Just before Christmas, the National Association of Railroad Passengers (NARP) delivered an early gift to those of us who like to look into the various statistics behind Amtrak with the 2013 ridership data. Being a bit of a data junkie, I immediately took a dive into it and came up with some rather surprising information regarding the distribution of travel within the state of Florida. The perception which I had always had of the two Florida serving trains, the Silver Star and the Silver Meteor, were that they were, to a significant degree, used, or intended at least, for travel from the Northeast to Florida and back again. The truth, however, is quite different: A significant and possibly the greatest single segment of travel on these two trains is actually Florida intrastate travel.
Struck by the fact that Florida city pairs, all to Tampa, were the primary city pairs for ridership on the Silver Star, I decided to look deeper into the ridership according to distance recorded by each station stop in Florida. As NARP has presented the data, the total number of boardings and alightings is given, as well as a percentage breakdown by distance, for every hundred miles of travel. I took this information, put it into a spreadsheet, and then calculated the distance to both Jacksonville, the most northerly Florida station, and the nearest out of Florida station, Jesup, Georgia. This information was either readily available from the station data sheet when Jacksonville was one of the top city pairs or was calculated from the current Silver Service timetable and the distance to the next station on the route which did have that information readily available. I then proceeded to sum up all of the boardings and alightings which existed in bands which were indisputably within the state of Florida. This method resulted in a certain degree of undercounting: There are no boardings or alightings counted from Jacksonville because Jesup lay only 92 miles away; similarly, ridership between Tampa and Jacksonville is not counted, despite being a top ridership city pair, because Jacksonville and Jesup lay within the same distance band at 203 and 299 miles distance respectively.
That conservative underestimate gives us a figure of at least 357,162 boardings and alightings, which translates into 178,581 passengers solely traveling within the state of Florida. With a combined ridership of 770,586 for the Silver Star and Silver Meteor, this means that at least 23% of their combined ridership is from travel solely within the state of Florida. In fact, at least 42.8% of all Florida traffic is within the state of Florida. Considered as a separate service, Florida certainly wouldn’t be one of the top performing routes, ranking between #36 Washington-Lynchburg and #37 Piedmont (though I suspect ridership levels on par with the Palmetto if all Florida intrastate travel were counted), but it would be a respectable performance level nonetheless, and all the more so for how poor the current service is for intrastate travel. The fastest trip between Miami and Orlando, one of the major rail corridors, is 5 hours and 3 minutes (Southbound, North is 5:45), aboard the Meteor, arriving at Orlando at 6:55pm and Miami at 1:23pm. This compares with a driving time of three and a half hours, assuming no major delays. Between Tampa and Orlando, though the train takes an extra hour than unobstructed traffic, and is probably on par with normal freeway travel before consideration of the last mile (2:03 vs 1:18), it suffers from similarly poor timings and only a single frequency in the midday and evening.
Obviously, this inclines one to think that All Aboard Florida will do quite well when they begin service, especially if future extensions are built to Jacksonville and Tampa. It also implies that the lack of an intrastate Florida train has been a severe mistake by Amtrak and the state of Florida. There is definitely a market to be served, yet all that they are offered is a pair of long distance trains which run in close succession to each other.
Certainly there appears to be a will to spend, and to spend heavily, for passenger rail service in Florida. Twice billions were appropriated for building a high speed rail service, though twice again cancelled by the governor, and currently a billion dollars, 25% from the state and 25% from local counties, is being used to purchase and construct the SunRail commuter line in Orlando. Further back, between 1982 and 1984, the state of Florida funded a once daily train between Miami and Tampa, canceling it when it failed to maintain a 60% operating ratio as required under the enabling Florida law. This funding requirement is not as ambitious as it may nowadays seem; Amtrak’s accounting systems were different back then and under them the Pacific Surfliner had farebox recovery levels of 59.1% and 76.4% for 1982-1983 and 1983-1984 respectively (page 24). It does however, seem to be an experiment foredoomed to failure by lack of frequencies and the short timeframe in which to build up ridership. At an expense of only $2.1 million over those two years, it also does seem like quite the odd penny to pinch.
The failure of the Silver Palm may have soured the state of Florida, unreasonably in my opinion, on supporting an intercity train, but it should not have done so for Amtrak. Just a few years earlier, for about the same million dollar per year cost as the Silver Palm, Amtrak added, at their own expense, an additional round trip between Los Angeles and San Diego; this despite the fact that there were already three state supported round trips on the route (and three more that were not supported by the state). Ridership in the waning months of the second year showed increases of 66% over the previous year and it is reasonable to suggest that it could have continued to increase to the point of no longer requiring a subsidy.
Indeed, I would go so far as to suggest that strong consideration should have been made to truncating one of the Silver Service trains at Jacksonville, using its equipment for a Florida intercity service, while transferring its sleepers to the surviving train. This would have freed up four sets of equipment for use within the state of Florida while consolidating certain costs for the sleepers onto just one train, possibly allowing for greater efficiencies. Given the example of the second Silver Palm, which ran from New York to Miami, it seems likely that this would have been a ridership positive move.
First running November of 1996, ridership on the Silver Palm appeared to completely cannibalize that of the Silver Star and Silver Meteor. In a year of general increase, the Silver Palm began with 188,000 riders while the Star and Meteor collectively lost 174,000 riders (page 37). With how important intrastate ridership is to the contemporary Silver Service, it’s no wonder that the Silver Palm, which had extremely poor timing for state service, did no great miracles in increasing ridership levels. Southbound it left Jacksonville at 1:56 in the morning, skipping Orlando except for a bus connection (though at that hour, it’s doubtful there would have been many riders bound for DisneyWorld), and arriving at Tampa at 6:47 in the morning. Five minutes later it left for a 12:07 arrival into Miami. At 5pm it left Miami, reaching Tampa at 10:13, skipping Orlando once more, and arriving at Jacksonville at 2:33am.
