When Amtrak discontinued the Dallas-Houston segment of the Texas Eagle in September 1995, it was generally assumed that the coaches operating between Chicago-Houston would be reassigned to operate on the surviving segment of the train between Chicago-San Antonio, due to heavy utilization of these cars for ridership which either originated or terminated at stations between Dallas and St. Louis. Rather than reassign these cars to accommodate existing ridership, however, Amtrak management chose to simply remove the cars, immediately dropping the total capacity of the Texas Eagle approximately 40 percent. In reviewing Amtrak actions involving the Texas Eagle during the past 18 months, it appears that the loss of these Houston cars was probably tied to Amtrak's desire to show a larger "paper" savings as a result of the discontinuance of the Dallas-Houston trains. The true out of pocket costs of the Dallas-Houston segment was relatively minor, essentially only the train operating costs. No significant savings were achieved at either the Houston or Dallas stations, and the discontinuance generated no station savings enroute since all intermediate stations were unmanned. A number of mechanical department employees were furloughed at Houston and/or Dallas, but most of these so-called savings continue to be offset by C-2 severance payments.
For accounting purposes, Amtrak charges the Eagle with the cost of operating a train all the way to Los Angeles, even though the Eagle cars are carried in an existing train, the Sunset Limited, between San Antonio and Los Angeles. The allocation of costs west of San Antonio is apparently a closely guarded secret (or at least what Amtrak calls "proprietary information"), so the actual formula for division of costs between the Eagle and Sunset is uncertain. However, this method of charging the Eagle with operating costs west of San Antonio is one of the reasons that two coaches and one sleeper carrying a total of 180+ passengers from #21 to #1 (or #2 to #22) nevertheless translates into a loss for the Eagle. Amtrak's expense allocation for operation of these three cars (presumably a formula on a car-mile basis), plus whatever share of the Sunset's overall expense that is assigned to the Eagle, more than offsets the revenue generated by the three cars. The problem, of course, is that the loss of the Eagle will result in no true savings west of San Antonio, simply a reallocation of the existing shared costs back to the Sunset. In other words, the loss of the Eagle through cars will yield no meaningful reduction in expenses on a global basis, but the loss of revenue from two coaches and one sleeper (all of which operate at near capacity) will indeed be a real loss. The loss of from 150-200 connecting passengers from the "combined" Sunset/Eagle west of San Antonio will also be a real loss, immediately apparent in SOT reports and other internal reports used to gauge train performance. If Amtrak is successful in killing the Texas Eagle or even the through cars, the Sunset can be expected to be burdened with a significant increase in expenses when the previously shared expenses are reallocated to the surviving route after November 10.
In reviewing SOT reports from the pre-September 1995 period when the Dallas-Houston (#521-522) segment of the Texas Eagle was operating, it appears that similar accounting procedures were in effect. These SOT reports always carried #21 and #521 (or #22 and #522) as separate trains between Chicago and Dallas. It is highly probably that the Chicago-Houston per-car-mile expense allocation for the Houston cars tended to obscure the true picture of the net revenue generated by these trains. The SOTs show a fairly consistent number [ranging from 40-60] passengers connecting to/from #521/522 at Dallas. By the time the combined train was north of Little Rock, all seats in "both" trains [#22-522] were filled. Amtrak was unquestionably aware that they would be unable to accommodate a large volume of existing traffic which utilized the capacity from the Houston cars between points north of Dallas. However, since Amtrak accounting methods tend to quantify many expenses on a car mile basis, it was more advantageous in terms of overall "paper" savings to simply drop the Houston cars (rather than reassign them to the San Antonio leg of the Eagle) when the Houston section of the Eagle was discontinued.
This convoluted and frequently inaccurate accounting method yields distorted conclusions that promote bad management decisions. One example would be the recent statement by Intercity SBU president Mark Cane, who stated "You could add ten sleepers to the Empire Builder --and fill them up-- and the train would still lose money." [March 16, 1996, at the NARP Region VII meeting in Chicago] The damage from this system of cost allocation will become more apparent as Amtrak moves toward the planned implementation of standardized consists to allow equipment sets to be interchanged between trains for better utilization. Rather than analyzing the incremental costs of adding an additional car to a consist (on a case by case basis), Amtrak will instead deal with heavy demand through the "yield management" program. In other words, because Amtrak's underlying belief is that another car (even a full car) nets only additional expense, any heightened demand will be moderated (i.e.- discouraged) by gouging the passengers with higher fares. Using the Individual Train Booking Reports, Amtrak will attempt to predict heavy demand periods for various routes, and "level" this demand by limiting the quantity of excursion or discounted seats in the computerized route inventory during the heavy demand period.
Travel on all long-haul routes and on all transportation modes is cyclical to some degree, with peaks and valleys in the volume of ridership. If ridership is discouraged by high fares, thus leveling out the peaks, there will obviously be no extra ridership to offset the inevitable slow periods during the year, and total ridership will suffer. If this management philosophy is allowed to prevail, the present threat to the Texas Eagle will be only the tip of the iceberg... the entire long-haul system will be at risk.
Prepared for Arkansas Rail by Bill Pollard.
Posted: Sunday, 8 September 1996.
This Page has been accessed 244 plus times.