FY12 ridership was 31.2 million

[NAVYBLUE]

OK, there are so many questions about my CIF statements I'll try to cover everyone's replies en mass instead of individually.

1. For whomever asked whats does "x" have to do with AMTRAK ? Answer. Nothing. It has to do with "consumerism". I want everyone to pull out your water, electric, natural gas, cell phone service, garbage pickup, land line phone, cable, satellite, car maintenance, etc bills. Look at all those "fees" above and beyond the BASIC charge for the service. They are trying to recapture their capital improvement costs. Why shouldn't AMTRAK ?You probably pay $500-$1000 a year in extra fees. Not a peep. You still keep using those services. There are right there staring you in the face. Plus you have the tips to other services/goods in kind you receive daily throughout the year. And then you act like a $50 CIF is like taking your first born from you.

2. Some one asked about the CIF on a short run portion of a LD as a sleeper passenger. Never thought about that. I don't think they should levy the $50 CIF on any sleeper run costing less $500.

3, Yes I do understand AMTRAK is using revenue maximizing but that money is going towards daily operating costs. My CIF goes to the capital improvement fund to reimburse (partially) money spent for new cars, interest on a loan (if they took one out) or to refurbishing older cars.

4. Forgot to include the CONO, Crescent and Silver Service Palmetto

NAVYBLUE

 

[Eric S]

If Amtrak is already "using revenue maximizing" then won't increasing the fare, or rather total ticket price, not result in total revenues to Amtrak?

 

[The Davy Crockett]

One of the things I like about Amtrak is that the price of a ticket is the actual price of going from one place to another. No games, no add-ons, no this that and the other.

Just tell me what the actual cost is for me and my reasonable amount of luggage.

And IMHO, the more carry-on in the cabin of an airliner, the greater the chance the 'theater goons' at the airport won't stumble upon an actual problem. The one thing TSA/FAA could do to make folks possibly safer they don't, which is to ban airlines from charging for the fisrt piece - or even two pieces :excl: - of checked luggage.

As the airlines have proven, add-on fees are a slippery slope.

 

[Peter KG6LSE]

And IMHO, the more carry-on in the cabin of an airliner, the greater the chance the 'theater goons' at the airport won't stumble upon an actual problem. The one thing TSA/FAA could do to make folks possibly safer they don't, which is to ban airlines from charging for the fisrt piece - or even two pieces :excl: - of checked luggage.

this is the most well thought plan( for airlines ) I have heard in a long time .. the # 1 reason I dont check my bags is the Fees I mean jeez up to 50 USD for my bags .

Less peoiple with borderline carry-ons . faster boarding and the like , Less hassle . Its a Win Win for every one.

Peter...

 

[Anderson]

One thing I'll need a few weeks before I can deal with, data-wise, is the sleeper portion of LD revenue versus the coach portion. I need the September PIP, so that's probably going to be sometime in November. With that I'll update my sleeper file to go alongside my overall file and we can play with it from there.

Going to war with the data I have (that is, through July) rather than the data I wish I had, sleeper PPR is edging upwards slowly..but it is very noisy due to the chaos surrounding the Builder, Zephyr, and CONO. Truth be told, there's no clear overall pattern: In sleepers, PPR was down on the Star even though ridership was up. On the Meteor, ridership was up but revenue was down. On the Crescent, ridership was off slightly but revenue was up nearly 10%, for a PPR jump of over 10%. On the LSL, PPR was down slightly while ridership and revenue both rose. On the Auto Train, ridership was off slightly but revenue was up firmly, and PPR was up about 5%. And so on. It's a dartboard.

A key fact, however, is that on the Auto Train, the YTD PPR on sleepers was $265.68. While edging it up above the rate of inflation might be workable, going above inflation by double digits seems like a recipe for trouble. Only in the case of the Crescent does it seem to be working, and that's more an artifact of capacity constraints north of ATL.

 

[cirdan]

Personally I wouldn't have a problem paying a little more to travel on Amtrak, especially on LD trains, which in my opinion are extremely low cost in relation to what you get and what the experience is worth.

I wouldn't complain if fares went up by 20 or even 30 percent.

I haven't ever done Iowa Pacific/Pullman Rail Journeys for example, but from their website description it's not too different from an Amtrak sleeper with maybe some extras thrown in, but it's much more expensive. If there's a market for that then I can only postulate that Amtrak is too cheap.

But I also understand there are college students and other people on low budget who would be hit hard by higher fares. And today's coach travellers are tomorrow's sleeper passengers, so don't scare them away.

