The AMTRAK Business Model

This week we talked about short distance trains and had sort of a “bakeoff” between AMTRAK (Amtrak: We’re the best choice for operating the Heartland Flyer – Wichita Business Journal)

and “Alternative Operators” (Amtrak, the States, and the Future of the Short Distance Trains) . Now let’s take a look at AMTRAK’s Business Model.

Progressive Railroading joined our “bakeoff” with “Operate Amtrak like a more nimble, customer-focused business? The railroad’s leaders believe they must”.

In 2011 they divided their business into six lines in order to help the railroad better serve customers and manage operating and financial performance. “Historically, Amtrak has been a very strong railroad command-and-control organization,” says Chief of Corporate Research and Strategy Jeff Clements. “We need to move from a siloed, functionally driven organization to a more nimble, customer-focused business.” “I think the focus at Amtrak for many years was on survival and self preservation,” says Amtrak Chairman Anthony Coscia. “Today, Amtrak is in the business of selling a service that is in great demand.” “Amtrak is required by their main funding source — the U.S. government — to do all sorts of things they wouldn’t have to do if they were operating like a business, and that puts them in a very challenging situation,” says Joshua Schank, president and CEO of the Eno Center for Transportation, a nonprofit organization that aims to improve transportation policy. “They have long-distance routes that are not profitable, so what’s the business reason for providing those services? There’s a social service aspect to it.”

The six business lines are:

  1. Northeast Corridor Infrastructure and Investment Development

  2. Northeast Corridor Operations

  3. State Services

  4. Commuter Services,

  5. Long-Distance Services

  6. Corporate Asset Development.

AmtrakHoosier

Some comments from Joe Boardman in USA Today:

Amtrak, created 41 years ago, has never functioned as the for-profit corporation it was intended to be. Last year, in response to criticisms of the railroad’s performance, Boardman introduced a five-year strategic plan intended to streamline the organization, reduce costs and boost revenue.

“When we’re done, Amtrak will look more like a business and less like a government agency,” Boardman told lawmakers. “Customers will find that our system is easier to use, more convenient, timelier, and more comfortable.”

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