» Amtrak charges too much for its existing services, and future operators should attempt to lower prices to maximize ridership.
Begin a discussion about the potential success of high-speed rail in the United States and people look at what they know, quickly proclaiming that it will not work. They argue that Amtrak already offers something like fast service on the Northeast Corridor in the form of the Acela, but tickets are too expensive, especially when compared to competing air and bus lines. Few Americans will choose to ride an expensive train when they can get into their cars for far less money.
These criticisms are accurate: Acela service is significantly more expensive than equivalent air routes, though it should be noted that slow-speed Northeast Regional trains are cheaper. Amtrak still carries more people between New York and Washington than the airlines, but that demonstrates some of the inherent benefits of train travel: it gets riders directly from center city to center city and it allows passengers to work on board. Indeed, there are plenty of reasons to think that high-speed trains will mostly replace air travel in their respective corridors. But the high costs of riding Amtrak have not diminished the market shares of bus service and automobile use even in the Northeast, and they collectively transport more people than rail or air. If future American high-speed rail is to succeed — in other words, if the U.S. is to become a train-riding country — operators must offer low prices to compete effectively with buses and automobiles.
As the charts below show, comparing Amtrak’s train fares to those of high-speed rail systems in operation today demonstrates that the American example comes in opposition to experience abroad, where travel on high-speed trains is typically more economical than competing offers from airlines on equivalent routes (see data table at the end of this piece). The affordable nature of travel by train in most developed European and Asian countries means that on corridors where high-speed rail is present, air travel is often reduced to connecting flights. More relevant to this article, rail there has a far greater market share than buses and often even than private automobiles.
But Amtrak’s problems are not due to the fact that it is particularly inefficient in the Northeast. The fares it demands per hour of travel are roughly on par with those charged by foreign rail operators. The American rail system’s problem, rather, is that its trains are too slow in general, increasing labor, maintenance, and operations costs. If U.S. rail services are to be successful in attracting customers at reasonable prices, in other words, one way to do so would be to offer services at higher speeds.
The California High-Speed Rail Authority, which is planning the nation’s most ambitious new rail project, has considered the effect of pricing on ridership. It predicts strikingly varying ridership outcomes depending on the cost of its future services; in 2030, with the full system operating, the agency estimates 93.1 million yearly trips if fares are set at 50% of air travel levels and 74 million if fares are set at 77% of air travel levels. Though final fares have not yet been established, one thing is for certain: California will not copy Amtrak and charge customers exorbitant rates to ride the train.
Peer experience on specific high-speed routes demonstrates just how expensive Amtrak’s Acela trains are. Acela rides cost more than $0.35 a kilometer, compared to $0.20 for Milan-Bologna trains in Italy or $0.08 for Paris-Lyon trains in France. The chart below illustrates that comparison; it also shows differences between “regular” prices offered on foreign trains and reduced prices that are easily available for any rider booking early. In terms of cost per distance, only Germany’s ICE comes close — and that’s only for regular-priced tickets. Note that none of the systems mentioned here — including Amtrak’s services in the Northeast — are subsidized in their operations.
The comparison with foreign railways is even more stark when evaluating how much riders pay for average speed on the routes I have compared here. Whereas Acela costs more than a dollar per average km/h, Korea’s KTX between Seoul and Daejeon costs less than $0.10 per km/h. Amtrak’s Northeast Regional service, at a bit less than $0.50 per km/h, seems far more cost effective in this comparison — that’s because Regional trains travel almost as fast as does Acela but cost less than half as much to ride.
When it comes to cost per hour of travel, however, Amtrak looks a bit better, charging customers about $45 per hour, versus $55 for trains in Japan and $50 for routes in Italy. Regional trains are even cheaper, coming in at less than $20 an hour, making them the cheapest of all routes evaluated in this comparison.
One of Amtrak’s problems in the Northeast Corridor, then, is the fact that its trains run so slowly, increasing power consumption, labor costs, and fleet maintenance. But these expenditures are more directly related to travel time than to distance or speed, so if trains were to cover more distance in less time, the organization could theoretically lower fares.
These issues are compounded by the relatively low capacity of the system’s existing trains — Northest Regional trains offer 5-9 passenger cars and Acela trainsets all have 5 seating cars. In 2007 and 2008, Amtrak was frequently selling out trains, and with no room to expand, the organization had an incentive to increase prices, especially since commuters on the Northeast Corridor subsidize rides on other parts of the system. Amtrak’s Acela trains have a capacity of 303 riders. Two French TGV Duplex trains coupled together can carry 1,024 passengers. The ability to move more people in one trainset allows for operational efficiencies — and, as a result, cheaper tickets for those who make it onto the train.
If American high-speed services offered similar prices for time traveled as Amtrak does today — at $45 per hour of running time for standard fares and $15 at reduced prices — on faster trains, U.S. commuters would switch to rail in droves. The San Francisco-Los Angeles route being planned by the State of California, with a travel time of 2h40, would cost $40 for reduced-price tickets and $120 for standard fares; those costs seem perfectly acceptable for just about everyone. A renewed Northeast Corridor, offering travel between New York and Washington in 1h40 (at an average of 220 km/h), would cost $25 for customers buying reduced-price fares. People currently driving their own cars or riding buses between the cities would take a second look at those prices.
There are significant advantages to lowering ticket prices to the lowest level possible while keeping operational finances in the black. California predicts a higher revenue stream for its rail system if it charges customers fares that are at 77% of airline levels: $4.3 billion annually versus $3.6 billion with tickets at 50%, even though the latter would attract 25% more riders. But opening services to a greater percentage of the population has a number of benefits beyond those affecting the bottom line, and American policy should be to encourage low-cost rail travel. It reduces carbon emissions as people choose to drive fewer cars. It encourages the sense that trains are an engine for universal mobility, rather than a limousine on tracks for the rich. It will, most importantly, smash the conception that Americans won’t take advantage of rail services, and encourage the creation of a train-riding society.
To make high-speed rail popular, American high-speed rail operators must do as much as possible to lower ticket prices. Amtrak’s existing fare structure is unacceptable.
|Comparing Pricing on World High-Speed Systems
||Travel Time (h)
||Rail Price (US$)||Air Price (US$)|
|New York-Washington Amtrak Acela||362||2.93||133||73|
|New York-Washington Amtrak Regional||362||3.33||49||73|
* Not a direct flight.
Data: from evaluating train and air tickets running one way on Monday, October 12th, 2009, at around 13h00. Only direct trains were considered and I have noted here the fastest trains offering the lowest prices for each of the corridors. Note that Japan’s rail services are particularly expensive because the Nozomi trains described here are the fastest in the system’s fleet; Hikari and Kodama trains are almost as quick and less expensive.