Amtrak's New Math for Long-Distance Route Expenses: Marketing Yes, Amenities No
Written By Matthew Melzer
Matthew Melzer is a NARP State Representative from San Francisco, Cal. and serves as NARP’s Southwest Division Leader. The views expressed in this post are strictly his own and do not necessarily reflect NARP policy.
Amtrak's national network of the 15 long-distance routes recently came under the aegis of Mark Murphy, Amtrak's new General Manager Long Distance Services. The reorganized business line is now largely overseen by a cadre of Amtrak veterans such as Murphy, who graciously presented to the joint NARP and RailPAC (Rail Passenger Association of California) “Steel Wheels” member meeting in Los Angeles on February 1....
Murphy outlined an optimistic vision for the national network trains whose sense of security has ebbed and flowed with the political winds and Amtrak's finances over the years. With diminished debt, record ridership for 10 of the last 11 fiscal years, and a record 89% operating ratio (89 cents in fares recovered for every dollar of expenses), Amtrak is the strongest it has been in modern times – albeit below its historical high water-marks of route breadth and fleet size.
The long-distance trains are the linchpin of this success, accounting for 44 percent of all Amtrak passenger-miles (actual transportation output). They punch far above their weight considering that they carry only about 16% of total system passengers....
Murphy was also bold in declaring that “every revenue opportunity is on the table” and that cost-cutting will not be the prevailing mentality going forward, even as Amtrak seeks to make food and beverage services more efficient. One of his slides concluded, “We're not trying to chop our way to success.” So imagine the shock of rail advocates when Amtrak issued an internal notice three days later announcing the elimination of many on-board amenities in the coming weeks for the long-distance trains, whose product had always been at the heart of their appeal for choice riders (particularly in the highly profitable sleeping cars).
There was a subsequent memo announcing the elimination of the separate sleeper lounge and wine reception on the Auto Train. While these cuts are fairly small in the grand scheme, they make the product incrementally less attractive. They're also a reminder of the very short institutional memory at Amtrak, despite the experienced management....
...on the Marketing side, Amtrak is acting quite emboldened to splash out dollars and resources to promote the long-distance experience to a variety of audiences....
Ultimately, while these Marketing campaigns will likely be very successful and deliver a handsome return on investment, there is no substitute for the marketing power of excellent product itself.
As rail advocates, it's our job to defend Amtrak against scurrilous political attacks on the very notion of offering high-quality food and beverage services and other amenities that define the train as the most human intercity travel option. At the same time, the announced cuts play into the hands of “concern trolls” within a micromanagerial Congress who claim to want Amtrak to become more efficient and operate more like a business, but who in their hearts are philosophically opposed to competitive passenger train service and would rather dictate or incent artificially inferior service. It dignifies the framing of “freebie” amenities being a waste and not a valuable marketing tool or a potentially key driver of revenue.
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