Evaluation of Route Performance in FY2011

[Anderson]

I'm about to contact Alan to get the file posted, but I've extended my year-over-year analysis of train revenue figures to include 2011 (so now I have 2003-11 in one file). Some thoughts in general:

1) Capacity constraints, capacity constraints, and capacity constraints. Amtrak is slamming into these all over the place...there is a lot of low-hanging fruit in 2012 because of issues on a number of routes in 2011, but there are a lot of routes that are basically filled to the brim right now. This is going to bear out in a lot of places.

2) Hell is breaking loose out west...and it's not the floods doing it. You know how the Zephyr and Builder were canceled over large chunks of their routes for much of 2011? It didn't make a dent in per passenger revenue: Both saw sharp increases, and the Builder saw its best year in per-passenger revenue since '06 (when there was a big across-the-board hike in LD fares (I believe that this was a big sleeper fare hike, if I've read the discussions on here correctly). Mind you, the flooding may have forced some business around here and there...but it'll be very interesting to see where things start going in the new fiscal year here if conditions are better in 2012.

3) Short corridors were a mixed bag. Why? A number of them had major track work done (CHI-STL) or had problems of one kind or another (Vermonter), while others saw a major boom in business (Piedmonts).

In general, in a vacuum and with the understanding that Amtrak is (in case you didn't notice above) limited in their ability to add cars to any routes for the moment, I'm going to rate routes' success in their ability to command increased fares alongside increasing ridership...after all, increased revenue and increased ridership might well amount to nothing for Amtrak's bottom line if all of the new revenue and then some gets put into added expenses running those trains. This is doubly important as routes approach capacity: Inflation will still be present, and so full trains need to at least tread water in terms of cost recovery year-over-year...and this requires them to be able to command steady increases in fares year-over-year at least in line with inflation.

 

[Anderson]

*A note: "PPR" refers to "per passenger revenue"

Now, going route by route, we'll begin with the "big boy", the NEC:

The Northeast Corridor

-Acela. The Acela has been an unqualified success for the last five years; there were trainset issues early on, but those have long been resolved. The Acela's share of NEC Spine ridership has remained more or less steady (at about 31%) for the last five years. It was slightly lower in 2009 (with the recession), but it's basically locked in position there.

The biggest problem the Acela currently faces may also be its greatest asset to Amtrak: The train is at capacity, enabling Amtrak to raise fares year after year. Again, 2009's dip aside, the Acela's share of NEC revenue has increased fairly steadily at about .5% per year, from 48.72% in 2007 to 50.04% now, surpassing the NE Regionals this year. Though cost figures aren't available, the Acela's operating profit margin is likely to keep growing going forward as long as demand pressure continues to exist...and absent a major recession such as we saw in FY09 (which lined up beautifully with the stock market crash), there is no reason to believe that this pressure will let up more than marginally even with the introduction of Wi-Fi on the NE Regionals. Absent a surprise, the average increase of $5 per passenger per year will likely continue.

-NE Regionals. The NE Regionals are the far more frequently-ridden train in the NEC, and are basically operating at break even as of last year. Whether they achieved an operating profit in FY11 is unknown, but I suspect they will have done so (narrowly) for the year once all is said and done. Fare growth here has lagged the Acelas, but demand on the Regionals is also far more cost elastic (that is, higher prices can run off passengers more easily, as a combination of commuter services and intercity bus services offer competition here).

Moreover, too sharp an increase in fares on the NEC might result in political fallout: While with the Acelas, Amtrak can point to the Regionals as a less expensive alternative, no such direct rail alternative exists between many destinations. Losing such business on short hauls can also lose longer-distance customers...so Amtrak must walk a fine line here, especially since per-passenger fares have risen more on the Regionals than the Acelas in a number of previous years.

Finally, it should be noted that with Regionals, additional demand can be accommodated by adding cars to a train (presuming that such cars are available), which is not the case with the Acelas. In theory, presuming a hard cap on the number of engines available, Regional trains could keep adding coaches (again, presuming availability) indefinitely, relaxing capacity problems here (at least for now).

