The MT Position

Posted by Fred Jandt
Editor, Mass Transit

This last Tuesday was Earth Day. The MT staff did our part and all worked from home on Earth Day. I know it’s a small effort, but if everyone just turned off their cars for one day, think of the effect that would have.

In that vein, gas prices rose again like a creeping shadow following along behind you. We all know that gas prices are predicted to hit $4 a gallon this summer (well, that is everyone but the president, who seems curiously oblivious to it). Unfortunately summer may just come a lot sooner than we expected. Gas prices are already topping more than $4 a gallon in California with some nearing or topping $4.50. The national average is hovering around $3.50, but that’s little comfort.

I was talking to a coworker yesterday who said that he had heard gas prices could hit $7 a gallon by 2010. Doubling in a year in a half? I once would have said that’s not likely or even impossible, but with the recent dramatic rise in gas prices over the last few years, I no longer rule anything out.

So what is there to do about it? Well, the obvious choice is to take transit. It’s simple math: transit = less car use = less $$$ spent on gas.

Of course, for a large part of the United States this isn’t an option. Transit just isn’t an option for some people. So what do they do? Telecommuting has become popular. And it is going to become even more popular.

Spend some time perusing the tech news. Google is offering a host of services for businesses to allow you to access all of your files anywhere. It has its own suite of office programs, and now you can access them offline as well as online. Adobe is putting up a streamlined version of Photoshop online. The next generation of software looks to all be Web-based.

With this trend you’d think people would travel more. They can stay connected anywhere. Unfortunately, people are using this to stay at home. And it’s that creeping shadow that is to blame. As gas prices grow we become more and more isolated as a culture. As gas prices grow, the price of everything else grows as well. If you haven’t noticed, the price of food is creeping up. Just a little here and there, but it’s going up.

As everything gets more expensive, transit becomes more and more appealing. A couple years ago when gas prices shot up, transit ridership soared. This year with that creeping shadow getting longer, keep an eye on ridership levels, I bet they are going to go up as well.

Thanks for reading the MT Position updated every Friday,

Fred
fred.jandt@cygnusb2b.com

Posted by Fred Jandt
Editor, Mass Transit

In the wake of the news of Delta and Northwest’s planned merger this week, I have to say despite what others might believe, the airlines have it easy when compared to public transit. If for no other reason than they don’t have to deal with arguments about America’s love with the flying car.

I took a trip to San Francisco last week. Growing up in the Midwest with a lack of public transit, it makes it even sweeter when you are in a large urban area with a well-connected transit authority. There is just something to be said for being able to walk out on the street and know there will be a bus or train (or both) at a stop within a couple blocks in a few minutes.

In San Francisco on-time performance isn’t just key, it’s pretty much the whole show. The populace has already bought into transit and its importance to the region. It’s not a matter of whether or not they want transit, it’s when will it get here.

Now let’s take a look at San Francisco. Last year San Francisco’s Municipal Railway (Muni) had an on-time performance of 71.2 percent — and the public threw a fit. See, a ballot initiative passed in 1999 demanding an 85 percent on-time performance. So Muni is being called on the carpet about this and is taking steps to hit that magic number.

Now let’s compare that to airline on-time performance. In the last year (according to the DOT) all air carriers had an on-time performance of 73.02 percent. And what was said about that … anyone hear that cricket sound?

See, this is where I think transit doesn’t get a fair shake and airline companies better be thankful there aren’t flying cars.

As I flew home my flight was delayed. Why? Weather. (Which strangely enough, while it seems like a reason often used by airlines for delays it is actually one of the lesser reasons for delays.) So I just shrugged my shoulders and settled down to wait, as did everyone else on the flight. The flight itself was oversold. That meant every single seat was filled.

When I got to my connecting airport, I found my connecting flight was also delayed. Why? Because all of the flights coming into the airport were delayed. (Air carrier or aviation system delays are the two largest reasons for late flights.) After waiting for more than an extra hour for my flight, I was pressed again into an oversold plane and finally made it home.

As I made my way to baggage claim I was thankful I had made it home and that my luggage had made it with me. I noticed most of the other people on the plane had about the same sentiment.