These were terrible times for an intercity service to run and they are worsened by the fact that the Silver Palm originated in New York, making all of its southbound times somewhat theoretical and dependent on keeping good time for nine hundred miles earlier; something that those stuck relying on the Empire Builder have known is easier said than done these past few years! Unsurprisingly, when the Silver Palm, now without sleeper or diner service and renamed the Palmetto, was cut back to Savannah, Georgia, there was only a minor change in ridership upon the Silver Service routes (combined in Amtrak’s ridership figures).
Why this is so is fairly simple of course: People want to travel only a few hours and they want to do so at reasonable times of the day, with an emphasis on day. Incredibly few intercity trips of any type are taken in the middle of the night or the earliest hours of morning; even commuter traffic is relatively rare at this time. Train stops at these times will not be well patronized, as one can clearly see in Ohio. Furthermore, these trips to be taken by train, they need to be competitive with other modes of travel, such as by air. This is, of course, ignoring the ability that speed has to induce ridership; many more trips were taken between Los Angeles and Chicago when air service began than were ever taken by train between the two cities.
If we look at NARP’s data, for all long distance trains, 31.2% of the trips taken were under three hundred miles in duration and an additional 18.8% were less than 500 miles in length and only 14.9% were over a thousand miles in duration. To a certain extent the distance which passengers travel is inflated thanks to the fact that on busier corridors, such as New York to Washington and New York to Albany, the long distance trains run receive or depart only, not allowing trips to be booked within those distances and requiring passengers to use corridor trains instead.
Now, it is suggested by some that the advantage of the long distance train is that it allows multiple of these corridors to be undertaken by a single train with the added bonus of some long distance passengers to help subsidize the travel. This comes at the downside, however, of giving many communities and even important corridors poor hours of service, especially when there is a misguided focus on creating a trip which best serves an end to end run rather than the more typical and desirable journeys in between (which may involve one end, but not both). As well, as I mentioned earlier, the long distances introduce significantly more potential for major delays to passengers as well as increased risk of train cancellation due to work on a portion of the line. Foamers may joke about how they should pay extra for the “pleasure” of riding longer in a delayed train, but passengers who are stuck waiting several hours, especially with Amtrak’s employee culture of refusing to give information about delays, for the single daily train which serves them will have rather a different view of the situation.
There is also the factor of equipment utilization. The current Silver Star and Silver Meteor use, not counting maintenance reserves and protect equipment, sixteen locomotives and seventy-six cars of various types. The Pacific Surfliner uses half that figure. Could not significant gains have been made in both ridership and revenue by having only a single train from New York to Miami while the rest of the equipment provides multiple frequencies? Certainly it could not match the frequencies of the Surfliner, not when Tampa to Orlando crawls along at 25 miles per hour (though that figure could easily have been improved with improvements to the line), but several frequencies, each conducive to more riders, could reasonably have been made, even across the whole extent of the state from Miami to Jacksonville.
Now, of course, it is far too late for Amtrak to consider such a thing. All Aboard Florida has committed to providing a significant number of frequencies with significantly improved service between Miami and Orlando, predicting three million riders and nearly twice as much revenue as the Silver Star and Silver Meteor combined, despite using less equipment. But Florida is hardly the only state where intrastate ridership makes up such a major portion of total existing ridership. Even if Amtrak is unwilling to shorten or cancel long distance routes in order to create spare equipment for more frequent corridor routings, it should still examine the potential for new corridor service that the existing long distance trains have shown may be popular that it might proactively offer this service to the states. It really makes no sense for Amtrak to be so incredibly passive and to be reliant upon the various states and local communities taking the initiative every time. It should be proactively offering plans for improved service and keeping those plans updated so that a change in the political weather does not risk losing its wind before anything is capable of starting.
Thursday, December 26, 2013
Wednesday, December 25, 2013
Merry Christmas
IN THE 5199th year of the creation of the world, from the time when in the beginning God created heaven and earth; from the flood, the 2957th year; from the birth of Abraham, the 2015th year; from Moses and the going-out of the people of Israel from Egypt, the 1510th year; from the anointing of David as king, the 1032nd year; in the 65th week according to the prophecy of Daniel; in the 194th Olympiad; from the founding of the city of Rome, the 752nd year; in the 42nd year of the rule of Octavian Augustus, when the whole world was at peace, in the sixth age of the world: Jesus Christ, the eternal God and Son of the eternal Father, desiring to sanctify the world by His most merciful coming, having been conceived by the Holy Ghost, and nine months having passed since His conception was born in Bethlehem of Juda of the Virgin Mary, having become man.
THE NATIVITY of Our Lord Jesus Christ according to the flesh.
Saturday, November 23, 2013
Amtrak Food and Beverage
Back on Halloween, Amtrak’s Office of Inspector General released a new report on the state of Amtrak’s food and beverage service. Unsurprisingly, it continues to lose money, to the tune of $72 million in Fiscal Year 2012. There are several issues, however, which it overlooked or otherwise did not appear to notice which I thought worthy of comment.
The first is that the Acela’s food and beverage profitability, and by extension that of the Northeast Corridor as a collective whole, does appear to be a case of cooking the books. Unlike the complimentary food on the long distance trains, which is accounted for according to the menu price, Acela first class meals are attributed according to a calculation based on hotel meals in four cities which Acela serves. In May of 2011, this formula was adjusted with the result of a significant increase in revenues attributed to food and beverage.
