Apparently you neglected to read my last letter, but with the fast approach of National Train Day and the increase in oil prices making your services slightly more competitive, I thought it might be helpful to bring up the topic again.
Your pricing skills suck. Are you intentionally trying to lose money and ridership?
Suppose that a family of four — or six — wanted to travel to Disney World from New York. This is a not uncommon occurrence, and provides the basis for over 250 flights per day by many airlines from more than five airports in the New York metropolitan area. The cost of air travel is currently going up, up, up due to some small upset over in the oil-producing regions, so where a seat on JetBlue from JFK to MCO would once have cost $50, it’s now between $100 and $150. This is an opportunity! And you’re missing it!
And you’re missing it in a big way. Look, I understand that it takes capital to improve infrastructure, and that you’re hobbled by riding on tracks owned by others, but it’s almost like you’ve intentionally set your prices to encourage folks to drive. For me to take a family of six to Disney World by plane costs almost as much as staying in one of Disney’s “moderate” resorts and going to all of the parks every day of my visit, so I, and many others, might be looking for a slightly less wallet-reducing option. And the first thing that comes to mind is driving. But who wants to drive the first 24 hours of their vacation? Or, who wants to spend three days driving, two days there, and three days driving back? No one. But the other option is too expensive. Buses? Ha! That’s worse than driving, especially with little kids. How about the train?
This is where you’re completely missing the opportunity. The cost per seat from, for example, New York Penn Station to Orlando is $106 per person for a 21 hour trip. That’s slightly cheaper than the more expensive JetBlue seat, but you forget the time differential. Time is, after all, money, which is why travelers choose to fly on JetBlue for 2 hours for $150 instead of suffer on Amtrak for 21 hours for $106. You need to take your utter inability to get anywhere fast into account when pricing your service. And when you’re more expensive, even if only by $7, than the cheapest option, you completely lose. No one wants to pay more money for the privilege of getting somewhere slower.
Yet the cost of airfare gets worse as one moves away from hub airports. This is where you have an advantage. It costs less to feed from Poughkeepsie to New York and thence to Orlando than it does for JetBlue to fly direct from Newburgh to Orlando. In terms of convenience for me, I’d much rather leave from Poughkeepsie than from JFK. If you can get your prices down to something approaching the cost of gasoline plus a hotel room, you might have a fighting chance in earning my dollar. But then you totally destroy any opportunity you had with the sleeper options. $358 for a room for two people? $658 for a slightly larger one? What? You think you’re a hotel on Times Square? I’m just looking for a contained, flat place for my kids to lie down so that they don’t spend the night in the bar car.
You have two options: lower your prices, or build faster trains. Because we’re sure as Hell not going to pay $658 for two cots or $640 for uncomfortable seats when we could pay less than that on gas and a swank room at the Holiday Inn Express.