Monday, March 25, 2013

How much does it cost to run a train?

A frequent complaint by rail advocates is that Amtrak's budgeting process, and how it allocates costs to particular trains, is rather less than clear on what costs are allocated to each route and in what amount. This often turns into further claims that overhead and Northeast Corridor costs are improperly allocated to the long distance trains, generally with a claim that this is the reason why the NEC appears profitable and makes the long distance trains out to be worse than they truly are. Even aside from this, the lack of transparency makes it hard to understand truly how much a route extension or new route may cost. Fortunately, while Amtrak isn't terribly clear on the matter, Metrolink does provide a breakdown of its operational costs that we can use to see how much it costs to run a train.

2012-2013 Metrolink Budget (page 38)

For 2013, Metrolink plans on a total of 2,626,864 train miles, with an Operations & Services budget of $121,229,000 ($46.15 per mile), a Maintenance-of-Way budget of $27,686,000 (bringing it up to $56.69 per mile), Administrative & Services budget of $26,004,000 (now up to $66.59 per mile), and finally $18,600,000 in premiums per year for a final entirely allocated per mile cost of $73.86. None of these, however, are the cost of running a particular train, but are instead are the cost of running commuter services on a mixed use railroad. Note that these costs include the maintenance and dispatch costs of hosting freight and Amtrak intercity passenger traffic, but not their revenues as well as the costs of transfer payments for connections to local transit and the Rail2Rail program.

Looking strictly at costs which are best allocated on a per train mile basis, that is, the marginal cost of running a train, we have the categories of Train Operations, Equipment Maintenance, and Fuel.

Train Operations is the single largest expense category for Metrolink, coming in at $36,531,000 and accounts for the costs of the train crews and dispatchers. It's worth bearing in mind that, to my knowledge, Metrolink runs with only an engineer and conductor (and possibly a second conductor on certain trains). Amtrak's intercity trains, with multiple conductors and a lead service attendant in the café, will be higher and the long-distance sleepers, which have a dozen or more crew members, even higher yet.

Equipment Maintenance is fairly straight forward at $23,036,000. In truth, this might be better expressed in terms of vehicle-miles rather than train-miles, but I do not have that information at hand and as long as train sizes are relatively consistent (in this case, 5-6 cars are increasingly common) it shouldn't be an issue. Where it isn't a near-match, scaling for sizes may be appropriate. Age of the equipment is an additional factor as well.

Fuel is self-explanatory and costs $27,250,000. Metrolink averages 2.7 gallons per train-mile with their heavier new Rotem cars and long consists and budgets $3.75 per gallon, which represents $10.125 per mile. By way of comparison, an electric train which consumes 30 kWh per train-mile at 12¢ per kWh would have a fuel cost of only $3.60 per train-mile and many trains average less.

With the proviso about equipment maintenance kept in mind, the total marginal cost of running a Metrolink train is $33.05 per mile. This may be slightly low as I did not include Rail Agreements in the allocation on the basis of the belief that this is predominated by maintenance charges rather than dispatch services; as over half of Metrolink's dispatching expenses are balanced by dispatching revenues, I suspect it evens out.

There are a number of other costs involved with running a full rail service or railroad however, several of which may be validly allocated on a per train-mile basis, even if they don't strictly scale with it. Other Operating Train Services, for instance, includes "Weather data forecast and earthquake reporting services, publications, uniforms, emergency bus services, and FRA required training." While these costs don't really scale with the number of train-miles run, one would be hard pressed to deny that train-miles makes for an appropriate manner to apportion the costs between various supporting agencies.

Other costs may scale with train-miles, but are not a marginal cost and are at the discretion of the agency. If one sends out a uniformed officer on a certain percentage of trains, the cost will scale, but there's no requirement to do so and, for that matter, I do not believe that to be the practice of Metrolink. As it happens, the additive for police in Amtrak's contracting agreement with the various states is actually based on passenger-miles, not train-miles. Certain of the costs scale with the number of passengers rather than the trains themselves. This is true of TVM Maintenance/Revenue Collection which is dominated by ticket stock costs and merchant fees. To a lesser degree this is true of Passenger Relations as well.

