Amtrak more expensive than flying?

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*** NOTE THESE POSTS WERE ORIGINALLY POSTED TO A THREAD OVER 5 YEARS OLD ***

I'm a VP at an online travel agency (I won't discuss which one, but it's similar to Expedia) and I'm constantly amazed by Amtrak's blatant disregard for the volume market. If I were to acquire these amazing, fixed routes (like Miami to Boston), I would fill every seat for a competitive price. I guess the beauty of government assistance is it constantly pays to fail.

Here's what we should be demanding from our trains:

  • Competitive pricing - lower than direct airline fares, since trains are more fuel-efficient than any plane. I think the rule should be, "trains should be cheaper than it costs to drive somewhere - in a Prius."
  • More sleeper cabins, again for a lower price. I wouldn't care if you nickel-and-dimed me for service, amenities, food, etc.
  • Meal plans. Unlimited food, drinks, and alcohol (from origin to destination) at a fixed price.
  • Extended routes. I know a few great tourist destinations that would kill to get their old train routes back.
 
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So the theory is that because you can fill every seat at a lower price, that will make Amtrak become profitable? OK. Would the actual cost of providing said service come into the equation somewhere beyond just the fuel cost perhaps? :D
 
And of course You and your Company would Profit @ the expense of Amtrak, and what is your idea for being Compensated for your Services, Commissions or Fees paid by Who? ( as was said, Lower Fares don't result in Profits!) plus Taxes would become involved (no Taxes on Amtrak Tickets and Services currently) since you are a For Profit Enterprise! Also have you looked @ the North East Corridor(Boston-Washington) where Amtrak competes with Airlines, Buses, Car Rental Companies and Limo Services and takes a Substantial Share of this Market and it is continuing to grow!

I'm not one to Discourage Innovative Ideas and Private Business but NO Passenger Service in the World makes a Profit and ALL have Government Subsidies of one kind or another! If Investors and Companies thought they could make a Profit running Passenger Trains there would already be such Operations! Many have tried but all have failed including the Class I Railroads which is the reason Amtrak Exists!
 
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Amtrak's biggest problem right now is that they really can't expand capacity without new equipment, and they don't have the money for new equipment.

Meal plans for coach would be nice, though I worry about unlimited alcohol. Maybe some sort of drink ticket system...each person gets X number of drinks. Sleeper cars already have "mean plans" which include all three meals. It's not "unlimited" food, but all meals are included (and their meals do have decent portions, in my opinion.)

Extended routes would also be really nice, but it can require a LOT of additional cost. Equipment may be used that's simply not available to expand it, lines may need to be upgraded in order for the train to go at a reasonable speed, etc.
 
The first one is all about the rules of economics. If people are willing to pay more and the trains are already filled, why lower your price? Many people think the trains are running almost empty.
 
The first one is all about the rules of economics. If people are willing to pay more and the trains are already filled, why lower your price? Many people think the trains are running almost empty.
If one ascribes to what-the-market-will-bear pricing, sure - that's the way to go. But over time don't be surprised that one loses ridership as other options come available. Such a approach is considered pretty old-school, and is typically focused on quarter to quarter earnings, with little concern for the longer term. Conversely, as we and others have learned from the online software world: we allow the potential customers to use our software for 90 days (and in fact they can even download a fresh copy at the end of 90), and at the end of that time they are asked to register is. Guess what: we now own something like 98% of our marketplace. True only about 40% have registered - which is more than enough to make us quite profitable... but we also have the other 60% quite knowledgeable about how to use our software, and not any competitions... so, the free copies we expensed as advertising, with the hope that they will eventually will become registered copies... and have made it very difficult for any competition to move into the marketplace.

How does this apply to Amtrak - if I were to run it: I would have cheap days once a month or something like that. I'm pretty sure those that currently ride Amtrak, aren't going to go anywhere, but would like to expand the user base: so, let new customers ride one trip for 50% off - let them come to experience Amtrak, maybe, just maybe they'll be back. Pricing Amtrak at what the market will bear, will attract very few new customers, and as the existing ones become older and less inclined to travel (late retirement), the population slowly decreases... to unsustainable, and then zero.
 