So I hope Amtrak plays this carefully.

 

[Ryan]

OK, unless this article is wrong, AMTRAK will start to receive new cars in 2012. I don't know AMTRAK's financial plan, but the CIF could help pay for the new cars OR put the money back into the fund it comes from. The rail fares I believe are being used as operating funds to pay the daily bills. The CIF would be used to supplement/reimburse the capital funds used for new purchases to replace older cars.

Yes they are, on the single level trains that you've excluded from this "CIF". You very carefully singled out trains that run with Superliner cars (except for the Cardinal, which used to run with Superliners and some advocate returning to Superliners).

I went from LAX-WAS-LAX and they worked so well when I wrote AMTRAK about what didn't work properly on every train segment they sent me a $500 voucher. Was it horrible and unbearable ? No. Was it less than I expected for $2,000 round trip. Yes. I do not have the rose colored glasses of a "rail fan". I am a rail enthusiast. I expect the facilities to operate as well as an airplane.

The problem comes when you take a single data point and assume that what you saw holds true across the system. Obviously, it doesn't.

I understand the cars are older than airplanes being used.

I don't think that's an accurate assumption in all cases.

Or we could just do nothing and take our chances with the political winds however they blow.

Again with the false dichotomy. Amtrak is already maximizing their revenue on a route by route, and day by day basis. Tacking a flat fee on top of that for sleepers without taking into account the impact that fee would have on ridership would be pants on head retarded.

Therefore I am willing to pay a CIF to have better cars for EVERYONE. I talk the talk and walk the walk. Increased fares will never cover the subsidy.

As brilliantly smart as you are, I'm sure you understand the difference between anecdotes and data. The fact that you're willing to pay a fee doesn't mean that everyone that takes Amtrak is. Amtrak is doing the work in a far smarter manner than you're advocating for, and there's nothing magical about a "fee" that will let you bring in more revenue than if you just manage fares properly to maximize revenue.

A key fact, however, is that on the Auto Train, the YTD PPR on sleepers was $265.68. While edging it up above the rate of inflation might be workable, going above inflation by double digits seems like a recipe for trouble. Only in the case of the Crescent does it seem to be working, and that's more an artifact of capacity constraints north of ATL.

Thanks, I figured that you've built up enough of a data set to actually shed some light on this.

 

[Ryan]

At the end of the day, you have to answer one simple question:

Amtrak has an office full of trained professionals whose job it is to adjust fares to maximize revenue. They have full access to all of Amtrak's data and can see firsthand the impact that adjusting fares has in how quickly they sell tickets.

Why is it that you think that a retired Navy MASTER Chief living in the middle of the desert with no access to any real data, no formal training in revenue management and no experience in revenue management for transportation companies is going to do a better job?

 

[user 1215]

As the airlines have proven, add-on fees are a slippery slope.

...And yet people continue to willingly pay it.

 

[The Davy Crockett]

As the airlines have proven, add-on fees are a slippery slope.

...And yet people continue to willingly pay it.

And we all know how EVERYONE loves :wub: the airlines.

 

[AmtrakBlue]

As the airlines have proven, add-on fees are a slippery slope.

...And yet people continue to willingly pay it.

And we all know how EVERYONE loves :wub: the airlines.

And I'm not sure WILLINGLY is the right word to use. Given the options for my travel, I may reluctantly choose an airline with add-on fees because the rest of the costs/dates/times/etc meet my needs.

 

[Trogdor]

OK, there are so many questions about my CIF statements I'll try to cover everyone's replies en mass instead of individually.

1. For whomever asked whats does "x" have to do with AMTRAK ? Answer. Nothing. It has to do with "consumerism". I want everyone to pull out your water, electric, natural gas, cell phone service, garbage pickup, land line phone, cable, satellite, car maintenance, etc bills. Look at all those "fees" above and beyond the BASIC charge for the service. They are trying to recapture their capital improvement costs. Why shouldn't AMTRAK ?You probably pay $500-$1000 a year in extra fees. Not a peep. You still keep using those services. There are right there staring you in the face. Plus you have the tips to other services/goods in kind you receive daily throughout the year. And then you act like a $50 CIF is like taking your first born from you.

Many of those fees are regulatory fees/taxes. But nonetheless, some businesses decide to itemize their bills, some give a flat rate. Amtrak chooses a flat rate. At the end of the day, the total amount you pay wouldn't change if your bill was $100+$5+$3+$0.50, or if it was $108.50.