Maintenance of Way is the category which is closest to being a train-mile marginal cost which I did not include. However, as Metrolink noted:
Member Agency contributions for ordinary maintenance are partially offset by revenues received from the freight railroads and Amtrak Intercity services. These revenue rates were negotiated based on the historical expenditures on maintenance of way by freight railroads prior to the purchase of these right of way properties by the Member Agencies. Consequently, these revenue rates do not completely offset the escalating costs of maintaining a higher standard of quality for passenger rail service
It might be better to simply hold it as reflecting the cost of owning a mixed use railroad (average cost per track-mile: $73,267) as a result. If we ignore that these costs are not entirely off-set and bundle Rail Agreements in with it, the pessimistic estimate is $6.59 per train-mile (compare to Amtrak's average payment of $4.44 per train-mile in 2009).

Wednesday, March 20, 2013

Advertising is critical to ridership

This is a simple follow up post to my previous one regarding rail perceptions and commuter knowledge. In it I had said:

The problem, as with many rail patronage issues, is one of knowledge. The most frequent refrain that rail advocates hear when talking with friends, coworkers, or the normal person in the street isn't that the train doesn't work for them, but rather "There's a train?" With such significant differences between user and non-user perception, the primary focus of Metrolink, and Amtrak as well, has to be on simply bringing the existence of the train as well as its reliability as a means of transportation to the knowledge of the common commuter. People will not take what they do not know to exist or reliably work.
Today I was reading the agenda for the March 8th Metrolink Board of Director's meeting and came across a pair of interesting graphs in a presentation about rebranding Metrolink.

Since much of the presentation was about how Metrolink is often confused with Los Angeles Metro, the apparent contradiction with the familiarity against named in Orange County should be easily resolved.

This, quite frankly, is a completely and utterly pathetic showing for potential customer awareness of Metrolink and Amtrak. For crying out loud, the Pacific Surfliner is the busiest American rail corridor, both in terms of train frequency and passengers carried, outside of the Northeast, with nearly 60% of passenger trips going to or from Orange County, and this is from a knowledgable population base of only 300,000? There are more than 10,000 daily Metrolink riders between the Orange County, 91, and IE-OC lines, and these from a knowledgable population base of only 600,000 persons, or perhaps 900,000 if we count all who consider themselves very or somewhat familiar with Metrolink.

To a certain degree this is a self-selecting ridership base; those who are motivated enough by transit to seek it out will of course be more knowledgable and aware of it and a linear extrapolation of ridership potential with expanded awareness would not be in any way accurate. But at the same time, the potential is clear. This also has the potential to become a self-sustaining public relations campaign. Consider, for instance, the fact that the Orange County Line has a 74% revenue recovery rate (page 33). Additional ridership thanks to a successful media campaign to raise awareness of the line easily has the potential to raise the line into a revenue-neutral or even revenue-positive state, at which point even the libertarian local paper, the Orange County Register, can be used to drum up additional support and awareness as they crow about their financial success, with the additional bonus that media articles are at no expense to the agency.

Unsurprisingly, the marketing budgets of Metrolink and Amtrak are tiny. For the Surfliner, approximately $1 million per year. For Metrolink, the FY2012-2013 budget contains $1,257,000 for marketing. This amounts to about 1% of the total budget for the Surfliner and 0.6% of the total budget for Metrolink. These numbers are far too low, as the pathetic potential customer awareness shows. An increase to five million dollars a year by each agency is not a budget breaker for either of them. If there should be worries about the rate of return on the increased spending, then perhaps they should consider asking local cities, chambers of commerce, and businesses to help underwrite the campaign in exchange for focus on those cities and businesses in advertising. There is absolutely no reason why an advertising campaign shouldn't kill two birds with a single stone after all.

Friday, March 15, 2013

Amtrak and Capitol Corridor ridership drop in February

February's information is now available from LOSSAN.

The Capitol Corridor has now had its ridership decline result in a revenue decline as well, but Amtrak posted a healthy 6% increase in revenue for February. An update is also provided on the Coast Daylight service which I will simply quote here.

