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Mr. Kirk. Idle equipment a good part of the day, and also this is the inability to correct the situation in the fare structure. I think it is obvious to most of us that mass transportation of people in most metropolitan areas is operated at a loss, be it run by private enterprise or public authority. The MTA, the Metropolitan Transit Authority in the city of Washington, where I reside and had some knowledge, operates at a deficit of $20 million per year. And this is why the trustees very basically maintain, whether we like it or not, it is a political philosophy that mass public transportation today is a public responsibility.
It will not attract and keep capital in it.
Senator LAUSCHE. Why can't you adjust your charges for fares so as to bring a self-sustaining income?
Mr. KIRK. We have had considerable experience along those lines, Senator, and I think you might look at one of our exhibits. I will try to spot it here. I think if you will look at exhibit No. 10, this will show you some figures for 1947 through 1963.
Indicated in the first column, commuting passengers expressed in thousands, using 1947 as an index of 100, and if you look down that column, you will find in 1963 we were carrying less than half that we were in 1947. But also, look
Senator LAUSCHE. That is in 1947. You were carrying 30,000 in round numbers, and in 1963 it was 13,000?
Mr. KIRK. Let's call it $30 million, sir, because those-
Mr. KIRK. But our revenues went from $7 million to $12.5 million and this is through the effort on our part in the last few years, and in early managements, to increase revenues by increased fares.
Now, we will set aside the repeal of the Federal excise tax which reportedly helped us when we didn't change the fare and got the benefit of that, although benefit never came through, but our revenues went down, but that aside early in 1962 we increased across-the-board passenger fares.
We were hesitant to do so because the records showed that passenger fare increases did not produce the results. Attrition set in and we are convinced after our 1962 expenses, and we tried to make this plain before other tribunals and to public agencies generally, that we have reached the point of diminishing returns with respect to fare increases.
Senator LAUSCHE. Did you get any of the moneys that were allocated to different cities or railroads under the Mass Transportation Act to conduct an experiment whether reduced prices and increased traffic service would bring a greater number of passengers?
Mr. KIRK. Let me just, before I answer that question, make one more comment on the former question; namely, farewise the New Haven Railroad has about the highest fare structure in the country.
Senator PASTORE. And at this point, could we have that inserted in the record.
At your convenience, will you have someone give us a schedule of the fare rates?
Mr. KIRK. Yes, we will, Mr. Chairman.
(See supplemental exhibits, dated March 11, 1965, inserted by the trustees, the New York, New Haven and Hartford Railroad Co. p. 318.)
Mr. KIRK. As regards the Mass Transportation Commission experiment, New Haven did experiment in that experiment.
Senator LAUSCHE. How much money was assigned?
Mr. KIRK. $600,000 on an annual basis for 6 months. After that, it was reduced to $300,000 for the last 6 months.
Senator LAUSCHE. What did you have to do in order to get that $600,000 on an annual basis?
Mr. KIRK. We reduced our fares by 10 percent and increased the frequency of our service and the results were negative. We did not invite new passengers on our lines on the one hand, nor did we increase our revenues on the other hand.
Senator LAUSCHE. Did you make any study to conclude by how much
you would have to increase your service and by how much you would have to reduce the fares in order to attract more passengers ?
Mr. KIRK. Concurrently with the experiment we conducted along those lines in Boston, was an experiment conducted by the Boston & Maine Railroad under similar conditions, but there, there was an enormous increase in the frequency of the service, and the fare reductions were on the order of 40 percent.
Now, both of those experiments, 10 percent on our side of the fence with respect to fare reductions, 40 percent, I think, I think 40 percent with respect to B. & M., both experiments conclusively proved, to our way of thinking, that this was not the answer to this problem.
Senator LAUSCHE. We had an expert testify before the Surface Transportation Committee who said, with many people you would have to pay them to ride the railroads and still you couldn't get them to go on it in this commuter service.
