News & Reviews News Wire News analysis: Amtrak equipment sale reflects lack of emphasis on growth, revenue NEWSWIRE

News analysis: Amtrak equipment sale reflects lack of emphasis on growth, revenue NEWSWIRE

By Angela Cotey | October 22, 2018

| Last updated on November 3, 2020

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Amtrak_P40s_Johnston
These P40 diesels, seen at Bear, Del., on June 7, 2010, are up for sale after being passed over for rehab.
Bob Johnston

BEECH GROVE, Ind. — Want to buy a 1954-vintage, ex-Santa Fe hi-level lounge? Or how about one of eight F40 or 12 P40 locomotives? Starting today through Nov. 2, Amtrak is offering prospective purchasers appointments to inspect 48 pieces of equipment for sale at its Indiana, Delaware, and Connecticut facilities. [See “Amtrak to sell Parlour Cars, locomotives as surplus,” Trains News Wire, Oct. 18, 2018.] Bids are due by Nov. 14.

Throughout Amtrak’s 47-year history, management has periodically thinned its fleet of equipment deemed too expensive to rehabilitate or maintain. But the short-term expediency, based solely on near-term needs, significantly constrained future ridership and revenue growth potential.

The first big purge occurred as the first Superliner order began to arrive in October 1979.  Because of a budget sharply reduced by the Carter administration, Amtrak cut the New York-Kansas City National Limited; New York-St. Petersburg, Fla., Champion; Washington, D.C.-Tri State, Ky., Hilltopper; Chicago-Miami/Tampa Floridian; Chicago-Seattle (via Billings, Mont.,) North Coast Hiawatha; and Chicago-Houston Lone Star. The company subsequently decided to convert just enough heritage dining cars, lounges, sleepers, and coaches to head-end power for its remaining single-level long-distance trains, rather than spend money it didn’t have to rehabilitate cars it might someday need.

Similarly, single-level coach-dome cars and all but one full-length dome were jettisoned at a Beech Grove sale in 1993 with the arrival of Superliner IIs, which allowed conversion of the City of New Orleans, Capitol Limited and Auto Train to Superliners.    

Now, Amtrak has decided to finally sell off long-stored F40 and P40 locomotives. They became surplus when more than 200 P42s began arriving in 1996 and express-business growth failed to materialize. (Three wreck-damaged P42s are also on the block.)

The Electro-Motive Division F40s, stored dead for more than a decade, are odd men out in a virtually all-General Electric diesel fleet. The 12 P40s, still in their turn-of-the-century phase IV paint scheme, were passed over in 2010 as being more expensive to repair than 15 800-series units chosen for rehabilitation as part of a $90.8 million economic stimulus program. With new fuel- and environmentally efficient Siemens Chargers on the prowl, it’s doubtful a vibrant market exists for these locomotives.

Eight heritage baggage cars displaced by new Viewliners, as well as five flat and material handling cars, are likewise expendable.

Amtrak_Parlour_Johnston
Passengers enjoy the Coast Starlight’s Pacific Parlour Car, a perk for those paying higher fares and therefore generating additional revenue, in 2009.
Bob Johnston

Inspections of the seven Horizon coaches and dinettes for sale will likely reveal why Amtrak has decided to see if states might be interested in paying to fix any ailments rather than keeping them on hand to handle peak-period passenger demand, thus generating more revenue.

But management’s decision to sell the five hi-level lounges, retired early this year from Coast Starlight Pacific Parlour Car service, precludes their future use to create an onboard environment designed to attract passengers willing to pay higher fares.

The fact that the Parlours are more expensive to maintain trumps any value they have at generating more revenue per passenger. That’s because Amtrak’s current management has demonstrated it has no interest in growing revenue unless it can be done with keyboard-driven fare sales on the internet. Management has also shown with the introduction of cold meal service that it lacks acumen for creating the kind of hospitality to improve the transportation experience.