There are many challenges with starting this new service including the estimated $68 million capital cost. Amtrak has offered to provide equipment once operational details have been developed. The biggest challenge is reaching agreement with Union Pacific (UP). If there is not agreement in the near future, SLOCOG plans to approach the Surface Transportation Board (STB) in conjunction with Amtrak for assistance.
I don't think I can really add enough emphasis to those last lines, that's a big line to cross in order to provide extra rail service, though there is precedent for it in previous actions (California and Amtrak apparently having had to sue Southern Pacific in order to extend the San Diegans north to Santa Barbara).

Another worthy item, this time from the draft LOSSAN Corridorwide Facilities, Equipment, & Operations Inventory.

BNSF has stipulated in their agreement that, upon completion of the triple-track project between Fullerton Junction and Redondo Junction, Amtrak is allowed 34 intercity train slots daily over the BNSF territory. Two of these slots however are reserved for Amtrak's Southwest Chief between Los Angeles and Chicago (one train consuming two slots).

With 11 round trips between San Diego and Los Angeles today, I don't believe that there's much call to add additional service beyond simply extending 761/1761 to start from San Diego rather than Los Angeles on its way to San Luis Obispo. A 5:00am departure, arriving in Los Angeles around 7:40-7:45am, should be able to pick up a fair amount of traffic, though it has the potential to run into COASTER and Metrolink traffic. For the most part, I think that the use of these slots should be handed over to Metrolink for increased service, especially evening and late night service, as well as extending some of the Laguna Niguel-Fullerton trains to Los Angeles.


Pacific Surfliner +4.8%
Coast Starlight +9.6%
Capital Corridor -8.2%
San Joaquin +2.2%
Amtrak -0.6%
Metrolink -3.3%
Coaster -3.6%


Pacific Surfliner +11.7%
Coast Starlight +8.6%
Capital Corridor -3.8%
San Joaquin +5.4%
Amtrak +6.0%

On time performance

LOSSAN-North 89.6%
LOSSAN-South 90.7%
LOSSAN Overall 91.0%
Metrolink OC 95.7%
Metrolink VC 98.3%
Coaster 98.6%

Monday, March 11, 2013

Long distance trains and direct costs

In CEO Boardman's recent testimony to Congress, there is a rather interesting graph showing the contribution or loss from the long distance trains. According to this, prior to the allocation of overhead, the Palmetto and Silver Meteor both return a small surplus and the Auto Train breaks even.

Backtracking from revenues and expenses via eyeballing the graph and adjusting from 2012 revenues, rounding to the nearest dollar:
Palmetto is implied at a direct cost of ~$23 per train mile.
Silver Meteor is implied $41
Auto Train at $112
Lake Shore Limited is $51
City of New Orleans $40
Capitol Limited $48
Silver Star $43
Cardinal $40
Crescent $42
Empire Builder $44
Texas Eagle $30
Coast Starlight $62
Sunset Limited $57
Southwest Chief $45
California Zephyr $47

At first glance, there appears to be a simple explanation for the various costs. The Palmetto is the only long distance service without sleeper cars or diner service and costs are appropriately lower with significantly fewer crew, cars, or related expenses; the Auto Train carries a significant number of freight cars; the Texas Eagle sends through cars on the Sunset Limited and may simply be miscalculated as a result; and the Coast Starlight carries the unique, and maintenance intensive, Pacific Parlour Car.

However, I do not entirely trust these numbers. The Capitol Corridor reports a FY2012-2013 standard of $45.59 in train expenses per train mile (Appendix C) and the Pacific Surfliner had a 2007-2008 standard of $47.74 per train mile (page 21). The San Joaquin was somewhat lower with a 2008-2009 standard of $34.82 (page 32), but still higher than the Palmetto or Texas Eagle. Out east, the Keystone Corridor reported 2007-2008 expenses of $34.59 per train mile, rising to $37.01 in 2008-2009 (page 127). The Keystone report does an additional service in showing the number of car miles (as does an older report, which also shows the state subsidy per car mile, on page 54); with an expense of $7.40 per car mile in 2008-2009.

