Are fares dropping?

[dlagrua]

A recent experience in booking our August trip from PHL-CHI-GPK has produced some interesting results. Fares from CHI-GPK held at high bucket until four months out and then dropped more than 50%. Fares from PHL to CHI on the Cardinal also just came down about 30% so we cancelled out the trip to CHI that went down the NE corridor to WAS for the CL. It looks like the system holds the price at high bucket for a time and if tickets don't sell they drop to another bucket. Then they stay at that bucket and if they don't sell after another interval of time has passed, they drop again. Anyone else seeing this phenomenon?

 

[AmtrakBlue]

It's called supply and demand

 

[dlagrua]

It's called supply and demand

I understand that but I have trouble understanding how that theory is applied. For instance on many routes the fares now open at high bucket from the first day of sale and stay there for many months. On day 1 there is probably little or no demand, for if there were the prices would not drop after several months. It seems as though Amtrak puts the price out there and later adjust it on the fly. I call this type of fare formula more like a cat and mouse game.

 

[TinCan782]

I've been watching bedroom fares on a couple of routes during July...it appears they have bottomed-out bucket-wise.

 

[Acela150]

I understand that but I have trouble understanding how that theory is applied. For instance on many routes the fares now open at high bucket from the first day of sale and stay there for many months. On day 1 there is probably little or no demand, for if there were the prices would not drop after several months. It seems as though Amtrak puts the price out there and later adjust it on the fly. I call this type of fare formula more like a cat and mouse game.

No. Fares haven't dropped. Everything is low bucket cause no one is traveling.

I really don't know why you're having trouble applying the "theory" of the buckets. It's pretty simple.

 

[the_traveler]

You say that “on day 1, there is no demand“?

So why do so many people say that they will get their tickets as soon as they become available 11 months out? And why do many groups reserve tickets for a certain train 11 months out?

I call that the “demand” portion of the term “supply and demand”!

 

[dlagrua]

I really don't know why you're having trouble applying the "theory" of the buckets. It's pretty simple.

Let me try to simplify this. The instant that the fares open there is plenty of supply. Right? No tickets have been sold, yet the price of the first ticket offered for sale is at high bucket and prices stay at high bucket for six months. At that point demand seems to be placed into the equation and fares then get adjusted based on the rate of sales over time. The puzzling part is that fares go down even later in the cycle or even week to week. That leads me to believe that Amtrak is not using a linear relationship when it comes to supply and demand.

 

[jebr]

Let me try to simplify this. The instant that the fares open there is plenty of supply. Right? No tickets have been sold, yet the price of the first ticket offered for sale is at high bucket and prices stay at high bucket for six months. At that point demand seems to be placed into the equation and fares then get adjusted based on the rate of sales over time. The puzzling part is that fares go down even later in the cycle or even week to week. That leads me to believe that Amtrak is not using a linear relationship when it comes to supply and demand.

That's because they're using expected demand for tickets 11 months out. It's not a simple "first x rooms at low bucket, second x rooms at second bucket, etc." They can look back at previous years and see what the demand trend historically has been, and err a bit on the side of a bit too high in case it happens to be more popular (and they can sell more rooms at a higher price.) If they don't sell as many rooms as they expect, then they'll lower the price a few months in to try and fill more rooms, adjusting as needed based on room sales and any other demand indicators from previous years. For example, they might keep holidays at a higher price even if rooms haven't sold yet, as they can see from previous years that they'll sell out closer in at higher prices.

Airlines do the same thing, just on a much more advanced scale than Amtrak. It's rarely the absolute cheapest to book when tickets are first released; they're either at a placeholder price (if they wanted to release the schedule but revenue management hasn't fine-tuned it yet) or the price that they can expect to get early bookers to pay. After all, if the price is only $20 more than the sale price, why wait and risk that sale never happening, or that sale applying to a less desired flight? As time goes on, they'll adjust some prices down (where they aren't getting as many sales) and others up (where sales are going strong.)

 

[AmtrakBlue]

Why wouldn’t they try selling at a higher rate? Don’t car dealerships start high and then you negotiate down? Don’t job hunters ask for higher salaries then negotiate down?

 

[the_traveler]

Haven’t you ever seen a shop like “Flip or Flop” where they set the selling price at say $599,900 (day #1), then they say “... after 2 weeks on the market with no interest, we lowered the selling price to $565,000 and found some offers”. If someone offered the higher price on day #1, would they turn down another $35,000?

Why should Amtrak turn down a higher offer on day #1 instead of a lower offer on day #130?

 

[Old MM]

After refunding our LSL tickets, a few days later I checked and the same fare was still available. I'm depressed enough not to keep checking, since my kids will remind me (in case I forget) why now is not the time for nonessential travel.

 

[NativeSon5859]

I'm thankful for the low bucket prices... was able to get LAX-CHI on the TE in mid-June for $581. That has to be one of the best sleeper deals in the country right now considering it's a three night trip.

 

[Chey]

I'm thankful for the low bucket prices... was able to get LAX-CHI on the TE in mid-June for $581. That has to be one of the best sleeper deals in the country right now considering it's a three night trip.

Is CHI one of the places they're quarantining people arriving from out of state?

 

[dlagrua]

That's because they're using expected demand for tickets 11 months out. It's not a simple "first x rooms at low bucket, second x rooms at second bucket, etc." They can look back at previous years and see what the demand trend historically has been, and err a bit on the side of a bit too high in case it happens to be more popular (and they can sell more rooms at a higher price.) If they don't sell as many rooms as they expect, then they'll lower the price a few months in to try and fill more rooms, adjusting as needed based on room sales and any other demand indicators from previous years. For example, they might keep holidays at a higher price even if rooms haven't sold yet, as they can see from previous years that they'll sell out closer in at higher prices.

Airlines do the same thing, just on a much more advanced scale than Amtrak. It's rarely the absolute cheapest to book when tickets are first released; they're either at a placeholder price (if they wanted to release the schedule but revenue management hasn't fine-tuned it yet) or the price that they can expect to get early bookers to pay. After all, if the price is only $20 more than the sale price, why wait and risk that sale never happening, or that sale applying to a less desired flight? As time goes on, they'll adjust some prices down (where they aren't getting as many sales) and others up (where sales are going strong.)

I believe that you make a very good point about Amtrak opening their tickets at prices using anticipated demand and later phasing in variable pricing that takes into account the rate of sales. That would account for the intrinsic characteristic differential between simple supply and demand and Amtraks current system. The only thing that's difficult to understand is why the bucket pricing stays at maximum for so long? A bedroom trip from PHL to SEA
at high bucket (CDL +EB) would cost something like $8,000 round trip which makes one wonder if sales like this even take place.

 

[jebr]

The only thing that's difficult to understand is why the bucket pricing stays at maximum for so long? A bedroom trip from PHL to SEA at high bucket (CDL +EB) would cost something like $8,000 round trip which makes one wonder if sales like this even take place.

It might just be a set rule, or they don't feel comfortable with deviating too much off of the initial price until a certain period when they feel more comfortable with judging booking levels.

It's also worth remembering that they don't need to sell a full PHL - SEA ticket in order to get high bucket revenue on at least part of the journey. If someone would only pay, say, $4000 for a round-trip bedroom, but Amtrak can get $6000 (some high-bucket bookings and some low-bucket bookings) between roundtrips from PHL - CIN, CIN - CHI, CHI - MOT, and GPK - SEA, they're still better off selling part of those at the higher price in order to get that additional revenue.