April/May Issue of Amtrak Ink is nothing short of "interesting&#34

[Acela150]

I'll be honest.. I had to read this one multiple times it was that interesting.

Between Boardman's piece and the "numbers"..

I have been talking to some folks who say that Amtrak is in need of Conductors pretty bad in certain locations.. Part of this Fiscal Year's problems did trickle down to "new hires"..

I think that this issue goes to show how things are within the company.

https://www.amtrak.com/ccurl/726/675/Amtrak-Ink-April-May-2016.pdf

 

[WoodyinNYC]

... read this one multiple times ...

...

... Part of this Fiscal Year's problems did trickle down to "new hires"...

... goes to show how things are within the company.

https://www.amtrak.com/ccurl/726/675/Amtrak-Ink-April-May-2016.pdf

Grim on the cash problem due (mostly) to falling gas and jet fuel prices. And forecasting that the crunch will extend into the next Fiscal Year.

Definite that diners will not return to the Silver Star. Put an official Amtrak estimate of $4 million a year net savings.

Nice report on the Wi-Fi rollout and further upgrades underway. Claims 80% of Amtrak riders have Wi-Fi access, with the Western LD trains next up.

 

[AlamoWye]

Didn't see much talk about lowering prices to stimulate demand. Isn't that what a lot of companies do? Even airlines have been known to lower prices.

 

[jis]

Allof this means nothing once the current boss leaves. The new boss will set his/her own new policies. So this holds until that happens

the fact that the Board is completely ignoring the incumbent's advice in selecting the new boss suggests that there are changes forthcoming that will remove some of the current boss' policies and replace them with something else. the Board at present is not looking for continuity without any change. And the new constitution of the Board will not be overloaded with NEC and Northeast types anymore either. So we'll see how things unfold.

 

[Bob Dylan]

Hopefully the next opening on the Board will go to Amtrak Joe Biden when he retires as the Veep!

And we won't get a political hack that needs a job for CEO/President!

 

[Palmetto]

Did anyone see any reference to trying to RAISE REVENUES? Cuts only is what I saw.

 

[A Voice]

Did anyone see any reference to trying to RAISE REVENUES? Cuts only is what I saw.

Seems to be all Boardman understands is cuts. Of course, come October 1st, perhaps there will be new and innovative ideas to indeed raise revenue.

 

[jebr]

There was a bit about the expansion of business class service, along with the student discount expansion to try and build long-term customers.

 

[dlagrua]

Ridership and revenue are down in 2016 and IMO the curve may continue down. What has been mentioned in the lower price of fuel making car travel more attractive is probably true but there was no mention of the soft economy, higher fares and the influence of the AGR program being revamped. When you redesign a successful program that makes it harder for people to use the service this has an influence on ridership. Needing about 30% more points to take the same exact trip this year as opposed to 2015 may be causing members to either ride less or to extend their time between trips. For those that assume that AGR points are for free travel they is not. Amtrak makes money off the program or it wouldn't be there. Those trips are paid for by the sellers that you purchase from. Now factor in the decline in airfares, the elimination of amenities, the yearly rise in train fares and all of this could tell the story.

A business can never cut its way to profitability or just raise prices as a solution. It's more complicated than that.

 

[Bob Dylan]

Never mind. Trump will make everything Huge! Trust him!

 

[jis]

Bob, the word is Yuuuuge!

 

[WoodyinNYC]

Didn't see much talk about lowering prices to stimulate demand. Isn't that what a lot of companies do? Even airlines have been known to lower prices.

Boardman says,

• 
  Fewer people are riding our trains, and we’re making less money for every seat sold (which is known as “yield”).
  

Yeah, if yield is down that's because prices are down.

At the end of Boardman's message on the cash crunch is a helpful graphic. It shows, in big letters,

Revenue -1.9% below last year, Ridership -0.5% below last year.

Revenue is down more than ridership because average ticket prices are down.

Anyway, pricing is a dark art of business, and it's easy to get it wrong.

If you cut the average ticket price by $10 and attract 2 more riders on each car, maybe that's good … BUT … watch out that you gave every other rider $10 off their tickets, too. If they were gonna ride anyway, you lose more by cutting prices than you gain from a few more riders.

You also need to protect your brand image. The Acela is an established premium brand, with hundreds of thousands of riders, or their employers, satisfied that it is worth the high prices. Offer too many bargains too often and customers will begin to question why the regular price is so high.