One possible explanation is that the state supported corridors, unlike the long distance trains, are burdened by the costs of track access fees while the long distance trains pay merely an incidental expense per train-mile. However, the Keystone Corridor is not subjected to such costs and of the three California trains, the Surfliner is the one that I would expect to have the lowest costs as a result of such a discrepancy, rather than the highest, since three of its frequencies were considered part of the national train system and thus potentially liable to the same incidental rates.

The information does provide for a bit of analysis on the ability of sleepers to pay for themselves however. If the numbers do hold true, and a train with six coaches and a baggage car is approximately $20 per train-mile cheaper to run than a typical overnight long distance train with three coaches, three sleepers, and a diner, the imputed cost of running long distance sleeper services is about $10.50 per car mile. With 45 "seats" in a Superliner II sleeper car, this comes out to $0.233 per seat-mile; since one of the roomettes is taken up by the train attendant, this actually rises to $0.244 per seat-mile. For a Viewliner, which can only accommodate 30 passengers (28 if a roomette is taken up by an attendant, but I do not know if this is the practice on single level trains), this rises to $0.35/0.375 per seat mile.

Unfortunately, Amtrak does not seem to be pricing their sleepers in such a fashion as to recoup the costs of operating them. Using information from the Performance Improvement Plan for the top five performing long distance trains, as well as the September 2011 monthly performance report, I put together this brief spreadsheet.

# of Sleeper Passengers
Average sleeper trip length
Sleeper Revenue
Revenue per sleeper passenger
Revenue per sleeper passenger-mile
City of New Orleans
Southwest Chief
Auto Train
Coast Starlight
Empire Builder

The City of New Orleans (the sole single level train), Southwest Chief, and Empire Builder do not even attempt to sell sleeper service at a price which could recoup the cost of providing it and while the Starlight and Auto Train are above the putative costs per seat-mile, it is doubtful that they match expenses after occupancy factors are accounted for. Additionally, these two trains have costs significantly in excess of the others. It is one thing to simply fail to attract sufficient patronage as to recoup your costs; it is quite another to deliberately price your trips in such a fashion that it is impossible to recoup costs.

I am aware that the National Association of Railroad Passengers has previously claimed that sleepers provide an incremental profit. Unfortunately, I do not possess the in depth access to Amtrak financials which NARP appears to be blessed with. However, with sleeper tickets priced at only a 1.6 multiple of coach tickets, per passenger mile, yet with the unique exception of the Auto Train, coach providing 2.4-4.1 times the number of passenger miles, I am strongly doubtful of the validity of NARP's analysis. Now, at this point, a caveat may be made. Because the cost of a sleeper is charged in addition to a base rail fare (the lowest bucket coach fare), it is possible that Amtrak, for reasons beyond the ken of mortal man, does not include the cost of that base rail fare in the sleeper revenue, which would make the current sleeper performance look better. Some quick trip pricing on Amtrak's website indicates that this is not the case however. The Auto Train, it must be noted, runs an abnormally high cost per passenger mile due to the necessity of paying for hauling a vehicle; it appears that coach passengers may be disproportionately likely to be traveling alone.

# of Coach Passengers
Average coach passenger trip length
Coach Revenue
Revenue per coach passenger
Revenue per coach passenger-mile
City of New Orleans
Southwest Chief
Auto Train
Coast Starlight
Empire Builder

Interestingly, assuming that the direct costs are indeed accurate, sleeper cars are, in a very real sense, the bane of long distance train travel. For the cost and equipment involved in running a single average long distance train, two Palmetto-style all coach trains could be run. I think it doubtful that any losses in revenue and passengers would not be made up, and indeed quite exceeded, by a second, opposed frequency, with the result of reducing much of the burden which the overhead imposes on the current long distance trains. Of course, this would likely run into issues with the Class Is demanding track access fees, however, Amtrak may be able to negotiate with the various states for them to pick up such extra costs in order to run the trains.

