Stephen Gardner's stewardship of Amtrak (4/22)

[Amtrakfflyer]

Slowly the dam is starting to break as more people are taking note of Amtrak’s mismanagement. Maybe not the most non bias view but he’s spot in in this case.


http://corridorrail.com/u-s-amtrak-...ng-scandal-commonly-known-as-the-texas-eagle/
http://corridorrail.com/u-s-capitol-limited-history-domes-dining-cars-and-bacon/

 

[Acela150]

Not really a scandal IMO.

 

[fdaley]

I don't think this amounts to a scandal except to a certain set of experienced train travelers. But the term "hospitality desert" certainly fits the Texas Eagle and Capitol at this point -- as well as the Crescent and Lake Shore. Those are all pretty sorry looking trains in their current form. They aren't trains I'd want to recommend to someone who'd never been a long-distance train before, and they're bound to disappoint those who have.

And for some of us, these pieces speak to the fear that, at a time when we should be cheering for the fact that Amtrak will soon be receiving a historic infusion of resources, we are not at all confident that the Gardner team is up to the task of using it to best effect.

 

[Seaboard92]

I hate Stephen Gardner and everyone knows that. But this is nothing. I look at corridor capital as a joke.

 

[jis]

I do not take Corridor Capital’s articles too seriously. He writes random stuff, sometimes even interesting but deciding something is a scandal based on his writings is a bit over the top IMHO.

 

[user 14106]

as well as the Crescent and Lake Shore.

I’d concede on the crescent - but the Lake Shore? That’s typically been running a pretty healthy consist - and along with the silver super star is basically one of the only trains they’ve been adding coaches to respond to demand lately. Also running with a VL2 diner. My recent lake shore experience was a thumbs up…traditional dining would be a further plus but they’re treating it relatively well all things considered.

 

[Trogdor]

Any connections J. Bruce Richardson’s writings have with the truth tend to be more of a coincidence than anything else.

 

[Amtrak25]

I see nothing that Richardson said in that article that is not true, whatever anyone thinks of him from some past writings.

The Lake Shore Ltd is back to pre-Covid, though down 1 coach (5 vs. 6). The Boston baggage car is still gone, the so-called diner is sleeper only, still flex food, no admitance even for a fee for up to 15 in business class west of Albany, and no food service at all for coach pasengers for the 3 hours south of Albany. No other LD train has that nonsense, and right through a dinner period. They could couple a dinette car to the dual-mode loco, or they could sell snacks out of the diner.

The Capitol Ltd and Texas Eagle are running multiple cars short, the run thru doesn't work, the rescheduling was not necessary as proven yesterday (51 minutes dwell in STL), and I have no doubt they will both be on the chopping block awaiting the next less-sympathetic Congress.

 

[jiml]

One person's scandal is another's effective management of available resources. The articles summarize opinions that were already established and would not likely raise an eyebrow outside the passenger advocate/railfan community. We don't have to like it, but need to remember not everyone views these things through the AU lens.

 

[user 14106]

One person's scandal is another's effective management of available resources. The articles summarize opinions that were already established and would not likely raise an eyebrow outside the passenger advocate/railfan community. We don't have to like it, but need to remember not everyone views these things through the AU lens.

I agree - like it or not the choice of the Texas Eagle for cuts is because it’s performance compared to other routes - While I have nothing against the route the prioritization of the other routes for dining and lounges seems appropriate if resources aren’t available for all.

 

[Amtrak25]

Maybe had Amtrak not fired the TEMPO revenue management group after 18 years, the T.E. would have been in far better shape. So we had resulting situations of booked up conditions south of St Louis, yet the 3 remaining coaches were often half empty, because Lincoln corridor passengers took up too many seats, squeezing out LD ridership with Illinois points on the northern end of their trips. Very stupid revenue and yield management resulted, which is exactly what Anderson & Gardner wanted to happen, creating an excuse to cut.

 

[Dakota 400]

like it or not the choice of the Texas Eagle for cuts is because it’s performance compared to other routes

Then, why not put some effort to improve its performance?

