I agree with most of that assessment, but I'd point out that from what I can tell, pre-Amtrak railfares were often on par with what we'd call "high bucket", so the "luxury disparity" wasn't as great as one might make it out to be.Those few who remember the passenger trains of the 1930s through the early 1950s no doubt remember them as being better than Amtrak.
Those who only remember the passenger trains of the late 1960s certainly think Amtrak was a LOT better -- the late-period Pennsy, NYC, Lehigh Valley, Erie Lackawanna, New Haven, B&M stories I've read -- horrorshows. Under Alfred Perlman, NYC often didn't even have working lights or heat in the cars, apparently.
Having looked into it pretty deeply, the point at which passenger trains started to lose money was the federal funding of free roads, combined with widespread cheap automobile sales running on cheap gasoline, combined with free parking on citiy streets, in the 1920s. Passenger trains were often profitable right through the 1910s. They couldn't compete financially with the cheap autos, cheap gas, and government-provided free roads of the 1920s. The autos also blocked the tracks of the streetcars, so this is when the first big round of streetcar and interurban company bankruptcies happened. The train lines with their own right-of-way held up better, got some boosts during the 1930s (when more people couldn't afford cars, and parking meters first appeared), and got a big boost during WWII when gasoline was rationed... but the financial death knell was the free Interstates of the 1950s.
I'm not sure trains ever really competed with airplanes. Commercial airplanes were an expensive luxury for the rich from their introduction until, frankly, deregulation in the 1980s. It was the subsidies to passenger cars which caused passenger trains to become unprofitable.
Trains did compete with planes for some time in many cases, I believe: I think folks forget that while there were some non-stops, a lot of flights were "locals" where you'd have to throw an hour or two onto the schedule because the plane would be making stops along the way. Look up an Official Guide from the 1950s and you'll see what I mean. Moreover, until jet airliners became a thing, there were going to be plenty of cases where a well-run first or second tier train beat the heck out of spending half a day in a DC-3. Even taking the specs of a DC-6, 311-315 MPH cruising speed is going to get you across the country, yes, but it's going to be somewhere in the range of 9-12 hours on the timetable (depending on whether you make a technical stop or any intermediate passenger stops). Even NYC-CHI is going to run you at least three hours in the air for a direct flight while I think we're all a bit spoiled thinking about that being able to be knocked down to a quick 90-minute trip.
Trains might not beat out planes New York-Los Angeles, but when compared to a multi-stop flight New York-Chicago, the overnight options of the Broadway and Twentieth Century did seem to hold their own for quite a while (the Broadway, in particular, was still turning a profit into the mid-60s as an all-Pullman IIRC...I strongly suspect that train's stranglehold on Philly after the B&O cut service north of Baltimore did wonders for propping it up).