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ERIE - LACKAWANNA MERGER STUDY
Competitive Passenger Train Service
Study XXI
The purpose of this study was to review all competitive through passenger train service and to determine what changes would be made as a result of merger.
The competitive through passenger trains were considered to be Erie trains between Hoboken and Chicago and Lackawanna trains between Hoboken and Buffalo and Hoboken and Binghamton. Present schedules, consists and revenues of these trains, including passenger, mail, express. and dining cars, were analyzed in the light of competitive and other reasons for operating trains at the times scheduled. In the case of the Lackawanna, train connections with the Nickel Plate at Buffalo were also considered. A special "on-and-off" report for the two weeks of June 1-14, 1957, was made of all passengers on the trains being studied. This report included information regarding the origin stations of passengers their destinations and revenue received.
Proposed schedules, consists and estimated revenues and. expenses were developed and a comparison was made between present and estimated revenues and expenses.
The table below summarizes the number of present competitive through trains and the proposed through trains.
P R E S E N T P R O P O S E D
Between Eastbound Westbound Total Eastbound Westbound Total
Hoboken-Chicago 3 3 6 3 3 6
Hoboken-Buffalo 4 4 8 2 2 4
Hornell-Buffalo - - - 1 1 2
Hoboken-Binghamton 1 1 2 1 1 2
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Total 8 8 16 7 7 14
The proposed passenger train schedules provide for the operation of through trains via the Lackawanna between Hoboken and Binghamton and one train per day in each direction between Hoboken and Binghamton via Port Jervis making connections with through service at Binghamton. The Lackawanna route was chosen for the proposed service as it is shorter and serves a more populous territory including Scranton, Pa., and the Pocono resort area. Between Coming and Buffalo the Erie would be used.
The estimated, loss in passenger revenues was $312,590 which reflects both "direct" and "dependent" losses. Direct losses were those considered to be attributable to revised passenger train operations of the through trains being studied. Dependent losses were:those which would result from the loss of passengers who would have moved to or from points on the line of the merged company beyond the route of the competitive trains being studied.
The loss of mail revenue was estimated to be $158,883, reflecting complete loss of local mail on the Lackawanna line between Corning and Buffalo offset by increased RPO miles for through mail carried over the longer Erie route.
An increase of $89,986 was estimated in express revenue which would result from anticipated longer hauls after merger. Traffic now handled via Lackawanna between Hoboken and Buffalo, for example, would move via the merged company to and from points beyond Buffalo, such as Chicago.
Dining car revenue was assumed to be unaffected by merger as it was thought that increased long haul business would offset the decrease in the total number of passengers.
The following items of expense were included in the out-of-pocket costs of operating existing service as compared with the proposed service of the merged company
Crew Wages
Wages were developed on an actual basis.
Locomotive Expenses
Repairs were based on normalized maintenance costs for diesel locomotives an outlined in Appendix B. Fuel costs are based on Erie' 1956 costs per gallon at the consumption rate developed for road passenger units.
Passenger Train Car
Passenger car miles were developed for the following types of care divided to show the miles made by each type of car separately:
- Coach
- Diner
- Lounge
- Head End
Estimated costs of repairs per mile were developed for each class of car listed above reflecting the different requirements of the various classes and designed to show the average normal cost of repairs.
The cost of repairs permits by class of car was applied the miles made by the different classes and included the merger study in order to develop estimated savings in repair costs.
Train Supplies and Expenses
Costs were based. on system average costs per passenger train car mile.
Dining and Buffet Expense
Cost of operating this service were available on an actual basis and the estimated savings were based on existing costs.
Equipment Rents
A loss was estimated which represents the 1956 net mileage of head end cars interchanged between the Nickel Plate and the Lackawanna.
Payroll Taxes
Standard allowances were made for payroll taxes and vacations, using 60% of repairs to locomotives and cars as representing the labor portion of those costs.
Pullman Deficit
Under existing contracts with the Pullman Company, the operating carriers make up any deficits incurred on Pullman cars furnished by that company and these deficits can be allocated on a per car basis. Savings were estimated on the basis of proposed changes in the operation of Pullman equipment as a result of merger.
Joint Facility Rents
A loss, reflecting 1956 revenue received by the Lackawanna from the Nickel Plate for the use of facilities at Buffalo, was estimated. It was also estimated that on the basis of proposed passenger train consists that an additional 1,478 head end cars would be handled at Chicago annually on which joint facility charges payable to the C&WI of about $63-00 per car would be applicable.
A recapitulation of the revenues and expenses of the present and proposed operations as well as estimated annual savings is shown on Schedule A.
Schedule A
Competitive Passenger Train Service
Recapitulation of Present and Proposed Operations
P r e s e n t O p e r a t i o n s Proposed Estimated
Erie DL&W Total Operations Savings
Train Miles 2,181,816 1,290,016 3,471,832 2,933,754 538,078
Unit Miles 4,363,632 2,580,032 6,943,664 5,799,910 1,143,754
Car Miles 17,362,020 10,527,088 27,889,108 25,224,918 2,664,lgo
Revenues
Passenger $3,001,766 $2,304,750 $ 5,306,516 $ 4,993,926 $312,590 L
Mail 2,721,123 2,071,806 4,792,929 4,634,046 158,883 L
Express 1,727,047 830,226 2,547,273 2,637,259 89,986
Dining & Buffet 374,530 353,648 728,178 728,178 ---
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Total $7,824,466 $5,550,430 $13,374,896 $12,993,409 $381,487L
Expenses
Crew Wages $1,773,028 $ 994,147 $ 2,767,175 $ 2,473,948 $293,227
Loco Exp 1,454,835 842,535 2,297,370 1,933,690 363,680
Pass Train Car
Repairs 823,521 497,316 1,320,837 1,181,788 139,049
Train Supplies and
Expenses 546,904 409,504 956,408 880,350 76,058
Dining and Buffet
Expense 458,004 470,315 928,319 898,014 30,305
Equipment Rents
(Credit) --- 19,957 19,957 --- 19,957 L
Payroll Taxes 350,041 215,591 1,565,632 502,613 63,019
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Total $5,406,333 $3,4O9,451 $ 8,815,784 $ 7,870,403 $ 945,381
Net Revenue from
Train Operations $2,418,133 $2,140,979 $ 4,559,112 $ 5,123,006 $563,894
Other Expenses
Pullman Deficit$ 354,811 $ 210,002 $ 564,813 $ 414,689 $150,124
Joint Facility Rents
(Credit) --- 68,394 68,394 93,114-Dr. 161,508 L
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Total $ 354,811 $ 141,608 $ 496,419 $ 507,803 $ 11,384 L
Net Revenues $2,063,322 $1,999,371 $ 4,O62,693 $ 4,615,203 $552,510