Software pricing is its own rather unique world because the marginal cost of producing a unit of software is nearly zero. That's not the case for Amtrak service.

Yes, there is a risk that pricing at what the market will bear might be undermined by new developments in the market. But I think the last major discontinuity in the long-haul transportation market -- "major" in the sense of disrupting market prices -- was the advent of Southwest Airlines as a significant player. Until another discontinuity comes along, it's prudent for Amtrak to price in order to maximize profit (or I should say, minimize loss). They are constrained, however, by a public service obligation in some respects.
 
Software pricing is its own rather unique world because the marginal cost of producing a unit of software is nearly zero. That's not the case for Amtrak service.
You are absolutely right. The model of software pricing for a commodity that has close to zero marginal cost for producing an additional unit, for pricing a commodity that typically has a marginal cost per additional unit close to or greater than what the market will bear is as close to lunacy as one can get.
Of course, if some source of funding decides that for the greater good of humanity they want to underwrite the difference between the fare charged and the marginal cost, more power to them. Under those circumstances one can charge whatever balances things out. In principle the charge could even be zero. But in case of the Congress the guidance given is pretty much exactly the opposite.

Also remember that Congress has hamstrung Amtrak by placing restrictions on what the minimum charges can be as a proportion of the maximum ticket charge. So just a brilliant idea to charge less than that will only run one afoul of Congress as things stand.
 
Obviously a failure to communicate on my part. Let's try again.

The point I was trying to make had to do with depth of customer base. Let's try differently: a butcher sells steak at $4/lb and notices that it sells out every day. So he raises the price to $5/lb and again it sells out. He again raises it ... incrementally, eventually to $10/lb, and he some days sells out, but other days does not. But over time he finds that the number of days he doesn't sell out increases. So, he tries the reverse process and starts lowering the price. But he finds that he has to go a long way down before he sells out again, and it seems to be at the expense of his lower priced cuts. The point I was trying to make was: at $4/lb the number of customers that he couldn't serve went half way around the city block, and started forming before he even opened. And even though at $9/lb he still consistently sold out, the number of customers that got left out was quite small. And why when he decreased the price it didn't bring more customers back... because those that had been priced out, had found alternatives. That's my concern with Amtrak: an ever shrinking potential customer base. Hence the suggestion of enticing new customers, or potential customers, by one day out of thirty, offering pricing that yes is going to lose money, immediately; but over the longer term may be the difference btwn having customers in the future or not. One might note that the National Park system has done this - they found that with $20 entry fees, guess what: the number of people that visited decreases... so, what did they do? They now have Nat Park day(s) twice a year where there are no entry fees... and equally huge surprise, they've managed to put the parks back on the palette for a lot of people... they may not be able to afford it every week, but at least they now consider them as an option. Under Reagan the parks were told to break even, so up went the fees. Then guess what, as per above, most of the customers became foreign customers, especially when the dollar was weak... but when the dollar gets stronger, then even they don't show up in droves... any company needs to worry about its customers, both immediate, and potential. That's my point.
 
Obviously a failure to communicate on my part. Let's try again.
The point I was trying to make had to do with depth of customer base. Let's try differently: a butcher sells steak at $4/lb and notices that it sells out every day. So he raises the price to $5/lb and again it sells out. He again raises it ... incrementally, eventually to $10/lb, and he some days sells out, but other days does not. But over time he finds that the number of days he doesn't sell out increases. So, he tries the reverse process and starts lowering the price. But he finds that he has to go a long way down before he sells out again, and it seems to be at the expense of his lower priced cuts. The point I was trying to make was: at $4/lb the number of customers that he couldn't serve went half way around the city block, and started forming before he even opened. And even though at $9/lb he still consistently sold out, the number of customers that got left out was quite small. And why when he decreased the price it didn't bring more customers back... because those that had been priced out, had found alternatives. That's my concern with Amtrak: an ever shrinking potential customer base. Hence the suggestion of enticing new customers, or potential customers, by one day out of thirty, offering pricing that yes is going to lose money, immediately; but over the longer term may be the difference btwn having customers in the future or not. One might note that the National Park system has done this - they found that with $20 entry fees, guess what: the number of people that visited decreases... so, what did they do? They now have Nat Park day(s) twice a year where there are no entry fees... and equally huge surprise, they've managed to put the parks back on the palette for a lot of people... they may not be able to afford it every week, but at least they now consider them as an option. Under Reagan the parks were told to break even, so up went the fees. Then guess what, as per above, most of the customers became foreign customers, especially when the dollar was weak... but when the dollar gets stronger, then even they don't show up in droves... any company needs to worry about its customers, both immediate, and potential. That's my point.
It would be cool if they did something major for ticket prices on National Train Day, because that would be a good tie-in.

