Amtrak plays pricing games with Crescent

[wayman]

Unless someone has a better explanation, I believe Amtrak is now offering passengers a great (but unadvertised) incentive to take the Regional to/from Lynchburg instead of the Crescent: All coach fares on the Crescent between the NEC and Lynchburg are high bucket from now on.

I checked five random dates from October through February, and for all of them, PHL-LYH was $140, while PHL-DAN (one stop further down the line, and hence not served by the new Regional) was either $83 or $103 on each date. Can there be any other explanation for this?

Obviously, in the future I'll use "DAN" when making reservations to Lynchburg....

 

[ALC Rail Writer]

I don't know if you'd call that playing games... peak demand pricing. That train sells seats pretty well because of the ability to use the diner and the AFII seats.

 

[wayman]

I don't know if you'd call that playing games... peak demand pricing. That train sells seats pretty well because of the ability to use the diner and the AFII seats.

The train is running half empty between Philadelphia and Danville, because it's still in the lowest two buckets. Therefore, it's also running half empty between Philadelphia and Lynchburg, but they're now charging a "dis-incentive fee" for that city-pair.

Amtrak's hope is that passengers going only as far as Lynchburg will take the Regional instead, so that inventory remains available on the Crescent for passengers traveling further, and they're over-riding the bucket system to try to engineer that.

As an interesting point of comparison, Amtrak does not do this to Richmond. The Silvers cost the same PHL-RVR (covered also by Regionals) and PHL-PTB (one stop beyond the Regionals)--there's no "dis-incentive fee" on this line.

 

[AlanB]

Amtrak's hope is that passengers going only as far as Lynchburg will take the Regional instead, so that inventory remains available on the Crescent for passengers traveling further, and they're over-riding the bucket system to try to engineer that.

It's not really correct to say that they are overriding the bucket system. The bucket system does what it's asked to do. It doesn't decide to put 10 seats at low bucket, 20 at the next, and so on. Someone tells it to do that. So all that's happening here is that someone is saying, no low bucket seats on the Crescent for those city pairs.

As an interesting point of comparison, Amtrak does not do this to Richmond. The Silvers cost the same PHL-RVR (covered also by Regionals) and PHL-PTB (one stop beyond the Regionals)--there's no "dis-incentive fee" on this line.

That's probably because the State of Virginia isn't sponsoring the trains to Richmond. Any losses for those trains come out of Amtrak's budget. Any losses for this new service comes out of Virginia's pocketbook.

 

[ALC Rail Writer]

So if the new service catches on real well, any bets Amtrak "restores" the low buckets?

 

[AlanB]

Not a chance. Amtrak will take the extra cash to improve the Crescent's numbers.

 

[ALC Rail Writer]

Not a chance. Amtrak will take the extra cash to improve the Crescent's numbers.

Hm.. well the question is... will people pay the extra cash or go with the Regional? If enough of them take the Regional option then then eventually the Crescent's numbers will start to fall off because the costs gained in ticket sales at the high bucket won't match what they'll get in reversing the decision.

You know more about this than I do, and I assume they know more than you do. They probably have this move calculated out to the point that they know there's no way they're going to loose money (or, loose more money) off this deal.

 

[PRR 60]

A Virginia rail group noticed the same thing. Here's an example taken from Amtrak.com this morning.

Monday, October 5 (one week from today)

Philadelphia to Lynchburg

- Regional #171: $71

- Crescent #19: $140

Philadelphia to Danville

- Crescent #19: $81

Philadelphia to Charlotte

- Crescent #19: $89

Philadelphia to Atlanta

- Crescent #19: $104

Philadelphia to New Orleans

- Crescent #19: $125

If someone wants to ride the Crescent, you can travel from Philadelphia to New Orleans (1276 miles) cheaper than some poor slob who bought a ticket Philadelphia to Lynchburg (307 miles). I can understand structuring the fares to encourage passengers to use the Regional, but does charging more than a trip all the way to New Orleans make any sense?

 

[NativeSon5859]

It makes sense to offer lower prices on the new regional train to build up demand, especially since its schedule is not that far off from the Crescent's.

 

[wayman]

As an interesting point of comparison, Amtrak does not do this to Richmond. The Silvers cost the same PHL-RVR (covered also by Regionals) and PHL-PTB (one stop beyond the Regionals)--there's no "dis-incentive fee" on this line.

That's probably because the State of Virginia isn't sponsoring the trains to Richmond. Any losses for those trains come out of Amtrak's budget. Any losses for this new service comes out of Virginia's pocketbook.

