A Pricy Ride

Trains Magazine Passenger
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The Acela is a pricy ride. Few ordinary Americans can afford to ride it. But they help support it directly and indirectly.

Outlined below are some fares for Wednesday, April 27th stated in average price per passenger mile. The miles between the locations shown and the fares were rounded. Of course, Amtrak’s fares change daily, depending on demand. April 27th is more than three weeks away, so the prices shown are probably near the low point.

The Acela (average) fare from Washington to Boston is 37 cents per mile, whilst the average fare on a Northeast Regional train is 21 cents. Between Washington and New York the Acela fare is 64 cents and the regional fare is 25 cents. The Acela fare from Philadelphia is $1.04 and the regional fare is 40 cents. From Providence to New York the price of an Acela ticket is 51 cents, whilst the regional ticket bills out at 23 cents. First class on the Acela is even pricier: $1.75 per mile from Philadelphia to New York and 88 cents from Providence to New York as examples.

Who really pays to use the Acela? What a silly question, Sam. The passengers! Not necessarily!

If my observations based on ridding the Acela between Philadelphia and New York are accurate, most of the Acela passengers are executives, high level managers, senior professionals, lawyers, consultants, etc. The majority of them are probably riding on an expense account. Accordingly, in most instances the cost of the ride will be passed through to the customers who buy the goods and services of the business, government agency, law firm, consulting firm, etc. So, at the end of the day, except for the relatively small percentage of passengers who pay the fares out of their pocket, the Acela’s premium service is subsidized by non-users. Of course, most of them don’t have a clue that they are doing so. And it should not be forgotten that part of

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Pricey but marketable. And helps keep airlanes along the east coast clear for existing traffic. But what we peons rarely understand is that those with money have and do spend money when and if the product suits them. So why not get their money? So, ACELA suits them! Downtown to Downtown plus airport connections, ability to stretch one’s legs, room to do your work (wi fi connections in many locales), enjoy a meal or snack or drink, no hassle with Security at the terminals (usually). It is a service they are willing to pay extra for and they do.

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Like henry6, I don’t see a problem. The cost of doing business – including fancy executive salaries – is always passed on to the customer. Furthermore, the customer can be seen as an Acela user, since that rail fare is part of the overhead, like office space, he pays for with the product.

Anyway, what is the difference between the customer paying for the exec’s Acela fare and paying for an airline ticket for the same exec?

I know, the airline is “private” – ha ha – and bad old Amtrak is “public” and subsidized, thereby theoretically costing the exec’s customer a second time (if he pays income taxes, which half of us do not).

But again – if that customer is a flyer himself, he underwrites the exec’s air trip a second time with that portion of his user taxes and fees devoted to air-traffic control, tarmac,etc.

The out-of-pocket difference to the customer sam1 is worried about? Probably zilch.

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If there is one thing I’ve learned in years of selling and marketing is that people with money will spend it on things they want or need at higher price than others. You can buy the exact same item at Walmart for a buck, Target for 2 bucks, Khols for 3, Macy’s for 5 and Nieman Marcus for $10; some people will only buy from Nieman Marcus and that’s that!

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From what I read, Acela does earn a profit and helps support other trains in the NEC. As long as the regional expresses are reasonably fast and comfortable, I see no problem. I may never ride one, but possibliy the regional express I will probably ride some day is made possible in part by profits earned by the Acelas.

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Also: We are used to sam1 beating up on Amtrak for failing to cover its operating costs out of the farebox – for undercharging, in effect. Is it fair or consistent of him to also jump on Amtrak for overcharging on Acela?

It looks to me as if Amtrak is being smart, for once, by not leaving money on the table. Surely sam1, of all people, salutes the principle of willing buyer-willing seller.

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True, true. There is a big difference between Acela which more than covers operating expenses from farebox revenues and long distance trains, which are huge losers. Given that, the use of the term “subsidize” in discussing Acela is inaccurate at best , disingenuous at worst.

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"most of the Acela passengers are executives, high level managers, senior professionals, lawyers, consultants, etc. The majority of them are probably riding on an expense account. Accordingly, in most instances the cost of the ride will be passed through to the customers who buy the goods and services of the business, government agency, law firm, consulting firm, etc. "

Right. There are none of those people on the airlines, and certainly none of them flying first class on the airlines. What a strange complaint.

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The thing tat I do not get (and I suppose thats because I travel little) is why anyone would pay the premium to ride Acela, when a regular NEC is only about 20 minutes more. I resarched this last year for a business trip I made from NYC to washington last year.

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Sam1,

Are you saying that Railroads should only offer 3rd Class (Coach) service on all trains? No 2nd Class (Business Class) or 1st Class (1st Class) for customers that want more?

Can you compair Regional Service with Coach and Business Class to Acela with Business and 1st Class. Acela runs on a faster schedule with 1/3 more room in the cars. How about a Dinner from the Menu served on china plates in 1st Class? Keep in mind, Acela fares are pegged below the competing air fares, more service, less money.

Should Airlines be required to build there own Airports? Should Airlines be required to build and maintain the Air Traffic Control System?

I know I’m going to start somethig now!

If there is Competition and a Profit is to be made, let the Free Enterprise System work, keep the Government out of it. This is Capitalism at its best. If the Goods or Service has no compition, let the Government Regulate it to prevent abuse. If the Goods or Service is needed, or required by the Public or Military, and that can not be done at a Profit, then, and only then, it’s up to the Government to steep in and do it.

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Several of the key points embedded in my comments have been missed.

