Wednesday, February 18, 2009

Behind its Acela fare cut, Amtrak hides a pretty big change

According to the Boston Globe, Amtrak is cutting fares on its Acela Express trains by as much as 25%. It makes sense: since the latest fare increases during the 2008 gas-fueled ridership boom, Acela fares have gone for as much as two and a half times equivalent Regional fares.

The lower fares are offered to passengers booking at least 14 days in advance and apply to Business Class tickets only. Limiting the discount, and making these tickets specifically non-upgradeable, feels like a misstep; Amtrak had a great opportunity here to introduce people to Acela First Class service (which is rather nice) and lure them as long-term customers.

But there is also another twist, and it is far more troubling: these discounted tickets are non-refundable.

For people used to flying, this might seem like 'no big deal.' Up until this point, though, Amtrak had two big advantages over its sky-based competitors:
  1. Amtrak fares included all taxes, so there were no surprises; and
  2. Amtrak fares were fully refundable and changeable.

Introducing non-refundable fares is a new twist for Amtrak, and frankly one that carries with it more downsides than it did for airlines.

Air travel is a big deal, involving a trip out to the airport; checking baggage; security screening; the flight itself; arrival procedures; baggage reclamation; and travel into to the city. Rail travel means showing up at the station, having a ticket, stepping on the train, and traveling.

In other words, you would rarely book a flight on a whim, because you can't cancel it if circumstances change. You can do that with rail, so it's easier to decide to travel. Nonrefundable fares get rid of that flexibility--and once that happens, how can I justify that it often costs just as much to take the Acela as to fly with a low-cost airline?

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