 

[Anderson]

State Corridors: Northeast

-Ethan Allen/Vermonter. The two Vermont-sponsored services have been some of the lesser performers in the state corridor category. The Ethan Allen is a marginal performer, with per-passenger revenue more or less treading water over the last 4-5 years (and definitely not keeping pace with inflation). The Vermonter, on the other hand, has been a basket case: Though fares are up over the last four years, this comes after a bloody decline between 2005 and 2008. The line was also troubled by track work, losing substantial ridership (to say nothing of the issues surrounding Hurricane Irene, which should become more apparent once the August report is available). Another problem here is likely shorter trips (as ridership will occasionally spill over from the NE Regional and the Shuttle, in particular, filling up seats south of Springfield).

-Empire Service/Maple Leaf. The New York-Albany services seem to have broken out of the doldrums they were in through the last few years, finally breaking a million passengers in a year (a number which they flirted with in 2008). The year-over-year gains on both lines were healthy, and per-passenger revenue rose on both lines for the first time since 2008 (though obviously both have yet to reach 2008's per-passenger records).

-Adirondack. This is one of the more complicated services, because it shares the lower Empire Corridor, but serves a large swath of territory north of there. To take an educated guess, it looks like per passenger revenue here was a casualty of Empire Corridor growth: Ridership here set a record (over the last few years, at least: On pre-2006 ridership allocations, the Adirondack had far more riders...but these figures aren't strictly comparable), revenue set a record, but per-rider revenue took a hit. Shorter trips are the most likely culprit. The Adirondack does seem to be slightly counter-cyclical in this regard (it posted per-passenger revenue increases in '09 and '10, but a decline in '08).

-Shuttle. The New Haven-Springfield Shuttle had another good year, with ridership, revenue, and PPR rising. This will be interesting to watch as the single-track sections get fixed...I'd predict an off year for PPR as capacity increases.

-Keystone Service. The Harrisburg line has shown steady growth every year, and this year has been no exception. All metrics look strong, though I'm left wondering (given that ridership has nearly doubled since 2005) whether PA is managing to add frequencies on a regular basis.

-Downeaster. The Downeaster had a questionable year this year...ridership was up, but it seems that an abundance of specials drove per-passenger revenue down.

-Pennsylvanian. The Pennsylvanian has been stuck in a ridership funk for the last six years, and its only spurt of solid growth was more a result of the Three Rivers getting killed off. This just isn't a growth corridor at all, but at least it's posting modest gains around 2% per annum. PPR is also edging up slowly, too...one can hope that if PA decides to spring for a second frequency and gets some track improvements, it will help things out here.

 

[Anderson]

State Corridors: Midwest

-Lincoln Service. The Chicago-St. Louis corridor is at the top of the list for low-hanging fruit for increases in FY12. After nearly tripling ridership from FY03 to FY10, ridership dipped by 4% in FY11. This was due to track work that had trains running nonstop over most of the route at times. Sadly, this brought revenue and PPR down with it, but given the nature of the problem (capital investment requiring rerouting of trains and resulting in reduced travel times), this line should be back in good shape for 2012 as long as more work isn't needed.

-Hiawathas. All metrics developing favorably here.

-Wolverines. This line had one of the worst summers of any short corridor that wasn't slammed by flooding, losing riders in June and July while OTP went to zero. You'd never know it from the year-end results, though, as ridership was up while revenue and PPR spiked, putting this in the top five state corridors in terms of PPR increases.

-Illini. This route is a bit of a head-scratcher: Ridership was up over 18%, placing it in fifth in that category, but PPR fell all the same. My best guess here is increased short-haul traffic in and around Chicago.

-IL Zephyr. Another line with all metrics developing favorably.

-Hoosier State. I'm tempted to say "Who cares?" given the low ridership here. PPR took its first hit since 2004, but this line has almost uniquely bad numbers because of lousy track condition, bad timing, and its tie to the Cardinal. Still, the fact that PPR fell amid a large rise in ridership suggests that this was another case of short-haul traffic messing with the numbers.

-Blue Water. Ridership skyrockets, PPR up modestly at 3.09%. The new bilevel car order here will be necessary if ridership keeps going up.

-Pere Marquette. Ridership up slightly, PPR up solidly. Good news all around.

-MoRR. Flooding happened over the summer, but this line did just fine: Ridership was up solidly, while this line posted the second-biggest gains in PPR (8.44%) as well as a second straight year of solid gains on this front.

