October and November 2016 Monthly Performance Reports

[jis]

Are CASM and RASM data publicly available? Are they in the monthly performance reports?

Page A-2.1 KPIs in the table.

 

[Philly Amtrak Fan]

They only list overall, not for each route.

 

[jis]

They only list overall, not for each route.

That would be a bit arbitrary since it would involve apportionment and allocation. As soon as that happens the numbers start becoming suspect for RASM, and to some extent for CASM too. So I am not surprised that they don't. Doing so below BU granularity would be highly suspect and untrustworthy.

 

[neroden]

Several of the metrics really can only be looked at on a *relative* basis and in conjunction with other metrics.

Seat occupancy is one of them. If seat occupancy goes up year-over-year (without reducing ticket yield) on a particular train, that's great. If it drops year-over-year on a particular train, you should try to find out why. If it goes up too high you may want to look for sold-out conditions and see if you need to add a coach or more service. It is, in fact, useful for that purpose.

Where it gets useless is if you try to have a "target number" or to compare the number from a typical train (with 50 stops) to Auto Train (with 2 stops) or an airplane (with 2 stops). Apples and oranges. The baseline is going to be different from one route to another based on the stops.

Metrics have to be viewed intelligently. Mindless devotion to single metrics has destroyed many once-great companies.

This is particularly true in capital-intensive businesses. And railroading is capital-intensive. You really have to have a proper understanding of what you're looking at -- most people don't -- and single metrics won't cut it. Single metrics drawn from other industries are especially terrible, since railroading is unusual structurally (though not so far off from landline telecoms).

For Amtrak, perhaps the most important metric is actually on-time performance. Rider behavior is well-documented; more people will ride a train if it runs on time. (Sort of obvious, but it's a *really strong* effect. When a train goes from 95% on-time to less than 80% on-time it loses well over half its riders, usually much more than that, and the remaining riders are willing to pay less for their tickets, too.) There's a reason I dig through the OTP reports routinely.

In terms of financial metrics, it is critically important to understand the economies of scale in railroading. Economies of scale are so enormous that they dominate practically *everything else* financially in railroads. Railroads scale up well and scale down badly. Railroads are *mass* transportation for *large masses* of people (or freight). I can explain in detail if I have to. Bascially, tacking on an extra car is cheap (unless you have a car shortage); running an extra train doesn't increase station or track costs; and the whole business is like that at all scales.

It is almost always wrong financially to do cutbacks in frequency of service and it is usually wrong to run shorter trains, because the economies of scale get lost. Whatever financial metrics you're looking at, you need to remember this, and if they start saying you should do something but it makes the economies of scale worse, you're looking at the wrong metric.

Second to the economies of scale are the network effects. Two lines which connect are worth much more (financially!) than two isolated lines. The reason should be obvious, but I can explain it if it isn't.

 

[Don Newcomb]

Metrics have to be viewed intelligently. Mindless devotion to single metrics has destroyed many once-great companies.

The VA is a good example of that.

I'd think that rail transport, where you do the same thing every day, would be a very metric-intensive industry. Before I retired, I could never tell what I'd be doing from one day to the next. Some of it was creative, some bureaucratic, but never the same thing twice. Upper management tried to impose "metrics" on us and the results were laughable. We ended up with ridiculous metrics, like the number of pencils used (not exactly but just that stupid). When everyone's cubicle was full of pencils and we had expended the pencil budget several times over, we made up different "metrics."

 

[neroden]

Well, the really classic metric for railroads is the operating ratio. But some huge accounting shenanigans have been done using deferred maintenance, so it's not a great metric overall.

That's one thing about a capital-intensive business. How "this year's numbers" look is largely dependent on how much is being spent on maintenance and capital improvements, so "this years numbers" often look great when you're letting the physical plant go to hell. Of course that will bite you in the ass in a few years. Most stock traders don't understand this. A couple of times I've made some money trading freight railroad stocks by *buying* when they're pouring money into capital improvements (making it look bad to Wall Street), waiting several years for Wall Street to notice the improvement in operations, then *selling* when I start hearing that they're cutting back on maintenance (and the stock declines a few years later as it catches up with the company).

So you have to balance the measurement of "how well are we doing on recurring operations" with "are we actually keeping up with depreciation". The latter question can be VERY hard to answer and very hard to measure.