Put plainly, this sort of formula is complete crap. Even if there is not a true menu price due to the meals not being sold to other passengers, a notional menu price should still be created, if solely for bookkeeping reasons, based on the cost of food and a normal and customary markup. The prices of meals at hotels near Amtrak stations has absolutely nothing to do with the cost or appropriate price of the food which Amtrak is serving. It may serve as an appropriate guide to the food which Amtrak should serve or the general price range of its offerings, but it cannot be used in isolation of the actual food itself.
Next we come to the Auto Train, the single most pointless train in all of America. The sole justification for the Auto Train is that it makes money; it provides no useful transportation service such as one might argue with the other long distance trains. Predictably, it loses tens of millions of dollars each year. I find it somewhat surprising that rail advocates who argue passionately for more long distance sleepers do not advocate the breaking up of the Auto Train and the distribution of its sleepers amongst other routes which might find more use from them; perhaps they fear the logical conclusion of an opportunity use argument against long distance equipment in general.
That aside, the Inspector General is swallowing camels while straining gnats when it comes to the Auto Train, marking only an objection to the Auto Train, and three long distance routes, spending $480,000 on complimentary wine and cheese tastings. Quite frankly, this is a pittance and, if one insists on investigating this, a better question would be how much does Amtrak make in revenue from sales of wine and cheese as a result of the tasting. Instead, the Inspector General should have questioned just why Amtrak spends quite so very much on food and beverages for passengers of the Auto Train.
For every single passenger aboard the Auto Train, Amtrak spends a total of $52.89 in food and beverages. That’s not the menu price, that’s not the price including labor, that’s strictly the commissary cost per passenger. To put the problem another way, for every three dollars which Amtrak collected in ticket revenue from passengers aboard the Auto Train, one dollar was spent on food and beverage service. Now, the Auto Train is naturally going to have a higher amount of spending than any other train; in view of the high fares which are paid in order to transport their vehicles, every passenger is given complimentary food, not merely the sleeper passengers. Perhaps this is a reasonable business decision by Amtrak to drum up additional business. What is not a reasonable business decision by Amtrak is that this extends to complimentary alcohol as well. Alcohol is one of the most profitable things there is in the food industry with markups of four to five times the actual cost to the restaurant. It should never be given away just for free like that, but only in such a fashion as to increase sales otherwise (such as a wine and cheese tasting which then offers bottles of wine for sale).
Let’s return to that commissary cost, $52.89 per passenger. That’s the cost of a single dinner and a continental breakfast and the food cost of a continental breakfast is extraordinarily low; a typical price including labor and profit margin is generally under $10 per person. If this represents a normal per person figure for sleeper passengers on other trains, there are some profoundly disturbing implications for the question of whether sleepers actually result in a marginal contribution to train revenues.
I grant that use of a contracted commissary may result in higher food costs than direct purchase of raw ingredients and as such, Amtrak can expect a higher ratio of food costs than the 33% of sales that restaurants normally go for. However, this ratio is never less than 42.9% (Silver Star) and exceeds 100% on six trains: the Auto Train, Sunset Limited, Crescent, Southwest Chief, Lake Shore Limited, and the Texas Eagle. That does not account for the cost of labor, which is tremendously high. A waiter, or any other Amtrak on board service employee, receives a wage of $25.54 per hour and has a total cost, including benefits and employer paid taxes, of $41.19 per hour according to the Office of Inspector General. This is far in excess of the $8 to $10 an hour that a normal waiter may receive here in the state of California, with higher levels of paid benefits and employer paid taxes as well for Amtrak employees, and in both cases the employees receive tips.
I do not begrudge anyone a living wage and even with positions that are normally heavily tipped, I am strongly in favor of a rate of pay which allows them an affordable living without a reliance on tips. But Amtrak’s labor costs are insanely out of line with anything that could ever be profitable and are significantly higher than what is necessary for a living wage. Generally I oppose comparisons to other industries, but in this case I think it is a valid one: Is Amtrak on board service truly worth being recompensed, before tips, at the same rate as nursing?
But, though the long distance dining car is doomed to make direct losses, perhaps it makes an indirect profit. Perhaps the dining car, and the free food that it provides for sleeper passengers results in sufficient additional sleeper revenue as to overshadow the losses. This may, perhaps, be true on some trains. It is most certainly not true on the Sunset Limited, Cardinal, and Crescent, where the cost of providing food and beverage service exceeds the total revenue from all sleeper passengers; in the case of the Sunset Limited, even with the revenue transfer from the sleepers, food and beverage losses exceed total sleeper passenger revenue.
Let’s assume that coach passengers on other trains, by and large, follow a similar pattern to the Palmetto, with the same average revenue and costs ($3.99 and $5.09). This will underestimate things on both accounts slightly of course, since some coach passengers do purchase meals (at a loss for Amtrak) from the diner, but useful for a first run through. Under this assumption, even the best performing train, the Silver Meteor, has food and beverage expenses amounting to 33.7% of total sleeper revenue, an average amount which comes up to 66.6% of total sleeper revenue, and the always terrible Sunset Limited coming up to 150% of sleeper revenue. The vaunted sleeper fares, which Amtrak admits are not set with consideration of the cost of food and beverage service in mind, very quickly disappear once food and beverage service is brought into play.
