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Why is Amtrak so Expensive? (or, Why is BoltBus so Cheap?)

I don't have a definitive answer, but recently I was planning a trip to New York, and came across some incredible numbers. Both BoltBus and Amtrak depart from Baltimore Penn Station, and arrive at New York's Penn Station. (The bus stop is a few blocks away from each).

The Amtrak's high-speed Acela takes two hours, fifteen minutes, and costs at least $134.

The BoltBus takes three and a half hours, costing $15.

Both of these are demand-based prices, but the ratio remains effectively the same: for an extra hour of travel time, BoltBus is one-tenth the price of Amtrak. How is this possible?

Let's look at the revenue for a BoltBus filled to capacity -- that's about fifty seats. If those tickets sold for an average of $15, then that's $750 gross income for the busload. Credit card costs will probably knock about 5% off of that, so you're already down to $710. According to Wikipedia, that coach bus will get about six miles for each gallon of diesel fuel. It's 190 miles to New York, so that's 32 gallons of diesel, or about $128 in fuel. Tolls wil probably add another $35 or so, so let's say that leaves about $650 of that income. It's hard to say what BoltBus pays their personnel, but the driver will probably cost another $200 at most. Now there's $450 to cover equipment, maintenance, marketing, the website, and, most importantly, half-empty buses.

These are scarily thin margins, but not impossible. And it's obvious, of course, that Amtrak has to deal with far greater infrastructural overhead. But trains are more fuel-efficient; they can hold considerably more people, and have appealing advantages in speed and comfort. Should there really be an order-of-magnitude difference in prices?

The first order of business is figuring out if Amtrak is overpriced. Let's compare it against the Japanese shinkansen or "bullet train" system: the trip from Tokyo to Nagoya is about 220 miles and well-traveled, much like the Baltimore-New York run. The Japanese trains generally don't do demand-based pricing: you can get the same deal walking up to the counter and hopping on the train the day of the trip as you can two months in advance (and there is often extra space to do so). Hyperdia tells me that the fare would be 6,090 yen, about $75 -- so, yes, Amtrak is overpriced. Vastly so, in fact. (And the shinkansen is considerably faster).

But that's still a fivefold difference from BoltBus. Threefold, if you consider BoltBus's maximum price of about $25. What's making up the difference?

My guess is that it's in the externalities. Making that drive from Tokyo to Nagoya in Japan would cost eighty dollars in highway tolls, according to this calculator. It could easily top $100 if you have to cross one of the major bridges across Tokyo Bay. Compare this to $15 or $20 in the US, less if the driver makes an effort to avoid toll roads. Then factor in America's gas and diesel taxes, which are just about the lowest in the developed world. These taxes don't even cover the cost of the interstate highway system, let alone the environmental and social impact of motor-vehicle dependence. Suddenly, it seems clear why BoltBus is so cheap: it's taking advantage of what is effectively a huge public subsidy that favors motor vehicles over all other forms of transport.

And people wonder why Amtrak is so expensive.