Most states are not lining up to pay for substitute corridor trains to replace the interregional trains that comprise the national network that Amtrak is chartered to operate. This means that Anderson’s proposal really is to do away with intercity service in most of the country.
Hoosier State tickets sales suspended for after June 30[/ur] thread.
What makes anyone think the states will want to fund the majority of their costs all of a sudden? it is not logical to conclude that most states will want he additional costs, particularly when they are already receiving the service now. Do you think congressional members will vote to raise the costs to their constituents? That is what they will do if the eliminate the 750 mile rule requirement, so I'm not sure a state with a train would vote to overturn it.
I'd like to see a citation on this. While it is true that trains are often sold out, that doesn't mean adding capacity would do more than create a glut. After all, that is what happens on the NEC. It is sized for the busiest points. Indeed, those train could use more capacity between key points. But, then you have a glut at other points.The interregional trains are the most capital-efficient segment of Amtrak’s business because their load factors are significantly higher than in any of the short corridors, including the NEC. Indeed, most of the interregional routes operate at a level that is statistically close to sold-out. Thousands of the highest revenue would-be passengers are turned away each year for lack of capacity, mainly in the sleeping cars. This alone demonstrates that the interregional services are undercapitalized (demand exceeds capacity) while the NEC, like the regional corridors outside of California, is overcapitalized (capacity exceeds demand). It surprises many to learn that, outside the commuter territories of Philadelphia-New York and New York-New Haven, and setting aside purely commuter passengers, Amtrak’s NEC load factor for intercity traffic does not (and arithmetically cannot) exceed about 25%. How many flights does Delta operate with a 25% load factor?
At any rate, I love the Wick Moorman references. It is interesting the Gardner and company pushes an agenda that most previous CEOs say is self destructive.