Let’s look at it another way. Each car incurs a certain amount of costs per mile for fuel (.03 gallons according to Table 3.4) and maintenance. As a per mile charge, this necessarily results in a higher charge for the Western trains, which travel up to 2,438 miles per run, and lower ones for the eastern trains and tri-weekly Cardinal and Sunset Limited. In absolute terms, this number ranges from a daily train low of $489,256 on the Capitol Limited to a high of $1,529,237 on the California Zephyr. As a percentage of sleeper revenues, this generally runs the gamut of 5-10%, for an unstaffed dining car with no food in it, with the notable exception of the Cardinal, where it amounts to 21.64%, rather easily explained by the fact that the Cardinal possesses only a single sleeper. Of course an unstaffed dining car is rather pointless, so let’s add the costs of staffing to it. Admittedly, most trains include a separate lounge, so we’ll discount those trains by the labor cost per mile of the Palmetto, which is coach only with a dinette (88¢ per mile) and the Coast Starlight twice to remove the Pacific Parlour Car. This isn’t a perfect solution of course; wages are paid by the hour, not by the mile, and there are pre and post trip paid duties, but it should get us into a reasonable ballpark. The result? Just under half of Amtrak’s sleeper revenue is dedicated to dining cars and that before they’ve even paid for any food. For the daily trains excluding the Auto Train, the average sleeper fare is only $71.91 higher than the average coach fare once such figures are deducted; a fare that must still account for the actual cost of food, the dedicated sleeper attendants, and the opportunity cost of using a lower capacity sleeper car instead of a coach car.
Is this an unfair assessment for the sleeper passengers? Unfortunately no. The dining car exists solely for the purpose of sleeper car passengers. Passengers on the Palmetto find themselves perfectly satisfied with a dinette despite traveling the same distance as coach passengers on the Coast Starlight. Yet the Coast Starlight finds it necessary to add not merely a dining car, but also a second lounge, the Pacific Parlour Car, dedicated for the sleeper passengers. What revenue is spent by coach passengers in the full dining cars, over and above the cost of food, serves to subsidize the sleeper passengers. Even then, even if every single dollar of revenue attributed to the diner came from cash, at no point does the revenue exceed the labor hour cost plus food cost (it exceeds labor cost by about a nickel in June).
Until the 1980s, food in the diner car was strictly a paid for extra, no matter whether one was a coach passenger or a sleeper passenger. It is time for Amtrak to either return to that tradition or to adjust sleeper fares in order to recover the full cost of providing complementary meal service to the diner passengers. Advocates for the long distance trains like to crow about how high the occupancy factors are for these trains (a feat accomplished by having a small number of seats); they should have no problem with fares increasing in order to recover costs until such time as total revenue actually begins to drop. An additional benefit of returning to the prior tradition of all passengers paying at the diner is that it should decrease demand somewhat, allowing for more cars to be served with a single diner.
Amtrak should also divest itself of the Auto Train. As I mentioned before, it serves no justifiable purpose except to make money, which it manifestly fails to do. It is possible that the equipment on the Auto Train (8 Superliner sleepers, 4 deluxe sleepers, 8 Superliner coaches, 6 diners, and 4 lounges) may allow for better cost recovery on the other trains. This sort of self-justification is something which every Amtrak supported route should be regularly subjected to; routes should never be kept running with abysmally poor ridership simply because they currently exist and nor should they do so in the hopes that there may be a future service improvement, especially since the capital cost of equipment should be accounted for. Yes, subsidies may be necessary for certain social goals, but they should still be given out on the basis of the biggest bang for the buck.
This is a question that is going to especially trouble the Western long distance trains as the Superliner equipment wears out and new bilevels are available thanks to the corridor purchase order by California and certain other states. Are these trains worth a capital investment of seven hundred million, likely over a billion dollars with new locomotives, and an ongoing annual subsidy of three hundred and fifty million dollars? Would the nation be better served instead by using the money for other programs (such as Essential Air Service) or by funding alternate capital improvements, such as an extension of the San Joaquins to Redding or Chicago to Omaha several times daily? These are questions that will be asked by Congress in the coming years and they do not bode well for the long distance trains until and unless they are able to remarkably improve their performance by, among other things, getting rid of losses for food and beverage service.
An Excel copy of the spreadsheets created to work on this is available here.
The first is that the Acela’s food and beverage profitability, and by extension that of the Northeast Corridor as a collective whole, does appear to be a case of cooking the books. Unlike the complimentary food on the long distance trains, which is accounted for according to the menu price, Acela first class meals are attributed according to a calculation based on hotel meals in four cities which Acela serves. In May of 2011, this formula was adjusted with the result of a significant increase in revenues attributed to food and beverage.
Put plainly, this sort of formula is complete crap. Even if there is not a true menu price due to the meals not being sold to other passengers, a notional menu price should still be created, if solely for bookkeeping reasons, based on the cost of food and a normal and customary markup. The prices of meals at hotels near Amtrak stations has absolutely nothing to do with the cost or appropriate price of the food which Amtrak is serving. It may serve as an appropriate guide to the food which Amtrak should serve or the general price range of its offerings, but it cannot be used in isolation of the actual food itself.
Next we come to the Auto Train, the single most pointless train in all of America. The sole justification for the Auto Train is that it makes money; it provides no useful transportation service such as one might argue with the other long distance trains. Predictably, it loses tens of millions of dollars each year. I find it somewhat surprising that rail advocates who argue passionately for more long distance sleepers do not advocate the breaking up of the Auto Train and the distribution of its sleepers amongst other routes which might find more use from them; perhaps they fear the logical conclusion of an opportunity use argument against long distance equipment in general.
