Who will break the status quo in U.S. passenger rail?

Posted by Malcolm Kenton
on Friday, January 19, 2018

A trend of recent developments has given me more reason to believe that the future of passenger rail in the U.S. is not, and should not be, wrapped up with the future of Amtrak, at least not in its current iteration. Amtrak is not providing the necessary level of vision and commitment to the long-term growth and success of its product, and all indications are that this trend is continuing under the leadership of new President & CEO Richard Anderson. Unless Congress or the administration forces an attitude shift at Amtrak, It will be up to states, other passenger rail operators, and advocates to express such a vision and see it through to fruition.

Interior of a Pacific Parlour Car on the northbound Coast Starlight on Aug. 29, 2017. These cars will be permanently retired in two weeks. Photo by Malcolm Kenton.
This is not to say that Amtrak is worthless. The vast majority of Amtrak employees are good people doing the best job they can given the circumstances, and much of the railroad’s woes can be traced to a political environment that is outside its control. It’s hard to run a forward-thinking business when the business’s very existence is threatened each year and there is no budgetary certainty beyond the current fiscal year. Amtrak, to its historical credit, has also managed to keep a national passenger train network, skeletal though it is, operating for four and a half decades in spite of long odds.

However, even given the binds under which it operates, Amtrak should demonstrate an understanding of the unique value of its own product and work to enhance the inherent advantages of trains over other travel modes rather than cheapen what trains offer to the traveling public. The company’s leadership should also have the courage to express a vision for what its future could look like if a desired level of long-term dedicated funding and policies that foster passenger rail expansion were to materialize. Sadly, the following developments indicate continued movement in the opposite direction:

  • Among a spate of fare and reservation policy changes taking effect this month are the elimination of the 15% student discount on all but state-supported routes and increasing the percentage of the value of a ticket that is forfeited if the reservation is canceled before departure and a refund is requested — a change that hits sleeping car passengers particularly hard. All of this suggests a nickel-and-diming airline mentality at work, negating one of the last advantages Amtrak had over airlines in terms of customer convenience and flexibility. Particularly baffling is why the company would further penalize some of its highest-revenue customers, sleeping car passengers, in this way. Even if it does result in some increase in revenue, this change seems penny-wise but pound-foolish. Luckily, one can still retain the entire value of a canceled reservation by converting it into an eVoucher that can be exchanged for future travel within one year of its creation.
  • A view of the head end of the northbound Coast Starlight from the Pacific Parlour Car as the train travels in rare daylight between Chico and Redding, Calif. Photo by Malcolm Kenton.
    Amtrak confirmed yesterday that, after the departure of Coast Starlight train 11 from Seattle on February 4, the Pacific Parlour Cars will be permanently retired from the railroad’s fleet. These ex-Santa Fe hi-level cars offered the only lounge and food-service space on the long-distance network that was truly upscale and open only to first class passengers. Amtrak says that maintaining these 60-year-old cars is cost-prohibitive, but where there is a will, there is a way, as demonstrated by VIA Rail Canada. Amtrak’s north-of-the-border counterpart keeps a 60-plus-year-old fleet of Budd-built streamliners in immaculate shape and running reliably through all weather extremes. Amtrak, however, seems to have lost the will to provide a truly first-class experience on a train where the experience is key to what attracts patronage. It is unclear whether Amtrak has enough Superliner lounges (Sightseer Lounges or Cross-Country Cafes) to take the Parlours’ place or if there are plans to offer some sort of substitute amenity to the train’s first-class clients.
  • Under Anderson, Amtrak is making another round of management headcount cuts, losing a considerable amount of institutional knowledge and some talented and dedicated people in the process. New CEOs have instituted similar reorganizations in the past in an effort to make the railroad’s org chart ‘leaner and meaner,’ but rarely have noticeable improvements from the customer’s perspective resulted from these shakeups. 
  • Anderson has apparently convened an internal committee to modernize the railroad’s fleet whose first initiative was the recently completed reupholstery and re-carpeting of the Amfleet I coach and Business Class cars. While this has made the seats in these cars a bit more ergonomic, it is a mainly cosmetic and rather lackluster change. Future initiatives of this committee should bring about more substantial improvements.
  • Finally, there are reports that Amtrak may be terminating the Trails and Rails program. This partnership between the railroad and the National Park Service, wherein interpretive guides from NPS sites ride trains and provided commentary on nature and history in the lounge car, is one of the best ideas Amtrak ever implemented to enhance the unique experience of the landscape that trains offer. It is unclear whether Amtrak management or the NPS initiated this rumored demise, but it certainly seems like another step in the wrong direction.

