Why Trains are so Expensive

Why Trains are so Expensive


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and the link is down in the description. Trains are expensive. So expensive, in fact, that on three of the
most travelled routes in three countries—New York to Washington in the US, Edinburgh to
London in the UK, and Paris to Lyon in France—they’re pretty much the same price as the plane. These routes start at $49, £30, and €30
respectively on the train and $52, £13, and €53 on the plane. On a longer route like New York to Chicago,
the difference is even more pronounced: $59 for the plane, $108 for the train. And that’s keeping in mind that trains are
subsidized or government run in almost every country while airlines are highly profitable
commercial enterprises. The planes flying between DC and New York
are $49 million dollar machines, while the trains traveling the route cost no more than
$10 million total. The plane has to burn 1.7 gallons of fuel
per mile flown (3.9 liters per km) while the train relies on cheap, clean electric power. All this therefore begs the question, why
are trains so expensive? Now, I mentioned that fares between DC and
New York start at $49, but that’s far from the average price—$73. Let’s look at the expenses that go into
that fare. The single largest expense for Amtrak is staffing. Trains require a lot of people to operate. 85,000 passengers journey on Amtrak daily,
but for that Amtrak employs 20,000 people meaning that, daily, Amtrak requires one employee
for every four passengers. On top of that, the majority of those working
for Amtrak are highly specialized, unionized workers who demand high salaries. Amtrak’s financial reports tell us that
they spend $105,000 per employee, but that’s not to say that everyone at Amtrak is making
six figures. Taxes and benefits typically cost an employer
30-40% of a salary so the actual average salary for an Amtrak employee is around $75,000. These salary costs are so high that they account
for over a third of the ticket price between DC and New York—$25.82 total. The cost of employees is so high for train
operators largely because trains are so slow. For a flight from DC to New York, an airline
would only have to pay employees for an hour of work while Amtrak has to pay their employees
for three and a half hours of work. The difference is even more striking on long-haul
routes—Chicago to Los Angeles for example. An airline would have to pay for four hours
of work, while Amtrak pays for 44 hours of work. In addition, trains have physical infrastructure
to maintain along the journey—the rails. Airlines also have infrastructure to pay for
on each end—the airports—but between those they just use the sky, which is free. Amtrak only owns 730 miles of the 21,000 miles
of track they use, but they still indirectly pay for the employees who maintain those 20,000
miles of rented track through the fees charged by the track owners for their use. The next largest cost for train operators
is that of the trains themselves. Trains aren’t that expensive compared to
airplanes, but they still cost millions of dollars. The locomotive pulling the train from DC to
New York costs $6.5 million dollars and then each one of the passenger cars costs an additional
$400,000. With a seven car train, that works out to
$9.4 million dollars which accounts for $9.67 on this particular ticket. The other part of infrastructure—rails—costs
Amtrak an additional $3.66 on this ticket. Railroad tracks are extraordinarily expensive
to build—typically more than $1 million per mile—but on routes like DC to New York,
they’re just used so much that the per train or per ticket cost is negligible. Amtrak is a business, so it also needs to
pay to run the business. $2.15 of this ticket goes to administrative
costs, and then another $1.31 to advertising. Moving on, trains are extremely safe compared
to cars, but you’re still more than 3 times as likely to be killed on or by a train than
a plane. Trains do occasionally crash, and they also
crash into people. When this happens, Amtrak often has to pay
a settlement to the victims, and the fees associated with that account for $0.79 of
the DC to New York ticket. That does mean that when traveling between
DC and New York, in essence, you’re paying $0.79 in order for Amtrak to kill or injure
people. Those were all the major costs to run a train,
but there’s still another $5.91 on that ticket that just represents other minor costs. So the total expense for Amtrak to run that
train is $50.14. The remaining $22.86 is pure profit. You see, the train from DC to New York, the
Northeast Regional, is one of the few Amtrak routes to make a profit. The demand, speed, and frequency of the train
helps it succeed financially where other routes failed. Per passenger per mile, Amtrak makes eight
cents of profit on the northeast regional, the low speed train, and 29 cents per passenger
mile on the Acela Express, the high-speed train. These profitable routes help pay for Amtrak’s
unprofitable routes… and there are a lot of them. Some routes like the Sunset Limited between
New Orleans and Los Angeles lose as many as 21.7 cents per passenger per mile, and when
passengers can travel 2,000 miles on that route, that’s a lot of loss. As I mentioned, that $49 fare is not the average
ticket price to travel between DC and New York. The $49 fare is the price at which Amtrak
starts selling tickets, but as the date of travel nears, the price can increase to hundreds
of dollars. That might seem like price gouging, but its
actually a way to make sure everyone can afford a ticket. That’s not to say Amtrak and other train
companies are these altruistic organizations trying to bring travel to the masses—it
just makes more money. Especially with trains where it costs the
operator roughly the same to transport 5 passengers as it does to transport 500, the operator
always wants to have as many seats as possible filled, even if that means selling cheap tickets. In a perfect world for the operator, they
could ask every potential passenger what the maximum amount they’d be willing to pay
for a journey is. If they adapt the ticket price to every passengers
maximum price then they can fill each seat with passengers paying the highest possible
amount. However, in practice, nobody would ever answer
the question truthfully so it would never work. Ticketing systems, however, try to ask this
question subliminally. Going back to that route from Edinburgh to
London, the operator, Virgin Trains East Coast, sells three types of tickets—advance, off-peak,
and anytime. The advance tickets range anywhere from 30
pounds to 140 pounds, the off-peak fares cost 137 pounds, and the anytime fares cost 148.50
pounds. For the advance fares, there are a certain
unknown number of tickets at different price levels on sale and once they’re gone, they’re
gone. For example, there might be 15 tickets at
30 pounds and once they’re sold, the price would increase to 35 pounds, then 40, 45,
and so on a so forth. That encourages those who can buy early to
buy early. Normally that means tourists. Tourists tend to plan far in advance and are
more budget conscious since they’re paying their own costs. They’re also more likely to travel down
to London on the often cheaper plane since they’re less attracted by the convenience
of the train. These advance fares are only valid for the
exact route, day, and time bought which is fine for leisure travelers, but business travelers
typically want more flexibility. Buying advance fares often doesn’t work
for business travelers since their plans are only made a few weeks or days in advance and,
since they don’t personally pay for their tickets, its no problem for them to pay for
the convenience of taking the train on a flexible ticket. That’s why they often pay £148.50 for an
anytime ticket. With these, you can just hop on a train whenever—it
doesn’t matter if its in 10 minute or 10 days. You just step on the train and take a seat. The middle ground between those two is the
off-peak single which lets you take any train that arrives in London after 11:17 am or is
on the weekend. These fares are still geared towards business
travelers, but by restricting against the early morning trains they give a discount
to those who can avoid the busiest morning trains.. For each of these fares there are equivalents
in first class—the advance first fares range between 40 and 200 pounds, the off-peak fares
are 185.50 pounds, and the anytime fares are 236.50 pounds. On top of that, young, disabled, and elderly
people get up to 1/3 off their fares with a rail-card. This all means that there are essentially
12 different types of tickets for sale and that one person heading to London might be
paying 20 pounds while the person sitting right next to them is paying 200 but what
they’re really paying for is convenience. Now, back in the US, if Amtrak only operated
profitable lines, their route map would look like this, but the routes that don’t make
money are the ones that really matter. Amtrak serves over 500 destinations in 46
states—many of which are small towns with no other means of public transportation. While trains are normally the more expensive
means of transport, they are less expensive than planes to service small communities. The small airports in the rural parts of America
are extraordinarily expensive to operate. Even if there are just two or three flights
a day, they still need a runway, terminal, security, and air traffic control while a
rural train station needs barely any infrastructure or maintenance. In fact, it’s cheaper to fly from Chicago
to London ($741) than it is to fly from Havre, Montana to Chicago ($811 May 17-22) whereas
Amtrak brings passengers from Havre to Chicago for only a few hundred dollars—much more
in budget for the average resident of Havre who makes only $22,000 per year. Of course this is a political issue, but a
part of why trains are so expensive is to allow train operators to fulfill obligations
to serve small communities who need solid transport links. Research has shown that ease of access to
transport has a stronger influence on whether someone will earn more than their parents
did than the level of crime in their area or whether they grew up in a two-parent household
and so keeping trains running through rural America is incredibly important. Next time you take the train from DC to New
York, just keep in mind that that $22.86 of profit goes to making sure that someone from
Havre can get to Chicago for less than you can fly to Europe. So you see this number? That’s how much these last few seconds would
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23 Comments

