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
| Revenue/PM | Cost/PM | Occupancy | |
|---|---|---|---|
| NEC Acela | 75.6 | 50.1 | 64% |
| NEC Regionals | 42.0 | 40.7 | 46% |
| NEC Average | 54.2 | 44.3 | 52% |
| Albany-Toronto (S) | 18.8 | 24.1 | 57% |
| Boston-Portland (S) | 15.8 | 18.9 | 39% |
| Chicago-Carbondale (S) | 14.6 | 22.7 | 38% |
| Chicago-Grand Rapids (S) | 19.2 | 25.2 | 62% |
| Chicago-Indianapolis (S) | 14.2 | 93.8 | 47% |
| Chicago-Milwaukee (S) | 22.4 | 26.6 | 38% |
| Chicago-Pontiac (S) | 17.1 | 33.3 | 51% |
| Chicago-Port Huron (S) | 14.9 | 21.6 | 45% |
| Chicago-Quincy (S) | 14.9 | 22.1 | 39% |
| Chicago-St. Louis (S) | 12.6 | 16.7 | 46% |
| Eugene-Vancouver (S) | 21.8 | 33.9 | 57% |
| 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% |
| Oakland-Bakersfield (S) | 22.1 | 27.0 | 41% |
| Oklahoma City-Ft. Worth (S) | 12.9 | 32.4 | 45% |
| Raleigh-Charlotte (S) | 15.9 | 28.6 | 46% |
| Sacramento-San Jose (S) | 23.5 | 37.4 | 29% |
| San Diego-San Luis Obispo (S) | 22.2 | 35.8 | 35% |
| Washington-Burlington (S) | 19.1 | 29.2 | 53% |
| Washington-Lynchburg (S) | 24.6 | 16.6 | 65% |
| Washington-Newport News (S) | 26.7 | 27.6 | 56% |
| Short-Distance Average | 21.5 | 31.3 | 44% |
| 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% |
| Chicago-Oakland (L) | 15.5 | 37.8 | 59% |
| Chicago-Seattle (L) | 16.4 | 33.8 | 57% |
| 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% |
| Washington-Chicago (L) | 17.6 | 39.4 | 69% |
| Long-Distance Average | 17.0 | 38.8 | 62% |
| Amtrak Average | 28.5 | 38.0 | 53% |
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.
However positive results were absorbed from the small number of ED condition results from low levels of male hormone testosterone How is ED Treated? PDE-5 inhibitors (phosphodiesterase type 5 inhibitors) are medicines that relax muscle cells in the penile and the sponge like substance in the penis Nocturnal penile tumescence (NPT): On average men have 4 to 5 erections during the REM viagra generico uk stage. Sometimes the result of enhancement surgery is not up to the mark. cute-n-tiny.com cialis online Taking these two drugs in one time will as a result cause rapid drop in your blood pressure when used cute-n-tiny.com viagra without prescription with nitrates, which can lead to dizziness, fainting, and rarely heart attack or stroke. Such enzymes pave a difficult way for the blood no prescription viagra to get along into the male reproductive organ which helps with the harder erection during the sexual sessions is called weak erections or erectile dysfunctions (ED). (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.
“As near as I can tell, Amtrak’s route structure is politically determined.”
This is an inherent scenario in most public transit operations. The service is subsidized and the fare box does not cover the cost of operations. Enter politics.
I’m admittedly ignorant on the subject of Amtrak, but I certainly believe that intercity bus (and air) service is a viable and cost effective alternative to Amtrak. I’m not sure how Amtrak is structured, how operations are managed or what revenue streams are used most (to be honest, I don’t really care that much), but of course politics play a large role in the determination of fares on public transit.
Naturally, politics plays a role in the cost of private mobility options too, but to a lesser extent for the most part. I suppose my point is that it doesn’t surprise me in the least that “Amtrak’s route structure is politically determined.” I would expect as much.
This is an inherent scenario in most public transit operations. The service is subsidized and the fare box does not cover the cost of operations. Enter politics.
Even though Amtrak is inter-region, not intra-city or maybe inter-county, your comment above is still correct.
I’m admittedly ignorant on the subject of Amtrak, but I certainly believe that intercity bus (and air) service is a viable and cost effective alternative to Amtrak. I’m not sure how Amtrak is structured, how operations are managed or what revenue streams are used most (to be honest, I don’t really care that much), but of course politics play a large role in the determination of fares on public transit.
Amtrak plays a lot of politics to keep the money coming from Congress (both capital and operating subsidies).
“Amtrak plays a lot of politics to keep the money coming…”
Them and everybody else. This is definitely NOT something unique to Amtrak, transit or public institutions.
When was the last time an Amtrak train went to Phoenix, Las Vegas or Boise?
It is political, though roads, airports and ports are extremely political too!
…and investment banking, and military contracting, and land development, and health insurance, and flood insurance, and home owners insurance, and auto insurance, and food/beverage, and cigarettes, etc. etc. etc.
It’s all political! That’s why I don’t understand Mr. O’Toole’s confusion (more like righteous indignation) about Amtrak’s politics. Sometimes I feel like this blog is a perpetual setting up of Mr. O’Toole’s foil, but he never brings it home.