Mr. SMITH. May I interject some points there, so far as the west end service is concerned, going into New York City, of which I am a daily
The problem about increasing our frequency of the use of our services is that we cannot meet the flexibility in the middle of the day which a private automobile provides. The road, as you may know, the
new, big Connecticut Turnpike, parallels our line right into New York City, and it is much more convenient for three or four or five women to take a car and there isn't anything we can do to overcome that, and it is the loss of this off-peak business on the west end which has aggravated the problem.
Now, the other thing, let me explain to you another thing. I have two boys who commute from out in our section of Fairfield. When the fares went up, they took their automobiles and drove in to a nearer station because of the fine road. They could beat the commutation train from Southport to Boroton, and then they maintained their fare.
We cannot meet basically the private automobile in the situation which exists, except in the rush hours, and we have as many people as we need on the rush hours.
Senator LAUSCHE. I want to get into another subject.
Recommendations have been made to this committee that the railroads could be helped by giving to them the same rights that we give to their competitors in the carrying of bulk cargoes. Competitors are not subject to the Interstate Commerce regulation on bulk cargoes.
Does that at all affect your railroad ?
Mr. KIRK. I am going to ask Mr. Dorigan to address himself to that question.
Mr. DORIGAN. Not very greatly. We are in favor of it and we would be better off freightwise, but because of our short haul, because of the necessity of connecting with other railroads, we would only get a short percentage of the overall improvement.
Senator LAUSCHE. Recommendations have also been made that to the railroads there be granted the right to engage in other modes of transportation than railroads; that is, trucking and airlines, which now under the law is prohibited to you.
Would the granting of such a right be helpful to you?
Mr. DORIGAN. Senator, we have a trucking company, a wholly owned subsidiary, and that ties in with our freight operations and does carrier trucking.
The airlines part of this, of course, we are not financially in a position to think about.
Senator LAUSCHE. With regard to the carrying of cargo or freight, Senator RIBICOFF testified yesterday that you are suffering an erosion of
your income on the freight business because of the competition of the trucklines running parallel to your line.
Mr. KIRK. I think that is substantially correct.
Senator LAUSCHE. Now then, I think it was Kennedy that recommended that we remove the prohibitions—no, that we remove the requirement that you procure Interstate Commerce Commission approval of reducing rates and that there be adopted a provision where you may set your minimum rates providing you don't do so for the purpose of prejudicing one community adversely in the acquisition of business.
Mr. Kirk. You are talking about freight rates?
Mr. DORIGAN. I think that there should be some easing up on the regulation of our establishment of rates, but the fact that competitors can give a quicker, faster, service in the short-haul area isn't going to benefit too greatly unless this becomes a long-haul part of a trunkline system, one line carrier, where it would be beneficial.
Senator PASTORE. Not only that, but we do get ourselves into a national controversy about the subject, which is resisted on one side by the truckers, being pushed on the other side by the railroads, that to me seems like running up against a stone wall.
Now, yes, along the lines that you have been interrogated by my distinguished colleague from Ohio, and I cite this not in criticism at all, I mean just merely to get the facts, Senator Dominick yesterday said:
Mr. Chairman, I do not want to pro ng this, but just to ke my own record in context here, I have some figures which show that the New Haven Railroad in 1963 carried about 26 million passengers, and the passengers paid a total of $41 million in revenue, which makes an average fare of $1.60 per passenger.
Now, they sustained a net loss of only 33 cents per net passenger; in other words, a 34-cent increase per passenger would seem to break them even on the basis of the 1963 figure.
Now, what is your comment on that?
Mr. KIRK. I hate to quarrel with the Senator's statistical approach in that manner, Mr. Chairman, but I think it is fundamentally an approach in error. It doesn't recognize the facts of the situation.
Let me point this out to you. A commuter in Boston who is asked to pay an additional fare of 36 cents, that is 72 cents a day. That is $3.60 a week. That individual is going to leave our railroad. This is what I had reference to before.
Now, you cannot deal in averages of this kind, of taking the woods and dividing by the number of trees, and coming up with the number of leaves on the tree. It just doesn't work.
Senator PASTORE. Is it fair for me to assume the answer to the problem that now confronts and besets the New Haven is not to be resolved by increasing the fares?
Mr. Kirk. That is correct, sir. That is our considered judgment.