Now look at this from a transit perspective. You go out to wait for your bus or train and it’s delayed … because of the weather. Many areas are now demanding to know exactly how much time before the next bus or train will arrive. The airlines simply shrug and give you a good guesstimate.

Now that the bus or train is here you get on and find you don’t have a seat because it is full to the brim with passengers. People demand more and more capacity for their transit authorities. The airlines actively oversell their flights in case someone doesn’t show up.

You go to make a transfer and find out that your connecting bus or train is more than an hour later than you thought it would be. Most people would be screaming bloody murder at a transit authority for having to wait that long.

The thing is airlines have us over a barrel. We don’t have an option and they know it. Transit has to deal with the ever-present option of people taking cars, bikes or even just walking.

So the next time you’re going to rail against transit for its ineffectiveness, think back to when you were sitting in that airport waiting for your delayed flight and how you just shrugged your shoulders and got out your book.

Thanks for reading the MT Position updated every Friday,

Fred
fred.jandt@cygnusb2b.com

Posted by Fred Jandt
Editor, Mass Transit

A report came out this week from the Department of Transportation, Office of Inspector General (available here) entitled Amtrak’s Future Outlook and Budgetary Needs. The report is in part, to be honest, what we’ve come to expect from the current administration, a transit agency requesting funds and having the actual appropriation falling short of the request.

That said, the budget numbers aren’t the interesting part of the report. The interesting discussion is when the report discusses Amtrak’s on-time performance (OTP), or lack thereof.

“Amtrak’s OTP had been declining steadily since FY 2002, from 77 percent to 68 percent in FY 2006. However, the OTP increased in FY 2007 to 69 percent and to 72.7 percent through January 2008.”

Now, an OTP hovering around 70 is far from desirable, but it isn’t unheard of in transit agencies across the country.

“In FY 2006, average OTP across Amtrak’s long-distance routes was only 30 percent.”

What?! Now that is a shocking number. A 30 percent on-time performance explains a lot about lack of consumer faith in Amtrak. Wow.

So who is to blame for this poor performance? Pick a group and see who they are pointing fingers at.

“…there is little agreement between Amtrak and the host railroads on whose track Amtrak operates regarding the cause of this poor OTP…”

Yep, everybody is blaming everybody else. In defense of the freight railroads whose tracks Amtrak largely operates on, they barely have enough room for their own trains, let alone Amtrak’s, as the report states.

“The capacity of the freight rail network is insufficient to handle the mix of fast (passenger and inter-modal freight) and slow (bulk commodity freight) trains operating according to different business models, i.e., scheduled versus unscheduled or loosely scheduled service.”

The report points out that most of the tracks outside the Northeast Corridor are single tracks with bi-directional traffic, necessitating the use of sidings. It also states that increasing OTP outside the Northeast Corridor to 85 percent would generate a net gain of $136.6 million.

Taking a look at this report, is there any clearer indication that there needs to be a concerted effort put into designing and building a high-speed rail network in the United States. The freight rail network is strained to the point of bursting for its own trains. Amtrak’s OTP for long-distance trains is 30 percent. And neither group is willing to give an inch to help the other out, as the report found, “certain practices intentionally delay Amtrak trains.”

We have an infrastructure crisis on our hands. We need to expand not only the freight rail network, but also implement a better plan for Amtrak other than just shoe-horning it onto existing tracks. And until we do that, Amtrak will continue to operate at losses with poor OTP.

On a personal note, we’ve redesigned the e-mail blast sending out the MT Position. If you haven’t seen it recently or signed up for it, take a look. It now includes Daily News and the top five viewed and emailed stories on the Mass Transit Web site from the past week.

Thanks for reading the MT Position updated every Friday,

Fred
fred.jandt@cygnusb2b.com

For many of my marketing colleagues, this is the time they begin formulating their budget for the next fiscal year. And for as long as I can remember, it’s also the time when calls, letters and email begin to circulate, all asking the same question: “What is the right amount for a transit marketing budget?”

