Amtrak vs. Low-Fare Airlines

This from Monday's "Destination Freedom" e-zine (published by the National Corridors Initiative). Looks like Amtrak needs to make some fare adjustments as well as improve on-time service.

Low-cost airlines bite into Acela, Metroliner markets; ridership slumps

The “Southwest Effect” has affected Amtrak Northeast Corridor service. The recently posted monthly performance report for June reports Continuing with trends from recent months, premium ridership – which includes Acela Express and Metroliner trains combined, “was 3 percent below last June, and 10 percent below budget.”

The report also stated, “Premium ticket revenues in June were 1 percent below last year and “9 percent below budget.”

Some of these downtrends, the report noted, “Especially the continued weakening in all major south-end markets, are due to poor reliability associated with premium trains.”

Trends in and through New York markets “have continued to weaken considerably due in part to increased low-cost air service, especially in the Philadelphia-Boston-Providence markets.”

Regional ridership and ticket revenues continued strong versus last June. Ridership and ticket revenues were up 8 percent and up 6 percent vs. one year earlier, and both gained about 1 percent vs. budget projections.

Regional ridership in June on the south-end and north-end was up 11 percent, and up and +7 percent over last year. Some of the Regional train growth on the south-end “is being diverted from the premium trains due to performance. Ridership thru New York, however, was 13 percent below year ago due in part to increased low-cost air service between Philadelphia and Providence.”

June was the first full month of Southwest Air operations at Philadelphia. In July, Southwest added additional routes including Manchester, N.H, which is another locale advertised as “Boston Area,” so the trend will likely continue.

Before Southwest’s arrival, the Philadelphia-Providence origin and destination air market was virtually non-existent. Walk-up fares were about $700 round trip. With Southwest and the competitive response by US Airways, walk-up fares now range from $100 to $150 round-trip, depending on seat inventory. Advance purchase fares are as low as $60 round trip. Other than a short-lived and minimal “Guest Rewards” Acela promotion, Amtrak has held to its fares - $242 to $304 round-trip Acela Express, and $146 to $182 round-trip for regional trains.

“Essentially Amtrak has conceded a big part of the Philadelphia-Providence travel market to air.

I'm a Southwest customer....and I still use Amtrak.

Providence to Baltimore on Southwest: 1 hr
Providence to Baltimore on Amtrak: approx 6 hrs

Sure, discount airlines hurt Amtrak....they're KILLING United, Delta, American, and USAirways.

My pro-Amtrak argument vs. Airlines:
Between NYC to points on the NEC
1) comparable arrival times, considering, no waiting through long security lines at gates, no waiting for baggage at the carousel, no sitting on the tarmac in a queue of 15 other planes waiting to take off.

2) I can get up and walk around, relax in the cafe car, eat and drink with a myriad of choices compared to a diet coke and a bag of peanuts.

3) I don't have to stand behind 90 other people to get off the plane, which is another 15-20 minutes lost, especially if the plane sits on the runway for about 10 minutes before arriving at the gate.

4) No surly Flight Attendant to tell me to fasten my seatbelt

5) I can sprawl out on 2 seats

6) I arrive in downtown instantaneously while plane travelers have to suffer through aiport traffic to get into town.

7) If I miss my train, I get the next one, with a minimum wait of 5 minutes to the maximum, an hour.

8) Often times, there are far fewer suprises, using Amtrak vs plane.

I've gone off on how much I hate the "low cost" airlines for business travel before, so I'll spare you that tirade

I travel on business frequently to Portland, San Francisco, Vancouver, BC and infrequently to LA and NYC. I take the Cascades exclusively to Vancouver and Portland, as flying to either of those towns is ridiculous, and much more expensive, particularly when you factor in taxis to and from the airport. Actual travel time usually comes out near the same as flying, once you get into town.

For my twice-yearly week-long trips to SFO to explain our new products, I have finally gotten the company to spring for a sleeper on the Starlight. I book far out enough that it's not that expensive, and I can get a lot of my presentation finalized without the annoyance of a cell phone or email.

