Amtrak IG: Updated Models Could Save Millions

Secaucus Junction
An Amtrak train passes through Secaucus Junction in Secaucus, N.J., in February 2016. (Photo by Todd DeFeo/The DeFeo Groupe)

The Amtrak inspector general recommended the company update its models to improve the reliability of its forecasts of the short-term financial impacts of various rates of on-time performance.

In a report, the inspector also recommended the railroad use its models to develop more reliable estimates of the financial impacts of delays associated with various business activities.

The Congressionally mandated report aimed to identify potential cost savings or revenue improvements associated with improved on-time performance (OTP).

The IG found a relationship between improved OTP, increased revenue, and decreased costs. In the short term, the IG estimated that improving OTP by five percentage points on all routes would result in $12.1 million in financial benefits in the first year.

These benefits would include $8.2 million in reduced costs and $3.9 million in increased revenue. In the longer term, if OTP on long-distance routes could improve to 75 percent and be sustained at that level for at least a year, the company could realize an estimated $41.9 million per year in cost savings, and a one-time savings of $336 million by reducing equipment replacement needs.

We also found that the company does not fully and systemically measure the impacts of poor OTP and, therefore, has limited data to discuss OTP’s financial consequences with stakeholders such as Congress and affected parties.

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