Friday, December 2, 2011

Pacific Surfliner to move to a yield managed fare system

In a presentation given to the November 16th meeting of the LOSSAN Rail Corridors Agency Joint Powers Board, Amtrak representatives mentioned that the fare system of the Pacific Surfliner will be changing, with an ultimate end goal of a fully reserved and revenue managed train service (page 15).

Currently, fares for the Pacific Surfliner are the same for all trains and times of purchase, the price depending only upon the origin/destination and the class of service. With the exception of business class and times of holiday rush, the tickets are unreserved, meaning that they are valid for any train (up to a year from the time of purchase if memory serves me correctly) and do not guarantee one a seat.

In the Northeast Corridor, however, reserved trains are the rule. This takes more of a Southwest Airlines approach to seating however and simply means that they will not sell more tickets than they possess seats; it does not reserve any seat in particular.

As presented in the meeting’s agenda, Amtrak has already embarked upon the first phase of the new fare structure by keeping fares at the peak level of the summer months rather than reducing them following Labor Day, as had previously been the norm. In the spring of 2012 this will transition to having peak-fare days; Friday Sunday, and possibly Saturday being mentioned as the candidates for such pricing. Finally, the third phase, which does not have a starting point mentioned, will be a full migration to reserved seating and yield managed seats with “an expanded fare structure aligned with the demand for each departure.” While not explicitly stated, I suspect that this will mean a variable fare depending on previous demand and the current number of vacant seats per train (likely with a flat fare for reservations two weeks in advance as is currently the practice in the Northeast Corridor).

The first, rather simple stage, of the new fare system has already shown results. Amtrak’s year over year ticket revenues for the Surfliner in September increased by 20.3% on a ridership increase of only 5.1%; of that 20% increase Amtrak estimates that half of it was due to the new fare plan, which was still double their initial expectations.

While I am a fan of the convenience of flat pricing and unreserved seating that are currently features of the Surfliner, increasing the ticket revenue of the Surfliner is certainly needed and this, along with the changes to the Rail2Rail progam (Amtrak currently receives only $2 per Metrolink rider and faces overcrowding on some trains due to popularity, Metrolink Rail2Rail riders forming up to a third of riders on some trains; understandably it is desiring more money), should help bring the farebox recovery ratio higher. In turn, that should help mollify libertarian complaints about subsidization and increase the case for capital grants for increased speed and service on the corridor.

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