This is why a proper investment-grade analysis of railroads actually involves hanging out on railroader discussion forums and seeing whether they're complaining that the track isn't being maintained as well as it used to be... invisible in the financial statements, visible on the ground.

You can actually tell what track maintenance levels are just by taking a ride and seeing how rough the track is, if you know what you're looking for (i.e. yes, it rides rougher at higher speeds, that's not important). It's harder to tell how much deferred maintenance is needed on signals and catenary, which usually work just fine until they break catastrophically, so one has to keep one's ear to the rumor mill.

For railroad cars, you can simply look at how old they are, and you can also observe directly how damaged they are or how often they fail.

Anyway, these sorts of physical measurements are very important metrics of whether you're keeping up with depreciation or not.

In case you're wondering, Amtrak has a ludicrously huge backlog of deferred maintenance, some of it dating to the 19th century. They are actually catching up on it (doing more maintenance than is necessary to maintain the current state), but very very slowly (at the current rate it would take decades to get to a "good" state).

Anyway, I hope this was interesting and informative.

 

[west point]

Listen ( read ) Neroden. Especially the statement about the almighty operating ratio.

 

[Karl1459]

1. I think any airline CEO who had a ~50% ridership (seat occupancy) number would probably kill himself.

And any group trying to manage roads which got ~50% ridership (seat occupancy) in automobiles would be ecstatic, since 25% is typical. Learn the difference between different modes of transportation.
As you were already informed, the situation where trains stop at many many stops along the way means that ~50% is actually extremely good. On a peak trip, the train is typically chock full at some point in the middle of the trip, the peak point. Anyone on the train at that point who isn't going to the west end ends up reducing the seat occupancy west of there, and vice versa east of there. If you're really lucky someone else will take the seat for a short hop on either end -- but basically 75% is the top you can plausibly get on a single *trip*

And obviously, some days will have less travel than others, but you still run a whole train. Overall, 33% is good, 50% is great.

There may be a couple of metrics missing here, call them "peak ridership" and "max ridership" for discussion. Peak ridership would be the maximum occupancy on any one train on any segment on a given trip. Max ridership would be the number of times the train was at or overcapacity for at least one segment. Having a hypothetical train show a 40% overall ridership with 80% peak ridership and 70% max ridership could show a fiscally responsible need for increased capacity on all or part of the route, rather than wasteful overcapacity as the 40% ridership number might otherwise suggest.

 

[Don Newcomb]

There may be a couple of metrics missing here, call them "peak ridership" and "max ridership" for discussion. Peak ridership would be the maximum occupancy on any one train on any segment on a given trip. Max ridership would be the number of times the train was at or overcapacity for at least one segment. Having a hypothetical train show a 40% overall ridership with 80% peak ridership and 70% max ridership could show a fiscally responsible need for increased capacity on all or part of the route, rather than wasteful overcapacity as the 40% ridership number might otherwise suggest.

I can understand how on a commuter run, 50% would be a good number. Zero at the start and 100% on arrival at Penn Station, could equal 50%. Not sure if 50% on city-to-city runs is a good number or not. I can see also that if you have the rolling stock, it might not cost you much to add another coach car, to make sure that you don't run into that maximum capacity. You can't do that with a jet.

One thing I looked at is pricing. It's the same fare to ride the NER into Penn Station on a weekday morning from Connecticut as to ride it out in the morning. So riding with the peak flow is the same price as riding against the flow. I wonder if those two trains are equally full?

 

[neroden]

Amtrak's pricing is a bit of a blunt instrument since the main reservations system dates from the 1970s. They've been trying to replace it...

 

[Don Newcomb]

Amtrak's pricing is a bit of a blunt instrument since the main reservations system dates from the 1970s. They've been trying to replace it...

Probably written in COBOL and running on an IBM-360 emulator.

 

[afigg]

It seems to be a pretty simple concept that if the unfilled seats could be filled at whatever price it would still be "found money" for Amtrak. Yes, there's a certain liability cost below which you can't go. (e.g. It costs more than $1 to sell a $1 ticket and the chance that the $1 passenger will sue you for $1M exceeds any benefit.) And while Southwest Airlines does not make "dozens" of stops along a route, they do make quite a few and manage to keep their planes pretty full.

