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Published: February 26, 2008

 
 

On Track for Growth

Inside Acela’s Success

Amtrak’s shining star and the most visible result of its new emphasis on meeting market needs is the high-speed Acela, which has grown passenger figures year-over-year since 2000. Congress approved its creation in 1997, during a rare pro-Amtrak administration, inspired by France’s Trains à Grande Vitesse (TGV) and Japan Railways’ famous Shinkansen bullet trains. Traveling at speeds up to 149 miles (200 kilometers) per hour, the Acela is slower than the TGV, but it is the fastest train in North America.

Amtrak’s initial premium offering in the Northeast Corridor, from Boston to Washington, D.C., had been the Metroliner: a high-end, branded service first offered by Amtrak’s predecessor Penn Central in 1969 targeting businesspeople. In the mid-1990s, when it came time to upgrade the infrastructure and the rolling stock for the Metroliner, says Fred Weiderhold Jr., Amtrak’s inspector general, Amtrak decided to update the entire service. From New York City to Boston or to Washington is prime high-speed train territory: A journey time of three to four hours from downtown to downtown competes well against air travel, especially with the strict post–September 11, 2001, security regime in U.S. airports. Consider the Eurostar high-speed rail service that links London with Brussels and Paris; it has captured two-thirds of the traffic on its routes. Amtrak has grown similarly dominant in the Northeast Corridor. Of the 10,000 daily passengers traveling between Washington and New York by either plane or train, 54 percent are now using Amtrak, up from 45 percent before the Acela was introduced.

Although there was an initial jump in Amtrak ridership when it was introduced, the Acela hit some early snags. A series of highly publicized technical glitches, including the discovery of cracks in the train’s disc brakes in April 2005, forced Amtrak to take the entire fleet of 20 Acela trains out of service for five months. And on-time arrival records that dipped below 50 percent in 2003 bruised the Acela’s reputation. Today, however, the Acela has an on-time rate of 88 percent, and it is shooting for 90 percent in 2008. “Basically, we took all of what we call the ‘delay minutes’ and we assigned ownership of the delays, minute by minute, to the respective Amtrak department: Is the train delayed because of a rolling stock [train car] failure? Is it something that belongs to the in­frastructure? Is it something that belongs to the customer handling? Why is the train late, and what can we do to consistently improve this pre­mium service for our passengers?” says Weiderhold. That analysis made each part of the system responsible for a portion of delays and to work across functions to drive up overall on-time performance.

Thanks to these improvements and a comprehensive advertising campaign, the Acela has regained its ridership. During Amtrak’s fiscal year 2007, which ended in September 2007, Acela’s ridership was 3.2 million, up from 2.7 million in the previous fiscal year.

And Amtrak continues to push its Acela services forward. Further positioning the service as a direct competitor to airline shuttle flights, Amtrak recently added another weekday Acela round trip between New York and Washington, which stops only in Philadelphia, reducing the trip by 15 minutes. The company is also working on what Weiderhold calls the “platform product” — customers’ experience from the time they enter the station to the moment they arrive at their destination. Washington’s Union Station, for in­stance, is an architectural jewel and looks great upon entry, but the gate areas are uncomfortable and overcrowded. “When you pass through that station to the gate areas, you almost get ‘herded’ in there,” Weiderhold says. “We haven’t solved the space and gate problems yet, but we will. We want that whole Acela experience to be seamless and we want it to be top-shelf.”

On the train itself, Amtrak is considering upgrading to more comfortable seats and better food and beverages. “Whatever we can do to differentiate the product for the prospective customer, especially as it relates to what the airlines are of­fering, I think it’s smart money,” Weiderhold says. “We also do what­ever we can to make the traveling time productive, in a way that customers can’t get if they’re flying or driving. For instance, we’re trying to launch a program with T-Mobile to provide continuous Internet access.”

Amtrak has set ambitious goals for the Acela, hoping to reach US$500 million in annual revenue on the line in fiscal year 2009, accounting for about one-quarter of Amtrak’s total passenger revenues. This compares to approximately $400 million for 2007. Weiderhold believes there is further opportunity to penetrate, in particular, the New York–Boston route. And the company is not limiting its vision to the Northeast: Weiderhold sees potential for high-speed trains in other U.S. markets, such as those serving travelers between Los Angeles and San Diego. “I think passenger rail in this country is going to enjoy a resurgence,” Weiderhold says, “and finally find its proper place in the intercity transportation system.”

— A.T. and J.Z.

 
 
 
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Resources

  1. Harry Bruce, The Pig That Flew: The Battle to Privatize Canadian National (Douglas & McIntyre, 1997): An overview of CN’s history and illustrates its progress and growth as a company.
  2. Viren Doshi, Gary Schulman, and Daniel Gabaldon, “Lights! Water! Motion!s+b, Spring 2007: Forward-looking view of expansion of transportation, energy, and water infrastructure, which are all linked together, with rail systems particularly important for travel within and between cities.
  3. Edward Landry, Andrew Tipping, and Jay Kumar, “Growth Champions,” s+b, Summer 2006: Survey data from Booz Allen Hamilton and the Association of National Advertisers identifies marketers who drive growth by leading product innovation and new business development.
  4. Geoffrey Precourt, ed., CMO Thought Leaders: The Rise of the Strategic Marketer (strategy+business Books, 2007): Insight from 15 top marketing leaders on the current and future direction of their field.
  5. National Association of Railroad Passengers (NARP) Web site: Includes a helpful overview of the U.S. Passenger Rail Investment and Improvement Act of 2007, with regular updates.
  6. For more business thought leadership, sign up for s+b’s RSS feed.
 
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