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Amtrak’s Long Distance Business Line

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Presentation on theme: "Amtrak’s Long Distance Business Line"— Presentation transcript:

1 Amtrak’s Long Distance Business Line
Mark Murphy General Manager, Long Distance Services

2 The Long Distance System
15 routes, carrying more than 4.7M riders in FY 2013 A vital public service: 15% of ridership 11% of frequencies, but 43% of passenger-miles 43% of identified passengers with disabilities who use Amtrak Only Amtrak trains in 23 of the 46 states we serve Two trains carry a fifth of all LD passengers: Empire Builder (11.3%) Coast Starlight (10.1%) 2008 DOT IG study estimated that an 85% average OTP would save $136M (in 2006 dollars) About $160M today In FY 2006, LD OTP was 30% I’m going to start by throwing up some of our most important statistics I know you’re probably familiar with many of these, but we wanted to show the latest now that FY 13 is closed out so you could see how we’re doing On the whole, I think it’s fair to say that this is very good – probably, taken as a whole, about as good a performance as we’ve ever turned in In FY 13 we had a lot of peak or near-peak performances: Ridership OTP (almost as high as FY 12, and a big component of overall financial performance) 89% cost recovery This is a challenging time, an exciting time – a time with a lot of great opportunities, and a lot of change I want to talk a bit with you about what’s happening with our long distance services, and what we are going to be doing over the next couple of years to adapt and grow our ridership and revenues

3 The LD Business Line Unified organization Three geographical regions
Terminal services Road operations On-board services Route directors Amtrak-operated commuter services (e.g., Metrolink) Three geographical regions Southwest (LA, Dallas, Albuquerque) Central (Chicago, Denver, St. Louis) Southeast (Richmond, Miami, New Orleans) Partnering with other business lines NEC (Silver Service, Cardinal, Lake Shore, Capitol Limited) State-supported (California Zephyr, Empire Builder, Coast Starlight, Midwestern State-supported services) Within our business line, you will see some familiar railroad functions: T&E operations OBS Terminal services We have also hired a talented group of folks for positions as “route directors” They will oversee every aspect of the service, track performance, and look for opportunities to improve and We got a really great mix of dedicated people for these positions, with a combination of backgrounds and experience that is already helping us to develop and share good ideas for service improvements While we are going to be the principal manager for three geographical regions, we will be working closely with the other business lines to run long distance trains elsewhere in the country We will in turn help them to run the services they are responsible for Each of us will retain P&L responsibility for our respective services, regardless of where they operate, which should promote the kind of collaborative relationships we really want to foster P&L responsibility for all Amtrak Long Distance services

4 The LD strategic concept
Deliver value by planning and implementing an optimal mix of short and long-term initiatives to increase the effectiveness and efficiency of service delivery while improving the bottom line. Improvement Opportunities Challenges / Risks Understand areas of opportunity and develop plans to drive improvement: Employee Growth Equipment/Facility Utilization Route Directors Safety Understand areas of challenge and develop plans to mitigate risk: Increase Coach Capacity Reduce Financial Footprint Optimize Process Standardization Improve Host Railroad Relationships Here’s how I want to go about it The overarching goal is revenue improvement, not simply cost reduction Efficiency is important, but we are vividly aware of the risks and problems that come from a “cut your way to success” strategy These trains are popular – their average peak load factor is as high as Acela – and we need to find a way to satisfy the demand We have fixed costs; our goal is to maximize the revenue returns One example of this is going to be the delivery of new sleepers for our East Coast services We’re expecting to get 25 new sleepers for the East Coast trains over the next couple of years As you probably know if you tried to get a reservation on the Cardinal at short notice, we have more demand than we can accommodate If we can add capacity judiciously, we can get a lot more revenue for only a slightly higher cost – and that includes food and beverage revenue There’s obviously a similar need for capacity on the Western trains We are looking hard at ways to augment them We’re not trying to chop our way to success

5 Some specific challenges
Sean Lamb photo The Southwest Chief On-time performance (OTP) There are a couple of issues that I think are going to be focal points for Amtrak, and more particularly for the LD business line, over the next few years OTP Food and beverage loss On-time performance is always important, but long distance trains are naturally more vulnerable to delay and disruption Length of trip Number of different railroads involved Range of potential causes (mechanical problems, train interference, infrastructure condition) Our food and beverage loss is the most heavily discussed 8% of Amtrak’s operating need, as you well know I think we’ve turned the corner on a lot of issues, but where food and beverage costs are concerned, the challenge is real We need to do something about it

6 Amtrak’ s Southwest Chief
Colorado Kansas La Junta New Mexico Route Miles Under Review (632.4) Remainder of SW Chief Route At stake: service in 9 communities across three states with over 66,000 passengers in FY12 Amtrak-BNSF master agreement expires January 2016. Key stretch is BNSF territory between Newton, Ks & Albuquerque., NM; currently maintained to Class 4 that will revert to Class 2 in some places. Newton – Las Animas – reduce to Class 2 for 30 mph speed Las Animas – Trinidad, Co – remain at Class 4 Trinidad – Albuquerque – No Maintenance entire burden falls to Amtrak to maintain to Class 4 standards. 200 million dollar total burden 100 million over 10 years for annual maintenance 100 million one time cost to restore bridges, culverts, rail and infrastructure to workable levels. Our position is to remain on the current route and maintain the existing relationships with current communities we serve. Other option is the Transcon that will require additional sidings, signals restrung at crossings, etc. for passenger operation. Took issue to the states of New Mexico, Colorado and Kansas for help. Kansas communities applied for a Tiger grant from the FRA that combined with matching funds from Amtrak and BNSF totals approximately 25 million…There will be a september announcement in the next 2 weeks. Colorado created state commission appointed by the governor to explore saving the train and looking to incorporate Pueblo into the mix. First meeting was just held Friday in Denver New Mexico Legislature advanced legislation to appropriate funding to save the train. 40 million over 10 years; passed the senate overwhelmingly but wasn’t considered by the house altho the final bill included language to require N Mexico DOT to consider funding in January timeframe studying ridership, revenue potential and BNSF infrastructure needs. Gaining momentum it seems. Also need to note that Mr. Boardman and Matt Rose from the BNSF toured the areas in July and were met by very enthusiastic crowds along the entire segment of the Southwest Chief route. This route connects Albuquerque and Kansas City with Los Angeles and Chicago

7 LD train performance is bad and getting worse

8 Not just more delay – longer delay
“YTD” is year to date

9 The Amtrak System, 2014 Trouble Areas
Legend At or above average OTP 0-10% below average OTP 10-20% below average OTP Over 20% below average OTP

10 The bottom line Amtrak is strongly committed to the long distance services Our goal is to make the existing services better financial performers: More riders More revenue Better cost recovery The decline in OTP over the past year is serious enough that it threatens every one of these goals Fixing it is Job One We are currently pursuing matters through the STB CN preference case Request to monitor train handling on freight railroads I think it’s important to close by expressing my sense of something that we really can’t overstate: this business is important to Amtrak It’s important to Joe Boardman It’s important to me – that’s why I took the job We know how important it is to you, and to the communities we serve Our sense of that importance underlines our strategy We want to make this business stronger We need to follow a strategy that will really do three things: Make our customers happy Make our bottom line better Will underscore to Congress that this is an important, relevant, and heavily patronized service, and that Amtrak is a good steward of the public money I think if we can accomplish this over the next four or five years, we will put this business line on a solid footing for the future

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