Amtrak is blocked by Congress from offering super cheap fares to fill seats on the NEC and LD trains. Every year in the appropriation bill, or whenever Congress finally passes the omnibus bill for the fiscal year, there is text that restricts Amtrak from offering fares more than 50% off the "normal peak fare". Which bucket the normal peak fare applies to, not sure. Digging up the text from an appropriations bill from several years ago:

Provided further, That none of the funds provided in this Act may be used to support any route on which Amtrak offers a discounted fare of more than 50 percent off the normal peak fare:

Provided further, That the preceding proviso does not apply to routes where the operating loss as a result of the discount is covered by a State and the State participates in the setting of fares.

The funds referred to are the federal funds provided to Amtrak. If Amtrak were to offer a 75% discount to fill empty seats for an off peak leg or portion of a NE Regional run, they would be unable to spend any of the federal funding for the NEC - as I read it. The state supported corridor routes are exempt because the state is providing the subsidy to cover (most of) the operating loss.

This is a prime example of bad Congressional micro-management. If it was not for this restriction, I think we would see some super discount fares on the NEC for the NE Regionals and the LD trains for the off-off-peak segments and seasons.

 

[afigg]

One thing I looked at is pricing. It's the same fare to ride the NER into Penn Station on a weekday morning from Connecticut as to ride it out in the morning. So riding with the peak flow is the same price as riding against the flow. I wonder if those two trains are equally full?

The weekday morning NER departing from NYP to CT may be heavily occupied by people traveling to Boston and Providence. Not too many I expect taking Amtrak between, say, Stamford, and NYP unless they need to get to NYP for connections to other NYP trains.

 

[neroden]

Amtrak's pricing is a bit of a blunt instrument since the main reservations system dates from the 1970s. They've been trying to replace it...

Probably written in COBOL and running on an IBM-360 emulator.

No, it's actually written in IBM mainframe *assembly language*. Not kidding. This was revealed in some of the documents about the replacement project a few years ago.

They wish it was as modern as COBOL. COBOL would be way easier to fix.

I believe you're correct about the IBM-360 emulator.

A large portion of the replacement project has been rewriting assembly language modules in C, so that it's possible to change things.

 

[Philly Amtrak Fan]

It seems to be a pretty simple concept that if the unfilled seats could be filled at whatever price it would still be "found money" for Amtrak. Yes, there's a certain liability cost below which you can't go. (e.g. It costs more than $1 to sell a $1 ticket and the chance that the $1 passenger will sue you for $1M exceeds any benefit.) And while Southwest Airlines does not make "dozens" of stops along a route, they do make quite a few and manage to keep their planes pretty full.

Amtrak is blocked by Congress from offering super cheap fares to fill seats on the NEC and LD trains. Every year in the appropriation bill, or whenever Congress finally passes the omnibus bill for the fiscal year, there is text that restricts Amtrak from offering fares more than 50% off the "normal peak fare". Which bucket the normal peak fare applies to, not sure. Digging up the text from an appropriations bill from several years ago:

Provided further, That none of the funds provided in this Act may be used to support any route on which Amtrak offers a discounted fare of more than 50 percent off the normal peak fare:

Provided further, That the preceding proviso does not apply to routes where the operating loss as a result of the discount is covered by a State and the State participates in the setting of fares.

The funds referred to are the federal funds provided to Amtrak. If Amtrak were to offer a 75% discount to fill empty seats for an off peak leg or portion of a NE Regional run, they would be unable to spend any of the federal funding for the NEC - as I read it. The state supported corridor routes are exempt because the state is providing the subsidy to cover (most of) the operating loss.

This is a prime example of bad Congressional micro-management. If it was not for this restriction, I think we would see some super discount fares on the NEC for the NE Regionals and the LD trains for the off-off-peak segments and seasons.

Another case of Congress meddling with Amtrak and ruining their financial performance. They need to butt out of Amtrak operations in general and maybe they won't need to pay as much money to keep Amtrak afloat (the operating ratio will go higher). I trust the Amtrak finance people more than a bunch of Congressmen that probably can't even balance their own checkbooks (or the federal budget).

 

[jis]

Another case of Congress meddling with Amtrak and ruining their financial performance. They need to butt out of Amtrak operations in general and maybe they won't need to pay as much money to keep Amtrak afloat (the operating ratio will go higher). I trust the Amtrak finance people more than a bunch of Congressmen that probably can't even balance their own checkbooks (or the federal budget).

