Hotline #770 -- August 3, 2012

At a House Transportation & Infrastructure Committee hearing held yesterday, Amtrak defended its food and beverage service as a necessary component of its service to passengers, while GOP Representatives attacked the program as a wasteful example of government operations.

Chairman John Mica (R-FL) dubbed the hearing, “A Review of Amtrak Operations, Part I: Mismanagement of Food & Beverage Services.”  He, Railroads Subcommittee Chair Bill Shuster (R-PA) and Rep. Jean Schmidt (R-OH) criticized the railroad for the money spent on providing Amtrak passengers with food and beverages.  Revenues collected from Amtrak’s dining service have risen steadily, from $84 million in 2002 to $121 million in 2011.  However, the cost of providing the service has outpaced that increase, reaching $206 million in 2011.

Mica said, “Last year, taxpayers subsidized Amtrak’s money-losing food and beverage operations by $84.5 million.  This means that Amtrak has to spend $1.70 to bring in just one dollar of revenue.”

Amtrak President & CEO Joseph Boardman, one of the hearing’s four witnesses, identified progress that has been made in improving cost recovery, and said food and beverage service was essential to provide a competitive service. 

In 2006, Amtrak was only recovering 49 percent of the cost of providing café and dining car service through directly captured revenue.  By 2011, however, the company had improved that rate to 59 percent.  Boardman vowed that the improvements would continue, and said the company is looking to recover 70 percent of food and beverage costs by 2015.  As a whole, Amtrak recovers 85% of its operating costs through ticket revenue. 

Boardman disagreed with a Amtrak Inspector General Ted Alves’s suggestion that Amtrak should initiate “cash-less” food service as a way to improve cost controls.  Dwayne Bateman, an “Amtrak Food and Beverage Employee” who also testified said going cash-less would cost Amtrak a lot of revenue but agreed with an Alves suggestion that selling food coupons in stations might be a good idea.  Rep. Corrine Brown (D-FL), the top Democrat on the Railroads Subcommittee, noted that US Airways accepts cash for food on board its domestic flights, and claimed that airlines spend around $6 to $7 in subsidizing passenger food and beverage, using it as a loss-leader.

Mica insisted, “No one’s talking about lower wages.”  But House Democrats defended Amtrak’s record, pointing to the 1,200 middle class jobs created by Amtrak’s unionized food and beverage employees, and suggesting that contracting out the service would merely shift taxpayer dollars from Amtrak employees to corporate coffers. 

For the most part, Representatives Brown and Nick Rahall (D-WV) spent their time objecting to the extreme-micromanagement on display. “It’s amazing to me we’ve got into the weeds rather than talking about the big things,” Congresswoman Brown said, suggesting that the committee would be better served by looking at the rail provisions in the Senate surface transportation reauthorization that were stripped out in the final version.

Looking at Different Service Models

Patricia Quinn of the Northern New England Passenger Rail Authority testified about the successes of Amtrak’s Downeaster, which contracts out the its service to a local company.  While the service still loses money, it has achieved a 75 percent rate of cost recovery from passenger purchases.  Quinn emphasized inventory control and marketing, while acknowledging that the model may not work for everyone.  For one, the Downeaster is a single, 116-mile route, while Amtrak manages a nationwide system that includes, for example, the over 2,200 miles traveled by the Empire Builder.  Labor accounts for a majority of the cost, and the Downeaster is able to pay its 10 to 15 person food service staff around $10 an hour. 

Alves said the multi-day shifts and critical safety duties required of On Board Service personnel on long-distance trains wouldn’t allow for that kind of wage, while arguing that Amtrak could benefit from the examination of different business models.  Alves did praise the railroad for the work they’ve already done in introducing an on-board point-of-sale system and warehouse inventory management system, which will improve data, reduce paperwork, and eliminate error.

Mica brandished a Congressional Research Service report claiming that Amtrak was violating the law because food service did not cover its full costs, but Shuster closed the hearing by expressing admiration for the Downeaster’s 75% cost recovery.  Earlier, Mica himself said, “I’d jump for joy at a loss of 37 cents per passenger” rather than more than $2. 

NARP has often quoted former Amtrak Senior Vice-President—Operations William L. Crosbie’s testimony at the subcommittee’s June 9, 2005, hearing on the same subject:  “Amtrak’s food and beverage service is a fundamental part of the service that we offer on board the majority of trains that we operate on a daily basis.  Its primary purpose is to enhance ticket sales and ridership, not serve as a profit center.” 

That 2005 hearing, incidentally, was chaired by Rep. Steve LaTourette (R-OH), a winner of NARP’s Golden Spike Award who announced this week that he would not be running for re-election. 