That aside, the Inspector General is swallowing camels while straining gnats when it comes to the Auto Train, marking only an objection to the Auto Train, and three long distance routes, spending $480,000 on complimentary wine and cheese tastings. Quite frankly, this is a pittance and, if one insists on investigating this, a better question would be how much does Amtrak make in revenue from sales of wine and cheese as a result of the tasting. Instead, the Inspector General should have questioned just why Amtrak spends quite so very much on food and beverages for passengers of the Auto Train.
For every single passenger aboard the Auto Train, Amtrak spends a total of $52.89 in food and beverages. That’s not the menu price, that’s not the price including labor, that’s strictly the commissary cost per passenger. To put the problem another way, for every three dollars which Amtrak collected in ticket revenue from passengers aboard the Auto Train, one dollar was spent on food and beverage service. Now, the Auto Train is naturally going to have a higher amount of spending than any other train; in view of the high fares which are paid in order to transport their vehicles, every passenger is given complimentary food, not merely the sleeper passengers. Perhaps this is a reasonable business decision by Amtrak to drum up additional business. What is not a reasonable business decision by Amtrak is that this extends to complimentary alcohol as well. Alcohol is one of the most profitable things there is in the food industry with markups of four to five times the actual cost to the restaurant. It should never be given away just for free like that, but only in such a fashion as to increase sales otherwise (such as a wine and cheese tasting which then offers bottles of wine for sale).
Let’s return to that commissary cost, $52.89 per passenger. That’s the cost of a single dinner and a continental breakfast and the food cost of a continental breakfast is extraordinarily low; a typical price including labor and profit margin is generally under $10 per person. If this represents a normal per person figure for sleeper passengers on other trains, there are some profoundly disturbing implications for the question of whether sleepers actually result in a marginal contribution to train revenues.
I grant that use of a contracted commissary may result in higher food costs than direct purchase of raw ingredients and as such, Amtrak can expect a higher ratio of food costs than the 33% of sales that restaurants normally go for. However, this ratio is never less than 42.9% (Silver Star) and exceeds 100% on six trains: the Auto Train, Sunset Limited, Crescent, Southwest Chief, Lake Shore Limited, and the Texas Eagle. That does not account for the cost of labor, which is tremendously high. A waiter, or any other Amtrak on board service employee, receives a wage of $25.54 per hour and has a total cost, including benefits and employer paid taxes, of $41.19 per hour according to the Office of Inspector General. This is far in excess of the $8 to $10 an hour that a normal waiter may receive here in the state of California, with higher levels of paid benefits and employer paid taxes as well for Amtrak employees, and in both cases the employees receive tips.
I do not begrudge anyone a living wage and even with positions that are normally heavily tipped, I am strongly in favor of a rate of pay which allows them an affordable living without a reliance on tips. But Amtrak’s labor costs are insanely out of line with anything that could ever be profitable and are significantly higher than what is necessary for a living wage. Generally I oppose comparisons to other industries, but in this case I think it is a valid one: Is Amtrak on board service truly worth being recompensed, before tips, at the same rate as nursing?
But, though the long distance dining car is doomed to make direct losses, perhaps it makes an indirect profit. Perhaps the dining car, and the free food that it provides for sleeper passengers results in sufficient additional sleeper revenue as to overshadow the losses. This may, perhaps, be true on some trains. It is most certainly not true on the Sunset Limited, Cardinal, and Crescent, where the cost of providing food and beverage service exceeds the total revenue from all sleeper passengers; in the case of the Sunset Limited, even with the revenue transfer from the sleepers, food and beverage losses exceed total sleeper passenger revenue.
Let’s assume that coach passengers on other trains, by and large, follow a similar pattern to the Palmetto, with the same average revenue and costs ($3.99 and $5.09). This will underestimate things on both accounts slightly of course, since some coach passengers do purchase meals (at a loss for Amtrak) from the diner, but useful for a first run through. Under this assumption, even the best performing train, the Silver Meteor, has food and beverage expenses amounting to 33.7% of total sleeper revenue, an average amount which comes up to 66.6% of total sleeper revenue, and the always terrible Sunset Limited coming up to 150% of sleeper revenue. The vaunted sleeper fares, which Amtrak admits are not set with consideration of the cost of food and beverage service in mind, very quickly disappear once food and beverage service is brought into play.
Let’s look at it another way. Each car incurs a certain amount of costs per mile for fuel (.03 gallons according to Table 3.4) and maintenance. As a per mile charge, this necessarily results in a higher charge for the Western trains, which travel up to 2,438 miles per run, and lower ones for the eastern trains and tri-weekly Cardinal and Sunset Limited. In absolute terms, this number ranges from a daily train low of $489,256 on the Capitol Limited to a high of $1,529,237 on the California Zephyr. As a percentage of sleeper revenues, this generally runs the gamut of 5-10%, for an unstaffed dining car with no food in it, with the notable exception of the Cardinal, where it amounts to 21.64%, rather easily explained by the fact that the Cardinal possesses only a single sleeper. Of course an unstaffed dining car is rather pointless, so let’s add the costs of staffing to it. Admittedly, most trains include a separate lounge, so we’ll discount those trains by the labor cost per mile of the Palmetto, which is coach only with a dinette (88¢ per mile) and the Coast Starlight twice to remove the Pacific Parlour Car. This isn’t a perfect solution of course; wages are paid by the hour, not by the mile, and there are pre and post trip paid duties, but it should get us into a reasonable ballpark. The result? Just under half of Amtrak’s sleeper revenue is dedicated to dining cars and that before they’ve even paid for any food. For the daily trains excluding the Auto Train, the average sleeper fare is only $71.91 higher than the average coach fare once such figures are deducted; a fare that must still account for the actual cost of food, the dedicated sleeper attendants, and the opportunity cost of using a lower capacity sleeper car instead of a coach car.