2. Some one asked about the CIF on a short run portion of a LD as a sleeper passenger. Never thought about that. I don't think they should levy the $50 CIF on any sleeper run costing less $500.

So, you're basically taking that $22 million in "free" fee revenue and reducing it to nothing. Half the roomette buckets on west coast trains fall below your cutoff. ALL of the roomette buckets, and most of the bedroom buckets on the Capitol Limited fall below your cutoff.

3, Yes I do understand AMTRAK is using revenue maximizing but that money is going towards daily operating costs. My CIF goes to the capital improvement fund to reimburse (partially) money spent for new cars, interest on a loan (if they took one out) or to refurbishing older cars.

And it amounts to a fare increase, which is going to then impact how many people are willing to buy a ticket. This will reduce the amount of revenue that will be available to pay for operating costs (which, then, will increase the operating subsidy required).

4. Forgot to include the CONO, Crescent and Silver Service Palmetto

CONO doesn't matter, since every sleeper bucket falls below your arbitrary $500 cutoff. Most of the Crescent buckets do, too.

Still, I'm curious to know how someone who is such an expert on economics believes that raising the cost of a ticket to the customer is not going to have an impact on quantity (of sleeper rooms) demanded.

 

[jis]

3, Yes I do understand AMTRAK is using revenue maximizing but that money is going towards daily operating costs. My CIF goes to the capital improvement fund to reimburse (partially) money spent for new cars, interest on a loan (if they took one out) or to refurbishing older cars.

Amtrak is using current revenues to fund part of the Viewliner acquisition and future expected revenues as collateral for RRIF loans to cover ACS-64 acquisition. So to assume that all of Amtrak revenues go to cover operations is an incorrect assumption. They also plan to use similar funding mechanisms for the 40Acela cars if they can find any manufacturer for them that'd do it for any reasonable price. It is just they don't have anything called a CIF. That is why I think this CIF proposal is a solution looking very hard for a problem to attach itself to.

 

[afigg]

As the airlines have proven, add-on fees are a slippery slope.

...And yet people continue to willingly pay it.

Yes, "willingly" is not the phrase I would use either. Grudgingly, with a lot of complaints, or forced to (if they want to check a bag that won't fit in carry-on or have acceptable leg room - depending on the carrier) might be more applicable.

The domestic commercial air travel market is still fairly stagnant in total number of domestic passenger flights. According to the Bureau of Transportation Statistics, the number of domestic passengers flights in (calender year) CY 2011 was around 6% below the CY 2007 peak and only about 6.5% above the CY2000 totals. So there has been little net growth over the 11 year span. The add-on fees may be making the difference between losing money and a small operating profit for the commercial airlines (as a group), but they are not growing their business by much in the US domestic market. In terms of growth in passengers, Amtrak is doing much better. The lack of solid growth for the US domestic airline industry does not make a good argument for the approach of add-on fees for almost everything.

 

[jis]

As the airlines have proven, add-on fees are a slippery slope.

...And yet people continue to willingly pay it.

Yes, "willingly" is not the phrase I would use either. Grudgingly, with a lot of complaints, or forced to (if they want to check a bag that won't fit in carry-on or have acceptable leg room - depending on the carrier) might be more applicable.

The domestic commercial air travel market is still fairly stagnant in total number of domestic passenger flights. According to the Bureau of Transportation Statistics, the number of domestic passengers flights in (calender year) CY 2011 was around 6% below the CY 2007 peak and only about 6.5% above the CY2000 totals. So there has been little net growth over the 11 year span. The add-on fees may be making the difference between losing money and a small operating profit for the commercial airlines (as a group), but they are not growing their business by much in the US domestic market. In terms of growth in passengers, Amtrak is doing much better. The lack of solid growth for the US domestic airline industry does not make a good argument for the approach of add-on fees for almost everything.

Also take into account that airlines are aggressively reducing capacity across the board in order to sustain the higher fares. They have learned that mindless competition on lower fares is a path to destruction of all. Something that airlines in other countries like India are still trying to learn, I might add.

 

[afigg]

One thing I'll need a few weeks before I can deal with, data-wise, is the sleeper portion of LD revenue versus the coach portion. I need the September PIP, so that's probably going to be sometime in November. With that I'll update my sleeper file to go alongside my overall file and we can play with it from there.

Since the August monthly report has yet to be posted, it will likely be later in November before the end of the FY monthly report is posted. The September report will be the interesting one to read for the FY totals and the route performance numbers. However, I noticed that Amtrak has posted revised monthly reports for each month going back to the start of FY12 with the financial and route performance numbers that were missing when the reports were originally posted.

