Silver Star Downgrade and Diner Discussion

OK everybody, obviously this "test" has been in response to the "Micascope". Now Amtrak can say "we did it, and we now have to evaluate the results".

Somehow, I don't think they are going to be in all that much of a rush to do so. Gotta let a cadre of consultants feed at the trough.

By the time the evaluation is complete, V-Chows will be on the property. Now what will generate more slings; Amtrak ordering the Diners or Congress imposing that some alternative F&B be provided not requiring them?

Powers That Be in Congress just may have to eat the hat on this one.

Never forget, no one is interested anymore in how to make the LD's more attractive (old hands like Rosenwald and Heard have checked out); they are just there to be a political football for Congress to play games with, and if Congress decreed that they all be gone, they would be so tomorrow - Notice under ARAA97 notwithstanding.

Arlington wrote:The stated duration of the test was "six months" with the Star's diner removed on July 1st and being put back on on some date that makes operational an marketing sense some time around New Years + or - a week.

PS: still no July report. It used to come out on the last Friday of the month that followed but maybe 5 weeks til posted on the documents page is the new normal.

The service alert for the Silver Star "experiment" states that it will run through January 31. One theory that has been floated as an additional reason for the duration of the test is that there is a shortage of working Heritage diner cars with some cars now well pass their last overhaul. Dropping the diner car from the Star reduces the number needed by four. If that is the case, Amtrak is gambling to some extent that a batch of new Viewliner II diner cars will be approved for revenue by next January.

As for the July MPR, I too was expecting to see it posted on or shortly after Friday, August 28 as that the pattern in the past year or so. The reason for the delay may simply be due to that it was August and some of the managers who have to sign off on provide data for report sections were on vacation. The July MPR will probably come out later this week. But I think the July MPR numbers will be too soon to conclude anything about the "experiment". Need the August and September numbers for trends and for more passengers previously booked on the Star (before the lockout) to either change to the Meteor or their travel plans,

afiggatt wrote:But I think the July MPR numbers will be too soon to conclude anything about the "experiment". Need the August and September numbers for trends and for more passengers previously booked on the Star (before the lockout) to either change to the Meteor or their travel plans,

Yes, on the revenue side, it'll take a while to really know how customer behavior has changed--indeed if the real usage pattern is "annual trip" then we will never really know because of the mix of 2014 folks that booked a Silver in 2015 by inertia, not careful choice, nor will we really know what to think of how 2015 trip makers "come back" in the same season in 2016.

We don't & won't really ever know (as outsiders) what mix of people focus on fares and what mix focuses on amenities. Only in-house surveys tell that.

But costs of a daily, dinerless, single-level--something which has been hotly disputed and only primatively-estimated here-- will be obvious for the first time, and unlikely to have any monthly/seasonal changes.

The July 2015 MPR has been posted for those interested in reviewing the initial Silver Star numbers.

So here are the headlines from July 2015
- Sleeper class ridership on the Star was up 26.2% (offset by considerably lower average fares = -1.8% revenue vs last year), about $12,500 in less revenue
- By my estimate (see below), eliminating the diner saved $800,000 per month in operating costs.

While revenue is reported in detail each month, costs are only reported on a "Year-to-Date" (YTD) basis, which blends all months together. The best guess for what happens in any month has to be computed by taking July's YTD costs and subtracting June's YTD costs.

- Sleeper class ridership on the Meteor was up 0.5% (offset lower average fares = -4.7% revenue vs last year), about $53,000 less in revenue
- By my estimate, costs on the Meteor were up about $100,000. This might be because there was a net movement of "heavy diner users" off the Star and seeking out the Meteor, and a net movement on non-diner-users moving off the Meteor and going to the Star (for its lower fares) and what you're seeing is the Meteor spending $100k more on food

As a check to confirm that costs in "single level southeast coach" would ordinarily have been the same in July as in the average month September to June, I ran the Palmettos numbers and they were, in fact, essentially unchanged.

