Why is Amtrak so expensive? Many people don’t understand how train travel can be much expensive. I’ve also found myself complaining about Amtrak tickets once or twice. But today, we dig deep we reveal this mystery.
Very few people don’t like traveling. In fact, for the majority of us, traveling is certainly a hobby. And, whether you are doing just local travels or international ones, the goal is always the same – leisure or business.
Amtrak is one company that has enabled inter-state travel in the U.S. since its formation in the 1970s. However, over the years, introducing other more reliable and faster means of transport has seen the company lose its relevance in the transport industry.
But one thing you’ll note with Amtrak is that despite not being the best or fastest mode of transport in the U.S., it’s still among the most expensive ones.
In many cases, it’s cheaper to fly than use Amtrak for your trip. So, why this difference? Why is Amtrak so expensive? Well, we will unearth that in a bit. But before that…
Show Table of Contents
- What is Amtrak?
- Why is Amtrak So Expensive? Top Reasons
- 1. Cost of Rail Maintenance
- 2. Several Non-Profitable Routes
- 3. Introduction of Better Transportation Alternatives
- 4. Amtrak Never Makes Profits
- 5. Increased Employee Salaries
- 6. Rent Cost for Railroads
- Are there Cheaper Amtrak Tickets?
- Which is Better, Train or Plane Travel?
What is Amtrak?
Established in the early 70s, precisely 1971, Amtrak is a passenger rail service, the only one operating throughout the entire U.S. continent. Amtrak serves over 500 destinations, but its expensive tickets have seen it continue to lose popularity over the years.
Since it was established, the service has been operating on losses year after year. Initially, train travel was quite popular in the U.S. Almost 42 million people used trains as their primary means of transportation in the early 20th century. Private companies owned and operated these passenger trains in the freight trains business.
However, this didn’t last long. By 1940, people started preferring other modes of transport like cars, buses, and planes to rail transport. All this made the train transport industry less prevalent, with various railway services discontinued by the 1960s.
These included the once-popular railway services like Topeka & Santa Fe Railway, Penn Central and Atchison, etc. Shipping mail by trucks and air dealt the final blow to the train transport industry.
However 1970, President Nixon signed an act that guaranteed railway services with government funding. The National Railroad Passenger Corp was created, which later transitioned to Amtrak. Some 26 railway services didn’t join the newly created Amtrak.
While the government has continually tried to make Amtrak profitable, this has never been possible. And this takes us back to our main question. Despite receiving government funding for all these years, why is Amtrak so expensive?
Why is Amtrak So Expensive? Top Reasons
1. Cost of Rail Maintenance
Just like we notice road repair works now and then as we drive to work or elsewhere, it’s not any different for the railway services. Rail tracks also need regular maintenance, which can be quite expensive. And although we usually don’t see these repairs and maintenance activities, you can be sure they occur constantly.
Regular maintenance is always necessary since the rails are old and constantly face harsh weather conditions. But why is rail maintenance that expensive compared with road maintenance?
Besides the need for constant maintenance, some tracks are pretty inaccessible as they are located deep inside some remote countryside. This only adds to the maintenance cost, especially when the weather is unfavorable for such work.
Other factors like tight deadlines and safety issues also contribute to the expensive nature of rail track maintenance. For instance, trains work with schedules, which must be observed even when undertaking rail maintenance. This is one reason Amtrak offers high-cost tickets to try and cover these costs.
2. Several Non-Profitable Routes
Generally, Amtrak gets most of its revenues from train rides – apart from the subsidies and funding it receives from the government. For instance, 70% of its 2018 revenues were from rail services.
It has to make enough money to cover its operational costs. However, since the introduction of alternative means of transport like planes, buses, and cars, some Amtrak routes have significantly reduced the number of travelers.
This has largely contributed to these routes becoming more and more non-profitable. And, being a quasi-public corporation, Amtrak has been unable to halt operations on these routes. This means that the routes continue eating into the profits of other routes that might be profitable.
This is quite impressive, considering that the route covers only 457 miles out of the 21,400 miles that Amtrak serves. These revenues, however, cover the routes operating at a loss. Consequently, the corporation has to increase its fare costs to stay afloat.
3. Introduction of Better Transportation Alternatives
As mentioned earlier, train transport was the primary mode of transportation in the early 20th century. However, this has all changed in the recent past. There are now more convenient modes of transport to choose from.
And taking a direct flight will only take about 1 hour and 10 min. Even worse, most alternatives are cheaper and more flexible than trains. Therefore, when someone hears that they will have to pay more to travel by train than by plane, most people choose the cheaper, faster option.
The decrease in the number of customers has seen Amtrak hike its fares to cater to the lost revenue. Subsequently, even more people stop relying on train travel. The only advantage of Amtrak train service is that you can efficiently work during your journey, unlike on a bus or while yourself.
Therefore, Amtrak becomes a good option if you are traveling for work, especially if you need to complete some work during the journey. Generally, the corporation uses higher ticket rates to cover the decrease in travelers.