Senator PASTORE. You have explored that to the point of no return, because that is the most obvious approach to increase your revenue. You have gone as far as you can without losing business. Mr. KIRK. We believe we have.
Senator PASTORE. And if you go any further in raising the fares, you are going to lose on the number of passengers?
Mr. KIRK. It would be a net loss.
Senator PASTORE. And the problem that confronts the New Haven, with reference to commuter service, is no different than the problem confronting the Nation generally on the question of mass transportation in urban areas?
Mr. KIRK. Correct.
Senator PASTORE. Now, on this question of debt service, is debt service chargeable to operating expenses?
Mr. KIRK. Debt service?
Senator PASTORE. Gentleman, I think we ought to get ourselves into comments
on the four bills that are pending here. Is that satisfactory? Before I do so, I think Mr. Pearson ought to be given an opportunity to ask any questions.
Senator PEARSON. I hesitate because I may go over some old ground, but Mr. Kirk, what percentage is freight and what percentage is passenger?
Mr. KIRK. I indicated earlier in my testimony that our freight revenues in 1964 are in the order of magnitude of 67 million, and passenger revenues, including allied services, such as mail and express, is roughly 54 million.
Senator PEARSON. I am fascinated by these figures because between 1947 and 1963 with reference to your exhibit 10, your passengers were cut in half and your revenues were doubled, almost complete
Mr. KIRK. Yes, sir, that was a race to keep up revenues with loss of passengers by increasing fares.
Senator PEARSON. And at the same time population was expanding in this entire metropolitan area.
Mr. KIRK. No question about it.
Senator PEARSON. Do I understand from the comment of the other gentlemen that the primary reason here for the loss of the passengers was the use of private automobiles in
Mr. KIRK. Let me point out, for instance, you have to distinguish between long-haul service and commuter service.
Senator PEARSON. I see.
Mr. KIRK. From Boston to New York, daily, each hour, there are three planes. Now since that service was instituted, our long-haul passengers have dropped by 25 percent, theirs have gone up by 45 percent.
Senator PEARSON. You say three planes, within an hour's time.
Mr. KIRK. Yes, sir. Now, as Mr. Smith pointed out, and as the Senator from Ohio has indicated earlier, the people won't get out of their automobiles on the one hand, nor on the other hand, you put them in automobiles when you increase your fares.
Mr. SMITH. I think also on the long-haul business, you should recognize that because of the excellent roads now existing, that the motor bus transportation from Boston to New York has increased tremendously.
Senator PEARSON. May I ask what the increased costs per passenger is between 1947 and 1963, just roughly? I think we were touching on this.
Senator PASTORE. If you haven't got it, and it takes time, we will have it inserted in the record.
Mr. KIRK. I will get it.
(See supplemental exhibits, dated March 11, 1965, submitted by the trustees, the New York, New Haven & Hartford Railroad Co., p. 318.)
Senator PEARSON. I thought he might estimate it.
Senator LAUSCHE. Mr. Chairman, I want to ask two questions and I will stay within that. I think that you testified that this area is rich. The railroads carry valuable resources and serve about 18 million people.
That is, it is an industrially rich area with communities close to each other and in the particular area with a very dense population. Is that correct?
Mr. SMITH. That is correct, sir?
Senator LAUSCHE. Now, I believe you made the statement that this increase in costs between 1963 and 1964 were beyond your control.
Mr. KIRK. Yes, sir, there were two primary factors there, increased wages and necessary increase in maintenance.
Senator LAUSCHE. Why was it beyond your control?
Mr. KIRK. We could not control what the national negotiation would result in with respect to wage rates. And we couldn't operate this
railroad on substandard wages. Senator PASTORE. Without a strike and with a strike
you ate it at all.
Senator LAUSCHE. That is the strike threat that puts it completely beyond your control to help yourself?
Mr. KIRK. Right.
Senator PASTORE. Well, of course, we don't want to leave the impression here that people don't have the right to strike. That is part of our American institution, too.
Senator LAUSCHE. I wanted to find out what he meant when he said it was beyond their control.