For the immediate future the prospect of a high level of rail travel is strong. A large number of returned veterans will be eager to travel with their families, and other classes of the population will desire to make trips which were postponed by the war. In view of the probability that, at least during the 1946 travel season, the number of serviceable private automobiles will still be far short of enough to satisfy the national demand, the railroads and other commercial carriers will have an opportunity to bid actively for a permanent share of the travel market which might otherwise be satisfied by the automobile. 2. Apparent Needs for Further Improvement in the Service On the basis of the findings of the Federal Coordinator of Transportation regarding rail passenger service in 1933, developments in the period from 1934 through 1941, and the effect upon railroads of wartime experience, several observations will be made in following paragraphs regarding improvements which apparently are required in passenger service if the railroads are to maintain war gains in traffic and increase their prewar share of the total. Travel requirements Railway executives appear to be studying methods of further improving railroad service. A survey conducted by Railway Age in 1943, in which the executives of the principal passenger-carrying railways were interviewed and asked to express their thoughts with regard to postwar passenger traffic and service, brought out that greater emphasis would be placed in the postwar period on what the passenger wants, including new, comfortable and luxurious equipment, faster schedules, and lower fares. The Association of American Railroads, as well as a number of individual roads, have also been conducting investigations of all phases of the passenger service in order to determine traveler's requirements. 1/ Some of the respects in which traveler's requirements might be more fully met include: (1) Extension of modern signaling and train communication to (2) More general use of improved loud-speaker systems in (3) Wider use of training courses in public relations for (4) Modernization of passenger stations and facilities to (5) Replacement of outmoded passenger cars with modern, light- (6) Further attention to completeness of service, including (7) Extension of through service of the type recently inaugur- b. Price of travel A study by a leading Western carrier based on a poll of selected groups of passengers indicated that 73 percent of the passengers felt that fares were reasonable. 1/ Even though the majority of the public may share this opinion, cost will be an important factor in the selection of a travel medium. Automobiles will become increasingly available and will provide a general alternative to travel by rail. Since the automobile is the most important competitor of the railroads for regular standard intercity travel, railroads must be prepared to adjust fares to meet the cost of operating an automobile or to a level which a traveler would be willing to pay to receive a more comfortable and convenient service by rail than by driving his own automobile. According to the Federal Coordinator, direct driving costs per passenger were estimated at approximately 1 cent per mile, and were considered by the average citizen to be much cheaper than comparable travel by rail. Based on returns by car owners to the passenger ballot of the Coordinator and upon mileage allowances to salesmen of a number of large concerns, for the period October 1, 1932 to October 1, 1933, the indicated average cost per automobile mile was 6.5 cents, including depreciation, insurance and overhead. Excluding these 3 elements, the cost per mile was 3 cents. Thus, at an average load per automobile in intercity travel of 2.83 persons, as found by the Coordinator's survey, the average full cost per mile was 2.25 cents and the average direct cost slightly over 1 cent per passenger mile. More recent data from the Public Roads Administration indicate the total operating cost per mile was 4.03 cents (for 9,000 miles a year) in the immediate prewar period of which 2.58 cents was for gasoline, oil, maintenance and tires. According to the Public Roads Administration, the average load per automobile on rural roads in 1940 was 2.15 persons, although it increased to 2.56 in 1944. Thus, the average of 2.83 found by the Coordinator may prove to be somewhat high. the other hand, per-mile costs were apparently lower in 1941 than in 1933, but have probably risen appreciably since 1941. To some extent the se factors will tend to counterbalance each other, so that the average direct cost per passenger-mile in automobiles may lie in the neighborhood of 1 cent per mile as reported by the Coordinator. The average revenue per passenger-mile in coaches (excluding commutation traffic) was 1.7 cents in 1944, and the basic fare 2.2 cents. Reduced rates for round trips, circuity of routes, and fare reductions for certain travel groups, such as children, clergymen and troops, account for the half-cent difference between basic fare and average passenger-mile revenue. It would seem that reductions in the fare level by railroads would assist them in competing for a larger share of the intercity travel market. At present, however, automobile driving costs are higher than prewar costs because of greater maintenance required to keep up older cars and higher tire prices. With respect to the relationship between railroads and bus-carriers, it should be noted that competition has reached a state of relative stability in many areas. However, unless railroads are able to increase their load factor either by lower fares or more attractive service, or both, they would be at a disadvantage in competition with the bus. According to one author, "The greater seating capacities of rail equipment units naturally place that carrier at a disadvantage in comparison