 

[Anderson]

State Corridors: The West

-Pacific Surfliner. All metrics here look good: Ridership up 6.6% and PPR up 4.75%. My suspicion: Crowding at rush hour is beginning to force peak fares up; do remember that this line is basically the Southern California version of the LIRR given the long distances it covers (exclusively within the LA/San Diego region).

-Cascades. All metrics here are golden: Ridership is rising steadily, while PPR has skyrocketed along the route, making a substantial dent in the state contributions here. The roughly $22 million state contribution in FY09 would likely keep the route afloat in the event of a federal subsidy cut, one of the few routes this seems likely on. Does anybody have any word on how the load factors look here?

-Capital Corridor. This line has returned to healthy growth in ridership, and has continued posting strong PPR growth even through the recession (which grew even as ridership dipped in both FY09 and FY10). The only line I can find where PPR has grown at 4% or more in each of the last seven years (the Cascades' growth was primarily in the last two years).

-San Joaquins. Again, all factors look favorable.

 

[Anderson]

State Corridors: The South

-WAS-NPN. This southern extension of the NE Regional saw ridership jump as a fifth frequency was added from WAS to Richmond. Note that this muddles the PPR picture, since the train does not continue to NPN as two others do. Technically a state-subsidized route, the new train came in well ahead of projections, and doesn't seem to have stolen any business from the other trains. May soon be state-subsidized in name only, given how close this line has been to an operating profit.

-The Lynchburger. State-subsidized in name only, this (very unusually profitable) route saw ridership jump in its second year. PPR was up slightly; one suspects that Amtrak may have to add cars to meet demand on this line (if Amtrak and the VA DRPT don't have to look at a second train). An unqualified success, this route is likely to be something of a curiosity, and there will almost assuredly be a lawsuit if Amtrak tries to bill VA for running this train with a discontinuation of federal subsidies going to state-supported routes given that it is profitable. Basically, this is the train that nobody anticipated.

-The Carolinain. The addition of a frequency to the Piedmont likely stole business, but PPR growth was solid (and likely the result of shorter business being pulled onto the Piedmont).

-The Piedmonts. Well, it seems that adding an additional frequency can do wonders: Ridership shot up 40% for the second year in a row, and per-train ridership appears to be up around 50%. PPR, after lagging for the last few years, made up plenty of lost ground vs. the other routes, rising nearly 15% and rivaling the Cascades' jump last year for the biggest single-year jump.

 

[Anderson]

Long Distance Trains: The East

-The Silver Service. I'm treating these two as one route even though there are limited differences in coverage. Both have posted solid gains in ridership, revenue, and PPR over the last year. Successful, but only likely to post modest cost recovery gains. Of note is the fact that Amtrak is scrambling to get additional coach equipment online for these trains because of demand...peak season capacity may have been reached. Also, the CR ratio is likely to improve here, even if the raw numbers don't move.

-Palmetto. The cut-off train which terminates at Savannah is likely to, in effect, break even for the year: Ridership, revenue, and PPR were up...but not likely enough to make a sizeable difference in the final analysis.

-Cardinal. Solid gains were made here in PPR...but that likely has to do with the fact that the train is regularly sold out already. It's hard to see meaningful ridership growth going forward, but at least the PPR situation should keep improving as time goes by because of these constraints.

-Lake Shore Limited. Another of the many trains where capacity issues are starting to visibly arise. Two years of 5%+ PPR are likely symptomatic of increasing demand, and this train appears set to improve its CR numbers going forward.

-Capitol Limited. See the Lake Shore Limited, in so many words...though in this case, I believe that there tends to be more capacity to spare.

-Auto Train. As always, one of the best performers in the system, with all factors looking good. May actually be on track to turn a profit in a few more years if demand trends continue and put enough pressure on the buckets.

-Crescent. Basically at capacity east of Atlanta, PPR increases are surprisingly low. Trouble west of Atlanta may be to blame; ditto connection issues with the CONO with flooding and so forth. Performance among the LD group mediocre in FY11.

 

[Anderson]

Long Distance Trains: The West

-City of New Orleans. This one isn't going to be pretty when it comes budget time. Ridership was barely up, PPR was barely up, and knowing the situation with LD trains and their budgets...this means an increased deficit. Will be helped by floods cutting costs.