The AFL-CIO’s Transportation Trades Department responded to yesterday’s hearing with a blog entry entitled “Note to House GOP: They Don’t Just Sell You Food.”

Voters in the greater Atlanta metropolitan area rejected a one percent sales tax that would have funded $7.2 billion in new transportation for the congestion-choked region.

Through the creation of a one percent sales tax, the Transportation Special-Purpose Local-Option Sales Tax (TSPLOST) would’ve created a $7.2 billion fund that to fund new transportation projects and upgrades.  The funding was roughly evenly divided between roads and transit, with 52 percent of the money going to transit. 

The package included upgrades to the Metropolitan Atlanta Rapid Transit Authority, and  creation of the Atlanta Beltline (probably light) rail transit on a former railroad right-of-way.  Funding for commuter and intercity passenger rail weren’t included in the final TSPLOST project list.

"It's heartbreaking," Ashley Robbins, president of Citizens for Progressive Transit, told the Atlanta Journal Constitution.  "If Atlanta's not the region that we want, the young energetic people that drove these campaigns are going to leave."

Anti-government activists claimed much of the victory when news of the defeat circulated.

"Let this send a message," said Tea Party leader Debbie Dooley. "We the people, you have to earn our trust before asking for more money."

However, the Tea Party’s slate of candidates did not win.  Moreover, the Tea Party was part of an unusual coalition.  The NAACP opposed the plan because a light rail line serving southeast DeKalb County, a largely African-American community, was dropped from the package.  The Sierra Club argued the project list didn’t include enough for transit.  The latter two groups, at least, are counting on a reconsideration of this issue in the near future; the law requires the state to readdress TSPLOST in two years’ time.

That strategy may work out in the long run.  But residents of the Atlanta region will be forced to contend with severe congestion in the meantime—paying more in wasted fuel, and more of their time with each commute.

"It was a struggle… we need to be able to grow,” 59-year old electronic technician Robert Williams told the Journal Constitution, who was conflicted on how to vote before eventually settling on a yes-vote.  “Traffic is one of the things that employers do take into consideration when they're thinking about where to bring jobs." 

As a point of information, Atlanta’s federally funded downtown streetcar line is already under construction and was not directly affected by this week’s vote.

 

Caltrain’s average weekday ridership averaged more than 50,000 passengers for the first time in the almost 150-year history of the railroad, the Peninsula Corridor Joint Powers Board announced yesterday:

An average of 50,390 riders took Caltrain on weekdays in June. The total number of riders in June was 1,319,404, an increase of nearly 11 percent over June 2011 and also a ridership record. June also marks the 23rd consecutive month of ridership increases.

The increase in ridership is responsible for a corresponding increase in fare box revenue. Fare box revenue is more than $10 million or 22.1 percent higher than last year. 

The record ridership is causing crowded trains and to respond to the increased demand, Caltrain will restore four midday trains, which were eliminated last year due to budget cuts, and add two new evening trains. The new service will begin in the fall.

“It took courage on behalf of the board, hard work by staff and patience from our riders to achieve this success,” said Caltrain Chief Executive Office Mike Scanlon. “But as gratifying as this is, we are still facing a formidable challenge in 2014.”

Scanlon’s statement referred to the lack of a dedicated source of funding, which has left the commuter railroad struggling to plan out a year-to-year budget.

Still, ridership has increased by 150 percent since the Joint Powers Board took over operations in June 1992, when average weekday ridership was 20,161.

Dallas Area Rapid Transit (DART) opened three new light-rail stations in Irving, Texas this week, a rolling opening for the line that will eventually connect downtown Dallas to Dallas/Fort Worth Airport.

Part of DART’s Orange Line, the light-rail line will connect the suburb to the Dallas-wide network.  University of Dallas received a stop, as did Las Colinas Urban Center.  For the time being, the line terminates at the Irving Convention Center, and is expected to bring a boom of economic activity to the surrounding, undeveloped land.

"You'll see some residential, some office, some restaurants ... an entertainment venue someday," Maura Gast, executive director of the Irving Convention & Visitors Bureau, told the Dallas Star Telegram.

Work on the line will continue westward, stretching out to North Lake College, the Belt Line, and Dallas/Forth Worth Airport.  Construction is on schedule for a December 2014 opening.

[Click here for a larger version of the map]

 

Travelers Advisory

—Passengers traveling aboard the Empire Builder—Trains 7, 27 and 807; and Trains 8, 28 and 808—may experience delays of approximately two to five hours due to track work, and speed restrictions caused by extreme heat conditions.

Plan on checking the train status before heading to the station—on Amtrak.com, Amtrak’s free iPhone app, or at 1-800-USA-RAIL.

—Passengers can save 30% on Amtrak travel between Chicago and New York or Boston when they book now through August 31, for travel taking place between November 1 and 18 of this year.