So Virginia asked Amtrak "hey, can you raise the price of the train we're not responsible for, so that the train we're responsible for gets more riders"? And Amtrak said "sure, we'll sacrifice some of our numbers to make your numbers look better"? And this is likely to be a permanent situation?

 

[wayman]

A Virginia rail group noticed the same thing. Here's an example taken from Amtrak.com this morning.

PRR60, do you have a link to that Virginia rail group website, or was it in a e-newsletter?

 

[wayman]

It makes sense to offer lower prices on the new regional train to build up demand, especially since its schedule is not that far off from the Crescent's.

... which, actually, is what their local newspaper advertising says they're doing!

MAKE A BREAK FOR ITIntroducing New Service From Lynchburg to the Northeast Corridor

... And now couldn't be a better time to try to because we're giving you a break on the price. Go to amtrakvirginia.com/HotDeals for special offers and pricing.

First, they got the address wrong in the newspaper ad--it's HotDeals.aspx and leaving off the .aspx means you get a "This page cannot be found" error with no further help!

Second, the deals they're listing on that page don't appear to be better than the standard Amtrak NEC discounts that have been running all summer/fall that are automatically applied at amtrak.com assuming the purchase is 14 days in advance. Though amtrakvirginia is offering an additional discount, for 3-days-in-advance, of 15%, which is something unique provided by them.

And third, making the Crescent up to $68 more expensive than it would otherwise be (I believe buckets PHL-LYH formerly were $72, $90, $112, $140, and now are only $140) is certainly one way to make the Regional look a lot cheaper, but it's not making train travel PHL-LYH much cheaper than it was before. The lowest non-discounted bucket on the Regional for PHL-LYH is ... drumroll please... $71, only one dollar less than the Crescent's old low-bucket.

For PHL-LYH
Bucket Old Crescent New Crescent Regional Regional 3-day Regional 14-day
 1	$71		  $140		 $71	  $60			$53
 2	$90		  $140		 $		$			  $
 3	$112		 $140		 $		$			  $
 4	$140		 $140		 $140	 $119		   $105

(The Regional is $140 on days surrounding Thanksgiving. I'm guessing this is the top bucket for the Regional, but I'm not sure. I haven't been able to find any other buckets for it, PHL-LYH, and I'm assuming that's because it hasn't been heavily booked yet.)

Offering a special amtrakvirginia discount code to get, say, 40% off for the first month, and 30% off for the rest of 2009, while leaving the Crescent untouched, would still have provided a huge price advantage for the Regional and been great incentive (Crescent $71, Regional $43, for instance)... I just don't think raising the Crescent to $140 was necessary, and think this will hurt Amtrak's numbers overall while not helping the Regional's (Virginia's) numbers in the short or long runs compared to actual deep discounts on the new service.

Granted, I am not an economist; I just play one on the Internet!

 

[Upstate]

As someone who travels to new england from the deep south, I think its great. I have checked plenty of times when the Crescent was sold out and Virginia was where it was actually selling out. The entire rest of the run was getting blocked off by a lot of regional passengers.

 

[AlanB]

As an interesting point of comparison, Amtrak does not do this to Richmond. The Silvers cost the same PHL-RVR (covered also by Regionals) and PHL-PTB (one stop beyond the Regionals)--there's no "dis-incentive fee" on this line.

That's probably because the State of Virginia isn't sponsoring the trains to Richmond. Any losses for those trains come out of Amtrak's budget. Any losses for this new service comes out of Virginia's pocketbook.

So Virginia asked Amtrak "hey, can you raise the price of the train we're not responsible for, so that the train we're responsible for gets more riders"? And Amtrak said "sure, we'll sacrifice some of our numbers to make your numbers look better"? And this is likely to be a permanent situation?

I'm not sure if Virginia did ask for that, but it is not beyond the realm of possibility. Amtrak does exactly that on the NEC south of NYP where it serves the same stations as NJT, and also north of NYP where it parallels Metro North. On the Empire Corridor Amtrak won't even sell you a ticket between two stations that both it and MN serve. Granted that's Amtrak competing with commuter RR's, but the idea is the same and the precedent is there. In fact, in the case of Metro North, it's by agreement. Not sure about NJT or if Amtrak just figures that they can get away with the higher prices.

Flip to California where traveling between Emeryville and Sacramento will also cost you more on the Zephyr, than on one of the Capitol Corridor trains. Granted the price difference isn't nearly as great as what we're seeing here, but there is still a difference.

Flip to Chicago and we find that the Empire Builder won't even carry passengers locally between Chicago and Milwaukee. Don't know if that's by agreement or just a smart idea by Amtrak to not fill up a long distance seat with a short haul passenger.

