Ways to Increase Revenue

Amtrak’s national system of long-distance trains lose about $500 million per year in cash, and Amtrak desperately needs to look at low-cost ways to increase revenue from the operations of the national system. The trick is to increase revenues at a much higher rate than increasing costs. It would be nice if Amtrak could simply increase passenger fares to cover more of the costs of operating the trains – and they have done this to some extent – but raising fares too high can actually cause revenues to decrease. Revenue management is definitely a delicate balance.

One way to raise revenue would be for Amtrak to meet passenger demand by increasing passenger-carrying capacity. Cross-country trains should be operated with at least 4 Superliner coaches and 4 Superliner sleepers during peak travel periods, not just 2 or 3 coaches and 2 sleepers they are operating now. Amtrak is literally turning away business that could easily be $50-$100 million per year, and they will need to build more cars to increase capacity.

Another way to increase revenue would be for Amtrak to resume carrying parcels. The parcel business in the U.S. is absolutely booming with Amazon experiencing a 20% increase in sales year over year. All of those parcels have to be transported to their destination, and it’s estimated that the parcel business is about $200 billion per year. If Amtrak could get just 1/2 of 1% (0.05%) of that business it could generate $100 million per year. Amtrak has brand new train-lined baggage cars that would be perfect for carrying parcels.