Is this an unfair assessment for the sleeper passengers? Unfortunately no. The dining car exists solely for the purpose of sleeper car passengers. Passengers on the Palmetto find themselves perfectly satisfied with a dinette despite traveling the same distance as coach passengers on the Coast Starlight. Yet the Coast Starlight finds it necessary to add not merely a dining car, but also a second lounge, the Pacific Parlour Car, dedicated for the sleeper passengers. What revenue is spent by coach passengers in the full dining cars, over and above the cost of food, serves to subsidize the sleeper passengers. Even then, even if every single dollar of revenue attributed to the diner came from cash, at no point does the revenue exceed the labor hour cost plus food cost (it exceeds labor cost by about a nickel in June).
Until the 1980s, food in the diner car was strictly a paid for extra, no matter whether one was a coach passenger or a sleeper passenger. It is time for Amtrak to either return to that tradition or to adjust sleeper fares in order to recover the full cost of providing complementary meal service to the diner passengers. Advocates for the long distance trains like to crow about how high the occupancy factors are for these trains (a feat accomplished by having a small number of seats); they should have no problem with fares increasing in order to recover costs until such time as total revenue actually begins to drop. An additional benefit of returning to the prior tradition of all passengers paying at the diner is that it should decrease demand somewhat, allowing for more cars to be served with a single diner.
Amtrak should also divest itself of the Auto Train. As I mentioned before, it serves no justifiable purpose except to make money, which it manifestly fails to do. It is possible that the equipment on the Auto Train (8 Superliner sleepers, 4 deluxe sleepers, 8 Superliner coaches, 6 diners, and 4 lounges) may allow for better cost recovery on the other trains. This sort of self-justification is something which every Amtrak supported route should be regularly subjected to; routes should never be kept running with abysmally poor ridership simply because they currently exist and nor should they do so in the hopes that there may be a future service improvement, especially since the capital cost of equipment should be accounted for. Yes, subsidies may be necessary for certain social goals, but they should still be given out on the basis of the biggest bang for the buck.
This is a question that is going to especially trouble the Western long distance trains as the Superliner equipment wears out and new bilevels are available thanks to the corridor purchase order by California and certain other states. Are these trains worth a capital investment of seven hundred million, likely over a billion dollars with new locomotives, and an ongoing annual subsidy of three hundred and fifty million dollars? Would the nation be better served instead by using the money for other programs (such as Essential Air Service) or by funding alternate capital improvements, such as an extension of the San Joaquins to Redding or Chicago to Omaha several times daily? These are questions that will be asked by Congress in the coming years and they do not bode well for the long distance trains until and unless they are able to remarkably improve their performance by, among other things, getting rid of losses for food and beverage service.
An Excel copy of the spreadsheets created to work on this is available here.
Saturday, November 9, 2013
Amtrak routes by 2013 cost recovery
As I did last year, I now present Amtrak's routes ranked according to cost recovery, color coded between the Northeast Corridor, state supported, and long distance trains. As with last year, while the Acela, Northeast Regional, and long distance trains use total revenue, the revenue for the state supported trains (in green) is solely based on ticket fares. While this does depress their actual performance somewhat by a few percentage points (from food and beverage sales and hauling private varnish), it eliminates the effect of state subsidies.
Special attention should be paid to Washington-Norfolk. Despite being in its inaugural year of service and being a single frequency with some fairly ugly timing (5am departure from Norfolk, 8:50pm return), it managed to make a profit to the tune of about $130,000.
It is a bit concerning that costs have increased so dramatically on some routes. The Hoosier State, for example, nearly doubled its expenses and I cannot think of a rational reason why. It's a short distance train that runs only four times a week, yet has a higher allocated cost now than the Heartland Flyer, Piedmont, Pere Marquette, Ethan Allen Express, or Virginia's Lynchburg and Norfolk lines. As for the other lines, I suspect that new allocations for the Northeast Corridor may be largely to blame. I'd like to say that Amtrak's taking possession of the former Norfolk Southern track in Michigan and upgrading to 110mph service is to blame for the Wolverine's increase, but that wouldn't explain the Blue Water's decrease or the lack of change for Illinois.
