(The following story by Tian Huang appeared on the Medill Reports website on November 12.)
CHICAGO — Amid unprecedented high oil prices this summer, Amtrak, the government-owned passenger rail service company also known as the National Railroad Passenger Corp., saw record gains in ridership. However, with a weakening economy and oil prices dropping, some Amtrak customers now say they may switch to other ways to travel.
Eleanora Wiley, who was returning to Chicago’s Union Station from Little Rock, Ark., said she currently saves $30 roundtrip traveling on Amtrak versus taking a bus. But, as fuel prices tumble, Wiley said she expects bus companies to slash their ticket prices as well.
“The Amtrak experience is comfortable,” said the southwest Chicago resident. “But, if it’s cheaper for me to ride a bus, I’ll take it.”
Other consumers added that carpooling is becoming another less-expensive alternative to Amtrak. Dana Comstock, of West Dundee, Ill., uses Amtrak to go to Southern Illinois University at Carbondale, but said she now tries first to get a ride, which saves her around $40 roundtrip.
“The prices are a little high, so Amtrak is my last resort for travel,” Comstock said.
According to a survey by CheapTickets.com, an online travel service of Orbitz Worldwide Inc., 95 percent of consumers are making changes to be more frugal, with 61 percent lowering traveling expenses.
The cutbacks are “the reality of how the economy is affecting consumer behavior in every area of life, including travel,” stated Marita Hudson Thomas, senior communications manager of Chicago-based CheapTickets.com, in a press release.
Though Amtrak President and CEO Alex Kummant acknowledged in a press release that “volatile fuel prices” contributed to Amtrak’s record-high ridership this year, Amtrak representatives said they still expect consumers to choose Amtrak.
“Despite some concerns about the state of the economy and fuel prices, we continue to show upward momentum,” said Marc Magliari, a spokesman for Amtrak.
Magliari added that sinking oil prices actually play into Amtrak’s favor, lowering operating costs. Amtrak is also set to become more attractive to consumers as it expands its services. Congress nearly doubled Amtrak’s funding in October, authorizing a five-year, $13 billion investment to improve the system, including $2 billion in grants for cities and states that add new passenger rail service between cities.
Oil prices have fallen more than 60 percent in the past four months from a record-high $147.27 per barrel in July. Light sweet crude oil for December delivery plunged $2.25 to $57.08 a barrel at mid-day Wednesday on the New York Mercantile Exchange.
With airlines cutting back capacity and tacking on ancillary charges, Ross Capon, president of the National Association of Railroad Passengers, which calls itself the largest national membership advocacy organization for train and rail-transit passengers, said he expects demand for Amtrak to soften some with the poor economy but have no dramatic changes.
“It’s that Wal-Mart effect,” Capon said. “People shift from airlines, where fares are more expensive, to trains, where fares are cheaper.”
However, as consumers begin to penny-pinch, Capon said, there is a possibility of consumers eliminating travel altogether.
“It’s tough to identify what the outcome is going to be or how long it’s going to last,” he said
Amtrak ridership increased 11.1 percent to an all-time record 28.7 million in the fiscal year ended Sept. 30, marking the sixth straight year of gains. All Amtrak trains across the system experienced ridership jumps, with the Hiawatha service, which travels between Milwaukee and Chicago’s Union Station, seeing its passenger count rise nearly 26 percent last year. Union Station, which is the fourth busiest train station in the nation, also saw service to Downstate Illinois reach the one-million-passenger milestone for the first time.