(The Boston Globe posted the following story by Keith Reed on its website on April 22.)
BOSTON — Amtrak, eager to build ridership on its premier route, will slash fares 22 percent on its Acela Express service between Boston and New York starting Monday. The cuts, which will be formally announced today, will bring the price of a one-way, peak-time ticket to $99.
The rail carrier has gained market share amid declining business travel because of terrorism fears and cutbacks in air shuttle service, analysts said. Now it is positioning itself to consolidate those gains by offering a 3 1/2-hour trip for under $100, competing with a 45-minute shuttle flight priced at about $200.
”We feel very strongly that there is about to be a rebound in business travel and we want to be in a position to take advantage of that,” said Amtrak spokesman Dan Stessel.
”We’re not necessarily concerned about losing share to the air carriers; we’re trying to expand our market share.”
The cost of a business-class ticket from Boston to New York on the Acela Express will drop to $99 from $127 each way during peak times. Fares for nonpeak trips are also being slashed, to as low as $85 each way from the current price of between $102 and $119.
The railroad’s slower Acela Regional trains, which take about four hours to reach New York from Boston, will remain priced at about $87 one way.
With the fare cut, a round-trip, business-class ticket on Amtrak will cost about half as much — $198 — as a round trip on an airline shuttle. Walk-up fares on Delta Air Lines’s shuttles, for example, cost about $436, taxes included. The most cost-conscious Boston travelers can choose from 31 daily bus trips to New York for about $44 one way and taking four to six hours.
The rail carrier also wants to take advantage of the fact that the airlines’ shuttles in the Northeast have dwindled in frequency. Delta, for example, cut four shuttle trips per day from the Boston-New York route last month. US Airways cut six round trips each from its shuttle service between the cities this month. American Eagle, American Airlines’ shuttle carrier, on the other hand, has added four round trips since last October, now offering 10 hourly shuttles daily. Amtrak offers eight round-trip Acela Express trains daily.
Although Amtrak’s fastest train, the Acela Express, takes more than four times longer than the shuttle to reach New York, the times are not directly comparable. Rail travelers can travel from downtown to downtown, avoiding the trip to and from the airport and the inconvenience of lengthened security checks.
Acela Express fares from New York to Washington will not change, nor will those on the Acela Regional service between New York and Washington. The regional services lack the conference tables, laptop computer outlets, and 150 miles-per-hour top speed of the Acela Express. Amtrak has taken other steps recently to lure passengers onto its Boston trains. One day last week, passengers on Acela Express trips between Boston and New York were surprised with free massages. In a separate move, the carrier replaced its overnight Boston-to-Washington, D.C., Twilight Shoreliner train with the new Federal, offering coach fares as low as $56.75 for a ride between the cities. The new train will also offer three classes of service — first, business, and coach, as opposed to the coach and business classes on other Amtrak trains.
Stessel said the moves were unrelated. But Amtrak’s recent ridership data and its struggle for solvency illustrate how critical it is for the nation’s passenger railroad to keep people riding the rails in the Northeast, its most lucrative territory.
”If Amtrak were to shut down tomorrow, its loss would be most dramatically felt in the Northeast,” said Ross Capon, executive director of the Washington-based National Association of Railroad Passengers. ”That’s where most of its riders are, and its core political support is based in the Northeast.”
According to Amtrak’s data, ridership between New York and Boston on its Acela Regional and Acela Express services grew from just over 213,000 passengers in the first quarter of 2001 — the first three months of Acela service — to a peak of about 291,000 riders in last year’s second quarter.
Driven by travelers’ fears of flying following Sept. 11 and the airlines’ service cutbacks since, the rail carrier’s market share vs. the airlines grew from 24 percent to as much as 49 percent in the first quarter of last year.
Since then, however, Amtrak has suffered setbacks. Mechanical breakdowns sidelined the Acela Express trains several times last year, helping to erode some of the gains. By last year’s third quarter, the most recent data available, the carrier had dropped back to carrying only 37 percent of all passengers between New York and Boston, compared with 63 percent for the equally troubled airlines.
”It’s undergone some painful reductions in ridership since last summer. The traffic has been particularly weak on the Boston end,” Capon said.
Amtrak, like the airlines, is also facing the toughest of financial times. In its last fiscal year, which ended Sept. 30, the railroad was performing so poorly that it warned it would have to shut down if it didn’t get hundreds of millions in emergency federal aid. The aid came — Congress gave Amtrak a $205 million appropriation and the Department of Transportation kicked in $100 million in loan guarantees — but at a price.
When Amtrak’s $1.05 billion budget was approved by the department April 10, it came with a stern warning from the agency that the government would not pony up any more money this year.
To make matters worse, Amtrak’s $1.07 billion contract to run the T’s commuter railroad system will end July 1. The contract is being taken over by Massachusetts Bay Commuter Railroad, a consortium of private rail firms, after Amtrak bowed out of the bidding last year.
Henry Harteveldt, a travel analyst at Forrester Research in Cambridge, questioned Amtrak’s decision to cut fares at this time.
”Amtrak is taking the 180-degree wrong approach from what they should do,” Harteveldt said.
”You’re not going to stimulate the market a lot by cutting the round trip from $246 to $198. You’re just not. I think what Acela needs to focus on is providing frequency, reliability, and value. The challenge for Amtrak is that the train needs to be seen as more hassle-free than a plane.”
Instead of cutting costs, Amtrak should be doing more to market itself and to sell upgrades to travelers riding its cheaper Acela Regional trains, he said.
Amtrak defended the fare cut, while the Department of Transportation, the agency holding Amtrak’s purse strings, distanced itself from the matter yesterday.
”Amtrak and its board are responsible for pricing and service decisions. DOT’s role is to make sure that Amtrak meets the revenue forecast contained in its business plan or otherwise reduces operating costs as required by law,” said Robert L. Gould, a spokesman for the Federal Railroad Administration.
Capon, of the Railroad Passengers Association, welcomed the move. At worst, he said, ”I guess they’re a bit worse off.
”Obviously the goal with the fare reduction is to increase revenues. It’s something that a lot of businesses are doing at this point to stimulate the market.”