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Amtrak's free-ride policy off-track from the start

Amtrak has eliminated what it once described as a travel industry first _ a no-questions-asked, customer-satisfaction guarantee.

It was handled relatively quietly. The news was leaked several weeks ago, so there was no need to hold a news conference as there had been in July 2000, when the railroad pledged to offer customers a free repeat trip if they were dissatisfied with their service. The satisfaction guarantee was removed on Nov. 1 from the Amtrak Web site and from all ticket stock.

"This doesn't change the fundamentals of what we're doing," said Dan Stessel, an Amtrak spokesman. "Customer service will continue to be an absolute priority."

Still, Amtrak's retreat has earned the railroad some bad publicity at a time when it is struggling for customer and congressional support. What's sad is that it all could have been avoided.

George Warrington, who was president of Amtrak when the guarantee was first announced, wanted to grab people's attention and demonstrate the railroad's commitment to customers. He succeeded, but he went too far.

Amtrak's guarantee was doomed from the start because it covered things over which the railroad had no control, such as bad weather and delays caused by using tracks owned by freight trains.

"The mistake was made two years ago when Amtrak didn't structure the guarantee better," said Barbara Bund, a senior lecturer at the Massachusetts Institute of Technology who does consulting work in marketing and entrepreneurship.

Customer guarantees can be effective in building customer loyalty if they are crafted and executed well, Bund said. She said the Lands' End merchandise guarantee, for instance, is broad in scope, but the covered items are all within the online retailer's control. That guarantee reads:

"If you are not completely satisfied with any item you buy from us at any time during your use of it, return it, and we will refund your full purchase price."

With its guarantee, Amtrak promised "to make your trip a safe, comfortable, and enjoyable experience. If something isn't right, talk to any Amtrak employee and we'll try to make it right. If our efforts aren't enough, call 1-800-USARAIL for a service guarantee certificate toward future travel. Your satisfaction is guaranteed."

Before the Amtrak guarantee was put in place, it was tested for three years on the Coast Starlight, which runs between Seattle and Los Angeles. Very few passengers, about 1 in every 100,000, opted for the travel certificates.

But when the program rolled out nationally, it was a different story. In the year ending Sept. 30, Amtrak issued 101,798 certificates with a value of $8.9-million. In dollar terms, that represented a whopping 56 percent increase over the previous year, when $5.7- million in certificates were issued.

Amtrak's goal was having to issue one certificate for every 1,000 passengers, but instead it averaged about four for every 1,000 passengers.

Stessel said the biggest problem was that more and more of the certificates were issued for problems beyond Amtrak's control. He said 45 percent of the certificates issued in the most recent fiscal year were for on-time performance, including weather delays and delays caused when freight trains were given priority over Amtrak trains. The other big certificate categories were complaints about equipment 10 percent and employees 7 percent.

"People understand, most of them anyway, that delays can occur when they travel," Bund said. "I don't know what it would have made sense for Amtrak to guarantee, but certainly not everything."

David Gunn, who took over as Amtrak's president in May, agreed. He pulled the plug on the no-questions-asked guarantee last month, saying it made no sense at a time when the railroad is struggling to survive.

Ridership is holding fairly steady and revenues are up slightly, but the railroad will be in trouble unless it receives a $1.2-billion subsidy from Congress.

Stessel said customers are still being encouraged to report problems, and Amtrak employees may still issue travel certificates on a case-by-case basis.

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