Ultimately, though, is it price that pushes people away from Amtrak, or is it other factors? That's going to be different in different places, but I'm guessing outside of the corridor markets price isn't the main issue. It's the skeletal network, length of trip to get many places, weird or bad transfers, and other things that a lower price just won't solve.
 
Ultimately, though, is it price that pushes people away from Amtrak, or is it other factors? That's going to be different in different places, but I'm guessing outside of the corridor markets price isn't the main issue. It's the skeletal network, length of trip to get many places, weird or bad transfers, and other things that a lower price just won't solve.
Edit: Quote is from jebr, not as shown. Fixed

I agree with jebr's comment above. I don't claim that we're the typical Amtrak passenger, but the times we've chosen to use Amtrak, price was not the deciding factor. We could have driven or flown for less money and gotten there a little or a lot sooner, but taking Amtrak was less hassle overall and a unique experience. It wasn't about price.
 
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Obviously a failure to communicate on my part. Let's try again.
The point I was trying to make had to do with depth of customer base. Let's try differently: a butcher sells steak at $4/lb and notices that it sells out every day. So he raises the price to $5/lb and again it sells out. He again raises it ... incrementally, eventually to $10/lb, and he some days sells out, but other days does not. But over time he finds that the number of days he doesn't sell out increases. So, he tries the reverse process and starts lowering the price. But he finds that he has to go a long way down before he sells out again, and it seems to be at the expense of his lower priced cuts. The point I was trying to make was: at $4/lb the number of customers that he couldn't serve went half way around the city block, and started forming before he even opened. And even though at $9/lb he still consistently sold out, the number of customers that got left out was quite small. And why when he decreased the price it didn't bring more customers back... because those that had been priced out, had found alternatives. That's my concern with Amtrak: an ever shrinking potential customer base. Hence the suggestion of enticing new customers, or potential customers, by one day out of thirty, offering pricing that yes is going to lose money, immediately; but over the longer term may be the difference btwn having customers in the future or not. One might note that the National Park system has done this - they found that with $20 entry fees, guess what: the number of people that visited decreases... so, what did they do? They now have Nat Park day(s) twice a year where there are no entry fees... and equally huge surprise, they've managed to put the parks back on the palette for a lot of people... they may not be able to afford it every week, but at least they now consider them as an option. Under Reagan the parks were told to break even, so up went the fees. Then guess what, as per above, most of the customers became foreign customers, especially when the dollar was weak... but when the dollar gets stronger, then even they don't show up in droves... any company needs to worry about its customers, both immediate, and potential. That's my point.
It would be cool if they did something major for ticket prices on National Train Day, because that would be a good tie-in.

Ultimately, though, is it price that pushes people away from Amtrak, or is it other factors? That's going to be different in different places, but I'm guessing outside of the corridor markets price isn't the main issue. It's the skeletal network, length of trip to get many places, weird or bad transfers, and other things that a lower price just won't solve.
Here, even though we're right on the main UP line and Amtrak stops here - people are shocked that Amtrak is even a choice. When I talk to them the price question comes up, and generally it's just above their point of being willing to experiment... but a "ride anywhere for $50" one (National Train Day would be excellent) or two days a year, would allow those train-virgins to sample the waters and not be out that much. Given my experience and me telling them about it, I know that several people around here are going to give it a try next time they need to go somewhere that Amtrak makes sense... but they were totally in the dark before talking about it.

W/re pushing people away from Amtrak - don't think it's the price... at least around here it's more of just not knowing it's out there, first; and/or second, previous trashy Amtrak from the 80's experiences, which never wish to repeat, and they have no idea that things have improved so much (that's what kept me off for three decades).
 
