Increased congestion and the unpredictability imposed by more rigorous security screening have motivated a passenger exodus from DCA-LGA and BOS-LGA shuttles, which once up on a time were regarded as cash cows for the various players in these markets.
Between 2000 and 2011, average fares increased over 73% for both the Delta and US Airways DCA-LGA shuttle. Despite those increases, average daily revenue decreased by 63% for DL and 43% for US over the same period, implying average annual declines of 7.8% and 4.5%, respectively.
Recent coverage in the New York Times highlighted Amtrak’s success at pulling market share from the airlines. (“Frustrations of Air Travel Push Passengers to Amtrak,” August 15, 2012.) While Amtrak has made heroic improvements and concurrent increases in Northeast Corridor traffic, the story is a bit more complicated than rail versus air. Numerous forces have driven passengers to Amtrak, but also to an increasingly competitive intercity bus market.
The graph below shows combined Delta and US Airways Washington-New York shuttle traffic contrasted with Amtrak traffic for calendar years 2000-2011.
A few interesting things pop up out of this trend. Rail is decidedly picking up market share – at least, that is, when one defines the market as being divided between air and rail. Going beyond share and looking at absolute numbers, it becomes clear that while the DCA-LGA air market has been averaging double-digit declines between 2000 and 2011, the rail market has been relatively flat, increasing only 5.3% between 2008 and 2011. This is hardly a stampede to rail.
Looking a bit further, however, something funny seems to be happening. When the nosediving traffic levels of the two DCA-LGA shuttles are combined with Amtrak’s relatively flat Washington-New York volumes, we see total air/rail traffic level declining at an average 3.2% annual rate between 2000 and 2011. While telecommuting, electronic communications, and economic recessions may have curtailed travel, it’s highly unlikely the 401,272 decline (32.3%) in air and rail trips results in trips not taken.
Of course, this picture is missing other modes, such as the bus. An explosion in curbside bus services in recent years has generated a wave of new competition by providers such as Coach USA’s Megabus, Boltbus (a joint product of Greyhound and Peter Pan Lines), DC2NY, Vamoose (the Hasidic bus), and Chinese buses, NYDCExpress, and Washington Deluxe.
How big is bus ridership between Washington and New York? Unfortunately, the bus industry (like Amtrak) is not forced to provide streams of origin and destination data to feed hungry analysts. (The Amtrak data in the above chart reflect implied levels based on their reported share of the Washington-New York air/rail market.)
Jetstream was able to get some figures from Megabus, a subsidiary of UK’s Stagecoach Group. They indicate an annual one-way flow of 556,500 passengers between Washington and New York. For the other seven principal carriers, we looked at current schedules and seating capacities for seven bus operators between Washington (or its suburbs) and New York. Assuming a 75% load factor, implied one-way annual passenger loads equate to 1.6 million, representing 65.2% of the total air/rail/bus market between the two cities.
With nearly two-thirds of the market, bus is hardly a footnote in the tale of Washington-New York passenger demand. And the rest? Rail gets 26.1% of the market. The two shuttles account for a mere 8.7%.
Data provided by Megabus suggest the bleeding is not only coming from Amtrak. Megabus reports that 9% of their passengers in 2009 previously would have gone by air. By 2011 that figure had grown to 14% — the same percentage that shifted from rail to bus. (Diversions from automobiles comprise most of their market.) There is little reason not to expect this trend to continue. Air service in the congested Northeast is not becoming any more certain. Passengers have voted with their feet and demonstrated they are content with a longer trip as long as they can be amused with the Internet.
The story isn’t simply that air passengers are switching to rail. The reality is – as one bus company executive told us: “With the advent of curbside services, Amtrak is bleeding badly.” As evidence of this he noted that Amtrak selectively lowered its fares to compete with the bus during last Christmas – a period of peak travel.