A transit advocate who calls himself Captain Transit asks, “How can Amtrak charge so much for the Northeast Corridor?” His answer, which he claims to have arrived at with the Antiplanner’s assistance, is that buses carry the low-income passengers in this corridor, so Amtrak can get away with charging first-class rates for high-end passengers.
That’s not exactly correct: there are low-cost buses in a lot of Amtrak corridors, but only in the Northeast Corridor does Amtrak collect average fares exceeding 32 cents per passenger mile. In fact, fares for the Northeast “regional” trains (which is what Amtrak calls the non-Acela trains in the corridor) average 42 cents a passenger mile, while the Acela fares average more than 75 cents a passenger mile (these numbers are from 2011 and are calculated based on page C-1 of Amtrak’s end-of-fiscal-year performance report).
As near as I can tell, Amtrak’s route structure is politically determined. Amtrak trains serve at least one city in all but two of the contiguous 48 states, and that is several states more than when Amtrak was created in 1971. Amtrak could only benefit by adding routes through more states, each of which have two senators. (Significantly, the two contiguous states that Amtrak doesn’t serve, Wyoming and South Dakota, each have only one representative in Congress.)
On the other hand, Amtrak’s fare structure is market driven. This doesn’t mean Amtrak sets its fares to make a profit; obviously it doesn’t. Instead, it sets its fares to be as high as it can get in each market. For example, Amtrak fares between Chicago and Minneapolis are nearly twice airfares because Amtrak has only one train on this route that continues on to Seattle, and Amtrak doesn’t want Chicago-Minneapolis passengers to take seats that might otherwise be filled by Chicago-Seattle passengers.
If Amtrak routes were determined by markets rather than politics, it would have about the same net revenues per passenger mile and about the same occupancy rates for all trains. Instead, as the table below shows, net revenues range from minus 47 to plus 26 cents per passenger mile and occupancy rates range from 29 to 81 percent. This is because politics demands some very poorly performing routes in addition to the ones that just perform poorly.
Amtrak Revenues & Costs Per Passenger Mile and Occupancies
|Chicago-Grand Rapids (S)||19.2||25.2||62%|
|Chicago-Port Huron (S)||14.9||21.6||45%|
|Chicago-St. Louis (S)||12.6||16.7||46%|
|Kansas City-St.Louis (S)||11.9||13.4||47%|
|New Haven-Springfield (S)||31.5||70.6||51%|
|New York-Buffalo (S)||31.5||57.2||34%|
|New York-Charlotte (S)||18.9||20.5||81%|
|New York-Harrisburg (S)||25.1||34.5||40%|
|New York-Montreal (S)||15.5||12.8||81%|
|New York-Pittsburgh (S)||17.9||33.7||62%|
|New York-Rutland (S)||27.0||55.0||41%|
|Oklahoma City-Ft. Worth (S)||12.9||32.4||45%|
|Sacramento-San Jose (S)||23.5||37.4||29%|
|San Diego-San Luis Obispo (S)||22.2||35.8||35%|
|Washington-Newport News (S)||26.7||27.6||56%|
|Chicago-San Antonio-LA (L)||13.8||31.2||71%|
|Chicago-Los Angeles (L)||13.6||34.6||68%|
|Chicago-New Orleans (L)||16.3||37.8||65%|
|Lorton-Sanford AutoTrain (L)||30.7||45.3||68%|
|New Orleans-Los Angeles (L)||13.2||60.2||51%|
|New York-Chicago (L)||15.5||57.3||57%|
|New York-Chicago (L)||15.2||34.3||64%|
|New York-Miami (L)||15.0||38.8||66%|
|New York-Miami (L)||16.7||36.1||66%|
|New York-New Orleans (L)||17.8||45.2||58%|
|New York-Savannah (L)||19.2||39.3||48%|
|Seattle-Los Angeles (L)||18.2||43.5||61%|
Revenues include state subsidies for some short-distance trains as well as food sales and passenger fares. Costs include only operations, not maintenance or depreciation. Occupancy is percentage of seat-miles sold.
(The worst-performing route, Chicago-Indianapolis, loses 80 cents a passenger mile. But this is because Amtrak uses this train to shuttle cars that need repair from the Chicago hub to its Beech Grove shops in Indianapolis. The fact that Amtrak can carry some revenue riders on this train is just a bonus. Even without this train, the range in net revenues is far too wide.)
As the Antiplanner has argued before, passenger rail works best for downtown-to-downtown trips, and no corridor in the country has more downtown-to-downtown trips than the New York-to-Washington corridor. Best of all for Amtrak, many of the passengers in this market are traveling on someone else’s dollar, so Amtrak can get away with very high prices. Thus, tickets on the Acela–which is only about 20 minutes quicker than the regional trains between New York and Washington–start at around $145, compared with $49 on the regional trains and $20 or less for buses.
Amtrak would charge these fares whether the buses are there are not. Not only is it not under political pressure to provide affordable fares, if anything it is under pressure to charge high fares so that it can cover a higher share of its costs.
About 64 percent of the Acela’s seats are sold, which is above Amtrak’s average of 53 percent, while 46 percent of the Northeast regional trains sell. Since many people don’t ride the entire length from New York to Washington, it is likely that Amtrak couldn’t sell many more Acela seats. Only two Amtrak routes–the New York-Montreal Adirondack and the New York-Charlotte Piedmont–sell much more than 70 percent of their seats, and they each, for some reason, are able to sell 81 percent. Perhaps Amtrak sets the fares on these trains to discourage short-distance riders.
At the other end of the scale are the California corridor trains, particularly the San Diego-San Luis Obispo Pacific Surfliners and the Sacramento-San Jose Capitols. I can’t calculate the fares collected on these trains because Amtrak reports count state subsidies in the revenues, but the fares must be less than 22 cents a passenger mile, which is the revenue Amtrak reports. These trains have the lowest occupancies in the Amtrak system: 35 percent for the San Diego trains and 29 percent for the Sacramento trains.
At first, I thought this was because the trains would run relatively full from San Diego to Los Angeles and be relatively empty from there, but then I noticed that Amtrak has 11 trains a day from San Diego to Los Angeles, but only two of them go all the way to San Luis Obispo and three more go to Santa Barbara. The likely truth is that California is subsidizing an oversupply of train service in these corridors, so the trains run relatively empty.
More broadly, almost all of Amtrak’s long-distance trains, which receive no state subsidies, have higher-than-average occupancies, while most of the short-distance trains, many of which are state subsidized, have lower-than-average occupancies. State subsidies in general seem to lead to too much capacity.
If ever Amtrak is privatized, the New York-Montreal route seems a likely candidate for private passenger service. Not only is this train tied for the highest occupancy rate in the Amtrak system, it has the lowest operating costs. As a result, it is one of only two trains outside the Northeast Corridor that turns an operational profit. Once depreciation and maintenance are included, all Amtrak trains lose money, but private operations could find efficiencies that elude Amtrak and make trains like the Adirondack pay.