Short-notice trips to the bay area are still flights, as are jaunts to New York and LA - although now I can fly a "real" airline like Alaska. Leave the cattle cars to the tourists.

I believe that if Amtrak can tighten up their on-time performance on the corridor routes, especially on the NEC, they have nothing to worry about from the cheapo airlines. Business travelers, especially as the economy recovers, will pay extra for service and performance. And I think there will always be a niche market for the discerning tourist with disposable income and less time pressure.

Hey, the quotes were from an *Amtrak* report, and I'm not talking about what I might choose, but what others are doing.

I live in PHL, and wouldn't even consider flying to NYP or WAS, but I won't be on Acela Express to Boston again unless the price comes down.

Amtrak is eventually going to have to meet the airline prices, and that's going to cut into revenue pretty severely.

I think that, if you simply consider the time your vehicle is actually enroute to its destination, it is impossible for any Amtrak ( or any other) train to "get there" faster than an airplane. In places like the NEC, however, a pure speed comparison is not necessarily a determining factor in the choice between air travel and train travel. Price is a major factor, and as long as the discount airlines are able to get you, say, between BWI and Boston, and especially BWI and NYC, cheaper than Amtrak, Amtrak will have a problem. Many will not find it absolutely necessary to get from Baltimore to New York in one hour, two or three might do perfectly well. But if the one hour trip is less costly than the two hour trip, guess which one people will use. ( my trip durations are not intended to be exact and I am not including the increasingly long delays getting into airports and onto the airplanes) Amtrak will have to adjust to lower fares charged by Southwest and other similar carriers if it expects to retain what probably is its core ridership in the NEC.

If they had High Speed Rail in the Midwest like they do on the NEC My Dad said he would take the Train instead of fly also what markets is Amtrak Killing Airlines in?

AmtrakFan

My only point is that a lot of business travelers are weary of the budget airlines, and are looking for alternatives to that service. Even a longer journey - if it performs to the posted schedule - can win out in many situations. Particularly if there is the opportunity to work.

Business travelers tend to have more money to spend, because it's "on the company", and are used to paying the higher costs anyway.

As for the tourist, on-time performance is important as well - but so is marketing. With so much competition and choices (particularly when you don't have a presence on the major travel agent sites like Expedia or travelocity) it's hard to get that message across without an aggressive marketing campaign, which costs money.

Lets not lose sight of the fact that with Southwest, you're no where near the downtowns of some of the major cities ... so not only are you dealing with airport traffic, but dealing with actually spending nearly an hour just getting to airport property. Providence, RI and Manchester, NH are NOT Boston, MA. BWI is not Washington Union Station or Baltimore Penn Station. Its not like Southwest can give those cheap fares to and from Logan or Reagan National.

We can agree all we want that end points aren't the only thing that matters for Amtrak in the NEC and elsewhere, but I can assure you that Boston will always generate more traffic than Providence.

With JFK Airtrain, and Newark Airtrain, all the remains is a decent Airport conector at DC or BOS, and a well run low budget line could come in and kill Acela, easy.

Flying NY to Boston takes only a few minutes in the air (45 or so, IIRC), once security + getting to/from the airport + flying time drops below Acela's travel time, and is cheaper, say good bye to Acela.

It's not going to take much more - just a decent connector to the MBTA Blue line from Logan (i.e., not a stupid bus), and a good low cost operator out of JFK. Heck, if JetBlue starts going to Logan from JFK, you'd be hard pressed to justify Acela.

The big issue is the Acela equipment is by design very expensive to operate, Amtrak's OTP is notoriously bad, even on the NEC, and the speeds are barely air competitive now. It's going to be hard to drop costs, and a speed increase isn't likely to happen (I'll predict it now - the 135mph speed restriction in curves will probbably not be lifted for a long time, there will never be 9 inches unbalance with the Acela).

And, as one friend of mine says - "It takes 4 hours to go NY to Boston, period, no matter how you go". And when that's the perception, cost becomes a BIG factor, and Amtrak simply can't compete with Acela in that catagory.