 

[user 14106]

Then, why not put some effort to improve its performance?

I hear you and hopefully in time but if the equipment simply isn’t there…

 

[fdaley]

I’d concede on the crescent - but the Lake Shore? That’s typically been running a pretty healthy consist - and along with the silver super star is basically one of the only trains they’ve been adding coaches to respond to demand lately. Also running with a VL2 diner. My recent lake shore experience was a thumbs up…traditional dining would be a further plus but they’re treating it relatively well all things considered.

I suppose the Lake Shore is not as bad as the Capitol and Texas Eagle have become, but it still seems a pretty sorry train to me compared with the one I knew in years past. It still has three sleepers west of Albany, but when I saw it at Albany last month it still had only two coaches running through to NYP. And "hospitality desert" seems to fit: flex food at bare tables for sleeper passengers only, and for everyone else a tiny lounge space (with half the car used for BC seating and maybe half the remaining table space occupied by crew), and of course no food service of any kind for coach passengers south of Albany.

 

[user 14106]

I suppose the Lake Shore is not as bad as the Capitol and Texas Eagle have become, but it still seems a pretty sorry train to me compared with the one I knew in years past. It still has three sleepers west of Albany, but when I saw it at Albany last month it still had only two coaches running through to NYP. And "hospitality desert" seems to fit: flex food at bare tables for sleeper passengers only, and for everyone else a tiny lounge space (with half the car used for BC seating and maybe half the remaining table space occupied by crew), and of course no food service of any kind for coach passengers south of Albany.

They are varying the coaches on the lake shore. When I was on it in March it had 3 going to NYP.

 

[nendee]

No news here. Passenger rail over long distance with shared track continues to be a significant money loser by Amtrak. Until a serious “private” rail company sees a means to making money, service will be tough to run at a loss.

 

[neroden]

No news here. Passenger rail over long distance with shared track continues to be a significant money loser by Amtrak. Until a serious “private” rail company sees a means to making money, service will be tough to run at a loss.

Sorry to laugh -- you haven't been here long, so you don't know. The long-distance trains are all earning marginal profits for Amtrak.

Citation to Amtrak data. Check out "avoidable expenses" (everything else is nonsense misallocation of overhead):

https://railroads.dot.gov/elibrary/fy21-q4-financial-metrics
I do think Gardner has, at least in the past, been an extremely bad manager of Amtrak. I am willing to hope that he's seen the light after the commuter collapse nearly cratered Amtrak's finances and the long-distance trains saved its bacon during the pandemic... but I would really like to see a competent manager who understood train service

 

[jimdex]

Marginal profits aren't the same thing as actual profits. While "avoidable costs" accounting can be used to argue that expanding service can in some cases reduce losses, fixed costs have to be deducted from revenues at some point in the accounting process.

 

[Amtrak25]

Allocating fixed operating costs is a tidy little arithmetic exercise, but has no practical value since they do not vanish when one of the avoidable components does. It gets redistributed to what is left, which in turn is made to look worse, also called Diseconomies of Scale. We saw the Cal Zephyr become a basket case when the Pioneer and Desert Wind came off. All the fixed costs assigned to the trio between Chicago and Salt Lake were piled onto the Zephyr.

They have to be deducted from the accounting process, but they should not be allocated to each individual train, which infers the costs goes away does when the train does.

 

[rs9]

No news here. Passenger rail over long distance with shared track continues to be a significant money loser by Amtrak. Until a serious “private” rail company sees a means to making money, service will be tough to run at a loss.

I don't have the knowledge to comment on the accounting practices of Amtrak, but let's accept your statement as true. A few points of commentary are necessary:

- In 2019, Amtrak posted a loss ($474 million) for its long distance routes with 4.5 million passengers. This loss is essentially government funding. That comes out to funding of about $104 per passenger.

