Passenger Trains > Airline traffic on the NEC - a NY Times article

This may be old news, but I didn't want my fellow fans to miss it. On April 19th., the New York Times did a story on the airline shuttles between Wash. and Boston. Some of the statistics surprised me. Here are the main points in a nutshell:

. The two airlines operating shuttles (Delta & USAir) are still offering hourly service, but they are using much smaller planes now. Delta uses 76-seat jets, and USAair uses 99-seat planes. (we train fans can boast that Amtrak also offers hourly Acela service, but with a 300+ capacity, plus hourly regional trains that can hold 400-700).

. On the NY-Boston run, Delta averages 37% occupancy and USAir averages 45%. They do a little better NY-Washington with Delta averaging 40% occupancy and USAir 50%.

. The presidents of both airlines refused to discuss profitability, but a spokesman for an aviation consulting firm said the industry has a tough time turning a profit, and making money on an hourly shuttle is "a challenge". The airline presidents say they continue to run hourly service anyway because it builds customer loyalty amoung business travelers.

. The article briefly mentions that Acela has lured passengers from the shuttles, but offered no details or comments.

The main idea I got out of the article is: with occupancy rates that low, these flights must be highly unprofitable losers; yet, the airlines continue to run them for other reasons. Also, I would disagree with the Times in saying Acela has "lured" passengers from the shuttles, I would say they have knocked hell out of them.

This give rise to a disturbing thought. If Amtrak had brand new, superior, equipment on the NEC, would this totally destroy the air shuttles? If Congress thinks along these lines, Amtrak will never receive new cars.

There's no question that both Delta and US Airways are hurting on the LaGuardia to Reagan National shuttles. Roundtrip airfare during business hours is as low as $220, and as high as almost $400. Acela Express is more expensive at several hours of the day, averaging about $150 one way

By contrast, flights from Newark to WAS average a little under $500 round trip on Continental. Flights to Dulles, where many high tech and defense firms are located, run $500 from LaGuardia. I suspect Amtrak gets none of the NY Metro to Dulles business traffic.

One thing to remember for comparisons is that most of the high fares (Acela and airlines) are paid by business travelers, who are much more likely to have elite boarding and security line privileges. When I held Continental elite status, it was rare to spend more than five minutes, and often a lot less, waiting for security at Newark.

So, I could be dropped off at the front door of the Newark terminal C, and get my pass at the kiosk, and go through security in under 10 minutes. I don't think that would be typical for the average leisure passenger.

For US Air, there's an added complication. I believe the US Airways landing slots for the shuttle at LGA were put into a special limited purpose corporation during one of US Airways financial messes. It's possible they have to run the flights to Washington, even though they're not making much money on them.

Lackawanna484 Wrote:
-------------------------------------------------------
> By contrast, flights from Newark to WAS average a
> little under $500 round trip on Continental.
> Flights to Dulles, where many high tech and
> defense firms are located, run $500 from
> LaGuardia. I suspect Amtrak gets none of the NY
> Metro to Dulles business traffic.
>
> One thing to remember for comparisons is that most
> of the high fares (Acela and airlines) are paid by
> business travelers, who are much more likely to
> have elite boarding and security line privileges.
> When I held Continental elite status, it was rare
> to spend more than five minutes, and often a lot
> less, waiting for security at Newark.


Two very good points here should be restated:
1) The Dulles corridor is one of the fastest growing employment areas in Metro DC....and it is not convenient to Union Station (over 1 hour during rush hour commute).
2) Business travelers are not very price sensitive because they don't pay the cost of their travel.

While I am sure new equipment has helped Amtrak in the corridor the last couple of years. I think the even bigger thing that has helped Amtrak ridership is the TSA. The TSA has single handily made air travel about as enjoyable as getting wisdom teeth removed. If the TSA ever starts screening rail passengers the same as air passengers, you will see the popularity of the shuttles go back to 1990's levels.

Some business travelers have to be price-sensitive, or they don't get to go. There are T&E budgets to be adhered to. My employer told its managers in Greenville, SC to drive 100 miles to Charlotte and fly to NY/NJ since the air fare was half. Also, the peons, could not travel unless approved by a senior VP, and no one would go out on a limb and ask them for that when they are laying people off,or fear they would make themselves a target by asking.

The size of the airplane has little to do with the profit. I flew the shuttle for about 17 years with Eastern and though we had A-300s on the route,it is important to remember that the A-300 cost was largely abated by the "gift" of six of them by airbus to get the order for more. For most of my career, we flew either DC-9s or 727s on the shuttle with the "guaranteed seat" concept and there were may hours during the day...7am being one, that there would be two and sometimes three sections. EAL made a lot of money with those airplanes. The 9s carried 105 and the later 727s carried 149...IIRC.