If any of these concerns turns out to be premature, I am happy to be dissuaded from the conclusion I have drawn. But what I have seen so far since Anderson took the helm has not inspired confidence.

Part of what deters strategic product development and customer focus at Amtrak is its de facto near-monopoly position in its market. Luckily, this week’s successful launch of Brightline in south Florida — the first regularly-scheduled intercity passenger train service operated by a company other than Amtrak since the 1980s — offers the prospect of meaningful competition that could prod the national carrier to up its game. Everyone who has written about his or her trip on Brightline so far has described it glowingly, though the service is contending with negative publicity around a string of unfortunately timed grade crossing fatalities.

The Midwest High Speed Rail Association, in an email sent to its supporters yesterday, describes Brightline as having "adopted a number of sensible ideas that have been proven overseas, but that American trains operators have resisted." These include reserved seating, having a unified equipment type with a locomotive at both ends, and the use of high-level platforms with bridge plates that automatically extend from the boarding doors, allowing speedy full-length level boarding and universal accessibility without running afoul of the platform clearances needed for freight trains. "Although Brightline enjoys the benefit of sharing a common owner with its host freight railroad, it will still need to co-exist peacefully with the railroad's core freight business," the Association points out.

The inaugural run of Brightline leaves downtown Fort Lauderdale northbound. Photo by BBT609 / Flickr.com.
There are also the three companies that compete with each other to operate commuter rail systems under contract to the authorities that own them, each of which is fully capable of operating an intercity service under contract to the federal government, to one or more states, or to Amtrak if it were to become a franchising entity. (Full disclosure: one of these companies, Herzog Transit Services Inc., is a major client of my independent consulting business.) Of course, any such operator will need to cooperate not only with state and local governments, but also with host railroads, without the statutory and institutional advantages Amtrak enjoys in this regard — unless federal law and policy change so as to make the playing field more level.

A less likely, though plausible, scenario is that other short line, and perhaps Class I, railroads follow Florida East Coast’s lead and develop their own passenger services. A key part of what has made Brightline possible is its (and FEC’s) parent company’s real estate holdings, which provide a reliable source of revenue to support the passenger operation should it fail to turn a profit on its own. There may be other currently freight-only railroads that are in a position to take advantage of station-adjacent real estate holdings. Both railroads and operating firms are in a position to experiment with outside-the-box revenue sources. This nimbleness in trying new approaches may be other operators’ biggest competitive advantage over Amtrak, which is both legally and culturally ossified.

Luckily, FEC’s parent isn’t the only previously freight-only short line company to try its hand at the passenger business. Jacksonville, Fla.-based Patriot Rail became a passenger operator by continuing the excursion service offered on northern Georgia’s Blue Ridge Scenic Railroad, which the company bought in 2016. And it was announced this week that Minnesota-based Progressive Rail was the winning bidder to take over the former Southern Pacific Santa Cruz branch line after Iowa Pacific Holdings walked away from it. The excursions that Progressive Rail plans to operate on this line will be the company’s first common-carrier passenger operations.

A future where Americans enjoy world-class passenger rail service — modern trains with passenger-focused crews and management offering frequent departures on a network that serves a greater portion of American cities and towns — requires a break with the status quo, in addition to a funding and policy structure that puts the rail mode on a more equal footing with the other means of travel. If such a future is to be brought into being, Amtrak appears not to be in the best position to lead that charge. The question is, who will?

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