Meanwhile, VIA Rail Canada continues to maintain and refurbish diners, sleepers, coaches, and lounges of a similar vintage built for Canadian Pacific by the Budd Co.

From a maintenance standpoint, the Parlour cars are clearly orphans after Amtrak retired 57 hi-level coaches and dining cars between 2003 and 2007 (according to David C. Warner and Elbert Simon’s “Amtrak By the Numbers”).

But that move, like previous fleet retirements in 1979 and 1993, also severely limited future route and revenue growth options; shop forces at Beech Grove have proven they can keep Amtrak’s aging fleet in shape for far less than buying new equipment if sufficient funds aren’t available. Unfortunately, the proposed Pacific Parlour Car sale is the latest iteration of Amtrak’s historical near-term only, short-sighted vision.

 

 

 

25 thoughts on “News analysis: Amtrak equipment sale reflects lack of emphasis on growth, revenue NEWSWIRE

  1. As one that has 30 plus years in the railroad industry, 10 of which were with Amtrak, I can tell you Mr. Ohlemeier is correct. Amtrak is an inept organization with an imagination of a blank piece of paper to attract new customers. This is what we have as a nation after nearly 50 years of this operation.

  2. Looking at passenger miles by mode in National Transportation Statistics gives a pretty good idea of the impact of personal vehicles on travel patterns.

    In 2016 – latest numbers, 86.1 percent of the passenger miles in the United States were attributable to personal vehicles, with 12.6 percent being racked up by air travel and 1.1 percent on transit. Intercity rail, including Amtrak, accounted for 2/10s of one percent of the passenger miles. Amtrak came in at 12/100s of one percent.

    In 2014 82.5 percent of the passengers miles were racked up by personal vehicles, with 16 percent attributable to air travel and 1.2 percent to transit.

    Mr. Markfelder is correct. The number one choice for transportation in the United States is the family buggy, at least as indicated by passenger miles. Interestingly, between 2014 and 2016 the dependence on personal vehicles increased. Although some have argued that reliance on personal vehicles in the United States is declining, which may be true, these numbers don’t seem to support that notion.

  3. While everybody here debates over ridership totals and service between trains and airplanes, let us not forget that the main competition and number one method of transportation in this country is the automobile. More people will drive or use a car towhere they want or need to over the train, the plane or intercity bus. Just look on any day at any time and you will see hundreds if not thousands of automobiles on our highways and streets. And while people will travel on hundreds of flights on at any given time and especially during the Christmas holiday season that number pales in comparison to the thousands of people and automobles traveling throughout this country and packing our highways. Airlines and long distance trains may make up a piece of the transportation picture in this country but it is the automobile that is king in this country and we are becoming if not already a nation that travels on rubber tired vehicles and that trend is increasing each and every day. The automobile is the only form of transportation that give people personel freedom to set their own schedule when and where to travel.

  4. While it may be sad to see this older equipment being sold offor eventually sold to the scrapyard, we must realize that we now live in an era when technology and new advances are being made and introduced on a daily basis. While these locomotives and passenger cars were great and advanced in their time, it has come and passed. Even the Acela Express trainsets are aging and nearing the end of their useful life. In an era now where we replace our cars every year, toss out cellphones and laptops and computers after only ayear or so for the latest model, it is only natural that in the transportation industry changes and retirement to aged and worn out equipment will occur. Airlines replace their planes on a regular basis with more up to date and modern equipment as well as the freight railroads too. Now I’mnot against operating something that runs well and is effiecient but just like us humans everything has its time and place and when its time to be outto pasture or sent to the cutting torch or a museum so be it. To return equipment that has been in storage for over 15 to 20 years and no guarantee of it working well or the expense to bring it back on line and in service does not make economic sense. As equipment ages, it gets more expensive to maintain and operate such equipment.Chances are that if it has been in storage all this time or taken out of service for loss or lack or ridership or revenue then it won’t now. Besides today’s generation identifies with and wants only the latest and most modern equipment and machinery and technology to use and ride on.

