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Why Is Amtrak So Expensive?

Why Is Amtrak So Expensive?

Why is Amtrak so expensive? Many people really don’t understand how train travel can be such 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 US 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 US, 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…

What is Amtrak?

Amtrak Logo

Established in the early 70s, precisely 1971, Amtrak is a passenger rail service, the only one operating throughout the entire US continent. Amtrak serves over 500 destinations, but its expensive tickets have seen it continue to lose popularity over the years.

In fact, since it was established, the service has been operating on losses year after year.

Initially, train travel was quite popular in the US. Almost 42 million people used trains as their main means of transportation in the early 20th century.

These passenger trains were owned and operated by private companies 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 than rail transport. All this saw the train transport industry become less popular, with various railway services discontinuing their services by the 1960s.

These included the once-popular railway services like Topeka & Santa Fe Railway, Penn Central and Atchison, etc. And, shipping of mail by trucks and air dealt the final blow to the trains transport industry.

However, in 1970, President Nixon signed into law an act that guaranteed the railway services of government funding. From this, the National Railroad Passenger Corp was created, which later transitioned to Amtrak. Some 26 railway services, however, 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

Amtrak Operating in Winter

1. Cost of Rail Maintenance

Just like we notice road repair works every 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 that can end up being quite expensive.

And although we usually don’t see these repairs and maintenance activities, you can be sure that they occur constantly.

Mainly, since the rails are old and constantly face harsh weather conditions, regular maintenance is always necessary.

But why is rail maintenance that expensive compared with road maintenance?

Well, besides the need for constant maintenance, some tracks are pretty inaccessible as they are located deep inside some remote countrysides. This only adds to the maintenance cost, especially when the weather is also unfavorable for such work.

Other factors like tight deadlines and safety issues also contribute to the expensive nature of rail tracks maintenance. For instance, trains work with schedules, which must be observed even when undertaking rail maintenance.

This is one reason why 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 purely from its rail services.

This means that it has to make enough money to cover its operational costs.

However, since the introduction of alternative means of transport like planes, busses, and cars, some Amtrak routes have seen a significant reduction in 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 not been able to halt operations on these routes. This means that the routes continue eating into the profits of other routes that might be profitable.

For instance, in 2018, the Northeast Corridor connecting Boston and Washington, DC, contributed around 38% of Amtrak’s entire revenue.

This is quite impressive considering that the route covers only 457 miles out of the 21,400 miles that Amtrak serves.

These revenues, however, end up covering 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 used to be 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.

For instance, while traveling by train from Boston to Washington DC (Northeast Corridor) takes around 7 hours 54min, it will take you approximately 7 hours 10 min by car.

And, taking a  direct flight will only take about 1 hour 10 min.

Even worse, most of these alternatives are cheaper and more flexible than trains. Therefore, when someone hears that they will have to pay more to travel by train than with a plane, most people definitely 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 with Amtrak train service is that you can easily work during your journey, unlike in a bus or while during 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 the number of travelers.

See related: 12 Best Day Trips from Boston, Massachussets

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 no matter what the corporation tries to do, it always loses. 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 both the trains and railroads leads to higher maintenance costs and other expenses that only eat up the little money the corporation makes.

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 easy.

Also, besides the lack of finances, Amtrak’s quasi status hinders it from making certain drastic decisions that would change its downhill trend. And for this reason, the more they increase the cost of tickets, the more customers they lose to the other affordable modes of transport.

Now, the only way that Amtrak can get out of this predicament is 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 like any other business, salaries take a good chunk of the money Amtrak makes each month.

While it should be able to cover such operational expenses, the lack of profits only makes the situation worse. Additionally, most of the employees in the train transport industry, like the 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 clearly answers our main question: Why is Amtrak so expensive?

6. Rent Cost for Railroads

The truth is 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. The rest is owned by other freight trains companies like Metro-North Railroad.

Therefore, apart from the maintenance, salaries, and depreciation costs, the corporation has to dig deeper into its already 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. In fact, most of the railroads on the northeast coast belong to other large freight companies. Therefore, for every mile that that almost empty passenger train travels, it has to pay.

Such costs add to Amtrak’s operational costs, which necessitates the increased ticket prices.

See Related: Eurostar Standard vs Premier: What’s Better?

Are there Cheaper Amtrak Tickets?

Amtrak Train

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 really 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 prior to 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 will have to 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. This is, however, only possible if they are traveling with an adult that pays a full fare ticket.

This can be a great way to save for families traveling with several kids.

Yet another option good option that allows you to save some money on tickets is buying them in bulk. Amtrak offers bulk packages, allowing people buying 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 you even up to 20% of the normal ticket cost if you buy group tickets of around 20 people or more.

Which is Better, Train or Plane Travel?

So, after all the evaluation of why Amtrak is so expensive, does it mean that 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 even cheaper than the train. In this case, unless you just want to enjoy the feeling of a train ride, flying becomes the best option.

Therefore if you want to reach your destination faster, air travel is quite convenient.

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