Dear Amtrak: Learn How to Price Your Service

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.

Dear Amtrak

You disappoint me.

You don’t understand pricing. Or perhaps you simply have no experience of buying things with your own money. In any case, what are you thinking?

I know that you stop in both cities, so I was hoping to take my family from Poughkeepsie to Montreal by train instead of by car. But then I checked your prices.

According to Google Maps, the trip is 5 hours 12 minutes by car, to travel 309 miles. Our van gets 25 miles per gallon on average, or 12 1/3 gallons from here to there. Let’s call it 13 gallons for imprecision. Gasoline currently costs roughly $3.00 per gallon. One way, the trip would cost, out of pocket, $39 plus lunch and dinner for six. If we eat at a restaurant, lunch or dinner tends to run between $50 and $60. Thus far, from here to there would be $159 by car.

But you? You want $241.50 to make the trip in 9 hours 30 minutes? Taking the train might be more relaxing than driving for six hours with four kids strapped into car seats, but trying to keep them in the same train car, much less the same seats, for ten hours would be well nigh impossible. They will have gone stir crazy before we reach Albany. And you and I both know that your timetables are a rough approximation: The last time I rode Amtrak you said the trip would take 8 hours; it took 12. For this you want me to pay almost six times as much as driving?

That was weekend pricing. Let’s look at the weekdays. Apparently there’s a deal if I take The Adirondack over the weekend, but I didn’t notice that in the price. Weekday prices drop the fare considerably, once this discount takes effect: $148.


And only a snack car on the train?

No, thank you.

Suppose that I were to travel alone. For that you ask $69. I could have a full tank of gas, half a pack of cigarettes and a pair of sunglasses, and make it there by morning for less than that.

I like trains; I do. But at the rates you charge, your only customers are those with time to spare, those without travel options, the price-insensitive, or die-hard railfans such as Vice President Biden. That’s no way to make a profit.

Oh, I think I just realized how you’ve determined the prices. You’re charging by the hour. OK. Let’s see how that compares.

$148.5 divided by 9.5 hours is $15.63 per hour. That sounds cheap. How does my driving compare? $159 divided by 5.25 is $30.28 per hour. Wait, I forgot to factor in bathroom breaks and time for casual dining: $159/8.25 = $19.27/hour. Ah, I see now. That makes perfect sense. The trip length is also almost the same. Let’s stop at a park for some running around and exercise: $159/9.5 = $16.73/hour.

Are you going to throw in dinner while we’re on the train? I didn’t think so. Let’s remove that from the equation: $39/9.5 = $4.10/hour.

I suggest perusal of this article at Wikipedia. Meanwhile, I’ll enter the Toot & Puddle Read & Ride Sweepstakes.

Competitive Pricing of Substitutes in Transportation

Nate Silver has an interesting, if partial, analysis of statistics comparing modes of transportation based on the National Household Travel Survey. He wonders why Americans prefer to drive long distances than fly, and calculates the costs to be generally cheaper if one flies.

Today the Poughkeepsie Journal did the same thing for the costs of commuting by car or rail. (Unfortunately the website doesn’t include the charts.) Rail is cheaper, but the comparison leaves out the cost of time.

Both comparisons depend on a variety of factors, including, among other things, the number of passengers, the length of the trip, whether you’ll need a car to get around at your destination, the bulk and mass of your cargo, and so forth, none of which are really taken into account. For us, trips generally involve six passengers and gear. This rapidly decreases the value proposition of plane or train travel since we’re dividing the total cost by six, making our own personal mass transit more affordable.

It doesn’t help that Amtrak’s prices this year are the same as last year’s, while JetBlue’s have gone down.

The Impact of the Daylight Saving Time Change on Traffic Accidents

It seems to me that accidents would increase during the transitional period surrounding the switch between Standard Time and Daylight Saving Time. And apparently others have asked this question, and looked at the data to see if what effect the transition has. The paper Daylight Savings Time and Traffic Accidents, with related discussion of the results, is, unfortunately, behind the New England Journal of Medicine‘s paywall. Fortunately, Stanley Coren presented on the subject at INABIS 98, and so the work is available online at McMaster University.

Other studies argue that, overall, DST reduces traffic fatalities because more driving is done in daylight. No shit, Sherlock; the day is longer because of the Earth’s orbit around the Sun, not because the clock changed. However, it just boggles the mind why the arguments proffered for DST are considered sufficient. Why not impose a curfew and forbid driving at night, then? Or remove headlamps from cars so that night driving becomes more hazardous and is thus avoided?

Worried about energy consumption and think it saves energy? Why not increase the price of candles, or kerosene, or whale oil, or electricity? Or, if you must compel the rest of us to do something, then forbid the use of electricity when it is dark. That will surely reduce consumption.

You want to use more of the daylight? Wake up when the sun rises, or leave the office earlier. Hell, work from home or live closer to your work location. But don’t move the clocks back and forth and pretend that you have more time. We may as well as call an inch a foot and pretend like penis enlargement pills work.