  5. Robert McGuire, I said nothing about roomettes,rather I mentioned Superliner bedrooms being sold out months in advance. I believe your most recent post verifies what I had stated.

  6. Mr. Cadwell you don’t need to book a sleeper 11 months in advance, that was another poster’s fantasy. I took a random date, I believe it was Nov. 4 or thereabouts and tried to book a sleeper on the Chief from CHI to LA. Turns out all the bedrooms were sold out but there were roomettes available on both the Chief and the Texas Eagle. There were even the cheapest coach seats still available. The idea that all Amtrak trains are sold out 11 months in advance is just another railfan myth.

    Mr. Williams, you go on dreaming. I prefer to be a realist.

  7. Roger Williams. you are dreamer. If there was any significant demand fro more rail passenger service people would be demanding it. They are not. Amtrak load factors nationwide are at about 63% . that means that there is a 37% overcapacity. Plus the Pacific Parlour Cars are non-revenue producing so they would have to be rebuilt as coaches or sleepers to be of any use. Americans have spoken with their feet and are walking away from the LD trains.

  8. Sixty or seventy years ago,America knew how to build quality passenger cars. These cars can last indefinitely with the proper restoration and maintenance. They should not be discarded simply due to their age,but should be kept for reserve capacity,just as the private railroads themselves kept older cars around for extra capacity before Amtrak took over.

  9. Robert McGuire,thank you for complementing me by calling me a dreamer. I will wear that label with pride,as it is so preferable than being a naysayer or pessimist. Yes, I do dream of an America with an integrated transportation system,one that gives people a choice of how they would like to travel. I dream of a safe,energy efficient,fast system that connects virtually all Americans both urban and rural and one that will relieve the congestion on both our highways and airways. And lastly, I also dream of a system that can be profitable like Brightline’s dreamers are intent upon their venture becoming. But before we can have all of this,we must keep our current long distance train network in place so we will have something to improve on and build on to for the future.

  10. Mr. McGuire,

    If you need to book a sleeper on the Southwest Chief 11 months in advance, how do you surmise that Americans have walked away from LD trains?

  11. So what if there are many flights from a certain airport. There wouldn’t be so many flights unless the government had built the airports, which it did.
    In fact, during the 1950s and 1960s, railroad passengers paid a special tax, which was used to construct airports.
    The railroads protested this to Congress, but to deaf ears.

    The only reason there are so many flights is because the government funded the infrastructure.
    The government should make similar investments in rail infrastructure, including tracks, locomotives and coaches, to provide equitable funding for passenger rail, a travel mode that, despite the nagging naysayers, is increasing.

  12. In FY17 Amtrak’s average system wide load factor was approximately 52 percent, i.e. 57 percent for the NEC, 40 percent for the state supported trains, and 58 percent for the long-distance trains. System wide ridership has remained relatively constant for the last five years at roughly 31.5 million riders.

    Between FY16 and FY17 ridership on the long-distance trains increased by 9/10s of one percent. But between 2013 and 2017 it declined from 4,753,000 to 4,698,000 or by 1.19 percent. Ridership in FY18 probably has fallen because of late running trains.

    No where in the trends does the addition of more capacity on the long-distance routes suggest a good business outcome. Even if one buys the argument that a 65 percent load factor represents a full load for the long-distance trains, the numbers suggest that the long-distance trains have excess capacity. Adding more capacity does not appear to be justified.

  13. This is horrible timing by Amtrak and shows the short sightedness of its inept management.

    This selling-off of valuable equipment, equipment which is needed to increase capacity and thus ridership (and thus revenue) comes at a time when ridership of all Amtrak lines — long-, medium- and short-distance) is increasing and is at record highs.

    For the past five years, ridership on the long-distance trains has been increasing. Though in recent years it’s remained consistent (likely due to increasing freight congestion), the record ridership is something that can be built on. This increase in service, accomplished without a corresponding increase in capacity, is something that should be applauded, as Amtrak has done what the private railroads were unable to do: stop the decline in train travel.

