Amtrak's real competition on the Northeast Corridor

Posted by Fred Frailey
on Friday, March 19, 2010

I’m headed from Washington to New York this weekend on an Amtrak Acela. My friends Richard Simon and Nancy Ross, a married couple who practice optometry in downtown Washington, are going to New York, too. They could well afford the Acela, but instead, they’re taking a bus.
“We’ll save $350,” she told Richard. They’ll actually save more than that. I paid $270 for my round trip on Acela. They’ll pay $50 each for a round trip on the bus, saving $440 over the Acela price. Do you begin to see Amtrak’s problem in the Northeast Corridor?
To begin with, these aren’t Greyhound buses. I stuck my head inside a MegaBus in Washington that was waiting to load passengers for New York this week. My, oh my. Brand new. Nice reclining seats. Free WiFi. Restroom. The Acela will get me to New York in 2 hours, 45 minutes, and a Northeast Regional train in about 3 hours, 15 minutes. The bus may take 4 hours, 15 minutes or more, depending on Interstate 95’s notorious jam-ups in Maryland and Delaware.
The East Coast bus phenomenon started, almost under the radar, about a decade ago. They were called Chinatown buses in a Washington Post feature story in 2002, because they began in D.C.’s Chinatown and ended in New York’s Chinatown. Today there are a host of D.C.-New York bus operators, and they are as likely to begin and end their trips at Union Station and Penn Station as in Chinatowns. I count 11 of them, under such names as EasternShuttle, Apexbus, NYDC Express, HolaBus, Vamoose, MVP Bus, New Century, Tripper Bus, DC2NY, Washington Deluxe, and MegaBus. A couple of the companies pick up in Arlington, Va., and Bethesda, Md., rather than downtown D.C. I calculate that on a Friday or Sunday, there must be 100 scheduled departures from each end in all; that MegaBus driver who let me inside said it has a driver roster of 30 in Washington, and some days they all make a trip.
Did I mention fare? I think Richard and Nancy paid too much. There are $20 tickets being sold, and several operators, including MegaBus (a multinational operation) claim to set aside a few seats each trip for as little as $1.
Amtrak is not standing still while this happens. The fairest comparison is between Northeast Regional trains and the buses. Amtrak fares on Fridays between New York and Washington seem to fluctuate between about $106 and $143 each way. Last summer, Amtrak lowered the fare to $49, but only if you book the trip at least two weeks in advance, which is something I’m never able to do.
Amtrak is obviously walking the fine line. If it sold $30 tickets, the buses would sell $20 fares. If Amtrak then went to $20, the buses would go to $10. And if Amtrak got a flood of business on Northeast Regional trains for $20 a pop, what would happen to income and expenses, and where would it find the equipment? I can answer all three questions. Revenue would shrivel, expenses would soar, and ridership wouldn’t rise all that much because Amtrak doesn’t have a surge fleet.
Northeast Regional ridership in January was up 3 percent in January over a year earlier. What do I gather from this? That Amtrak is doing a pretty good job maximizing revenue on the Northeast Corridor. What is probably happening is that rock-bottom bus fares are expanding the D.C.-New York travel market, just as discount airline fares a generation ago persuaded people to travel more often. — Fred W. Frailey

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