We get it, government sucks at running trains. We never go into detail (“detail” not theoretical hypotheticals) about the logistical, political, social and economic ramifications if we privatize and/or eliminate public transit operations in America.
It’s easy to bitch or get on a soap box and espouse an ideology. It’s a little harder to show how a massive shift in the American paradigm will actually work out. Needless to say, I’m waiting.
“…intercity bus service is a viable and cost effective alternative to Amtrak.”
Viable, yes, but my aversion to the intercity bus is 4 seats and an isle crammed into a box measuring just 8’6″ (Van Hool double-decker Megasbus) vs Amtrack’s Superliner measuring 10’2″ in width. Buses would be more attractive if operators removed a row of seats or used wider buses. Given that every jurisdiction allows over-width trucks, surely the same standard could apply to buses…?
And to make them safer (and add an extra fare-seat and remove the biggest expense), bring on RoboBus.
The Antiplanner wrote:
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.
Don’t forget that Acela also runs north of New York to South Street Station in Boston, Mass, and some Acelas run “through” from Washington to Boston.
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.
I believe the North Carolina Department of Transportation (NCDOT) subsidizes the Piedmont (which only runs between Raleigh, N.C. and Charlotte, N.C.)? I belive NCDOT also provides some subsidy to the operate the Carolinian (which runs from Charlotte, N.C. to New York).
Perhaps Amtrak sets the fares on these trains to discourage short-distance riders.
I assume that Amtrak wants its patrons to ride to its “major” stops on the N.E. Corridor in places like Washington, D.C.; Philadelphia; New York; and Boston.
How does Amtrak determine fares? My guess:
1) Estimate short-run average costs
2) Subtract 50-70%, depending upon strength of local Congressional delegation.
It’s probably not quite that crude and simple, but that seems about right.
That deserves a “like.”
Randall:
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.
That isn’t correct at all. Just look at airline or bus industry pricing, because railway pricing is done the same way (both for passenger and freight). Routes with different demand and service levels get different price structures. Even on the same route, prices vary by time of day, seat location, overall demand and sales, and capacity. The goal is to charge the full and highest price the traffic is willing to bear, not a uniform per mile price. Politically determined prices would be the opposite – i.e. its always 20 cents per mile no matter where, when or how you are going.
As to costs, they vary in lumpy ways, not linearly, due to factors such as the number of cars or engines per train being a non-linear variable (i.e. one diesel engine is good for up to 6 cars, but when you hit 7 you need two, but you only need two all the way up to 12 or 14 when you need three, etc.), crew size varying in a step function with number of cars, various odd requirements by host railroads (for example, Canadian National mandates a minimum 36 axle train count – i.e. 9 locomotives and cars – for any train on its tracks), types of service offered on board (sleepers and diners vs. coach and cafe only), varying station costs depending on how many on a route must be staffed, run time vs. equipment turns forcing differing equipment requirements, etc.
Moreover, the variables are interlinked in non-linear ways, such that adding an engine to all trains, for example, can let you go much faster and might save an entire train consist of cars in the schedule for a particular line. This saves on passenger equipment costs and maintenance of passenger equipment and crew costs, but it adds costs for locomotives, fuel, track wear, and locomotive maintenance.
Because prices should be market clearing prices, and because costs are non-linear, financial results can vary wildly between lines, or between trains on a line. This is well known in the freight business, where everyone is aware of how much more money grain and chemical traffic brings vs. intermodal and aggregates. But it is also true in the passenger business.
How should Amtrak determine fares? It should charge the highest possible price which will fill as many seats as possible at a rate producing the most overall revenue on a given set of equipment assigned to operate a specific service. On the Northeast Corridor, this means very high priced peak period walk up tickets and even higher prices Acela tickets, but low price advance purchase and off-peak tickets and rock-bottom ten-trip and monthly passes. A person wanting a ticket at 5:05pm at Penn Station NY for a 5:10pm train to get home for dinner should pay a lot and is generally willing to pay a lot – often such a ticket will set one back $120 just to go 90 miles to Philadelphia. But there are not trainloads of such desperate souls, so it also pays to offer monthly passes at $29 per ride to people who are guaranteeing you a filled revenue seat every day, and $50 tickets to people who buy a week or two in advance.
Non-transportation industries work this way also. A hotel might normally charge $150 a night for a room, and $250 for the same room when a big convention is in town, but will also offer you the room at $100 a night if you are going to be in town 5 nights a week for the next 4 months on a project.
The money issue with Amtrak has always come down to high fixed costs on a skeletal network. The costs of crew, fuel, and equipment for a train is generally far less than the ticket revenue derived. On a commuter train, the break-even point can be as little as 50 passengers paying $4 each. But when you start throwing in terminal, overhead, and headquarter costs, the equation gets out of whack because although you can grow or shrink the number of trains you run by 50%, you can’t grow or shrink your accounting system or reservation system by 50%, and you can’t grow or shrink your backshop by 50% to match. Half a diesel shop, or half a ticket agent serves no purpose.
Randall:
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.
Unlikely, unless NY State continues its subsidy. Ticket revenue is $6.3 million, and food and beverage might bring that up to $6.5 million. Meanwhile, it costs $13.6 million to operate including overhead contribution.