On March 27, we posted about the numbers surrounding the proposed $600 million investment to bring Amtrak rail service along a corridor between Minneapolis and Duluth.
Many of you shared your stories of rail and bus travel, and many expressed a deep appreciation for the comfort and conveniences of travel by rail. To learn more, I created a short, anonymous reader survey that asked where you would like to travel on the proposed route and how much you as a rider would be willing to pay for it.
Before we dive into the data, it is important to note that this was a survey of readers of Streets.MN, not a random sample of the traveling public at large. It is highly likely that our readers are more willing to travel by rail and willing to pay more to do so. Nonetheless, we received over 300 responses, which gave a good sample size of this influencing community. Check out all the data.
Headline numbers
Most readers said they would be leaving from Minneapolis. Among all 301 responses in our sample, 68.44% said they would depart from Minneapolis, 20.27% from Duluth, and 7.64% from Coon Rapids. Nearly all the trips taken were to either Minneapolis or Duluth, with 94.20% of Minneapolis trips going to Duluth and 98.40% of Duluth trips going to Minneapolis. Only 12 responses, or 3.99%, included trips to a station other than Minneapolis or Duluth. One thing to note here is that riders would be making return trips to their starting station, but it is striking how the vast majority of the traffic is between only two stations.
68.44% of responses included trips that started in Minneapolis. Check out all the data.
Diving into the economics
The key question of our survey gauged what our readers’ “willingness to pay” for their tickets was. I broke down our original 301 responses by station-to-station trip, and created charts for the three most popular trips, Minneapolis to Duluth, Duluth to Minneapolis, and Coon Rapids to Duluth.
The charts below for each trip are simple demand curves, which you may recall from high school or college economics. On the X-axis is the number of people who are willing to pay for a ticket, the quantity (Q). On the Y-axis is the price of a ticket for that specific trip, the price (P). We assume that if the ticket price is less than or equal to what a reader responded as their upper limit, they are then willing to buy that fare.
Here are the demand curves for each of the three trips that were most popular in our survey.
As the price of a ticket decreases, more people are willing to pay for the trip. Check out all the data.
How an Amtrak monopoly would price tickets
Of course, for every demand curve, there should be a corresponding supply curve or line. In our case, Amtrak has a monopoly on passenger rail travel, although it competes with commercial air and personal vehicles.
For the Minneapolis-to-Duluth route, it would be fair to assume that once all the capital improvements are made and the train cars are running, the marginal cost, that is the cost to add one more passenger, is very low and close to zero dollars. In this environment, it would make sense for Amtrak to price their service to maximize total revenue, ticket price multiplied by passengers. As it happens, knowing the exact shape of the demand curve would allow a monopoly like Amtrak to price its tickets to best maximize total revenue.
Going back to our demand curves, you may notice that those two variables that determine total revenue — price and quantity — are both there. Our next step was to create a new set of charts that multiply those two along the demand curve and see where Amtrak could maximize total revenue, essentially the biggest rectangle under the blue line of the demand curve.
Total revenue peaks at a ticket price of $30. Check out all the data.
Total revenue peaks at a ticket price of $30. Check out all the data.
Total revenue peaks at a ticket price of $30. Check out all the data.
For all three trips, the total revenue peaks at a ticket price of $30. It would likely be in Amtrak’s best interest, therefore, to price all three trips at $30 one-way, even though the Coon Rapids trips are slightly shorter. What matters for a monopoly is willingness to pay.
How our readers travel now
At the end of the survey, our last question asked how readers traveled for their last trip of more than 100 miles. Nearly two-thirds, 65.12%, of readers made their last major trip by personal vehicle and nearly a quarter, 24.92%, made it by commercial or private flight. Of the 301 readers who participated in a survey on rail travel, it was surprising that only 12, or 3.99%, made their last major trip on Amtrak.
Nearly two-thirds of our readers made their last major trip by personal vehicle. Check out all the data.
The bottom line
The bottom line of this survey is mixed. There is clearly great excitement for a rail link to be reestablished between Minneapolis and Duluth. If our readers are a reflection of the rail traveling public, then Amtrak would be wise to price its tickets at about $30. But right now the car is still king, and finding last-mile transportation options for riders arriving in both cities could be a major obstacle to station-to-station rail travel. It’s no accident that airports and car rental lots are so well connected at hubs across the country.
What was the last trip you took on Amtrak? (Mine was to skiing in Montana!) What do you think we can do to reduce personal vehicle use or the carbon footprint? Share your stories and your thoughts in the comments!