However, such behavior would be inconsistent with their hidden agenda of some (the ones that force such silliness into bills) to try to shut Amtrak down. hence they do what they do.

 

[WoodyinNYC]

Another case of Congress meddling with Amtrak and ruining their financial performance. ...

... their hidden agenda of some (the ones that force such silliness into bills) to try to shut Amtrak down. hence they do what they do.

It also protects some competitors, like the airlines and bus companies.

What would be the shuttle fares be LaGuardia-National and LaGuardia-Logan if the Acelas went away? Or even just the Regionals? Back when St Louis-Springfield-Chicago went from 3 daily trains to 5, airlines lost business and dropped Springfield-Chicago flights. And we had posts on this board about how the Lynchburger upended the fare structure of the airlines previously serving Lynchburg and Charlottesville.

Amtrak is a real competitor on many routes, preventing the airline oligarchy from raising fares to an extreme, and a potential competitor on other routes helping to moderate airfares almost everywhere Amtrak operates.

You thought Amtrak's only powerful enemies were political zealots.

As we learned in Economics 101, the entrance of another competitor to a market almost always lowers prices in that market.

 

[edjbox]

Southwest Airlines discontinued their BWI to EWR flights back in 2012 due to NEC train travel

 

[MARC Rider]

Southwest Airlines discontinued their BWI to EWR flights back in 2012 due to NEC train travel

Ha ha, and I remember flying People Express in the early 1980s between BWI and EWR because the fare was cheaper than the Amtrak "regular trains" forget about the Metroliners.

 

[Just-Thinking-51]

EWR : Newark Liberty Airport

BWI : Baltimore/Washington International Thurgood Marshall Airport

Just so the rest of us can understand.

 

[Train2104]

Amtrak is blocked by Congress from offering super cheap fares to fill seats on the NEC and LD trains. Every year in the appropriation bill, or whenever Congress finally passes the omnibus bill for the fiscal year, there is text that restricts Amtrak from offering fares more than 50% off the "normal peak fare". Which bucket the normal peak fare applies to, not sure. Digging up the text from an appropriations bill from several years ago:

I interpret this as the "cheapest fare available without discounts at peak times", or D bucket. $49 NYP-WAS saver is a lot more than 50% off the $176 Y bucket fare, or even the $116 B bucket fare. The $45 NYP-WAS Black Friday deals were the lowest whole number fare they could sell at and still comply with the law.

 

[Don Newcomb]

Southwest Airlines discontinued their BWI to EWR flights back in 2012 due to NEC train travel

I recall, at one time, there was an airline that connected the cities in the NE corridor by seaplane (e.g. Grumman Goose). Their theory was that if they could cut out the long commute to and from the airport it would more than make up for the slower speed of the plane for downtown to downtown flights. I also remember the helicopter shuttle from JFK to the Pan Am building. Neither lasted.

Edit. I think there are several air shuttle services that operate float planes but they seem to be semi-charter services.

 

[edjbox]

Also in addition to discontinuing service to Newark, Southwest Airlines also discontinued service between BWI and New York LaGuardia in 2013. Right now there are no regularly scheduled commercial flights at all between BWI and LGA.

 

[jis]

A lot of the existing flights along the NEC are for connecting to hubs of airlines to connect to long distance flights at the hub, rather that for any serious O/D traffic where O and D are both on the NEC. There are exceptions to this for longer distance like Washington to Boston or even New York/Newark to Boston where there is some significant amount of O/D traffic. I don't know of too many business travelers who take Acela from Boston to Washington, but do know a lot who fly that route, for example.

Oddly enough, there are some 16 or 17 daily nonstop flights from DCA (Washington National) to LGA (New York La Guardia) [American and Delta], and there are nonstops BWI - EWR [united]

 

[Don Newcomb]

As long as we're on the subject of short flights. The shortest scheduled airline hop I ever took was SFO to OAK, a total of about 10 miles. My employer's travel agent had no understanding of "ground transportation" and assumed if someone needed to go to San Francisco, they had to fly to the nearest airport. This resulted in some pretty crazy connections. I understand that this flight was popular with some people who needed to bump their frequent flier miles up just a bit to get a free flight.