With advocacy organizations such as RailPAC continually calling for lengthening long distance trains and pointing to sold out sleepers as evidence in their favor, they would do well to also call on Amtrak to price sleepers appropriately. Sufficient demand for an additional car is also sufficient demand for a higher priced ticket and, as the long distance trains are insanely capital intensive, a luxury service such as sleeper cars ought not to be expanded, nor called for expansion, until it shows that it pays for itself at least on the margins.

Saturday, March 2, 2013

Knowing is half the battle

In the February 8th Board of Directors meeting for Metrolink, a study was presented of the I-5 corridor, developed in partnership with Caltrans in order to establish a baseline for marketing efforts to encourage public transportation while Caltrans undertakes $1.6 billion in improvements to the I-5.

Unsurprisingly, freeway and rail commuters both rated getting to work on time as quite important. However, there were massive differences between the two when it came to the perceived reliability and comfort of trains. Only 30% of I-5 commuters considered trains a reliable means of commute, while 70% of Metrolink passengers thought so, while there was a 49% difference between freeway and Metrolink commuters on whether trains made for a pleasant commute.


Meanwhile, for the Orange County Line, which is the one drivers would be switching to, Metrolink reported that weekday trains arrived within 5 minutes of schedule 94.5% of the time in 2012 (while combined on time performance was 98.81%, the weekend on time performance was only 89.47%; I honestly have no idea how they came up with their combined performance figure). Now, it is entirely possible that I may be a very unusual person, but an arrival time of 94.5% within 5 minutes of when it is scheduled strikes me as a very reliable commute. There is also the additional reliability of a schedule: There is no need to worry about what traffic will be like, there is no need to add additional pad time to one's commute because today is Friday or a holiday or other such reason. On the other hand, there is the lower reliability inherent to low service levels which is what one is restricted to with Metrolink without a monthly pass allowing free travel on Amtrak trains. With that said, the massive difference in opinion between users and non-users implies that it can be considered quite reliable.

The problem, as with many rail patronage issues, is one of knowledge. The most frequent refrain that rail advocates hear when talking with friends, coworkers, or the normal person in the street isn't that the train doesn't work for them, but rather "There's a train?" With such significant differences between user and non-user perception, the primary focus of Metrolink, and Amtrak as well, has to be on simply bringing the existence of the train as well as its reliability as a means of transportation to the knowledge of the common commuter. People will not take what they do not know to exist or reliably work.

Luckily this is a fairly easily remedied flaw: Simply spend money to promote the service. This need not be overly flashy or expensive, but it does need to impress upon the qualities of the service. For instance, simply driving mobile billboards into the peak hours of traffic congestion, when even the fourteen or more lanes of Interstate 5 grind to a halt, with a simple message such as "95% arrive within 5 minutes; how reliable is your commute?" on the billboard is a relatively cheap and effective means of spreading the information. The crucial thing however is that it must be advertised and people need to know that it exists. This does mean that spending only $9 million over three years for all of California's trains is absolutely ridiculous and needs to be greatly expanded. $9 million ought rather to be the annual sum for the Surfliner, Metrolink, and COASTER services until such time as they run into physical capacity limits. With all of the numerous convention centers, colleges, and vacation destinations within the area that they serve, and the absolutely abominable traffic for which Southern California is infamous, the advertising strategy should be fairly straightforward and cost-effective.

Yes, this does call for substantial increases in spending and probably lowering the cost recovery of the regional rail services for a few years until a sufficient degree of mindshare has been taken and ridership ramps up appropriately. But raising awareness of the service's existence is absolutely critical to building ridership and grassroots political support for rail service. In the fight to win customers, getting them to know of your existence and value is the first and most crucial half of the battle.

Friday, March 1, 2013

The fraudulence of the Vegas X-Train

A recent article on the Las Vegas X Train, a conventional train from Fullerton to Las Vegas, exposes some of the massive issues involved in this project.