- Finding reliable data on subsidies to airlines is difficult, but there are quite a few:

• Many commercial pilots come from the military, cutting training costs for commercial airlines.
• Airlines don't build their own airports. For example, the $4 billion cost of LaGuardia's rebuild is funded 50% by taxpayers. And yes, Amtrak does use some municipality-owned stations, but the costs are obviously much less.
• Every existing major US airline has gone through bankruptcy, in which they have shed costs like pensions onto the taxpayers. United - $7 billion in pension debt transferred to taxpayers. American - $18.5 billion. Just to name a few.
• Critical infrastructure jobs are staffed through taxpayer funding, such as air traffic control, runway maintenance and snow removal, airport fire departments, TSA, police, etc.
• Most Amtrak stations are centrally located. Yes, people have to travel to them, but airports by definition are in far-flung areas from city centers. All of the infrastructure to get people back and forth (interstates, trains, parking shuttles, etc.) are taxpayer-funded.
• Then there's the pandemic, in which US airlines received about $79 billion in total. Based on 2019 passenger data, this comes out to about an $84 subsidy per passenger in a normal pre-pandemic year.
• We should also be clear what exactly taxpayers are funding with these bailouts. For example, from 2014-19, United Airlines spent more than $8.5 billion on stock buybacks. In my opinion, stock buybacks have no discernible benefit to society outside of enriching the largest shareholders - i.e. United's board of directors. When United declared it needed billions upon billions of dollars to survive the pandemic, were taxpayers funding United's operations, or its ability to generate shareholder profit? The point here is that while Amtrak also received a bailout, its bailout was at least earmarked for actual operational expenses - no matter how much management decisions may have botched it up.

One of Amtrak's challenges is that its long distance trains compete with flying in terms of price. As many an American has noted, "Why would I spend more for Amtrak when it takes me 20 hours as opposed to two hours for less money on a plane?" Well, perhaps the answer is that we have hidden the true cost of flying.

For me, I am utilizing long distance trains as much as I can because of the environmental benefits as opposed to flying, given the challenges we face with climate change. I believe a functional government should be encouraging this behavior. In this light, a subsidy for long distance train travel actually makes a lot of sense! For my twice-annual trips CHI-ROC, about 600 miles, this is right in the sweet spot of where planes are poor performers in terms of emissions, and trains can be much more successful - particularly with Amtrak's Tier IV locomotives coming on line.

 

[MARC Rider]

I don't have the knowledge to comment on the accounting practices of Amtrak, but let's accept your statement as true. A few points of commentary are necessary:

- In 2019, Amtrak posted a loss ($474 million) for its long distance routes with 4.5 million passengers. This loss is essentially government funding. That comes out to funding of about $104 per passenger.

- Finding reliable data on subsidies to airlines is difficult, but there are quite a few:

• Many commercial pilots come from the military, cutting training costs for commercial airlines.
• Airlines don't build their own airports. For example, the $4 billion cost of LaGuardia's rebuild is funded 50% by taxpayers. And yes, Amtrak does use some municipality-owned stations, but the costs are obviously much less.
• Every existing major US airline has gone through bankruptcy, in which they have shed costs like pensions onto the taxpayers. United - $7 billion in pension debt transferred to taxpayers. American - $18.5 billion. Just to name a few.
• Critical infrastructure jobs are staffed through taxpayer funding, such as air traffic control, runway maintenance and snow removal, airport fire departments, TSA, police, etc.
• Most Amtrak stations are centrally located. Yes, people have to travel to them, but airports by definition are in far-flung areas from city centers. All of the infrastructure to get people back and forth (interstates, trains, parking shuttles, etc.) are taxpayer-funded.
• Then there's the pandemic, in which US airlines received about $79 billion in total. Based on 2019 passenger data, this comes out to about an $84 subsidy per passenger in a normal pre-pandemic year.
• We should also be clear what exactly taxpayers are funding with these bailouts. For example, from 2014-19, United Airlines spent more than $8.5 billion on stock buybacks. In my opinion, stock buybacks have no discernible benefit to society outside of enriching the largest shareholders - i.e. United's board of directors. When United declared it needed billions upon billions of dollars to survive the pandemic, were taxpayers funding United's operations, or its ability to generate shareholder profit? The point here is that while Amtrak also received a bailout, its bailout was at least earmarked for actual operational expenses - no matter how much management decisions may have botched it up.

