From Bloomberg. Please visit http://www.bloomberg.com/news/2013-11-14/amtrak-serving-free-wine-to-steak-loses-millions-on-food.html to comment on this story.

Amtrak, the U.S. taxpayer-supported passenger railroad, is losing tens of millions of dollars a year on food and beverage service even after years of cost cutting, its inspector general said.

Almost all of last year’s $72 million in food-service losses were from providing meals on long-distance trains, Inspector General Ted Alves said in testimony at a House Oversight and Government Reform Committee hearing today. Contracting out some functions has the greatest potential to stem losses, he said.

“Amtrak’s operating losses on food and beverage services have been a long-standing issue, and they contribute directly to the need for federal subsidies to support operations,” Alves said.

The hearing highlights the interest of the Government Operations Subcommittee’s chairman, Florida Republican John Mica, in exposing what he says are wasteful practices at Amtrak.

Alves in his testimony outlined a number of ways for the railroad to reduce waste and cut costs, from contracting out operations to reducing theft and food spoilage.

Amtrak’s Auto Train from Virginia to Florida offers passengers complimentary wine and cheese, and three long-distance routes provide complimentary wine and champagne to sleeper-car passengers, Alves said, costing Amtrak $428,000 in 2012.

Amtrak employees traveling on free passes consumed about $260,000 in complimentary meals on the Auto Train, Alves said.

Break Even

“Somehow some of this has to be revised,” Mica said.

The railroad is continuing to make improvements and expects to break even on food service within the next five years, Thomas Hall, the railroad’s customer service chief, said in his prepared testimony.

Changes have included cashless sales, staffing reductions and supply-chain improvements. Losses have been reduced by 30 percent since 2006, he said. The railroad has found that it would lose more revenue from ticket sales than it would save if it reduced food service on its high-speed Acela trains, he said.

The report’s conclusions are of “dubious value,” Representative Gerald Connolly, a Virginia Democrat, said at the hearing.

Most of the losses are on long-distance trains that Congress requires Amtrak to operate, Connolly said. The café cars on Amtrak’s Northeast corridor between Washington and Boston break even or make money, he said.

Rice Pilaf

The latest audit shows Amtrak’s reported improvements in food and beverage finances are the result of transferring a portion of increased ticket revenue to food service accounts, Mica said in a statement.

“The Amtrak Inspector General has confirmed that Amtrak cooked the books to cover up food service losses that now approach $1 billion,” Mica said.

Amtrak’s long-distance passengers have full menus on their dining cars for trips that can last several days. On the 43-hour Chicago-Los Angeles Southwest Chief, travelers can enjoy a $23.25 Mahi-Mahi dinner with a vegetable medley and three-grain rice pilaf.

Trains run by states in Maine and Alaska using private contractors have significantly lower labor costs than Amtrak does with its dining service employees, Alves said. The states pay $7.75 to $13 an hour with no benefits, compared with $41.19 including benefits for an on-board Amtrak employee.

Paul Worley, director of North Carolina’s rail division, said the state switched from money-losing café cars to snacks and vending machines to reduce unsustainable losses on its intrastate Piedmont service. Even so, vending machines wouldn’t be suitable for long-distance trains, he said.

An Amtrak food service worker, Dwayne Bateman, testified it was unfair to compare his salary to the wages paid to those serving food on state-run trains, some of whom are part-time workers.

Source: http://www.bloomberg.com/news/2013-11-14/amtrak-serving-free-wine-to-steak-loses-millions-on-food.html

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From the Detroit Free Press:

If the train has seemed crowded lately, you are right.

Amtrak’s U.S. ridership soared to a record 31.6 million passengers between Oct. 1, 2012, and Sept. 30, 2013. Its Michigan trains also did well, with 804,697 passengers on the Wolverine, Blue Water and Pere Marquette lines.

The popular Wolverine line between Pontiac and Chicago (stopping in Detroit, Dearborn, Ann Arbor and other southern Michigan cities) had 509,100 riders, up 5.2%. Its ticket revenue rose 9.2%.

The Blue Water Line from Port Huron to Chicago (stopping in East Lansing and other points) rose to 191,106 riders, up 1%. The smaller Pere Marquette line from Grand Rapids to Chicago saw ridership fall to 104,491, down 4.4%.

Ridership on Amtrak has soared about 41% in the past decade.

Source: http://www.freep.com/apps/pbcs.dll/article?AID=/201311100300/FEATURES07/311100008

From The New York Times:

When Hurricane Sandy swept across railroad beds in the Northeast last year, Amtrak went quiet. Officials at the nation’s railroad scrambled to repair the damage that stretched the length of the huge storm. Amtrak in the region was out for a week. And disruptions continued along the popular Boston to Washington corridor for almost a month.

For all that, Amtrak had one of its best years ever. Amtrak officers boasted this week about carrying 31.6 million passengers this year, up from 31.2 million last year. And ridership increased even in the Northeast Corridor where Sandy did her worst. As a result, the railroad will ask for less federal help. That old story about how Amtrak is a transportation money pit has, once again, been proven false.

Tony Coscia, chairman of the Amtrak board of directors, said in a telephone interview Tuesday that he sees three main reasons why Amtrak is gaining financial strength and more customers. One: The company has worked hard to modernize the business. Did you notice, for example, that rush hour tickets finally cost more than off-peak tickets — which makes good financial sense — and that Amtrak has at least added wifi even if it doesn’t always work?

Two: The company seems to be benefiting from the sorry state of other forms of travel in the U.S. It only takes so many traffic jams or hours in a musty airport lounge before a wise passenger decides that a train makes more sense.

The third reason is perhaps most cheering. Mr. Coscia believes that young urbanites have finally discovered the pleasures of traveling by rail. The average age of passengers is getting younger, he said. And as people move back into cities, they’re learning that it’s convenient to take trains from one urban center to another. Driving is time spent away from the computer, the cell phone, the afternoon nap. Why not let the conductor take over?

This good news should remind Washington how far behind America is when it comes to passenger rails. Unlike France or Spain or China, the U.S. government doesn’t invest enough in rail beds and bridges and all the underpinnings that can allow a train to go at speeds of more than 150 miles per hour. Congress still favors cars and airplanes, but at some point, all those fresh-faced passengers (and voters) will start wondering why their trains are so slow.

Amtrak is working to make its passengers comfortable with wifi and quiet cars, and to make planning rail travel easier with etickets. But it will take real money from Washington to pay for the big, expensive fundamentals that make a fast, modern railroad work.

Source: http://takingnote.blogs.nytimes.com/2013/10/16/amtrak-not-a-money-pit-after-all/?_r=1