Public Works

I was listening to old shows on my TiVo while I repainted the sun room. NOW reminded me that the amount of money that governments spend on mass transit pales in comparison to the amount spent on roads. [links needed, but I’m just taking a short break from painting.] One wishes that Randal O’Toole would realize that once in a while, instead of ceaselessly harping on trains.

Now, I like trains. I like the built environment that arises around foot traffic. Because of the nature of railroads, they tended to encourage foot traffic and villages where they stopped.

And I think that government funding distorts incentives. And I think it would be a very interesting project to examine the costs and benefits of the public works of the 20th Century. I suspect that the effects of the National Highway System might be comparable to, for example, the Erie Canal. The costs, however, include a built environment scaled for automobiles rather than humans.


This morning I heard a piece on the radio about scooter sales in New York City. One of the comments piqued my interest.

[The owner of Vespa SoHo, Zachary] Schieffelin says he hopes this means New York will start to look more like London or Rome — the streets buzzing with as many scooters as cars.

Europe has had high fuel prices since the end of WWII. I would suspect that this has contributed as much to scooter use as have the older shapes of the cities — more like New York than Los Angeles — if not more so, particularly as the European cities have become more automobile-oriented.

Telephony Substitutes for Transportation

One oddity of visiting my family in Virginia is that there’s little to no cellular phone coverage in Highland County. This is partially due to the landscape, and partially to the lack of antennae, though some claim it is because of the proximity to the National Radio Astronomy Observatory in Green Bank, West Virginia and another listening post in Sugar Grove. Normally, this is not such a problem, as most residences in the county do have landlines, thanks to the Universal Service Fund. It is a problem if, for example, you’re late to meet your sister three mountains and 30 minutes away just to exchange kids, but then your dad will pass the meeting point at the time you originally planned. But since there’s no cellular coverage, you can’t call to ask him to stop, so you’ll make what would be a duplicate trip.

Robert Jensen, in The Digital Provide: Information (Technology), Market Performance, and Welfare in the South Indian Fisheries Sector (Quarterly Journal of Economics, August 2007) [via The Economist], notes that a significant limitation to fish marketing is that while at sea, fishermen are unable to observe prices at any of the numerous markets spread out along the coast. Further, fishermen can typically visit only one market per day because of high transportation costs and the limited duration of the market. As a result, fishermen sell their catch almost exclusively in their local market. This led to inconsistent supplies along the coast. Some markets would have an abundance of fish, while others none at all. That all changed after the introduction of cell phones. Now the fishermen call ahead to find the most profitable market before they head to shore, and can make course corrections in transit. Supply meets demand, and everyone’s happy.

Lesser of Two Evils

We live about five miles, 11 minutes, by car from the Kindergarten, but the Big Sister rides the bus for 30 minutes or more.

Last night residents in the Mahopac Central School District voted on a bond proposition. The question before the people was whether the district could raise funds to purchase six new buses by issuing a five-year bond not to exceed $500,000. The proposition was approved, by 502 to 309. The rest of the population abstained, and accepts the majority decision.

The Journal News asked a couple of voters what they thought.

Kevin Dunn, however, voted against the plan because he feels the cost of running the district has grown out of control.

“They need to cut, not increase spending,” said Dunn, a business analyst, whose three elder children graduated and whose youngest is a second-grader at Lakeview Elementary School. “I want to see cuts. They can do plenty on the administrative side, I’m sure.”

I voted for the proposition because it was the lesser of two evils. Were the bond to be denied, the district would have leased the same number of buses, and the tax burden would have been higher. We could not tell the district administration to find the money elsewhere, but only how much they could remove from our pockets. I expect the district to retire the oldest buses, those with less efficient engines and which generate more pollutants, and replace them with the new equipment. But I wouldn’t be surprised if they don’t.

If the citizens do not want to support a large fleet of buses, then school buildings need to be built near the students, and the towns must be laid out so that the children can safely walk to school.

Spare the Belt, and Spoil the Child

The Big Sister goes to kindergarten in the Fall. On Tuesday, I went to an orientation session about the school buses, where I learned an interesting thing. The buses have seatbelts. The drivers may “suggest” that the children wear the seatbelts, but the children are not required to wear them. At this tender age the children may exercise their discretion in this matter of personal safety, but we adults may not.

I recall in 1980-something when Virginia proposed and passed a bill requiring the occupants of a car’s front seat to wear safety belts. We — that is, the consensus in Highland County — were aghast that the State’s interest in preserving the life of its citizens extended so far as to curtail the risks one willingly undertook to drive a vehicle. We, or at least I, could understand the negligence of a driver in not asking his passengers to wear their safety belts, but to penalize a consenting adult for actions that would harm only him? Such a thing could happen only in a Nanny State like New York.

Now I live in New York, and find that safety belts and seats are required in private passenger vehicles, not in public buses; that the State’s actions in the public sphere are inconsistent with those in the private; and I have to laugh because it so absurd. The State, to which we entrust our children, acting in loco parentis, deems it unnecessary for our children to wear the same belts they fine us for not wearing.