Price cutting can ruin a brand: "Get a luxury Packard sedan for $2,000 off list price!" People start to wonder, "What's gone wrong with the Packards?" Or the company owner sees his junior V.P. drive up in a Packard. Suddenly the owner feels his Packard isn't quite good enuff, not if just anybody can afford one. So he goes to see the Cadillac dealer for his next new car.

 

[PRR 60]

...

Price cutting can ruin a brand: "Get a luxury Packard sedan for $2,000 off list price!" People start to wonder, "What's gone wrong with the Packards?" Or the company owner sees his junior V.P. drive up in a Packard. Suddenly the owner feels his Packard isn't quite good enuff, not if just anybody can afford one. So he goes to see the Cadillac dealer for his next new car.

Or, you simply buy a Studebaker and confound everyone.

 

[AlamoWye]

The whole premise of Boardman's argument is that people were not going to "ride anyway" because fuel prices are so low. If a business model is to save money by having fewer and fewer customers at a time when fuel prices are low, then the best thing would be not to have any customers. The fewer customers, the less Amtrak has a justification for even being in existence.

It just seems that as fuel prices fluctuate that Amtrak (Boardman) needs to respond just like other transportation models -- specifically airlines. With their bucket system as soon as demand picks up the prices will automatically rise anyway. Also, I'm sure that Congress will never fund Amtrak when it starts acting like a luxury brand because I thought that was part of their arsenal of arguments against the current luxury cruise of LD routes.

 

[Philly Amtrak Fan]

Didn't see much talk about lowering prices to stimulate demand. Isn't that what a lot of companies do? Even airlines have been known to lower prices.

Boardman says,

• 
  Fewer people are riding our trains, and we’re making less money for every seat sold (which is known as “yield”).
  

Yeah, if yield is down that's because prices are down.

At the end of Boardman's message on the cash crunch is a helpful graphic. It shows, in big letters,

Revenue -1.9% below last year, Ridership -0.5% below last year.

Revenue is down more than ridership because average ticket prices are down.

Anyway, pricing is a dark art of business, and it's easy to get it wrong.

If you cut the average ticket price by $10 and attract 2 more riders on each car, maybe that's good … BUT … watch out that you gave every other rider $10 off their tickets, too. If they were gonna ride anyway, you lose more by cutting prices than you gain from a few more riders.

But if you gain those riders and they enjoy the experience maybe they come back later and pay a higher price. So you lose a little revenue now to gain more down the road. Happens everywhere. You've never gotten a free sample at the grocery store? In the case of Amtrak the gain will be a little farther down the road in this case. Hopefully Congress is patient enough to wait for the long term picture.

 

[WestBerkeleyFlats]

I found Boardman's analysis to be imminently reasonable.

 

[Larry H.]

I for one have several years ago lost my enthusiasm for Amtrak. It was slowing growing but the large increases in first class fares while downgrading nearly everything you would expect would go with first class has made me simply stay home. Rail travel has no respect among the congress an some here. When you pay the charges they want now days you don't expect to be treated poorly. When the upgrades were originally made to the Empire Builder and the Coast Starlight they drew passengers. You don't build a system by cutting, cutting, cutting. Plus i still contend that turning away large amounts of sleeper passengers by not running enough sleepers is part of the reason that long distance numbers are not good. I know its not exactly Amtrak's fault but much of their thinking tends to prevent passenger increases rather than encouraging them.

 

[Acela150]

In discussions with other members of AU.. We agree that Joe Boardman is getting tired of the job he does, and one member and I agree that his job is to tell congress "NO, this is what we need". But instead has gone to the "Ok that's what you want, you got it" attitude. Re: Silver Star Dining.. I do think his time has come to an end.. And from what I've been told by quite a few folks the Employee Morale is very very low. I'm simply stunned that the Board at Amtrak hasn't made a move to get him out even more so since it seems from reading this Months "Trains" magazine, Amtrak's board has made a decision or is close. This person faces an uphill battle to say the least. As I said to one AU member, this could be another David Gunn situation.

 

[Mystic River Dragon]

Acela150,

Thanks for posting the link to Amtrak Ink. I used to read it every month but forgot about it recently.

After skimming it, there are many snarky comments I could make, but I will confine myself to two for the moment:

How, exactly, is giving people on the Crescent access to a digital newspaper instead of a real one, and allowing them to shell out $20 extra bucks to use the Club Acela in Philly, "providing people with more enhanced amenities"?

Second, this is the first time I've seen or heard of "I AMTRAK"--possibly because most employees have the sense not to broadcast it? It sounds absolutely ridiculous--a sort of combination of "I, Robot" and "I SEPTA Philly" (disclaimer--I actually like that one and have a button that says it ).