The Acela covers its operating costs only because it is a premium service. Otherwise, it would not be able to do so. It still requires a large subsidy for the capital costs. And according to Fred Frailey, its costs $370 million a year to maintain the NEC. Of course, not all of them maintenance cost is allocable to the Acela’s, but most of the improvements in the NEC were made to accommodate the Acela’s.

The premium fares are paid by riders who for the most part are on an expense account. They are passing the cost through to the ordinary Americans who buy their goods and services or have them imposed on them. Few of these ordinary Americans can afford to ride the Acela, yet the goods that they buy and the taxes that they pay help support a premium rail service. This is fair?

It is the premium portion of the fare, which is the difference between the Acela fare and the regional fare, that is the premium pass through. Most corporations require all but their top executives to travel coach class.

The majority of air travelers between Washington and New York fly coach class. The majority of them use the shuttle. Some of the same class of travelers that ride the Acel

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First, Sam! Airlines are subsidized by government money for research for military purposes which transposes to commercial airplanes; by municipal building and owning airports; by air traffic controllers just for starters.

But Joe, the point is that people with money will pay money for the service. Plus people want choices of service levels, comfort and time and amenities. As an aside, in my Ride With Me Henry trips, we have ridden Amtrak NYP to Poughkeepsie, NY returning by MNRR and to Stamford, CT returning by MNRR. In both cases, as I remember, the one way Amtrak tickets was equal to the round trip fare on MNRR. But the speed and the comfort of the ride was sooooooo different! The comfort of the seats, the suspension of the car, the lighting, etc.

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There is only one intercity passenger railroad in the United States. Amtrak requires one dollar of subsidy for every two dollars of revenue that it brings in. Actually, that is for the operating expenses. If the capital expenditures are included, the ratio gets even worse.

Amtrak should offer whatever service can be supported by the market place. It should charge a fare that recovers all the costs of the service, as is the case for airlines, bus companies, cruise lines, etc. This is especially true for premium services, i.e. Acela, business class, sleeper class, etc. The only reason the Acela can charge less than the shuttle between Washington and New York or New York and Boston is because it is heavily subsidized. If it had to cover all of its attributable costs, it would be challenged to offer the service at competitive market rates.

If the country believes that passenger rail service is in the public interest, to use an over worked phrase, the subsidy should be restricted to coach class. If I remember correctly, this is what the Inspector General was saying, at least by implication, when he recommended that Amtrak’s long distance trains offer only coach service.

The airlines use approximately 30 per cent of the airport capacity and air traffic control capacity in the United States. Most of it is used by general aviation and the military. The airlines pay for the portion of the system that they use. In fact, they argue that they pay more than their proportional share, and they have some studies to back-up their argument.

Most of the 525 airports the United States that are served by commercial airlines are operated by public authorities. They are paid for by gate fees, landing fees, terminal rentals, parking lot fees, hangar fees, FBO fees, etc. With the exception of some rural airports, most of them do not require a subsidy from the federal or state governments. On occasion, the federal

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No problem with willing buyer-willing seller. The problem is the seller is offering a heavily subsidized service to premium customers who would not in all probability pay the fully recoverable market rates.

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Yep! If you cannot come up with a logical rebuttal, just claim that the terms are inaccurate and disingenuous.

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The last airplane that benefited directly from military research and experience was the Boeing 707, which is a carbon copy, in many respects, of the KC-135.

You could stretch this claim further, as NARP has done, that the airlines have benefited from NASA research. This is true. It is equally true that the railroads have also benefited from the same or similar research, e.g. micro-processors, GPS, etc.

Many folks on these forums are quick to point to supposed subsidies received by the airlines, but seem to over look the large subsidy received by passenger rail (higher per passenger mile than any competing mode of transport) or

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Passenger rail subsidy appears larger because of fewer riders…if ridership was up, it would be less, and maybe equal to airline and other modes. But you are right about the subsidies being irrelevant when it comes to wanting and paying for higher levels of quality and service; even paying a price for a label!. I know of an instance of a furniture dealer who sold a friend of his a living room set for less than the high end store down the street but had to deliver it in a plain truck so that the neighbors wouldn’t know the purchase was made at the low price store. Another instance I had customer who was a gift and antique shop in a touristy town who’s prices were double those of shops outside the town! But there were people willing to pay the higher price all the time.

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Nope it goes much further. You are correct about the KC-135 however the B-727, B737s were both essentially the same fuselage as the B-707 (KC-135). B-747 fuselage development that came from R & D paid by DOD for the C-5 (which went to lockheed).

Another subsidity that is almost the same amount is the cost of engines. The JTD-3 came from the eninge of the KC-135 This was the engine on B-707,720, DC-8s (JT-4s on some DC-8s also subsidized). The JT-8 came from fighter jets and powered the DC-9, B-737- 100, -200s . The CFM-56 a GE jet on other B-737s came from military research. B-747 JT-9s came from early C-5 engines. I could go on and on.

But I take umbrage saying the final customer pays all the freight (pass fare) only if riding Acelas. If those business men took an airline instead of train they would bill (either directly or causing employer to hire more persons to do the necessary jobs) for that time they could not work because of work restrictions when flying. Therefore there would be billing for security line waits, taxiing, take offs turbulence etc.

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The operative words are benefited directly.

The other airplanes were developed because the airlines quickly realized that the jet airplane was much more productive than the piston driven airplanes. Of course, they benefited from the technology knowledge base. Had there been no military aviation, the U.S. could have taken a clue from the British, who amongst other things were t

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Several things, Sam. One, the airline industry did not have to pay for research and development of aircraft, etc. because the government did. The railroads had to pay for research and development in the cost of purchase of their equipment. In the US commercial airports are governements built,