So the precedent is there.

Now again, I don't know if Virginia asked for this or if Amtrak just decided that they want the long distance train to be for people actually going the longest distances. But either way, Amtrak is assured that their revenues will improve for the Crescent. As either those wanting the luxury of the better train will pay extra for the short haul or Amtrak will sell those seats to passengers actually going the long haul. And the Crescent as noted by Upstate, often does sell out through the Virginia, even though it's not sold out through Atlanta.

Will it always stay at the top bucket, that I don't know. I suspect that revenue management may have some flexibility here and that as they see how things develop, we may see prices on the Crescent drop a bucket or two, but somehow I don't really expect to see the Crescent ever offer a low bucket price again for those Virginia stops.

 

[Philzy]

As someone who travels to new england from the deep south, I think its great. I have checked plenty of times when the Crescent was sold out and Virginia was where it was actually selling out. The entire rest of the run was getting blocked off by a lot of regional passengers.

Agreed. I think this makes sense.

If you can make more money by blocking off local passengers to a regional train which travels the same route, which allows passengers traveling a further distance in those seats who will pay more money, I think that speaks for itself. It means more revenue, period.

If I paid $40 for a seat from WAS-CVS and that kept a seat from being sold to NOLA which sells for $125 or more, then Amtrak loses out on potential revenue as the seat could only be occupied from CVS-NOL where the market would not be as high in need to sell (except to a few UVA Students over spring break).

In addition, maybe this will help the number justify another frequency over the Noreast Corridor 4? Perhaps another train in the oppisite directions in the afternoon and evenings? or a later AM departure?

Just saying, IMHO, I think it's the right move.

 

[George Harris]

As someone who travels to new england from the deep south, I think its great. I have checked plenty of times when the Crescent was sold out and Virginia was where it was actually selling out. The entire rest of the run was getting blocked off by a lot of regional passengers.

Agreed. I think this makes sense.

This issue probably plays out on the Acela and anthing else with reserved space that runs between DC and New York. I worked in Newark some 10 yeasrs ago and was told regularly that traisn on Friday afternoon to DC or points south were full. Leave a little early and take Jersey Transit /SEPTA to Philadelphia, and belod! space was available from there south. After the beople from points north got off, there would be empty seats from Philly onward.

This sort of stuff is why for many years most long distance trains had cars cut in and out at points along the way.

 

[rrdude]

As someone who travels to new england from the deep south, I think its great. I have checked plenty of times when the Crescent was sold out and Virginia was where it was actually selling out. The entire rest of the run was getting blocked off by a lot of regional passengers.

Agreed. I think this makes sense.

This sort of stuff is why for many years most long distance trains had cars cut in and out at points along the way.

Bingo! But don't hold yer breath waiting for THAT to happen.................

 

[Chris J.]

As someone who travels to new england from the deep south, I think its great. I have checked plenty of times when the Crescent was sold out and Virginia was where it was actually selling out. The entire rest of the run was getting blocked off by a lot of regional passengers.

Agreed. I think this makes sense.

This issue probably plays out on the Acela and anthing else with reserved space that runs between DC and New York. I worked in Newark some 10 yeasrs ago and was told regularly that traisn on Friday afternoon to DC or points south were full. Leave a little early and take Jersey Transit /SEPTA to Philadelphia, and belod! space was available from there south. After the beople from points north got off, there would be empty seats from Philly onward.

This sort of stuff is why for many years most long distance trains had cars cut in and out at points along the way.

Using long distance services for local commuter runs does have this problem.

In the UK (maybe in the rest of europe too, I don't know) it's made worse by the fact that pretty much all the trains are DMU or EMU 'fixed formation' setups. Amtrak does (Acela and Talgo aside) seem to run with the more traditional arrangement of one or more locos pulling a number of cars; which means you can set cars out or pick them up en-route. However; it takes time to do the joining / splitting.

Don't (at least some of) the long distance services run 'pick up only' and 'set down only' on the NEC?

 

[wayman]

Don't (at least some of) the long distance services run 'pick up only' and 'set down only' on the NEC?

All LD trains run that way between New York and Washington.

But LD trains continuing south by way of Richmond (that is, the Silvers, and the Palmetto which is a lesser LD train) are not discharge/receive only between Washington and Richmond, despite that territory also being covered by several Regional trains per day. Nor are they priced higher for those stations to discourage travel to/from Richmond.

Alan said above that he thinks the distinction may be that those Richmond Regionals are not funded by Virginia, while the Lynchburg Regional is.