-Sunset Limited. Numbers are basically back to pre-Katrina levels, which is a good thing...but this is still one of the dogs of the LD system. Growth was decent in FY11 for a train that is noted as being near capacity.

-Texas Eagle. Also bouncing along near capacity, this train wasn't helped by the issues along the CHI-STL line (which axed a subsection of the train and cost it ridership from intermediate stations). Still, it's performing fairly well (even if in the lower cluster of the LD rankings in terms of PPR improvement).

-Coast Starlight. The increases here are amazing in terms of PPR, and all the moreso given the fall in ridership. It's hard to tell if there's going to be another push upwards in ridership, but the train may be limited by capacity. Do try and sense a theme...you'll be hearing that a lot from now on.

-SW Chief. The PPR increases and ridership increases here are surprisingly modest, given what's going on elsewhere in the West...but it's already the second most expensive LD train, so there may be some constraints at work there.

-Empire Builder. This is the great enigma: Ridership fell sharply because of the flooding, but PPR jumped anyway. Considering that the flooding knocked out a lot of through business (which would provide your highest-revenue riders), look for fares to keep going up and PPR to keep improving.

-CA Zephyr. Ridership down, but PPR up. The former goes to flooding, the latter to capacity crunches. This will be interesting to watch next year. The fact that PPR increased 8.77% in spite of cancellations this summer suggests that average prices rose 10-15%. When Boardman said he intended to control demand through price increases, he clearly meant it. I expect to see a painful rise in PPR in FY12 barring flooding...fares on both trains likely went up 10-15% in FY11, and I'd expect to see additional substantial increases in FY12 if Amtrak can manage the demand. This may be the only train in the LD system that can actually start making a serious dent in its deficit, though the Builder may come close as well.

 

[afigg]

State Corridors: Northeast

-Ethan Allen/Vermonter. The two Vermont-sponsored services have been some of the lesser performers in the state corridor category. The Ethan Allen is a marginal performer, with per-passenger revenue more or less treading water over the last 4-5 years (and definitely not keeping pace with inflation). The Vermonter, on the other hand, has been a basket case: Though fares are up over the last four years, this comes after a bloody decline between 2005 and 2008. The line was also troubled by track work, losing substantial ridership (to say nothing of the issues surrounding Hurricane Irene, which should become more apparent once the August report is available). Another problem here is likely shorter trips (as ridership will occasionally spill over from the NE Regional and the Shuttle, in particular, filling up seats south of Springfield).

The Vermonter should see improvement in ridership over the next year with the major track work in VT completed. Think there is still some Irene recovery work and remaining signal work next year for faster speeds. There was an official ground breaking ceremony this week for the restoration of the "Knowledge" corridor line in Mass, although the major track work will not begin until next spring. Once the re-route in central MA is done, the Vermonter should shave close to an hour off the trip time north of Springfield which is pretty significant. And once the New Haven to Springfield track upgrades are in place (2016 however), that should shave another 30 minutes off of the Vermonter trip time north of NYP. Add in additional service frequencies up the Knowledge corridor and to VT, passenger rail ridership and revenue in central New England will see marked increases.

The Ethan Allen route to Rutland had track work done on this summer, just ahead of Irene, which were supposed to reduce trip times by around 18 minutes. While VT is looking for funding to further fix up the tracks to Rutland and track upgrades in western VT to extend the Ethan Allen to Burlington, the train should see improved service and ridership as the projects that have been funded for the Empire south corridor and the 2nd track bypass on the CP line are completed.

 

[sportbiker]

State Corridors: The West

-Pacific Surfliner. All metrics here look good: Ridership up 6.6% and PPR up 4.75%. My suspicion: Crowding at rush hour is beginning to force peak fares up; do remember that this line is basically the Southern California version of the LIRR given the long distances it covers (exclusively within the LA/San Diego region).

Between a given city pair, Surfliners charge a flat fare, with a few exceptions:

• Summer fares are higher than 3-season fares
  
• Holiday fares are higher than Summer fares
  
• Business Class (basically a reserved seat on an otherwise unreserved route) is available for an accommodation charge
  

To the extent that PPR is increasing faster than ticket prices, my suspicion is that more people are now booking business class just to avoid the SRO coaches that often occur during summertime or on the 700-series trains (San Diego to Santa Barbara).

Thanks for compiling all the information!