The truth is, though, the route has NOT grown in traffic, and if you add the number of pax carried by the two carriers, it is probably not much more than EAL carried alone carried in the 80s and while train service has improved a lot, airline service is pretty much in the toilet.

After having said that, though, it is important to remember the Eastern Air Shuttle had NO services on board and the Flight Attendants sold and collected tickets during the flight.

My wife, who considered herself a shuttle queen once accepted a Shell Oil Company credit car for payment when she was a newbie only to find out is was not accepted. Shell, did pay the bill, however. Funny.

joemvcnj Wrote:
-------------------------------------------------------
> Some business travelers have to be
> price-sensitive, or they don't get to go. There
> are T&E budgets to be adhered to. My employer told
> its managers in Greenville, SC to drive 100 miles
> to Charlotte and fly to NY/NJ since the air fare
> was half. Also, the peons, could not travel unless
> approved by a senior VP, and no one would go out
> on a limb and ask them for that when they are
> laying people off,or fear they would make
> themselves a target by asking.

There's quite a gap in pricing out of Greenville to the NY area.

You can take Amtrak train 20, and pay $147 to sit up all night and the next morning, arriving Newark at 1.44pm. Sleeping accommodations don't appear to be available on the trains I sampled.

or, you ca fly out of Greenville for as little as $256, via Charlotte, in three hours and 20 minutes to Newark. or, fly direct to Newark for almost $600.

Amtrak is definitely playing price games on the Crescent, though. Greenville to Newark is $147. From Atlanta, farther south, the fare drops to $123. Farther down line, B'ham is $128, and NOL is $128.

What was rather telling was that even with sub-100 seat planes, load factors were still under 50 percent. Given the landing/gate fees at those airports, how can they possibly be making money on those flights?

SDGreg Wrote:
-------------------------------------------------------
> What was rather telling was that even with sub-100
> seat planes, load factors were still under 50
> percent. Given the landing/gate fees at those
> airports, how can they possibly be making money on
> those flights?

I wouldn't be surprised if US Airways is losing money on the line. As I mentioned up thread, I don't believe they can sell or trade the slots at LGA without triggering other obligations, so they're stuck with 50% load factors on small planes.

Doing the math, if they're flying a 100 seat plane at 50% average load, that's fifty seats. The fare seems to be about $200 - $220 for most flights, per expedia. Fifty seats at $200 a pop is about $10,000 a flight, and they prob turn the aircraft every three hours, allowing for ground delays, cleaning, etc. So, they get three or four turns per day.

I think Amtrak is making a LOT more money on this route.

Lackawanna484 Wrote:

> I think Amtrak is making a LOT more money on this
> route.


I have to think that the two air carriers in question provide the service as a customer loyalty service, meaning that they provide a money losing service in order to keep passengers loyal to them. My question is does Amtrak sell more seats than either the two airlines? And also, how does Amtrak rank in the WAS-PHI-NY-BOS corridor? Is Acela king? Or is it the airlines that rule the corridor?

scooter Wrote:
-------------------------------------------------------
> Lackawanna484 Wrote:
>
> > I think Amtrak is making a LOT more money on
> this
> > route.
>
>
> I have to think that the two air carriers in
> question provide the service as a customer loyalty
> service, meaning that they provide a money losing
> service in order to keep passengers loyal to them.
> My question is does Amtrak sell more seats than
> either the two airlines? And also, how does
> Amtrak rank in the WAS-PHI-NY-BOS corridor? Is
> Acela king? Or is it the airlines that rule the
> corridor?


Amtrak Northeast Corridor Assessment report, 2009:

Prior to the Acela Express startup, Amtrak had 37% and 20% of the combined air-rail market shares between New York and Washington and New York and Boston, respectively. In 2008, Amtrak carried 63% and 49% of passengers in these markets.

I wonder if the folks in the airline business make a lot of noise about competing with Amtrak "because Amtrak is so heavily subsidized?" Yeah I know, so is the airline industry, but they probably don't think of it that way...

TIOGA PASS

72368 Wrote:
-------------------------------------------------------
> I wonder if the folks in the airline business make
> a lot of noise about competing with Amtrak
> "because Amtrak is so heavily subsidized?" Yeah I
> know, so is the airline industry, but they
> probably don't think of it that way...
>
> TIOGA PASS

I oversaw the travel area for a midsize investment firm in NJ for a while. Never heard an airline rep complain about Amtrak or buses. Each of the lines sent somebody in every once in a while to pitch for our business. Amtrak did, too. Airlines did complain endlessly about the incompetence of the FAA, and its inability to update their 1950s radar systems. The FAA has taken billions of dollars and flushed them down the toilet since the 1960s. With next to nothing to show for it.

What the airlines did do, and did frequently, is cut out routes where they didn't make money, and shut down entire destinations in some cases. Even in very sensitive places like John Earmarks Murtha's district.