As a *system* the Silvers, therefore, lost no more than $65,500 in revenue (note that most LDs were down year over year too. A loss of $65k assumes the Silvers would have operated at no change. If some decrease was due to other factors, the losses due to "diner removal" would have to be less than $65,500)

As a *system* the Silvers' costs fell by $700,000 (down $800,000 on the Star, up $100,000 on the Meteor). Across a year of operations, that'd be a $8.4m {cost} win" on the Silvers, {and if you said the revenue effects were -$66k/mo ($800k/year) the profit (reduced losses) win would be $7.6m per year.}

16 - Silver Star 3,516 2,785 +26.2 $695,947 $708,550 -1.8
19 - Silver Meteor 4,039 4,018 +0.5 $1,072,308 $1,125,439 -4.7

Direct Costs Silver Star (table C-1)
YTD June Costs $61.5m
YTD July Costs $67.5m
Net July Cost $6.0m
Avg 9mo Cost $6.8m/mo (Sep - Jun)

Direct Costs Silver Meteor
YTD June Costs $57.8m
YTD July Costs $64.3m
Net July Costs $6.5m
Avg 9mo Costs $6.4m/mo (Sep - Jun)

Direct Costs Palmetto
YTD June Costs $22.3m
YTD July Costs $24.8m
Net July Costs $2.5m
Avg 9mo Costs $2.5m

Looking at just the July costs,
Star costs = $6.0 million
Meteor costs = $6.5 million
So there's a half million difference in costs for the month between the two trains.

But, there is data available for both the trains and their Sleepers for the month of July:
Star ticket revenues = $695,947; Star sleeper passengers = 3,516; therefore $198 per sleeper
Meteor ticket revenues = $1,072,308; Meteor sleeper passengers = 4,039; therefore $265 per sleeper

Total Star ticket revenues = $3,233,221; Total Star passengers = 37,440; therefore $86 per train passenger
Total Meteor ticket revenues = $3,931,916; Total Meteor passengers = 36,150; therefore $109 per train passenger.

Using math, we can determine coach passengers only data.
Star = 37,440 - 3,516 = 33,924 coach passengers
Meteor = 36,150 - 4,039 = 32,111 coach passengers
Star = $3,233,221 - $695,947 = $2,537,274 for coach passengers
Meteor = $3,931,916 - $1,072,308 = $2,859,608 for coach passengers
Therefore, Star earned $75 per coach passenger in fares while the Meteor earned $89 per coach passenger in fares.

In just about every data point available, the Meteor earned more revenues in fares than the Star.
The data not available is how much money was lost in the diner and in the cafe cars. All we get is monthly costs data in one lump sum total.

Looking at the totals, the data doesn't look good at all.
Star total earnings = $3,233,221, Star total costs = $6,000,000. Therefore the net loss was $2,766,779. Meteor total earnings = $3,931,916, Meteor total costs = $6,500,000. Therefore the net loss was $2,568,084.
Using total passengers, the Star lost $74 per passenger while the Meteor lost $71 per passenger.

At my first look at the data, it appears the Meteor and its full diner performs better than the Star.
Note: I really don't trust the %6 million and $6.5 million costs data for these trains mainly because the numbers are obviously rounded to the nearest half million. So my exercise has probably been a waste of time.
Never-the-less, the data available to date does not indicate that the food losses were higher on the Meteor than on the Star.

Suburban Station wrote:my parents just completed a tampa-philly journey and felt that it was too long with the awful options in the cafe car, especially when the train was late forcing a second dinner. of course, despite arlington's assertions the test is anything but clean but the results should be good enough to encourage or discourage food services changes such as cutting the diner on certain trains (capitol ltd I'm looking at you). it would have been far more sensible to upgrade café options (at least along the lines of the acela cafe) in conjunction with cutting the diner. since they were tampa riders the one seat to tampa trumped the dining car on the meteor which they would have preferred.

Just looked over the café/lounge menu, and it is not good enough or nutritionally balanced for multiple meals. Add a few pre-made items supplied by a commissary (but made within 24 hours) such as chicken Caesar salad and chicken Parmesan. Thaw-and-serve yogurt fruit parfait (like McDonald's but less sugar). Lasagna [cheese, spinach, and beef/italian sausage] (can be frozen & microwaved). Legal Seafood clam chowder (available refrigerated in supermarkets & wholesale clubs in New England, so easy to obtain & good shelf life). For dessert, superpremium ice cream in small single-serving cups, 3 or more rotating flavors and packets of toppings or sugar cones. Have pastries, baguettes and rolls that are baked no more than 4 hours before departure. Quality juice drinks such as Naked or Odwalla. Then make sure passengers know upgraded menu is available.

This would also take the pressure off Amtrak to restore diners on 1/31/2016, before v-diners will probably be available.

If a "typical" month saw $700k in Sleeper-class revenues on the Star (which is roughly what it took in last year with a diner and roughly what it took in this year without), and if $800k is what a diner costs, then the Star could afford to lose 100% of Sleeper revenues (down $700k) so long as it dropped the diner (at $800k) and still come out $100k ahead.

