Amtrak needed someone to come in and run it like a private business. Former Delta CEO Richard Anderson was probably the right choice. He knows how to turn things around, even if he may ruffle a few feathers along the way.
Travel's most forward-thinking insiders will gather September 18–19 for our annual Skift Global Forum in New York. In just a few years, Skift's Forums — the largest creative business gatherings in the global travel industry — have become what media, speakers, and attendees have called the “TED Talks of travel.”
Skift Global Forum 2019 will take place at Jazz at Lincoln Center’s Frederick P. Rose Hall in New York. This year's Forum speakers include CEOs and top executives from Booking Holdings, Delta Air Lines, Expedia, Air France-KLM, Marriott International, Amtrak, and many more.
When former Delta Air Lines CEO Richard Anderson joined Amtrak two years ago, he sought to bring an airline’s sensibilities to the national railway.
U.S. airlines may not be beloved by all customers, but over the past decade they have made impressive strides, providing safe, mostly reliable transportation at a reasonable cost, compared to historical norms. Amtrak, though, had been struggling, both with safety — it had two crashes in a short period — and with making enough money to cover its costs.
As it is government subsidized, Amtrak is probably never going to be as nimble as a private business. But Anderson has been pushing the railway to adopt some techniques implemented by the airline industry, in operations and commercial strategy.
Not everyone loves his approach, which sometimes prioritizes shorter money-making trains over long-haul routes. But along the East Coast, where the company produces the bulk of its revenue, Amtrak is improving, adding more comfortable train cars and providing more reliable service.
Anderson will speak Sept. 19 at the Skift Global Forum in New York City. We’ll ask him about how he is trying mold Amtrak into a more market-driven company. Here’s a preview of the discussion.
Note: This interview was edited for length and clarity.
Skift: What was the first thing you wanted to fix when you joined Amtrak?
Ricard Anderson: We had a couple of accidents that made safety the very first priority. We had an accident in Washington, and we had one in South Carolina. We doubled down our focus on implementation of an aviation-based safety management system and running a really safe and reliable operation. The leaders of the NTSB have endorsed our approach to essentially implement an aviation-based safety management system for Amtrak.
Skift: What about on the commercial side of the business?
Anderson: We didn’t use [revenue management] systems and think about how we could use our pricing segmentation and product segmentation to attract significantly more riders and fulfill our statutory mission. We didn’t think about offering different products in the market.
In some sense, prior to my being there, pricing, revenue management, and commercial offerings were sort of an afterthought and not a core part of driving our statutory mission to provide high-quality intercity rail transportation.
We have spent quite a lot of time and effort on it. For instance, we now have a group product. We have segmentation where we offer some deeply discounted fares on weekends. We have buy one, get one free roomettes. Just a much more commercial focus, because Congress created Amtrak to provide safe, reliable, on-time intercity transportation at good value for consumers and good value for the federal government. We needed to be much more adroit and invest in basic commercial capabilities.
Skift: You make a lot of your revenue on short-haul trains on the East Coast. But you said the longer routes are more challenging. What’s their future?
Anderson: There will always be a place for the experiential long-haul train, because Congress has told us clearly that that’s an important part of our mission. What we do is follow the law at Amtrak. The laws are clear that the national network is an important offering.
Probably today, we operate 15 of them, including Empire Builder across the northern western half of the U.S., the Zephyr from Chicago to San Francisco, the Southwest Chief, and the Coast Starlight. In an ideal state, we probably would operate somewhere between five to 10 and instead focus our efforts and resources on short-haul intercity transportation, because that’s where the demand indicators are for Amtrak.
Skift: Last month you showed off new interiors for your Acela trains that run along with the East Coast. Why is it so important to have an updated product?
Anderson: Well, the most important thing is for Amtrak to offer a modern product. The Amtrak fleet, except for the Acela, is dated.
So there are two steps. First step was to fix all the interiors on our trains with LED lights, good WiFi, new seat covers, new carpet, clean bathrooms. We began to wash the exterior of our trains consistently so that we have a nice clean product — as modern as we can get on a 70s technology.
The second piece is that we’ve worked hard to fix the balance sheet, pay down our debt, conserve our capital, and work on continuing to build the confidence of our Congressional oversight so that we have the resource to re-fleet Amtrak. We took a first step, which is to replace the long-haul locomotives, which we completed last December. We are in the midst of a significant RFP to bring modern European train set technology to short-haul intercity markets — 300 to 400 miles in the U.S. — so that we can offer a service that’s reliable and modern and is consistent with travelers’ experiences around the world on modern passenger railroads.
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Photo credit: Richard Anderson is bringing some airline sensibilities to the U.S. national railway. Amtrak