Link of Glory
Of note: Apparently the Sunset Limited went down to three trainsets from four, not sure where the equipment was redeployed. Extra sleeper is/was being tested on the Auto Train. Also additional cars on the LD trains, including the new Viewliner IIs, really don't add all that much extra money.
Of note: Apparently the Sunset Limited went down to three trainsets from four, not sure where the equipment was redeployed. Extra sleeper is/was being tested on the Auto Train. Also additional cars on the LD trains, including the new Viewliner IIs, really don't add all that much extra money.
Business line managers told us that adding the coach car from January 2014 through May 2014 generated about $1 million in incremental revenue during the testing period, and that the revenue could amount to about $2.2 million annually. These managers also estimated that using a sleeper car instead of the extra coach could generate an additional $0.7 million for a total of up to $2.9 million annually.
Possibly a reason for delays with the Viewliner II order?When we initiated this evaluation, the original long-distance general manager stated that he planned to put all 130 new cars into the active fleet when they were received, although no specific plan was developed for how and where they would be used. We analyzed the cost and revenues of deploying these cars on all of the single-level overnight routes and briefed the general manager on our work in May 2013. At the time, we estimated that if all of the new sleeping cars were put into full-time service, the company would lose about $6 million per year because the operating costs associated with the additional cars would outweigh the potential revenue gains.
If the incremental revenue gain is only $2.8M a year, and quite possibly a loss, I'm really doubting that we'll see any additional Viewliner II orders and certainly not any sleeper/diner Superliner III orders.Quantifying baggage requirements for the single-level long-distance trains proved to be a challenge for the group. The company had planned to replace all of the existing baggage cars because of their excessive age, but it was not buying enough new full- baggage cars to replace the old baggage cars on a one-for-one basis. Therefore, some trains needed to use a combination car, which have 60 percent less cargo space than a full-baggage car. The working group attempted to identify the trains that should get the combination cars, but data on baggage requirements for each train were limited and unreliable. Based on the data available, the working group eventually identified only one long-distance train with year-round baggage requirements that could be accommodated by a combination car rather than a full-baggage car. Therefore, they concluded that the company was not buying enough full-baggage cars to meet its requirements.
Decisions Were Made to Change the Mix of Cars Before the Working Group Had Completed its Analysis
On April 11, 2014, senior executives met with the President and Chief Executive Officer to discuss issues related to the new long-distance car procurement. During the meeting, the Marketing department presented an analysis showing that deploying the new cars would result in incremental revenue exceeding incremental costs by $2.2 to $2.8 million annually once all the cars are received and are put into the active fleet. Marketing recommended changing the mix of car types to address the shortage of full-baggage cars and also recommended route assignments for the new cars. These recommendations were not intended to be the final word on the ultimate deployment of the new cars, according to the Vice President for Marketing.
Marketing officials told us that the utilization plan presented in the April meeting was developed on short notice by a subgroup of the working group. The plan was not approved by the working groups steering committee, and it was not reviewed before the meeting by the general manager for the long-distance business line. Marketing officials added that the plan did not include a full updated analysis of the operating costs from the Finance department because of the truncated timeline, but that they focused on providing sufficient information to make an informed decision at the meeting.