Many DC-area residents would prefer to travel by train rather than by bus to other Northeastern cities, but some often find tickets too expensive. There are several reasons for higher fares, and a primary reason is simple economics.
Photo by tracktwentynine on Flickr.
The train is faster, statistically safer, and more comfortable—additionally, trains have greater energy efficiency and smaller carbon footprint. But many opt for curbside carriers like Bolt Bus and Megabus because they charge, at most, half what Amtrak's lowest fare is for a round-trip from DC.
There are three main factors that cause Amtrak's fares to generally be at least twice the highest competing bus fare:
Supply and demand: Amtrak still manages to fill most of the seats it carries between Washington, New York, and Boston on both on Acela Express and Northeast Regional services. This despite charging fares many consider to be too high. As long as Amtrak is under pressure from Congress to reduce the amount of federal subsidy it requires by maximizing ticket revenue, the railroad has very little incentive for lowering fares, outside of the occasional special promotion.
Besides, if Amtrak is selling almost every seat at its current fare points, there's little economic incentive to lower the fare. Lowering the fare wouldn't sell any more seats since they're selling out already. And it would bring in less revenue.
Capacity: Amtrak simply does not have enough coaches in its fleet to handle the amount of passengers who would want to ride the train if Amtrak fares were comparable to those of curbside buses. Furthermore, there is very little room on the existing railroad to add new trains, particularly at peak hours when tracks leading into New York Penn Station (from New Jersey) are already at capacity with both Amtrak and commuter train traffic.
Giving Amtrak the ability to handle the passenger volume that it could if it were price-competitive with buses would require sustained higher levels of capital investment from the federal government, or from private sector partners, which are loathe to make such investments absent a strong federal commitment. Unlike highways and aviation, Amtrak lacks a dedicated source of reliable annual funding.
An Amtrak cafe car. Photo by MoDOT on Flickr.
Unlike buses, which operate over highways built and maintained by federal gas tax dollars (along with some general federal and state tax revenue), Amtrak owns its own tracks in the Northeast Corridor and has to bear the full cost of maintaining them, with limited federal assistance. If the bus companies had to pay their full share of highway maintenance, they could not get away with charging the fares they do.
Railroading, by nature, is characterized by high fixed costs. Fixed costs are those that do not vary based on how many people use a good or service (in this case, buy an Amtrak ticket). It will cost Amtrak roughly the same to maintain the tracks, signals and stations on the Northeast Corridor regardless of how many trains run and how many riders use them. Railroad labor costs are also largely fixed. Remarkably, Amtrak nevertheless covers over 80% of its total costs through revenue from passengers, whereas most of the world's passenger train operators fall in the 50% to 60% range.
Despite this, Amtrak trains in the Northeast Corridor actually make an "above-the-rail" profit. Fares bring in enough revenue to pay for operating costs on the Northeast Corridor, though not enough to pay for the maintenance backlog of the corridor.
The need to promote energy efficient travel, lessen highway congestion, and spur the development of walkable, livable communities around train stations are good reasons to encourage greater numbers to use the train instead of flying, driving or taking a bus. Increased federal investment in Amtrak infrastructure and equipment—in the Northeast Corridor and elsewhere—would allow the railroad to increase the frequency, speed and capacity of its trains. This would allow more riders to be carried over the line, thus spreading the fixed costs over more paying passengers, leading to lower fares.
Some form of ongoing public capital investment will be needed to keep the infrastructure and equipment in good shape. Federal funding should come from a dedicated "trust fund" with its own revenue source rather than from a Congressional appropriation, which would make the amount of funding reliable year after year.
If you support higher and more reliable funding for passenger trains as a viable leading choice for intercity travel, join us in the National Association of Railroad Passengers in calling on Congress to fully fund Amtrak and the High-Speed and Intercity Passenger Rail grant program.
- Amtrak celebrates 40 years today (May 1, 2011)
- FY11 budget threatens national high-speed rail network (Apr 14, 2011)
- Are private operations on the Northeast Corridor the means to an end, or just an end? (Jun 20, 2011)
- Metro isn't the NYC subway, part 2: Don't forget transfers (May 26, 2010)
- WMATA budget deep dive, part 4: A better fare increase? (Feb 25, 2010)
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