So the theory is that because you can fill every seat at a lower price, that will make Amtrak become profitable? OK. Would the actual cost of providing said service come into the equation somewhere beyond just the fuel cost perhaps? :D
Exactly! They might lose money on each ticket, but make up for it in volume! :D
I'd love for Amtrak to run 10 times as many trains, and have the lower prices that reflected that greater supply.

But, as long as they're not provided the funds for expansion (equipment, staffing, track rent, track capacity improvements), it ain't gonna happen.
 
Just a follow up: if one is in a major metro center, then price might be a factor, but like RDD, just a puddle jump to SFO is several hundred dollars; or one has to drive almost three hours to SMF to get reasonable fares. When I went to LNK in May - it would have been $500 via the flying cattle car; or $138 via Amtrak and the time difference might have been half a day... but via the flying cattle car arrived all stressed out; or Amtrak with a smile and having seen 1800 miles zip by at a near human speed.
 
*** NOTE THESE POSTS WERE ORIGINALLY POSTED TO A THREAD OVER 5 YEARS OLD ***

  • Competitive pricing - lower than direct airline fares, since trains are more fuel-efficient than any plane. I think the rule should be, "trains should be cheaper than it costs to drive somewhere - in a Prius."
  • More sleeper cabins, again for a lower price. I wouldn't care if you nickel-and-dimed me for service, amenities, food, etc.
  • Meal plans. Unlimited food, drinks, and alcohol (from origin to destination) at a fixed price.
  • Extended routes. I know a few great tourist destinations that would kill to get their old train routes back.
Fuel costs are a much smaller percentage of Amtrak's operating cost than it is for the airlines. The costs drivers are in staffing the trains, the stations, paying track access fees, maintenance of the rolling stock, security, overhead, maintenance of tracks, and so on.
If you want to get the old train routes back, first you have to talk to the freight railroads who own the tracks (other than the NEC) and find out if the tracks on the route you want still even exist. The railroad system we have in the US today is the end result of decades of consolidation, abandonment of many miles of Right of Ways, tearing out tracks where double tracks were no longer needed, or letting tracks degrade to lower class speed ratings because they no longer wanted to maintain them for passenger train speeds. the airlines get the benefit of a subsidized air traffic control system and airports that were built by airport authorities set up by local governments.

I'm just scratching the surface of a complex topic here.
 
  • More sleeper cabins, again for a lower price. I wouldn't care if you nickel-and-dimed me for service, amenities, food, etc.
I would care, and care hole lot, if Amtrak started to "nickel-and-dime" its sleeper class (aka LD's First Class), passengers for service, for amenities, for food. That's the path taken by airlines, and it sucks. Use of the First Class lounge (ClubAcela, et al) should not be an extra charge. Luggage should not be an extra charge. Meals should not be an extra charge.

As "a VP at an online travel agency" I would think you would have a good grasp of First Class means.
 
Seems to be a "hit and run" troll, if you ask me. Yeah, I know, nobody asked me. ;)
 
Just a follow up: if one is in a major metro center, then price might be a factor, but like RDD, just a puddle jump to SFO is several hundred dollars; or one has to drive almost three hours to SMF to get reasonable fares. When I went to LNK in May - it would have been $500 via the flying cattle car; or $138 via Amtrak and the time difference might have been half a day... but via the flying cattle car arrived all stressed out; or Amtrak with a smile and having seen 1800 miles zip by at a near human speed.
How much would OMA cost? I don't see too many price-conscious people flying out of LNK, but I could see them flying out of OMA.

My only problem with the "anywhere for $50" option is that it could cause an issue with someone buying some crazy long three-overnight ticket for $50, losing some major money in the process. Maybe something like $50 for an unlimited coach class ticket for 24 hours from first departure, though. That way they can still experience it but not lose tons of money.
 
Just a follow up: if one is in a major metro center, then price might be a factor, but like RDD, just a puddle jump to SFO is several hundred dollars; or one has to drive almost three hours to SMF to get reasonable fares. When I went to LNK in May - it would have been $500 via the flying cattle car; or $138 via Amtrak and the time difference might have been half a day... but via the flying cattle car arrived all stressed out; or Amtrak with a smile and having seen 1800 miles zip by at a near human speed.
How much would OMA cost? I don't see too many price-conscious people flying out of LNK, but I could see them flying out of OMA.

