The California Zephyr

Page 6

Red Ink and Discontinuance

Western Pacific’s operation of the California Zephyr showed a loss for the first time in 1957. Combined with losses incurred from trains 1 and 2, the Zephyrette’s, rumors of discontinuance began to spread throughout the company. Western Pacific reassured its employees there was no intention of giving up passenger service. In order to bolster revenues Western Pacific applied for and was granted authority to cancel one-way fares to 27 stations, which had not been served for many years and charge to the next regular stop, which in essence was a fare increase. 1960 found Western Pacific again declaring the Zephyr was operating at better than the break-even point for year around earnings with discontinuance being considered only if operations went seriously in the red. Alluring to the fact the Zephyr was losing money the company ran a contest late in 1960 through early 1961 that rewarded employees for recommending people who may want to travel via the train.

Red ink and serious financial losses in 1962 showed the Zephyr was becoming a liability. Rail travel continued in a downward trend with other forms of transportation cutting deeper and deeper into profits. By offering faster or cheaper forms of transportation more and more travelers were being lured away from the train as a means of travel. Movement of passengers between Oakland and San Francisco changed again when arrangements were agreed to on July 18, 1962 with Santa Fe for assumption of the bus service that was currently being provided by Greyhound. In 1965, attempting to bolster sagging revenues Western Pacific offered private shippers a fast, although expensive, containerized flatcar service between Oakland and Salt Lake City. These “Mark III Flexi-Van” flatcars, specially equipped with steam, air and signal lines, were coupled directly behind the power on the California Zephyr. This service was discontinued in 1966 shortly after the Railway Express Agency canceled all through express service on the Zephyr and private shippers found it to be to expensive. In an attempt to offset losses beginning January 1, 1966 reserved seat coach passengers were charged an additional amount that applied to all travel on or originating from Western Pacific territory.

On August 2, 1966 Western Pacific forwarded formal notice to the Interstate Commerce Commission (ICC) of their intention to discontinue operation of the California Zephyr from Salt Lake City, Utah to Oakland, CA. On August 31st the ICC ordered that discontinuance be suspended until January 14, 1967.

Hearings were held beginning October 10 in San Francisco and continued throughout the month in Sacramento, Oroville, Winnemucca, and Salt Lake City with a final hearing in San Francisco on October 24. On February 13, 1967 after a one-month extension of deadline the ICC denied the application and ordered the “unique” train remain in service for one more year.

In turning down Western Pacific's request to discontinue its portion of the run - from Salt Lake City to San Francisco and back - the ICC cited assets that had long enchanted Zephyr passengers, it was so scheduled that it afforded a better daylight glimpse of scenery than any other transcontinental train. The westbound passenger left Chicago in mid-afternoon, slept across the Nebraska plains, spent the next day traveling through the fir forests and deep gorges of the Colorado Rockies, slept the second night as the train rolled through the Nevada desert, and woke up on the final morning in California's breathtaking Feather River Canyon. En route, the train served good, moderately priced food in dining cars that sported vases of fresh carnations at every table. Not surprisingly, the California Zephyr proved to be increasingly popular with foreign tourists and Americans alike. During all of 1966, the Zephyr operated at 78% of capacity.

Although it operated almost at capacity in peak seasons, remained as luxuriously appointed as the day it came into operation and had received virtually no complaints from passengers about deteriorating service, Western Pacific expected to lose $560,000 on the Zephyr in 1967, largely because of rising labor and maintenance costs.

Conceding that the train "imposed a substantial economic burden on Western Pacific," the ICC nonetheless expressed optimism that the financial picture could gradually improve. One possibility: giving Western Pacific an increased share of the revenues collected jointly by the Zephyr's three operating railroads. The ICC did note “No carrier to the Commissions knowledge has been more diligent than Western Pacific in fulfilling the obligations of a passenger carrying railroad”. Western Pacific for the remainder of the year devoted almost 50% of the advertising budget to promoting the train and also established numerous incentive rate fares in an attempt to bolster ridership.

In spite of its efforts Western Pacific losses nearly doubled and on December 11, 1967 President Christy in announcing the decision to again ask for discontinuance stated "You can't run a long-distance passenger service on nostalgia." On January 16, 1968 a second application for discontinuance of service was filed with service to terminate on February 20th. Out of pocket losses for operating the California Zephyr now exceeded 1.5 million dollars per year. The ICC again suspended discontinuance pending further hearings. On July 26, 1968 the ICC again refused the application with an order to run the train at least one more year.

Joining the Western Pacific in requesting discontinuance, the Denver & Rio Grande Western petitioned the ICC on May 20, 1969 to discontinue its portion of the run between Denver and Salt Lake City effective June 16 citing losses in 1968 of $1,795,585. Opposition came from many places including Illinois Attorney General William J. Scott, acting on behalf of the Illinois Commerce Commission, who in a letter to the ICC, said the railroad did not notify the state of Illinois of its plans and he would call for a formal investigation of the rail passenger service from Illinois to the southwest in general and California in particular and the continuing trend of reducing rail passenger service “must be halted, particularly in Illinois, which has already suffered great loss of mobility in the downstate sections thru a steady reduction of service. Historically, the railroads have depended upon the Illinois public and all levels of Illinois government for growth of their rail lines and they cannot now be permitted to abandon this obligation and responsibility to provide Illinoisans with adequate transportation.”

For the final time an application of discontinuance was filed by WP on July 22, 1969. The ICC suspended the proposed discontinuance date until January 5, 1970 with hearings set for October 12, 1969. Voting 8 to 1 on February 11, 1970 the ICC released an order stating in part "operation of the train by W. P. was no longer required" but must wait 30 days or until the SP and D&RGW could arrange an interchange agreement whichever is earlier. Shortly thereafter Western Pacific announced passenger operations would cease to exist on March 21, 1970.

The United Transportation Union and the city of Chicago filed suit in Federal Court on March 12, 1970 against the ICC and the three railroads seeking a reversal of the ruling approving cancellation of the California Zephyr, citing many workers would lose jobs and the public would suffer “irreparable damage.” A three-judge panel convened on March 20th and denied the application for a temporary restraining order and interlocutory injunction, which sought to prevent discontinuing service. The death warrant for the "Silver Lady" had been signed and was ultimately affirmed by the Supreme Court on January 11, 1971.

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