Revenue 2013
|
Expenses 2013
|
Cost recovery 2013
|
Revenue 2012
|
Expenses 2012
|
Cost recovery 2012
|
Change in cost recovery
|
Change in revenue
|
Change in expenses
|
|
| Acela |
$542,700,000
|
$305,800,000
|
177.47%
|
$521,000,000
|
$312,200,000
|
166.88%
|
10.59%
|
4.17%
|
-2.05%
|
| Washington-Lynchburg |
$11,744,966
|
$8,700,000
|
135.00%
|
$11,411,821
|
$8,100,000
|
140.89%
|
-5.89%
|
2.92%
|
7.41%
|
| Northeast Regional |
$585,800,000
|
$452,800,000
|
129.37%
|
$552,000,000
|
$476,400,000
|
115.87%
|
13.50%
|
6.12%
|
-4.95%
|
| Washington-Newport News |
$32,916,626
|
$31,600,000
|
104.17%
|
$34,286,847
|
$31,700,000
|
108.16%
|
-3.99%
|
-4.00%
|
-0.32%
|
| Washington-Norfolk |
$6,233,871
|
$6,100,000
|
102.19%
|
N/A | N/A | ||||
| Carolinian |
$19,841,847
|
$22,900,000
|
86.65%
|
$18,652,552
|
$20,500,000
|
90.99%
|
-4.34%
|
6.38%
|
11.71%
|
| Keystone Service |
$35,442,502
|
$47,200,000
|
75.09%
|
$32,970,951
|
$47,600,000
|
69.27%
|
5.82%
|
7.50%
|
-0.84%
|
| Maple Leaf |
$23,796,560
|
$33,000,000
|
72.11%
|
$24,600,726
|
$28,400,000
|
86.62%
|
-14.51%
|
-3.27%
|
16.20%
|
| Auto Train |
$75,400,000
|
$107,300,000
|
70.27%
|
$74,100,000
|
$108,500,000
|
68.29%
|
1.98%
|
1.75%
|
-1.11%
|
| Hiawathas |
$16,287,184
|
$25,400,000
|
64.12%
|
$15,963,261
|
$26,900,000
|
59.34%
|
4.78%
|
2.03%
|
-5.58%
|
| Pennsylvanian |
$10,431,324
|
$16,300,000
|
64.00%
|
$9,281,813
|
$15,600,000
|
59.50%
|
4.50%
|
12.38%
|
4.49%
|
| Empire Service |
$44,299,328
|
$71,100,000
|
62.31%
|
$43,877,344
|
$65,900,000
|
66.58%
|
-4.28%
|
0.96%
|
7.89%
|
| Palmetto |
$19,100,000
|
$33,900,000
|
56.34%
|
$18,400,000
|
$29,600,000
|
62.16%
|
-5.82%
|
3.80%
|
14.53%
|
| Pacific Surfliner |
$62,576,548
|
$113,800,000
|
54.99%
|
$58,595,820
|
$118,900,000
|
49.28%
|
5.71%
|
6.79%
|
-4.29%
|
| Empire Builder |
$72,900,000
|
$133,200,000
|
54.73%
|
$72,200,000
|
$129,800,000
|
55.62%
|
-0.89%
|
0.97%
|
2.62%
|
| Downeaster |
$8,211,723
|
$16,000,000
|
51.32%
|
$7,741,844
|
$14,700,000
|
52.67%
|
-1.34%
|
6.07%
|
8.84%
|
| Adirondack |
$7,035,147
|
$13,900,000
|
50.61%
|
$6,748,333
|
$12,900,000
|
52.31%
|
-1.70%
|
4.25%
|
7.75%
|
| Silver Meteor |
$42,400,000
|
$84,800,000
|
50.00%
|
$42,600,000
|
$80,500,000
|
52.92%
|
-2.92%
|
-0.47%
|
5.34%
|
| New Haven-Springfield |
$11,944,482
|
$24,300,000
|
49.15%
|
$11,723,569
|
$24,300,000
|
48.25%
|
0.91%
|
1.88%
|
0.00%
|
| Lake Shore Limited |
$35,200,000
|
$71,900,000
|
48.96%
|
$35,000,000
|
$67,600,000
|
51.78%
|
-2.82%
|
0.57%
|
6.36%
|
| City of New Orleans |
$23,200,000
|
$47,600,000
|
48.74%
|
$22,000,000
|
$43,300,000
|
50.81%
|
-2.07%
|
5.45%
|
9.93%
|
| Capitol Limited |
$23,500,000
|
$48,600,000
|
48.35%
|
$22,600,000
|
$46,600,000
|
48.50%
|
-0.14%
|
3.98%
|
4.29%
|
| Texas Eagle |
$30,000,000
|
$62,200,000
|
48.23%
|
$28,500,000
|
$62,500,000
|
45.60%
|
2.63%
|
5.26%
|
-0.48%
|
| Pere Marquette |
$3,152,828
|
$6,900,000
|
45.69%
|
$3,276,210
|
$6,000,000
|
54.60%
|
-8.91%
|
-3.77%
|
15.00%
|
| Crescent |
$34,500,000
|
$78,100,000
|
44.17%
|
$34,900,000
|
$76,500,000
|
45.62%
|
-1.45%
|
-1.15%
|
2.09%
|
| San Joaquins |
$39,401,591
|
$89,500,000
|
44.02%
|
$38,661,536
|
$86,500,000
|
44.70%
|
-0.67%
|
1.91%
|
3.47%
|
| Coast Starlight |
$47,700,000
|
$109,600,000
|
43.52%
|
$45,300,000
|
$100,500,000
|
45.07%
|
-1.55%
|
5.30%
|
9.05%
|
| Ethan Allen Express |
$2,825,134
|
$6,500,000
|
43.46%
|
$2,829,307
|
$5,100,000
|
55.48%
|
-12.01%
|
-0.15%
|
27.45%
|
| Vermonter |
$5,029,712
|
$11,600,000
|
43.36%
|
$4,761,018
|
$10,700,000
|
44.50%
|
-1.14%
|
5.64%
|
8.41%
|
| California Zephyr |
$55,700,000
|
$129,900,000
|
42.88%
|
$53,200,000
|
$123,500,000
|
43.08%
|
-0.20%
|
4.70%
|
5.18%
|
| Illini |
$9,562,149
|
$22,400,000
|
42.69%
|
$9,258,647
|
$21,400,000
|
43.26%
|
-0.58%
|
3.28%
|
4.67%
|
| Blue Water |
$6,228,730
|
$14,600,000
|
42.66%
|
$6,094,659
|
$15,300,000
|
39.83%
|
2.83%
|
2.20%
|
-4.58%
|
| Silver Star |