 

[user 1215]

As the airlines have proven, add-on fees are a slippery slope.

...And yet people continue to willingly pay it.

And we all know how EVERYONE loves :wub: the airlines.

And I'm not sure WILLINGLY is the right word to use. Given the options for my travel, I may reluctantly choose an airline with add-on fees because the rest of the costs/dates/times/etc meet my needs.

Exactly my point. Willing is, indeed, the correct word. If they are not willing to pay it, they will not travel. Certainly different than "Happy" to pay it.

As for add on fees, etc., my preference is to set a price and charge it. The only price that really matters to me is what is sent to my credit card for processing. Include ALL the fees & charges. That's one thing I REALLY hate about cruise lines! When I see a rate of $120, I know that I first need to double it because I buy a cabin for two and pay for two whether two travel or one. Then I double THAT for port fees, taxes, parking, etc. That $120 is now closer to $500.

When Japan introduced their consumption tax a couple decades ago, people were used to paying prices rounded to the nearest 10-yen. Magazines and many other commodoties would now put the "after tax" price on the cover with the odd pretax amount just above it. People don't want to spend time doing math in their head. Just tell me what you're going to cost and charge me THAT amount. I'll let your accountant figure out the taxes from what you took in.

I digress..

 

[The Davy Crockett]

From the Bing dictionary:

will·ing

[ wílling ]

1.ready to do something voluntarily: ready to do something without being forced

2.helpful: cooperative and enthusiastic

3.offered voluntarily: offered or given by somebody readily and enthusiastically

I don't think most people are 'willing' to pay extra fees based on the definition of 'willing' above .

If they fly, they have no choice. That sounds more like being forced.

 

[user 1215]

They have a choice. Don't fly.

Those guns that the TSA have are not used to ensure that someone who steps into an airport buys a plane ticket.

I think playing semantics on the 2nd definition of a word is silly now, especially since I stated that I would prefer to see all costs and fees bundled into one (small?) number. The point is that NO ONE is FORCED to BUY TICKETS on ANY MODE to go ANYWHERE. We are still a relatively free society and ANY decision we make is a CHOICE.

 

[Ryan]

Sure, quitting your job or just choosing to not see family that lives across the country is a CHOICE, but it isn't really a viable one for most people.

Not everyone has the luxury of taking an extra week of travel time to take the train or drive when their presence is required far from home.

 

[jis]

They have a choice. Don't fly.

Those guns that the TSA have are not used to ensure that someone who steps into an airport buys a plane ticket.

I think playing semantics on the 2nd definition of a word is silly now, especially since I stated that I would prefer to see all costs and fees bundled into one (small?) number. The point is that NO ONE is FORCED to BUY TICKETS on ANY MODE to go ANYWHERE. We are still a relatively free society and ANY decision we make is a CHOICE.

That is just one step short of saying something like if you don't like to pay the taxes you have a choice. Leave.

 

[Trogdor]

Arguing over the definition of "willing" or "choice" is semantics that ignores the real issue of the discussion. Namely, if you add on fees (or taxes, or whatever) will you still sell the same amount for a given base price as you would without those, or do you have to lower the price somewhat to compensate?

The airline argument is a bit misleading, in part, because airlines are required to quote the total, all-in price (excluding optional extras like baggage fees) up front. So, all taxes, security fees, facility charges, etc. are included in the price when you go search for a fare. Somewhere in the booking process, they might tell you what the breakdown is, but I doubt you'd ever find more than a handful of people that really notice, let alone care, what that breakdown is. What they care about is the final price paid, not how fancy of a title is given to each line item. And the airlines know this.

Case in point: Last year, due to congressional bickering, there was a brief period where certain airline taxes expired. Airlines immediately raised fares to cover the tax. This means that the taxes were forcing the airlines to charge a slightly lower fare in order to keep total ticket prices at a certain level. Once the tax went away, the ticket price remained the same, but the base fare was raised to cover the difference. I believe that once the taxes were reinstated a few days later, the base fares went back down (I can't find specific news article stating such, but I recall that being mentioned at the time).

This tells me that, whether certain folks want to believe it or not, it is indeed the total price that matters and not just the base fare.

To put it another way: there ain't no such thing as a free lunch.

 

[NAVYBLUE]

At the end of the day, you have to answer one simple question:

Amtrak has an office full of trained professionals whose job it is to adjust fares to maximize revenue. They have full access to all of Amtrak's data and can see firsthand the impact that adjusting fares has in how quickly they sell tickets.