One of Amtrak's challenges is that its long distance trains compete with flying in terms of price. As many an American has noted, "Why would I spend more for Amtrak when it takes me 20 hours as opposed to two hours for less money on a plane?" Well, perhaps the answer is that we have hidden the true cost of flying.

For me, I am utilizing long distance trains as much as I can because of the environmental benefits as opposed to flying, given the challenges we face with climate change. I believe a functional government should be encouraging this behavior. In this light, a subsidy for long distance train travel actually makes a lot of sense! For my twice-annual trips CHI-ROC, about 600 miles, this is right in the sweet spot of where planes are poor performers in terms of emissions, and trains can be much more successful - particularly with Amtrak's Tier IV locomotives coming on line.

It needs to be reiterated that the government does not subsidize long-distance trains primarily as competition for the airlines. They are really corridor trains that happen to run once or twice (in the case of the Silvers) a day and connect primarily rural areas and small towns with the rest of the country. Most of the passengers are not riding overnight or the whole trip from terminal to terminal, they are riding the usual 2-5 hours rides that are the optimal rides for rail travel. Passengers who ride the longer distances are people who can't or won't fly or who just like riding a train and don't care that it takes 4 days to get from coast to coast. It turns out that the long-distance travelers, especially those going by sleeper, cross subsidize the masses who take the shorter coach rides, thus providing a decent experience for the long-distance travelers seems like it's good for the overall business. As for the reported losses for a given train, I wouldn't put too much stock in them, as the cost side is loaded with possibly dubious overhead charges that may or may not be relevant to the operation of that particular train. Allocating overhead is one of the trickiest tasks in cost accounting. There's apparently something called "avoidable cost" accounting that shows that the long-distance trains have better financial performance than what's usually presented. You're also right that all of our transportation modes are subsidized to some degree. Thus, allocating how much subsidy goes to which mode is strictly a political issue, and basically, rail advocates have to work the political system if they expect to get more funding.

 

[rs9]

It needs to be reiterated that the government does not subsidize long-distance trains primarily as competition for the airlines. They are really corridor trains that happen to run once or twice (in the case of the Silvers) a day and connect primarily rural areas and small towns with the rest of the country. Most of the passengers are not riding overnight or the whole trip from terminal to terminal, they are riding the usual 2-5 hours rides that are the optimal rides for rail travel. Passengers who ride the longer distances are people who can't or won't fly or who just like riding a train and don't care that it takes 4 days to get from coast to coast. It turns out that the long-distance travelers, especially those going by sleeper, cross subsidize the masses who take the shorter coach rides, thus providing a decent experience for the long-distance travelers seems like it's good for the overall business. As for the reported losses for a given train, I wouldn't put too much stock in them, as the cost side is loaded with possibly dubious overhead charges that may or may not be relevant to the operation of that particular train. Allocating overhead is one of the trickiest tasks in cost accounting. There's apparently something called "avoidable cost" accounting that shows that the long-distance trains have better financial performance than what's usually presented. You're also right that all of our transportation modes are subsidized to some degree. Thus, allocating how much subsidy goes to which mode is strictly a political issue, and basically, rail advocates have to work the political system if they expect to get more funding.

Yes, I don't mean trains are subsidized to compete with airlines, but that from what I've read, Amtrak prices its long distance coach seats at relatively comparative levels to flights among the same city pairs in order to be reasonably competitive. My point is that whatever Amtrak's cost recovery issues may be, they are partly impacted by the artificially deflated cost of airline tickets.

 

[jis]

Actually, Amtraks biggest competition by far is road transport and that is subsidized way more than almost anything else. But it also serves many other constituents and purposes beyond short to medium distance intercity travel. So it is complicated.

But none of this has much to do with Stephen Gardner's stewardship of Amtrak. All this would happen regardless of who was stewarding Amtrak.

 

[MARC Rider]

It seems like the main things we can criticize Mr. Gardner for are:

Downgrade of food service on long-distance trains. (flex meals) Also, not providing decent meal service for long-distance coach passengers.