Of course, if one or more of the traditional carriers should fail, what we consider to be a "low fare" is likely to change quite a bit. Volitility in the jet fuel market could change things quite a bit as well. It will be interesting to see what will happen with UAL and US Airways. If UAL can unload their pension plan on the taxpayers, they might be able to pull through. Otherwise, they will probably get another kind of bailout. US Airways is anyone's guess.

And we need to remember that point-to-point is not what train transport is about. Intermediate destinations play a big role as well.

Quick cause-and-effect question: would certain corridor airfares be so low if it weren't for Amtrak?

I think not. Where Acela and other regional trains go, so goes the high supply-per-demand that keeps all prices competitive.

Amtrak OTP for June 2004:

Acela Express: 71.8%
Metroliner: 70.1%
Regional: 76.9%

Compared to Southwest, Amtrak has two things against it that Southwest doesn't have: a huge pension fund liability, and a unionized workforce which negotiated higher pay when things were good in the 1990's but have been reluctant to take cuts. The legacy air carriers tend to be more similar to Amtrak, with high labor costs and difficulties meeting pension payments (at least for Delta, United and US Airways). The legacy carriers in bankrupcy (US Airways, United) are trying to reorganize themselves to be more like the low cost carriers.

I have taken both US Airways ($90 each way) and Amtrak ($156 each way Acela Express) for PHL-BOS, and I would choose the 1 hour flight over the 5 hour train ride in the future. Even adding two hours for getting to the airport and getting through security, air is much faster, plus I can use my frequent flyer status to bypass most of the lines and sit near the front of the aircraft so that I can be one of the first ones off the airplane. On the other hand, if I were going to New York or Washington, I would take the Acela.

Lets level the playing field and see what happens to the airlines. A new House bill for 05-06 is proposing over $13B for the FAA to pay for Air Traffic Control and whatever else is buried in there. Amtrak is proposed to get $900M which will be enough to close down the system.

Check out HR5025 to get the details.

How can you compete in that environment?

My Representative Judy Biggert (R-IL) lauded HR5025 for the monies for highways and airlines in latest newsletter but ignored mentioning the $900M for Amtrak. Hmmm.

ckb wrote:Lets not lose sight of the fact that with Southwest, you're no where near the downtowns of some of the major cities ... so not only are you dealing with airport traffic, but dealing with actually spending nearly an hour just getting to airport property. Providence, RI and Manchester, NH are NOT Boston, MA. BWI is not Washington Union Station or Baltimore Penn Station. Its not like Southwest can give those cheap fares to and from Logan or Reagan National.

We can agree all we want that end points aren't the only thing that matters for Amtrak in the NEC and elsewhere, but I can assure you that Boston will always generate more traffic than Providence.

Actually, BWI and National Airport have pretty good local transit service
( BWI is served by a spur of the Central Light Rail Line which, ironically runs between Penn Station and BWI), and National (I refuse to call it "Reagan National") is served by two Metrorail Lines, but generally I must agree with the general thrust of this post.

ckb wrote: Its not like Southwest can give those cheap fares to and from Logan or Reagan National.

It is true that Southwest Airlines can not fly directly into Dulles international with those low faires. However, other carriers like US Airways can.

In a quick comparison of Amtrak and USAir from Philadelphia to Boston, I found that you can go round trip from Philadelphia to Boston for about the same amount of money as a one-way Amtrak ride. Added to that, the plane will get you there in just under 1.5 hours, whereas the train will take over 6 hours. Even if you add 2 hours for security clearance, the plane takes about half the time as the train. Times are improved for Amtrak if you go via Acela, but then it's still a 5-hour trip and still takes about twice the time. Yes, Amtrak is significantly more comfortable and there are no security hassles or waits on the runway, but I am not alone in being willing to put up with those problems to spend 1/4 the time and less money.

So in the NEC, Southwest may be a minor competitor with Amtrak since it doesn't always go to the important destinations and never goes to the city's downtown, but there are other competitors that are able to directly pull money out of Amtrak's coffers. Amtrak is going to have to start lowering fares to compete, if they expect to make any ground against the plummeting costs of air travel.