Amtrak has recently requested additional funds to cover operating costs and reduced revenue because of the Covid-19 pandemic. A corollary to this request is a plan to reduce long distance service from daily (in most cases) to three or four times a week.
RailPAC President Steve Roberts replies:
Amtrak’s request for funds – How should advocates respond?
Identifying and defining the costs will be critical. Advocates should start first by strictly defining the assumptions and timeframe. The time frame Amtrak says it is addressing is a 9-12 month period (FY21) where overall travel demand remains substantially lower than normal and discretionary travel is dramatically less than has been seen historically. Ridership on the trains will average about 50% of historic norms. Assuming the roll-out of a vaccine or more consistent social protections and the slow continuation of an economic rebound in late winter/spring of 2021, there should be a steady growth in ridership by Summer of 2021. In short, we are looking at a one year event.
On the cost side there is a reason why this is important. It means the estimates of cost savings need to focus on short-term avoidable costs without allocated additives. (Additives are added to direct costs to account for overheads directly link with an activity, i.e. the cost of crew base management shared by many routes accounted for with an additive on for example a conductors salary cost, a specific known cost). When you make a change for only a year you save the cost of the conductor’s salary but the cost of the crew base remains. Any proposal to reduce service needs to focus on short-term avoidable costs – fuel, on-train wages, train supplies, turn around maintenance, etc. The decision should not be made based on fully allocate costs, i.e. backbone costs, that are allocated to train routes as part of the accounting process (A perfectly fine academic accounting exercise but totally useless for deciding tri-weekly vs daily).
Two revenue areas that are important.
The first is connections. It varies by route, but looking at arrivals at the major hubs around 30% of the riders are connecting to other trains. Many are connecting to corridor trains but many are also connecting to other long-distance trains. It is impossible to have all the long-distance trains operate tri-weekly and still have connectivity in Washington, Chicago, LA and Seattle. So that is a big loss in revenue from breaking those schedules. Only daily service can maintain the utility of the National Network.
The second is what is called “claw-back”. Claw back is the percentage of riders who will shift their travel date to match a tri-weekly schedule. Longer distance vacation/leisure travelers are those where the greatest percentage of riders will shift their travel days. For those traveling strictly for transportation, a lower percentage will shift. Sleeping car riders are more likely to shift, 300 to 500 mile coach travelers are the riders least likely to shift but will choose another mode. The key difference driving these differences is that leisure travelers are making longer duration trips with more options for layover days. Shorter distance travelers are making shorter duration trips where adding a day to match a train schedule can add 30% or more to the trip duration. Because there have been numerous instances of LD trains moving from daily to tri-weekly and then daily again Amtrak has data to correctly calculate “claw-back” should it choose to use it.
So why is this important? The answer is who is going to be traveling in FY 21? Will it be seniors taking long circle trips in sleeping cars around America or will it be coach passengers traveling between 300-500 miles on the long-distance trains, strictly for essential transportation, to handle personal business, a medical treatment, to help elderly parents, etc. The level of service required for this type of market in FY 21 is daily service. A tri-weekly train is exactly the wrong kind of service for the market in FY21.
Steve Roberts – RailPAC President