My only problem with the "anywhere for $50" option is that it could cause an issue with someone buying some crazy long three-overnight ticket for $50, losing some major money in the process. Maybe something like $50 for an unlimited coach class ticket for 24 hours from first departure, though. That way they can still experience it but not lose tons of money.
Actually KSU, Manhattan was the target... but LNK allowed her (*) to drive up 77 from KSU to there. But even to OMA it would have been 2x, 3x Amtrak. Next month we'll do the reverse trip and instead of leaving me at LNK it'll be in fact OMA since I need to talk the some UP people there.

W/re limitation on the tickets: absolutely - don't want to give the barn away with the horse... but still allow them enough to get hooked on it. And yes, coach only.

(*) this was about my oldest, a DVM student at KSU, and getting her and her car to RDD for her summer internship... and in August, back to KSU for one last year before she gets to hang out her own shingle :)
 
Here, even though we're right on the main UP line and Amtrak stops here - people are shocked that Amtrak is even a choice. When I talk to them the price question comes up, and generally it's just above their point of being willing to experiment... but a "ride anywhere for $50" one (National Train Day would be excellent) or two days a year, would allow those train-virgins to sample the waters and not be out that much. Given my experience and me telling them about it, I know that several people around here are going to give it a try next time they need to go somewhere that Amtrak makes sense... but they were totally in the dark before talking about it.
Amtrak is prohibited in the annual appropriation bills passed by Congress from offering "a discounted fare of more than 50 percent off the normal peak fare" on any route that is supported by federal funds. That means the NEC, the LD trains, and the corridor trains that are not yet fully supported by a state subsidy. Even for the state supported corridor trains, the language may preclude discounts of > 50% because there will still be federal operating subsidies and capital grants that help pay for part of Amtrak's overhead that is applied to the state supported trains.
For an example of Congressional micro-management and overreach, hard to beat the 50% limit. Otherwise Amtrak could offer short notice super discounts on the NEC for slow parts of the week such as Saturday evening.

Correction: checking the language of the FY2012 appropriations bill, it does make an exception for state supported corridor services for the 50% discount, so the state could allow large price discounts if they want to.
 
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Amtrak is NOT more expensive than flying - at least between Chicago and New Orleans. Just priced two people traveling round trip and the City of New Orleans, with a roomette, priced out between $100 - $180 less that roundtrip airfare (depends on airline, etc.). Amtrak coach seating roundtrip for two of us was almost exactly half the coach airfare.
 
Amtrak is NOT more expensive than flying - at least between Chicago and New Orleans. Just priced two people traveling round trip and the City of New Orleans, with a roomette, priced out between $100 - $180 less that roundtrip airfare (depends on airline, etc.). Amtrak coach seating roundtrip for two of us was almost exactly half the coach airfare.
All depends on where you're going and what you're willing to sacrifice. It's roughly the same to fly MSP to BOI as it is to take the train/bus, but taking the airline is a lot faster and more convenient (no middle-of-the-night transfers.)
 
Amtrak is NOT more expensive than flying - at least between Chicago and New Orleans. Just priced two people traveling round trip and the City of New Orleans, with a roomette, priced out between $100 - $180 less that roundtrip airfare (depends on airline, etc.). Amtrak coach seating roundtrip for two of us was almost exactly half the coach airfare.
The same is true between St. Paul and Minot, a route I often travel. I don't think that anyone will deny that there are still some sweet spots for Amtrak. Nevertheless, try other busy city pairs (New York-Los Angeles, Miami-San Francisco, for instance), and Amtrak isn't really price competitive.
 
I think Amtrak should have some discount programs when trains are no where near full. I guess the government regulation permits this. But lets say a train for tomorrow at the highest ridership point on a route is at only 25% of capacity, it would make sense to try and get those seats full to increase revenue. Amtrak should be allowed to have last minute deals for trains 7, 3, or 1 day ahead of departure when there is capacity.

As far as getting new riders, I don't think price is a major factor. I think train frequency, delays, and speed are much bigger factors. Other than a few lines, most other areas would be difficult to get passengers from driving or flying.
 
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