Why is it that you think that a retired Navy MASTER Chief living in the middle of the desert with no access to any real data, no formal training in revenue management and no experience in revenue management for transportation companies is going to do a better job?

Do you agree or disagree with my premise to add a CIF to sleeper fees ?

That was the question I asked you. So you disagree with my OPINION. I gave my opinion like everyone else whom I think a majority are not revenue managers for ANY kind of business.

I was assistant revenue manager for a consortium (7) of Northeast Pennsylvania McDonald franchises where each store's average gross receipts were $1.2-1.6 million per year. Not quite the glory job like AMTRAK, Greyhound or Southwest Airlines, but I did learn a little about revenue management, sales, marketing, pivot tables, data filters, weighted averages, standard deviation, distribution systems,and statistical trends. McDonalds is successful because they listen to their customers. Remember the Arch Deluxe? The people spoke and McDonalds listened.Maybe AMTRAK experts need to listen.

Thank you for your input. I don't think I would do a better job. YOU think I think I would do a better job. Didn't say it. Wouldn't be prudent.

Anyways, have a nice day and if you are going to highlight MASTER, please do it in my favorite color, navyBLUE.

And PLEASE, call me Mike. All my FRIENDS do. (LMAO)

NAVYBLUE

 

[NAVYBLUE]

OK, there are so many questions about my CIF statements I'll try to cover everyone's replies en mass instead of individually.

1. For whomever asked whats does "x" have to do with AMTRAK ? Answer. Nothing. It has to do with "consumerism". I want everyone to pull out your water, electric, natural gas, cell phone service, garbage pickup, land line phone, cable, satellite, car maintenance, etc bills. Look at all those "fees" above and beyond the BASIC charge for the service. They are trying to recapture their capital improvement costs. Why shouldn't AMTRAK ?You probably pay $500-$1000 a year in extra fees. Not a peep. You still keep using those services. There are right there staring you in the face. Plus you have the tips to other services/goods in kind you receive daily throughout the year. And then you act like a $50 CIF is like taking your first born from you.

Many of those fees are regulatory fees/taxes. But nonetheless, some businesses decide to itemize their bills, some give a flat rate. Amtrak chooses a flat rate. At the end of the day, the total amount you pay wouldn't change if your bill was $100+$5+$3+$0.50, or if it was $108.50.

2. Some one asked about the CIF on a short run portion of a LD as a sleeper passenger. Never thought about that. I don't think they should levy the $50 CIF on any sleeper run costing less $500.

So, you're basically taking that $22 million in "free" fee revenue and reducing it to nothing. Half the roomette buckets on west coast trains fall below your cutoff. ALL of the roomette buckets, and most of the bedroom buckets on the Capitol Limited fall below your cutoff.

3, Yes I do understand AMTRAK is using revenue maximizing but that money is going towards daily operating costs. My CIF goes to the capital improvement fund to reimburse (partially) money spent for new cars, interest on a loan (if they took one out) or to refurbishing older cars.

And it amounts to a fare increase, which is going to then impact how many people are willing to buy a ticket. This will reduce the amount of revenue that will be available to pay for operating costs (which, then, will increase the operating subsidy required).

4. Forgot to include the CONO, Crescent and Silver Service Palmetto

CONO doesn't matter, since every sleeper bucket falls below your arbitrary $500 cutoff. Most of the Crescent buckets do, too.

Still, I'm curious to know how someone who is such an expert on economics believes that raising the cost of a ticket to the customer is not going to have an impact on quantity (of sleeper rooms) demanded.

See 7:32 PM reply to Ryan.

NAVYBLUE

 

[CHamilton]

Apparently one reason airlines like raising fees instead of fares is that the former are not taxed -- thus increasing our subsidies to the airlines.

As airlines raise fees instead of fares, taxpayers pick up the tab

There’s a 7.5 percent federal tax on every airline ticket. The money goes into a fund that pays for the air transportation system: airports, capital improvements and the operation of the Federal Aviation Administration.

But in nine of the past 11 years, the amount of money flowing into that fund — mostly ticket-tax revenues — has fallen short of projections. When that happens, Congress can increase general fund contributions to cover the FAA’s budget. In both fiscal 2009 and 2010, Congress appropriated an additional amount of almost $1 billion.

When the airlines kept ticket prices down by shifting $12.8 billion to baggage fees, they also saved almost $964 million in federal taxes they would have owed if they had hiked ticket prices by that amount.