In order to launch this service, they need to raise a total of $150 million by the end of this year, a task that I consider to be essentially impossible given that they possessed only $332,123 in cash assets as of December 31st. The situation is actually grimmer than that: If they do not pay Union Pacific $27 million of the $56 million owed for track improvements and use by the end of this month, March 31st, they will lose their $600,000 deposit and likely the track use agreement as well. With low cash on hand and no demonstrated ability to raise those funds, I am extremely doubtful that this will go forward. To a certain degree I'm doubtful that they want to move forward; seeking only $2.5 million in bridge funding when a critical $27 million payment is due in a month does not strike me as good business practice.

Then we come to the ridership expectations.
Barron said he sees a demand for this kind of targeted limited service. About 12 million Southern Californians drive to Las Vegas every year. He says that if Las Vegas Railway can attract just 237,000 travelers or about 2 percent of that traffic, the venture can be successful.
By way of contrast, in 1992, when Amtrak's Desert Wind still ran a daily service, only 84,000 passengers took the train from Southern California to Las Vegas. Even using Talgo trains with three daily frequencies from Los Angeles to Las Vegas via Montclair, San Bernardino, Victorville, Barstow, and Primm expected only 362,000 passengers per year and still a financial loss (page 107). To claim expectations of 237,000 annual passengers on a non-stop service from Fullerton, without through ticketing from other corridor rail services I might add, on a twice weekly train, and that it would reach this level within four to six months of beginning service can most charitably be described as delusional. It flies in the face of every sound rail study or rail planning methodology and would be based entirely on wishful thinking.

Of course, I did title this as "the fraudulence of the Vegas X-Train" and not "the delusion of the Vegas X-Train" and I did so because fraud seems to be the operating factor. For instance, their website claims "At $4.00 per gallon, a round trip from LA to Las Vegas by SUV costs $300. As prices rise, travel by rail becomes even more economical." This is a blatant lie; such a fuel expense belongs to a bus, not to an SUV. Even the worst performing SUVs, at $4 per gallon, would have a fuel expense of $177; a far cry from $300. "Initial train fares will be $99 each way. Barron notes that the rates compare favorably with Orange County-to-Las Vegas air fares, which recently averaged about $225 each way on Southwest Airlines and its subsidiary AirTran." While it is true that average fares at peak travel times and short notice for Southwest may be $225 each way through John Wayne, Fullerton is, time-wise, about equidistant from John Wayne, Long Beach, and Ontario airports, the latter two of which are substantially cheaper than John Wayne for traveling to Las Vegas.

In addition to those grave deceptions, the fact that what appears to be an essentially fictitious company (Rail Enterprises, Inc. of Orlando, Florida)  handling the rebuild of their cars raises additional issues. While some rebuilds can be associated with the name of the owner, Donald Primi, they are almost universally under a different company's name (Royal Rail) and do not appear to be allowed on the rail network. I do not believe that that this was a competently bid out project or that any of the rail cars will be refurbished as described, much less on time and on budget. Rather, it strikes me as essentially paying a buddy rather than any real project.

As a final bit of evidence of fraud, while $99 is claimed to be the ticket price, with "Vegas class food and beverage" included in the price, the actual numbers are different. Per this presentation, (also available here in case they take it down), the expected ticket price per traveler is $198, escalating to $278 within five years, and an anticipated revenue of $278.40 per rider, escalating to $352.99; a far cry from an inclusive $99 fare. However, it must be said that this also works admirably as proof of simple incompetence. The ticket price works out if you assume all riders are round trip, however, this plays merry hell with their ridership numbers. Adjusting to what any other company would report ridership as, they're now claiming 454,112 passengers in the first year and that they are cramming over two thousand riders into each and every train (while they confusingly refer to "Two trains making two round trips 2 days a week (Thursday, Friday –Sunday)" in this presentation, and portray four round trip services in the finances, their proposed schedule clearly indicates that they mean four trains with two trips total each way per week).

At the end of the day, none of the potential explanations for the X-Train look good. Either they are completely delusional in their projections and expectations; they are involved in some sort of fraudulent, or at least grossly unethical, enterprise in a throwback to 19th century railroading; or they have single-handedly managed to put together the most incompetent American passenger rail project in recent history.