    Travelers are demanding more travel options.

    There’s no rational reason why (by law) passenger rail service to and from cities like Atlanta, Cincinnati, Dallas, Denver, Houston, Minneapolis, Salt Lake City and Tampa only have one (or less than one) train a day with service only in two directions (east-west or north-south).

    By law, are highways restricted to such skeletal systems? There’s no service from Atlanta to Chicago or Florida, very highly-traveled travel corridors. Yet, highways serve that important city in every single direction.
    Unlike the highly-subsidized highway system, which, thanks to federal “investments” (subsidies), rail travelers have few travel options. Now is not the time to cut rail service, which serves an important need and is growing.

  14. There are 80 flights a day between Chicago and Los Angeles – numerous airports. According to Travelocity there are 26 non-stop flights and 54 one stop flights. Fares begin at $96.

  15. Any new service that would be reliant upon 70 year old cars and 30 year old locomotives is not a service worth starting. Let’s call this what it is; Amtrak properly cleaning out junk. New service would be great, but it will need new equipment to have any shot at being run reliably.

  16. I fully comprehend that train travel cannot support the crush of travel needs in America. I am not sure comparing train and air travel is valid any more because of large government active and tacet support of the airline industry. Federal, state and local governments shovel subsidies, but government has no money, only taxpayers and passengers. If train travel was subsidized at the same level things would look different. And this subsidization is obscured likely on purpose. Look at the taxes and fees added to the price of your airline seat. This will never change. But I have another view.

    I have advocated before in this forum: grow regional service then connect to LD service. If states want alternative to airline service, make them stimulate the growth. Observe what North Carolina has done.

    Finally, if there is no hope of expanding Amtrak service, sell the hardware to someone who can. It will be telling to see who does buy the equipment. Best regards,

  17. ROBERT – Amtrak LD is not about end-to-end (Chicago to LA) but middle to end (Albuquerque to LA). But where you’re correct in that the middle-to-end is entirely a niche market, almost to the point of irrelevancy. It assumes not only that someone wants the length of the ride (sixteen or so hours on Amtrak as opposed to 90 minutes on an airplane) but that’s where they’re going. The only train in Albuquerque doesn’t necessarily go where people in Albuquerque want to go. Albuquerque has an airport, from which airplanes can go in any direction.

  18. Mr. Williams, I say that there is no market for Amtrak outside the corridors because there is very little. Even if Amtrak were to double its total passenger load, something that is not going to happen, they would still be carrying less than one percent of intercity travelers. Pointing to sold out bedroom accommodations is useless to state otherwise. There are what, 5 bedrooms on a Superliner and at peak times 3 sleepers so that means 15 rooms available to accommodate 30 people per train. How many flights are there between Chicago and Los Angeles per day? I don’t know but certainly more than one train carrying maybe 200 people on the best day. How many of those thousands of daily airline passengers traveling between Chicago and Los Angeles would take the time to spend 2 nights, 1 full day and parts of 2 others to take the train. Maybe some old people who have an irrational fear of flying but certainly not millennials, the “I want it now” generation. The airlines carry more passengers during the Christmas week holiday than Amtrak carries in an entire year. And that includes the well patronized corridor trains.

  19. Robert McGuire, what you don’t seem to understand,is that within each long distance train,there exist multiple corridors,whereas passengers are getting on and off all along the way. Considering that Amtrak does little or nothing to market their long distance network,the trains are still well patronized. If given proper marketing,increased frequencies,refurbished equipment and better connections,then there is a huge potential for growth. With all of your naysaying,it is hard to believe that you are truly a friend of trains,and if you are,with friends like you we sure don’t need any enemies!

  20. In 2013 the Coast Starlight carried 479,522 passengers and had revenues of $47.7 million or an average of $99.47 per passenger . It booked 74,217 passengers in a sleeper. The average ticket revenue for a sleeping car passenger was $245.47.