with competitors whose smaller units may acceptably serve light density routes without much reduction in the load factor, and are more adaptable to traffic variations on the heavier routes."Moreover, at a given fare, bus operation requires fewer persons per vehicle in order to show a profit, since the cost per bus-mile, at least in 1933, was lower than the cost per coach-mile (see Passenger Traffic Report, page 93). The national average revenue per passenger-mile (effective fare level) is now very little different in buses and in railway coaches, and there has been some tendency for the difference between the two to narrow in recent years. Both agencies will in the foreseeable future be able to maintain a lower fare than scheduled airlines. Average airline revenue per passenger-mile recently has been running slightly above 4.5 cents compared with a corresponding figure for rail coach and intercity bus in the neighborhood of 1.7 cents. With respect to deluxe intercity traffic, costs of airline travel are now in some instances below the first-class rail rates, including sleeping accommodations and meals enroute. In this case, rail fare reductions along the lines suggested by the Coordinator might be effective in competing against air carriers. For "reserved service" (transportation of distance passengers with standard but not luxurious sleeping and parlor car accommodations), the Passenger Traffic Report suggested a 3-cent basic fare, including berth. For de luxe service" (high-speed trains operated with few or no stops exclusively for reserved passengers desiring separate rooms, restaurant cars, lounge and club cars, bath, barber, valet and maid service, radio, dance, and recreation facilities) a 5 cent basic fare, including room and all incidentals was suggested. 1/Passenger Transport in the United States, 1920-1950, hy Lewis C. Sorrell and Harry A. Wheeler, Railway Business Although these fare adjustments may not be precisely the correct ones to produce maximum revenue, it would seem that they indicate a method by which the railroads could continue to carry a large share of the passenger traffic. The Board of Investigation and Research found, on the basis of 1939 traffic, that the total costs of transporting a passenger in the reserved section of a limited train and in an airplane, including a moderate return on invested capital and allowing for the greater circuity of rail routes, were almost the same -- 6.5 cents per air-mile by rail and 6.25 cents by air. 1/Although it is not known whether this relationship is applicable at present, air costs will no doubt be lowered with the use of improved and larger planes. The railroads might reduce costs per passenger-mile as much or more by reducing fares and improving their load factor. 3. Problems Associated with Service Improvements The foregoing review of characteristics of rail passenger service and apparent needs for improvement suggests that the chief postwar problem of the carriers is that of increasing the payload per car. Even with a small volume of business, profits are attainable if equipment and facilities are fully utilized. Conversely, a large volume of business might be unprofitable if the average load factor is low. In order to meet this problem, the railroads must, first, provide an increasingly attractive service in order to stimulate the demand for rail travel; second, reduce costs per passenger-mile by adjusting quantity and quality of service to demand, and installing more equipment of lighter weight; and third, more actively promote the marketing and sale of the service. Coach service (other than commutation) During the decade of the 1920's coach traffic declined, partly because of the high fare of 3.6 cents per mile generally in effect and partly because the railroads made relatively few improvements in service and equipment. This decline was accentuated from 1930 through 1932 because of the economic depression, although sleeping and parlor car traffic dropped off even more sharply. After 1933, coach traffic and sleeping and parlor car traffic both followed an upward trend, although the former showed the greater increase during the remainder of that decade. During the war period coach traffic continued to outrun by far the sleeping and parlor car traffic. It is difficult to appraise the relative effect of competition on these two classes of noncommutation rail traffic in the early postwar years, but it will certainly be keenly felt in both cases. Whereas the coach service is relatively free from air competition and should be able to hold its own with bus competition, the reserved service by rail is in direct competition with airlines, not only as to price but as to service. 1/The National Traffic Pattern, Board of Investigation and Research, The problem confronting the railroads in providing coach service will be treated under two headings, (1) the fare level and (2) service and ●quipment. (1) The fare level Along with the national income available for transportation expenditure, and the competition of other agencies for traffic, one of the most important factors influencing the demand for rail passenger travel is the fare level. While the effect upon traffic and revenue of a change in fares cannot be precisely calculated because of such factors as varying elasticity of demand for rail travel, competition, and variations in national income, the experience of recent years has shown a definite inverse relationship between the effective fare level (average revenue per passenger-mile) for coach travel and coach traffic and revenue. Table 3 shows the relation between traffic volume and revenue and the revenue per passenger-mile. Year Table 3.--Selected Statistics of Coach Traffic and Revenue Revenue Passenger-miles Revenue per passenger-mile (average in cents) (thousands) Sources: For years 1929 through 1936, Interstate Commerce Commission, |