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4. Amtrak Never Makes Profits
Generally, Amtrak is stuck in a lose-lose type of scenario, or what is known as the Catch-22. This means that it always loses no matter what the corporation tries to do. In other words, it cannot evade losses due to certain limitations and regulations.
For instance, Amtrak has to deal with the consequences of old trains and aging railroads that demand constant maintenance. Increased depreciation of the trains and railroads leads to higher maintenance costs and other expenses that only eat up the corporation’s little money.
And, since buying new trains or installing new railroads is expensive, Amtrak has to continue operating with what it has. This way, losses keep trickling in, making the management hike up travel tickets to sort out the mess the only way that seems effortless.
Also, besides the lack of finances, Amtrak’s quasi-status hinders it from making certain drastic decisions that would change its downhill trend. For this reason, the more they increase the cost of tickets, the more customers they lose to the other affordable modes of transport.
Amtrak can get out of this predicament only if the government agrees to fund it even more.
See Related: What Does Domestic Travel Mean?
5. Increased Employee Salaries
Despite not making enough profits, Amtrak still has to pay its employees. And salaries take a good chunk of Amtrak’s money each month like any other business.
While it should be able to cover such operational expenses, the lack of profits worsens the situation. Additionally, most of the employees in the train transport industry, like train engineers, fall under high-earning professionals.
Whether there is business or not, the staff will demand their pay at the end of the month. For this reason, if Amtrak doesn’t charge more money for the tickets, it will certainly lack the necessary amount to pay the employees and keep its operations running.
Generally, a train works in the same way as a plane. Even if there are just a handful of travelers by the time the train is scheduled to depart, it won’t wait.
This means that the passenger trains are still operational on the routes that experience significantly low passengers, and the staff still get paid. This is why Amtrak increases the cost of its train tickets to cover the empty seats. This scenario answers our central question: Why is Amtrak so expensive?
6. Rent Cost for Railroads
Amtrak parts with some good money as rent for the railroads. Sounds weird, right? Well, it’s the weird truth! Generally, Amtrak trains operate on approximately 21,400 miles of railroads. However, only 630 miles of these railroads belong to Amtrak. Other freight train companies like Metro-North Railroad own the rest.
Therefore, apart from the maintenance, salaries, and depreciation costs, the corporation must dig deeper into its empty pockets to pay for these rented railroads. Some sources indicate that Amtrak pays around $5 per mile of railroads to cater to this cost.
You might not have known this, but it’s the truth. Most railroads on the northeast coast belong to other large freight companies. Therefore, for every mile that almost empty passenger train travels, it has to pay. Such costs add to Amtrak’s operational costs, necessitating increased ticket prices.
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Are there Cheaper Amtrak Tickets?
No one wouldn’t want to enjoy that train ride at an affordable ticket rate. Saving even a few dollars is never a bad thing! But can you save money on Amtrak tickets? Certainly yes!
Even with all the limitations that drive Amtrak’s tickets up, you can still enjoy an affordable ride with their trains. But how? The first and easiest way is to take advantage of advanced booking. If your traveling schedule is flexible and can be adjusted, you might be able to enjoy some cheaper travel tickets if you book 14 days before your travel date.
By doing so, you can get a reduced rate, depending on the prevailing fare rates. However, if you are on a tight schedule that can’t be altered, you must travel at those expensive rates. Several exceptions are also allowed for people in the military, kids, and senior citizens. Also, people traveling in huge families and groups might enjoy some discounts.
For the kids, especially those below 12 years, tickets are sold for a 50% discount. However, this is only possible if they are traveling with an adult who pays a full fare ticket.
Amtrak offers bulk packages, allowing people to purchase several tickets to enjoy lower prices. Therefore, if you are traveling as a huge family or a group, this option can help you save some money. The group discount can save up to 20% of the average ticket cost if you buy group tickets for around 20 people or more.
Which is Better, Train or Plane Travel?
So, after evaluating why Amtrak is so expensive, does it mean we should avoid train travel? How does rail transport compare to air travel?
Well, depending on the nature of your travel or destination, the train can still be the best transportation mode. For instance, when you have more luggage or want to enjoy the outside view as you travel.
However, in normal circumstances, the plane is faster and sometimes cheaper than the train. In this case, flying becomes the best option unless you want to enjoy the feeling of a train ride. Therefore if you want to reach your destination faster, air travel is quite convenient.
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- About the Author
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Kyle Kroeger is the Founder and Owner of ViaTravelers.com. He is a seasoned traveler and entrepreneur. Kyle started ViaTravelers.com to help travelers find their next adventure, whether it’s exploring new places or revisiting old favorites.
He’s a converted finance nerd and Excel jockey turned world wonderer (and may try to get lost on purpose). He loves listening to people’s stories from around the world as well as sharing his own experiences traveling the globe. He loves travel so much that he moved from his hometown of Minneapolis to Amsterdam with his small family to travel Europe full-time.