$37,800,000
|
$89,100,000
|
42.42%
|
$38,700,000
|
$83,900,000
|
46.13%
|
-3.70%
|
-2.33%
|
6.20%
|
| Cascades |
$29,269,205
|
$69,400,000
|
42.17%
|
$30,886,455
|
$68,600,000
|
45.02%
|
-2.85%
|
-5.24%
|
1.17%
|
| Southwest Chief |
$49,100,000
|
$118,200,000
|
41.54%
|
$48,200,000
|
$114,900,000
|
41.95%
|
-0.41%
|
1.87%
|
2.87%
|
| Wolverines |
$19,398,853
|
$46,700,000
|
41.54%
|
$17,704,897
|
$38,500,000
|
45.99%
|
-4.45%
|
9.57%
|
21.30%
|
| Chicago-St. Louis |
$16,382,439
|
$39,700,000
|
41.27%
|
$13,353,833
|
$39,600,000
|
33.72%
|
7.54%
|
22.68%
|
0.25%
|
| Piedmont |
$3,325,948
|
$8,300,000
|
40.07%
|
$3,077,031
|
$7,200,000
|
42.74%
|
-2.66%
|
8.09%
|
15.28%
|
| Capitol Corridor |
$27,699,783
|
$71,500,000
|
38.74%
|
$27,927,540
|
$75,500,000
|
36.99%
|
1.75%
|
-0.82%
|
-5.30%
|
| Kansas City-St. Louis |
$5,617,913
|
$15,500,000
|
36.24%
|
$5,139,069
|
$15,800,000
|
32.53%
|
3.72%
|
9.32%
|
-1.90%
|
| Illinois Zephyr |
$5,788,619
|
$17,700,000
|
32.70%
|
$5,687,467
|
$17,500,000
|
32.50%
|
0.20%
|
1.78%
|
1.14%
|
| Cardinal |
$8,600,000
|
$26,600,000
|
32.33%
|
$8,400,000
|
$25,600,000
|
32.81%
|
-0.48%
|
2.38%
|
3.91%
|
| Sunset Limited |
$13,800,000
|
$54,700,000
|
25.23%
|
$13,000,000
|
$54,800,000
|
23.72%
|
1.51%
|
6.15%
|
-0.18%
|
| Heartland Flyer |
$2,022,956
|
$8,500,000
|
23.80%
|
$2,086,587
|
$9,200,000
|
22.68%
|
1.12%
|
-3.05%
|
-7.61%
|
| Hoosier State |
$892,553
|
$8,900,000
|
10.03%
|
$856,675
|
$4,700,000
|
18.23%
|
-8.20%
|
4.19%
|
89.36%
|
Special attention should be paid to Washington-Norfolk. Despite being in its inaugural year of service and being a single frequency with some fairly ugly timing (5am departure from Norfolk, 8:50pm return), it managed to make a profit to the tune of about $130,000.
It is a bit concerning that costs have increased so dramatically on some routes. The Hoosier State, for example, nearly doubled its expenses and I cannot think of a rational reason why. It's a short distance train that runs only four times a week, yet has a higher allocated cost now than the Heartland Flyer, Piedmont, Pere Marquette, Ethan Allen Express, or Virginia's Lynchburg and Norfolk lines. As for the other lines, I suspect that new allocations for the Northeast Corridor may be largely to blame. I'd like to say that Amtrak's taking possession of the former Norfolk Southern track in Michigan and upgrading to 110mph service is to blame for the Wolverine's increase, but that wouldn't explain the Blue Water's decrease or the lack of change for Illinois.
|
|
Change in expenses
|
|
Hoosier State |
89.36%
|
|
Ethan Allen Express |
27.45%
|
|
Wolverines |
21.30%
|
|
Maple Leaf |
16.20%
|
|
Piedmont |
15.28%
|
|
Pere Marquette |
15.00%
|
|
Palmetto |
14.53%
|
|
Carolinian |
11.71%
|
|
City of New Orleans |
9.93%
|
|
Coast Starlight |
9.05%
|
|
Downeaster |
8.84%
|
|
Vermonter |
8.41%
|
|
Empire Service |
7.89%
|
|
Adirondack |
7.75%
|
|
Washington-Lynchburg |
7.41%
|
|
Lake Shore Limited |
6.36%
|
|
Silver Star |
6.20%
|
|
Silver Meteor |
5.34%
|
|
California Zephyr |
5.18%
|
|
Illini |
4.67%
|
|
Pennsylvanian |
4.49%
|
|
Capitol Limited |
4.29%
|
|
Cardinal |
3.91%
|
|
San Joaquins |
3.47%
|
|
Southwest Chief |
2.87%
|
|
Empire Builder |
2.62%
|
|
Crescent |
2.09%
|
|
Cascades |
1.17%
|
|
Illinois Zephyr |
1.14%
|
|
Chicago-St. Louis |
0.25%
|
|
New Haven-Springfield |
0.00%
|
|
Sunset Limited |
-0.18%
|
|
Washington-Newport News |
-0.32%
|
|
Texas Eagle |
-0.48%
|
|
Keystone Service |
-0.84%
|
|
Auto Train |
-1.11%
|
|
Kansas City-St. Louis |
-1.90%
|
|
Acela |
-2.05%
|
|
Pacific Surfliner |
-4.29%
|
|
Blue Water |
-4.58%
|
|
Northeast Regional |
-4.95%
|
|
Capitol Corridor |
-5.30%
|
|
Hiawathas |
-5.58%
|
|
Heartland Flyer |
-7.61%
|
|
Washington-Norfolk |
|
As before, an Excel version of the file is available for those who wish to see the original and the numbers are from Amtrak's September monthly performance report.