Precipitously letting go of staff and mothballing rolling stock as a result of the Covid pandemic. This has resulted in cancellations and limited consists continuing even though business has picked up again.

On the other hand, there may some things that he's doing right, such as being very aggressive about restoration of Gulf Coast service, which could set an important precedent. The fact that he's a former congressional staffer and probably has access to critical members of Congress may also be helpful.

I would find it hard to think that he's on the order of the 1960's railroad management who were running passenger rail service into the ground so they could justify cancelling the trains and selling off the valuable downtown real estate where the stations were. I think that he really wants Amtrak to succeed, though he may have different priorities about what service is most important, as compared to a lot of people on this discussion group. Also, he may not know a whole lot about actually running a railroad.

 

[toddinde]

I don't have the knowledge to comment on the accounting practices of Amtrak, but let's accept your statement as true. A few points of commentary are necessary:

- In 2019, Amtrak posted a loss ($474 million) for its long distance routes with 4.5 million passengers. This loss is essentially government funding. That comes out to funding of about $104 per passenger.

- Finding reliable data on subsidies to airlines is difficult, but there are quite a few:

• Many commercial pilots come from the military, cutting training costs for commercial airlines.
• Airlines don't build their own airports. For example, the $4 billion cost of LaGuardia's rebuild is funded 50% by taxpayers. And yes, Amtrak does use some municipality-owned stations, but the costs are obviously much less.
• Every existing major US airline has gone through bankruptcy, in which they have shed costs like pensions onto the taxpayers. United - $7 billion in pension debt transferred to taxpayers. American - $18.5 billion. Just to name a few.
• Critical infrastructure jobs are staffed through taxpayer funding, such as air traffic control, runway maintenance and snow removal, airport fire departments, TSA, police, etc.
• Most Amtrak stations are centrally located. Yes, people have to travel to them, but airports by definition are in far-flung areas from city centers. All of the infrastructure to get people back and forth (interstates, trains, parking shuttles, etc.) are taxpayer-funded.
• Then there's the pandemic, in which US airlines received about $79 billion in total. Based on 2019 passenger data, this comes out to about an $84 subsidy per passenger in a normal pre-pandemic year.
• We should also be clear what exactly taxpayers are funding with these bailouts. For example, from 2014-19, United Airlines spent more than $8.5 billion on stock buybacks. In my opinion, stock buybacks have no discernible benefit to society outside of enriching the largest shareholders - i.e. United's board of directors. When United declared it needed billions upon billions of dollars to survive the pandemic, were taxpayers funding United's operations, or its ability to generate shareholder profit? The point here is that while Amtrak also received a bailout, its bailout was at least earmarked for actual operational expenses - no matter how much management decisions may have botched it up.

One of Amtrak's challenges is that its long distance trains compete with flying in terms of price. As many an American has noted, "Why would I spend more for Amtrak when it takes me 20 hours as opposed to two hours for less money on a plane?" Well, perhaps the answer is that we have hidden the true cost of flying.

For me, I am utilizing long distance trains as much as I can because of the environmental benefits as opposed to flying, given the challenges we face with climate change. I believe a functional government should be encouraging this behavior. In this light, a subsidy for long distance train travel actually makes a lot of sense! For my twice-annual trips CHI-ROC, about 600 miles, this is right in the sweet spot of where planes are poor performers in terms of emissions, and trains can be much more successful - particularly with Amtrak's Tier IV locomotives coming on line.

Something to bear in mind is that a very small percentage of long distance train travelers travel end to end. People that live in cities are the ones who constantly say “why don’t you just fly?” They don’t get that when an airport is three hours away or more, air travel suddenly isn’t very convenient. Cities of 50-70,000 people frequently have little air service, or an infrequent puddle jumper. To cross Montana by air requires flying to Salt Lake City or Minneapolis to change planes. I also wish people would just shut up about the profit thing, and “until private enterprise figured out how to make money” … blah blah. You correctly point out that there isn’t a private highway or commercial passenger airport in the US. In point of fact, our entire transportation system aside from the freight railroads (which were largely built with public subsidies of various kinds) is socialist. There, I said the scary S word.