A friend asked me why Amtrak loses money the other day, and rather than repeat just what I could remember, I wished there were an online document that explained it in layman's terms. Is there? His take was that Amtrak should be charging enough money to cover everything. So I would need a document that would show what happens if Amtrak raises its prices that high.
jb
A document? The title "Economics for Dummies" comes to mind. A few paragraphs on "Competition" should cover it.
Amtrak's many competitors include the airlines; Bolt, Megabus, Greyhound, and other bus services; and most of all, private automobiles. (All use taxpayer-subsidized facilities to do business.) Not to overlook the option to stay at home for free, housebound for lack of other opportunities.
Our textbook should explain that (barring illegal price-fixing) the presence of even one more competitor will hold down prices in the marketplace. Of course, all the competitors have different features, pro and con. Private cars require private drivers, while buses, planes, and best of all trains allow riders to use their time otherwise. Planes are usually faster (not always on shorter center-city-to-center-city routes). Trains offer more space with no middle seats and the right to move around on board. But in the end, each consumer weighs the relative service levels and different prices -- and usually the low-price option wins. So if Amtrak raises prices too much, riders take a competing plane or bus, drive or stay home.
btw, a flip side of competition is that Amtrak helps to hold down competitors' prices, even with only one train a day. Sounds improbable, and too good to be true. But Virginians posted on this board that after the new Lynchburger train entered service, airfares decreased. Nationwide, the effect is faint, but "Economics for Dummies" should tell you that with the airline industry dominated (combined 80% market share, iirc) by just four big players, if the Amtrak LD trains are killed off, average air fares WILL go up.
Still, another useful document to introduce is the Monthly Performance Report.
https://www.amtrak.com/ccurl/188/327/Amtrak-Monthly-Performance-Report-September-2016-Final-Audited,0.pdf
In the past full year, FY 2016, on the NEC Acela and Regional ridership had weak gains or even declines, but revenues were up. That comes from raising prices; no other way to explain it. I don't see any places where Amtrak is obviously under-pricing what the market will bear. Instead, it has been aggressively pushing fare increase wherever it can, despite low gas prices aiding its biggest competitors.
I've tried to answer politely the "Why not raise ticket prices?" silliness. Perhaps others will answer the larger question of why all forms of passenger transportation lose money.