Often the response is simply to say, “The industry rule of thumb is that marketing should be in the range of one to three percent of operating expenses.” This is usually when I want to take out a hammer and pound on the thumb making the rule. Let me make it perfectly clear — this rule is bogus, it leads to bad budget policy and as long as it is applied, it will short change marketing efforts.

Why? Well, for starters, this perverse guidance goes back more than 20 years when transit marketing wasn’t as sophisticated as it is today. Those were also the days when marketing was undervalued and underfunded, and more often than not the first thing cut in hard budget times.

Today’s transit managers and their marketing staffs are much more market and customer driven. Their awareness of good marketing practices is better and their overall support of marketing as a key strategy to recruit and retain riders, as well as protect their revenue stream, is keener than ever.

Even so, this bogus rule of thumb is still around. But is there a better rule that can replace it and better reflect how transit marketing is done in today’s world?

The answer doesn’t lie in a rule. The answer lies using a process that takes into account the marketing functions and activities that an individual system engages in, then building a budget accordingly. Ask questions like how many materials does your agency still need to have in print? Are things like signage and on board information updated regularly? When it comes to major cost categories like Web sites, advertising, publications, etc., it may be especially helpful to compare what your peers are doing and spending. Exchanging this type of information can lead to a better budget perspective. Remember though, that size matters when it comes to costs, so make sure you use good comparisons.

Build on this idea by looking at areas where performance goals will help determine what the cost of achieving them will be. Take broadcast advertising for example. Reach to target markets and frequency of message are important in media planning, and gross rating points (GRP) are a good representation of measuring how much media you effectively need. So, if you need to achieve a certain reach and frequency level, you can estimate the average costs per GRP for your market and better budget in that area. Similarly, if you are in charge of a call center and need to achieve a certain level of calls being handled, then you’ll need to budget accordingly for staff and equipment.

Whatever method you use, bring the hammer down on a very bad and often unrealistic rule of thumb. It’ll feel so good!

Joe Caruso is Senior Consultant for Brecon Hill Consulting. He’s the former marketing director for the Milwaukee County Transit System (WI) and has over 33 years of transit marketing experience. He welcomes your comments at jcaruso@breconhill.com.

Posted by Fred Jandt
Editor, Mass Transit

Statistics Canada released 2006 census data this week. Not surprisingly more Canadians are using alternate means of getting to work than just taking their cars. Calgary boasted the largest increase in public transit use (three percent), but Toronto weighed in with a more than 30 percent increase in the number of bike riders.

Now how do we compare to that in the United States? We take money from public transit to increase roads while at the same time increasing gas prices seemingly exponentially.

Something just doesn’t seem to mesh here…

The problem here is the lack of investment by the U.S. government when it comes to public transit. The Canadian government is spending billions of dollars to improve its transit system and in this country transit has to fight for every penny it gets.

Now, I understand that this has been the case for some time now. But it’s amazing how we just accept this lack of forethought on the part of our government.

I was watching the Daily Show last night and they showed footage of the representatives from leading U.S. oil companies being called before Congress because of the soaring gas prices while their companies set record profit numbers.

The interesting bit was seeing the same footage from a year ago. And two years ago. And three years ago.

Two years ago gas prices surged. People were outraged. Public transit ridership swelled and discussion of more investment in public transit grew.

Last year gas prices surged. People shrugged and tightened their belts. What could they do? Interest in public transit flattened.

This year we are looking at gas prices at near $4 a gallon or greater. Again people are outraged. And yet, we don’t see the government looking toward public transit as a solution.

They look around trying to lay blame on somebody while people struggle to get by. Will next summer be another year of shrugged shoulders and belt tightening? Is this a vicious circle we’re in?

We don’t need more money for transit agencies. We don’t. We need a massive investment in public transportation. We need to make public transit the first choice for commuters and travelers instead of the second or third.

And we need the government to stop for a second and realize that the problem it is desperately trying to solve is a fire it keeps feeding with its current policies.

Let’s hope it doesn’t get beyond its control.

For the latest industry news, check out MassTransitMag.com’s Daily News section.

Thanks for reading the MT Position updated every Friday,

Fred
fred.jandt@cygnusb2b.com