Meeting Details: Monday April 17, 7pm, Online
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How to make Amtrak's Hiawatha profitable
The train named the “Hiawatha” goes back to 1935, when the Milwaukee Road used it to designate its express services that originate from Chicago and spread out cross the northwest United States as far as Seattle. In 1971, when Amtrak was created the Hiawatha name disappeared. The Chicago to Seattle service was renamed the Empire Building, while the Chicago to Milwaukee service was replaced with the “Abraham Lincoln” (1971-1975) and “the Prairie State” (1972-1975). Then there were such names as the Turboliner, LaSalle, Marquette, Nicollet, Radisson, Badger, and Encore. Finally in 1989 all the Chicago-Milwaukee services were renamed “Hiawatha Service”.
Since then, two train sets make the 90-minute journey 14 times a day (7 each way) on tracks owned by Canadian Pacific & Metra Commuter Rail. It is also sponsored by the states of Wisconsin and Illinois, which subsidize the losses Amtrak on the route. Hiawatha is special because it is the most reliable Amtrak train in the whole system and has the most riders at 158,300 riders as reported in the Dec 2022 TYD Amtrak figures. It is also the core of a Midwest High-Speed Rail Route!
Using the Amtrak December ’22 monthly performance report (published Jan ’23), Hiawatha lost $800,000 in 2022. This service had gross ticket revenue of $3.9 million, operating revenue of $6.9 million, and expenses of $7.7 million. So this may look like passenger rail between Milwaukee and Chicago doesn’t work…but dig deeper and things aren’t as they seem.
Now there is no short 86-mile state-supported train route to compare fixed costs to. However, from Chicago, there is the Illini (which runs to Champaign & Carbondale), the Wolverine (Detroit), and Illinois Zephyr (to Quad Cities). There is also the Chicago-St. Louis service.
There is an interesting story when looking at the revenue. In 2022, the Hiawatha had $3.9 million in gross ticket receipts while carrying 158,300 passengers in this period. This translates into a revenue per passenger mile of 31 cents per mile. On a 1 passenger carried 1 mile basis, Hiawatha is the most lucrative route in the Midwest, including the long distance Empire Building and City of New Orleans. The Wolverine was second best with 24.3 cents per mile. The worst performing routes were Illini (between Chicago and Carbondale via Champaign) at 18.3 cents and the Chicago-St. Louis at 17.6 cents per mile. Of all these services the Hiawatha carried more passengers than any over service.
However, the Hiawatha lost money? In fact, according to Amtrak the Hiawatha lost 14 cents per available seat mile. If we add these 14 cents onto the current costs of 28 cents per mile, the breakeven cost per mile of moving 1 passenger is 42 cents per mile. This calculates out that the true cost that someone should be charged is $51.00 one way.
The irony is that the current price of an Amtrak Hiawatha ticket was set at $25 in 1995. Adjusted for inflation, $25 in 1995 is now worth $50.21 in 2023. So had the state of Wisconsin and Illinois allowed Amtrak to keep up with inflation, the train would now be breakeven, without any need for subsidy.
Of course, this is the question of why Amtrak’s operation is so expensive? The Illini comes in at 18 cents per available seat mile. Even St. Louis- Chicago service costs less at 19 cents per available seat mile. More disconcerting is that the airlines are cheaper. Southwest Airlines’ cost per available seat mile was 15.36 cents per seat mile, and Delta Airlines’ average seat mile costs was 20.1 cents per mile. So why is the breakeven for Amtrak’s Hiawatha come it at over 42 cents per mile?
However, is not the only solution. In fact, the Hiawatha could be made profitable at $25. The problem is the load factor which is only 45.5% (meaning 45.5% of the seats are filled. Assuming all expenses would stay the same (since the seat is already paid for, but just empty), if we increase the load factor to 89.5%, the Hiawatha becomes profitable at $25 a ticket.
Now the true answer is all of the above. A small price increase, new coaches to reduce the operating costs, and maybe even faster trains to attract more people from their cars to achieve a 60% load factor. The answer to make the Hiawatha profitable is in there….in fact perhaps even very profitable.
We asked ChatGPT: How Marco the Maglev ended up on the island of Sodor
(last week we introduced Marco and Jessie to each other, this week is Marco's backstory)
Once upon a time, in a bustling city, there was a young maglev train named Marco. He was always in a hurry, zipping around the city at lightning speed, racing to the next destination. He loved the thrill of speed and the excitement of the city, but sometimes he forgot that not everything was in his control.
One day, while speeding along his usual route, Marco took a sharp turn too quickly and found himself jumping off the track and plunging into the nearby ocean. He was surprised to find that his maglev technology allowed him to float on the water, but he couldn't steer or control where he was going.
Days passed as Marco floated on the open sea, feeling lost and helpless. But then, one day, he floated towards an island on the horizon. As he grew closer, he saw a kind gentleman waving from the shore. The man, with a fancy hat and a friendly smile, helped Marco out of the water and onto the island.
Marco soon discovered that he had arrived on the Island of Sodor, a place where trains roamed free. Here, the trains didn't race around like he was used to in the city. Some of the trains were slow and steady, while others were fast and adventurous. During his time on the island, Marco realized that there were some things that were out of his control. He couldn't control the ocean currents that brought him to the island, nor could he control the weather that sometimes made travel difficult. But he could control his attitude towards these situations. Instead of getting frustrated or upset, Marco learned to take each new challenge as an opportunity to learn and grow.
The Faster Badger is produced by students at the University of Wiscosin-Madison to help break through the misconceptions of high speed rail and high speed transportation. This blog is for educational purposes only and all opinions presented are of the students.