    In 2016, the last year that Amtrak makes sleeping car passenger information available to the public, as far as I can determine, the Coast Starlight carried 453,131 passengers and had revenues of $46.1 million or an average of $101.74 per passenger. It booked 77,280 passengers in a sleeper. The average ticket revenue for a sleeping car passenger was $232.34.

    In 2017 the train carried 439,000 passengers and had revenues of $45.7 million or an average of $104.10 per passenger.

    The Coast Starlight has been experiencing a steady erosion of passengers since 2013. But the number of sleeping car passengers increased substantially. These are the passengers who would have access to the Pacific Parlor car. It would be interesting to know the number of sleeping car passengers booked in 2017 and 2018.

    The last Pacific Parlor car was removed from the Coast Starlight on February 2, 2018. If there was a sharp downturn in sleeping car passengers since then, it would indicate removal of the car may have been a factor. Unfortunately, unless Amtrak makes available to the public information regarding the number of sleeping car passengers and the revenue that they generate, as it did prior to FY17, it will be impossible to gage the impact of the removal of the cars on passenger loads and revenues.

  21. Trying to argue about passenger rail’s previously government funded competition is futile. That has come and gone and the marketplace responded accordingly.

    I’d be curious to know the Coast Starlight’s ridership and revenue numbers pre and post Pacific Parlor car. If the numbers stay the same, Amtrak made a wise decision to drop a car that had no revenue space, but had significant costs.

    I struggle to believe that Amtrak has significant untapped potential on the long distance trains because of a lack of capacity. Certain trains on certain days, probably. But overall, the numbers don’t indicate it. The era of keeping large fleets of cars “in reserve” for seasonal traffic peaks died a long time ago.

    With the exception of the Horizon cars, Amtrak is not unloading anything that makes money. The new Chargers for the midwest trains is creating surplus P42s, there is no near-term need for the stored locomotives. The Pacific Parlors are not revenue producing cars. Amtrak still has Superliners that could be rebuilt if a future revenue opportunity can justify the costs.

  22. I find all of this interesting as well as a bit sad. Last November on a Portland – Los Angeles (and Fullerton) round trip, I noticed that very few passengers appreciate Business Class. Sleeping Car passengers walk through a nearly empty coach to visit the diner, then they walk the length of the diner to visit the lounge car. My wife and I use sleepers, but for daytime travel we travel coach when it is convenient.

  23. DOUG O. My post of a couple of days ago stated that the Santa Fes are NOT valuable equipment. They are worn out. I have no knowledge and no opinion about the other equipment up for sale and will leave it to others to comment whether this other equipment should be sold or should be retained.

    Now as far as your opinion that trains have failed because the government built airports decades ago is something that the facts simply cannot support. Have you been to BNA Nashville Airport? It’s enormous. It’s enormously busy. And it has expansion plans. What does that have to do with some decision the government made decades ago? The answer is, nothing. If you routed every single Amtrak LD through Nashville it wouldn’t make a dent in BNA’s traffic.

  24. Perhaps if we, the traveling public, did not maintain such high expectations and standards for satisfactory travel, we would cease being disappointed by Amtrak’s Soviet model to satisfy nobody?

    Jettisoning equipment that could certainly be utilized to serve seasonal traffic surges, to increase frequencies, or, to actually support route expansion should not be a surprise. After all, how was Amtrak allowed to dump all of its Budd-built 480 HEP fleet? And was it not Amtrak’s failed ex-CEO Joe Boardman who once proclaimed he would take a torch to all such rejected equipment to prevent any private operator from acquiring such cars to compete with Amtrak?

    Relating how VIA Rail Canada continues to modify and improve its 1954-Budd built fleet just evidences how Amtrak has failed to understand its mission to serve a National Network of inter-connecting regional and long distance trains. This is the same failed business model that continues to promote the fable how “profitable” the NEC has become.

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