So let's watch the month-to-month costs of the Star. If they had been 6.8m/mo for 9 months and then look like 6.0m/mo for all 6 months of the test, I'd say that'd be pretty clearly "all diner" in the 800k/mo, but we won't know until March of 2016 (but will have a strong indication by, oh, December 2015)

Meanwhile on the Meteor, if a typical month saw $1m in Sleeper revs you can see that they come much closer to paying whatever the Meteor Diner costs (it probably costs less than the Stars because the Meteor operates for fewer staff-hours per trip). Let's swag the Meteor's diner at $750k.


Looking at whole-year ended Sept 2014 it was:
Star: Cost $79.9m = $6.66m/mo
Metr: Cost $72.9m = $6.08m/mo

So another fair estimate is that a Month of Star has traditionally cost 1.1x whatever a month of Meteor costs. (through June 2015, It'd been like 1.05 (6.8 vs 6.5)) so it is kinda a big deal if it now really does cost less to operate the Star.

electricron wrote:Using total passengers, the Star lost $74 per passenger while the Meteor lost $71 per passenger.
At my first look at the data, it appears the Meteor and its full diner performs better than the Star.

define "performs", and I think you need to comment on the change in the Star. Is it performing better or worse without a diner?

Or consider that what makes the Meteor work better (higher revenues & lower costs) is plenty of non-diner advantages like better times of day(the perfect NY-to-Fla window...good for capturing premium $), has the faster route (so both better revenues and lower costs), and might even go through richer territory (more GDP-per-route-mile)

I think that one month's data would be too sparse to really say whether or not the Silver Star changes are good or bad over the long run. If the net loss per train is about the same as in prior comparable time periods, but lower fares result in higher ridership, I'd say that the change is thus a good thing due to higher ridership alone, but it's still too early to really tell.

I think that if Amtrak is going to try changing one long distance train into a "budget" train, with few amenities, it should also try turning one long distance train into a "premium" train, with expanded amenities at higher fares, and see what happens.

Airlines are pouring money into upgrading their premium services. Airlines are different because so many of their premium seats are given to frequent travelers as upgrades from regular coach fares, but the fact that so many airlines, from American to Jet Blue, are focusing on improving their premium services indicates that doing so must be good for the bottom line, and perhaps Amtrak should try it.

The airlines are also making billions in profits these days. Amtrak is not, and therein lies a big difference.

Rockingham Racer wrote:The airlines are also making billions in profits these days. Amtrak is not, and therein lies a big difference.

Yes, the airlines' ability to slice and dice their markets into very narrow niches and charge a huge range of different prices to different customers is key to their profitability. Airlines charge just a basic fee for basic coach, but then add-on fees for extra services, such as early boarding or premium economy seating or a checked bag, and an increasingly high range of fees for higher-grade services, ending with full-fare tickets for relatively lavish premium accommodations.

Amtrak should try the same. To do so would include offering a range of services that would include a premium level of service at a premium price. Amtrak has somewhat segmented its ticket fares into "basic coach" to business/first class but should keep segmenting them, including by offering improved premium services to those who are not cost-conscious.

I think everyone leaves out the sheer fact that they didn't have to run these liabilities out on the road for a month was an internal victory.

You know every year we take at least one trip Boston - Florida on Amtrak (usually the Meteor southbound and the Star northbound due to scheduling). When we get back, our co-workers ask us about our vacation and we tell them about the train trip. Every year both my wife and I hear the same thing: "You can take a train to Florida?", "I didn't know that you could do that", "I have to check that out - I hate to fly now", etc.

I think there may be a large market out there that Amtrak just has not reached. Advertising just long distance trains is probably not a good investment, but perhaps they should get creative and expand on their existing marketing. For instance, I see that there are "AMTRAK.COM" advertisements at MLB baseball games in the Northeast (on TV and in the parks). Perhaps new taglines could be added such as "Take the Train to Florida". Most of the public have no idea that these services are available.

Bostontrainguy, you're right.

What John Mica is missing is that Amtrak has only a 55% load factor. That's horrendous and much lower than airlines' load factors. If Amtrak had the same load factor as airlines, it may well make a profit.

Running trains as long as Amtrak can run them, and filling seats (and bedrooms), should be the focus, not cutting costs by reducing amenities. If Amtrak ran a 12-car Silver Star, with a dining car and a range of service levels from NJ Transit coach style to lie-flat coach seating style to premium bedroom style, all at varying prices that would attract new riders from across the socioeconomic spectrum, it would do better.