  1. 3.30 the math doesn't quite make sense for me. As far as I know a train can be used more than once. So saying a train costs 9 dollars per ticket is just BS

  2. There are these things called busses that can serve rural areas profitably. Might be better than bloated government bureaucracies

  3. Because it's the government who keeps on putting train fares up. And passengers who use trains do pay more. Which o think it's a cheek. And it's just pure misery.

  4. Good point that faster can be a savings. It's not just labor, but use of capital. If a $100 million plane can make 8 to 10 flights in the time that a $10 million train makes 1, that makes the cost of capital for the vehicle more similar per trip.

    It's odd that tickets on the slow train often cost less than on the fast train (I saw that markedly in Spain), given that using so many more hours of labor, and tying up capital for so much longer, costs. A motivation for France's TGV was supposedly greater throughput on some busy stretches of rail. Slow trains are such resource hogs.

    Using 40 person buses may make more sense for serving smaller cities than 1000 person trains.

  5. If Amtrak would operate as efficient as the trains in Europe people would use them more. Let's face it, Amtrak is pricey, it runs late often and several could use an overhaul. Just my opinion of course.

  6. Well here's a simple awnser the reason planes are cheaper is because it saves more time and fuel then trains do and trains Arent always so expensive it depends on the leanght of the route you take idk if this is true in america i but it is how in Europe

  7. Passenger trains are so 19th/early 20th century. Ike's interstate highway plan coupled with the family car, motels, and eventually competition in what was once a heavily regulated airline industry killed the passenger train. The final 7 class A railroads in this nation will not bring passenger trains back because freight is profitable and passenger trains are not. One of the reasons why AMtrak still operates across the nation is because congressmen in those districts with small burgs you talk about force it down the taxpayers throat.

    Folks like to talk about Red China, but with over one billion plus people, cheap transportation is a must, thus their passenger rail operations. Same goes for India, which also has over one billion people. As for Europa, it's small and easier to get around by train if you're not in a hurry. In America, we're always in a hurry. If not the car, then it's flying.

  8. intercity rail is a bad example for the US, rapid transit and lightrail, and/or subway systems are better and more efficient, bart for example in the sf bay area (which alot of people hate because of some of their practices and delays) get you to three major cities (by the end of this year it will be 3) and countless small towns and suburbs, all quicker or competitively on time with driving

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