Ok--that's enough snark from me for now (need to save some for NJT )

 

[jis]

Ok--that's enough snark from me for now (need to save some for NJT )

Hah! You need to start with an infinite supply for NJT under its current non-mangement

 

[WoodyinNYC]

How, exactly, is giving people on the Crescent access to a digital newspaper instead of a real one, and allowing them to shell out $20 extra bucks to use the Club Acela in Philly, "providing people with more enhanced amenities"?

Sadly, a good many people will pay extra not to have to share public space with the likes of us. Well, the likes of me for sure. I might tell them that my life depends on Medicare, or how I know personally three people now covered by Obamacare who before were uninsured. If they're willing to give Amtrak $25 or whatever to keep away from me challenging their world view, I'm o.k. with Amtrak taking their money.

 

[me_little_me]

How, exactly, is giving people on the Crescent access to a digital newspaper instead of a real one, and allowing them to shell out $20 extra bucks to use the Club Acela in Philly, "providing people with more enhanced amenities"?

Sadly, a good many people will pay extra not to have to share public space with the likes of us. Well, the likes of me for sure. I might tell them that my life depends on Medicare, or how I know personally three people now covered by Obamacare who before were uninsured. If they're willing to give Amtrak $25 or whatever to keep away from me challenging their world view, I'm o.k. with Amtrak taking their money.

Only if you are one of the few pigs that manage to turn Crescent and Carolinian restrooms into pigsties. We took BC (at a small markup to saver and at lower cost than flexible) on our last Carolinian simply because we prefer to use a restroom that doesn't require that you hold your breath for the full time you are in it and doesn't look like the train flipped over a few times. We also liked the idea that the car attendant must have actually cleaned it at least once instead of waiting for the crew that does it at the end of the route as has always seemed the case to me on Crescent and Carolinian trips.

So since you are not one of those few pigs, understand that cleanliness has nothing to do with income and people aren't going to B/C to get away from the poor but only to get the kind of service their coach seat should have entitled them to.

PS: Most of our income is from SS and I use the VA aka America's version of socialized medicine (both the good and bad) only because affording the drugs Medicare doesn't cover means a lot to me. Sometimes you have to splurge a little to get decent service.

 

[seat38a]

I can only speak for out here in CA. Lower gas prices has also equated to much worse traffic. I mean really bad. I think this ugly traffic situation is helping the ridership numbers out here. When it takes you 3 hours to get from OC to the valley in your car in the middle of the afternoon on a Saturday or Sunday, people like me will most likely take the train. Last performance report showed that the Capitol and Surfliner both had increased rider numbers.

 

[MARC Rider]

The whole premise of Boardman's argument is that people were not going to "ride anyway" because fuel prices are so low. If a business model is to save money by having fewer and fewer customers at a time when fuel prices are low, then the best thing would be not to have any customers. The fewer customers, the less Amtrak has a justification for even being in existence.

It just seems that as fuel prices fluctuate that Amtrak (Boardman) needs to respond just like other transportation models -- specifically airlines. With their bucket system as soon as demand picks up the prices will automatically rise anyway. Also, I'm sure that Congress will never fund Amtrak when it starts acting like a luxury brand because I thought that was part of their arsenal of arguments against the current luxury cruise of LD routes.

I'm not sure about this whole "gas price" excuse, anyway. For one thing, the price of gas is starting to go up, so things should be looking up. For. Another, fuel prices are not the major factor in total driving costs. My boss pays me 50 cents a mile to use my own car. Thus if I went to NYC, I'd get $100. My car gets 25 mpg. Thus 8 gallons of gas for the 200 mile trip. At $2 a gallon that's $16. At $4 a gallon, it's $32. My boss isn't paying me a C note out of the goodness of his heart, operation of my car. He also reimburses me the 40 bucks worth of tolls seperately.

Low bucket Regional fare BAL -NYP is $79, but usually you end up paying more. If you were paying more when gas was $4, the savings from $2 gas is not really enough to offset the convenience and speed, in the NEC,anyway. Anyway, once you talk about more than one person in the car, Amtrak is way more expensive, at least until gas gets to be $10 a gallon.

So what's the real reason ridership is off? Reliability and OTP? Fares too high in relation to decreasing incomes? Discount bus lines? Inquiring minds want to know.

 

[jis]

Whether you like it or not, the correlation between fuel price and ridership has held over several decades now. Admittedly that does not imply causation. But the correlation is an empirical observation that seems to have held steady. Indeed Amtrak was saved from extinction by one such spike during the Arab oil embargo.