A Stitch in Haste

Back in June I noted an embarrassing report about how Amtrak was not only losing money (about $1 billion per year) on its basic rail operations, but was even losing money on its food and beverage operations.

Now comes word that one Amtrak line is flip-flopping and trying to lure more passengers by -- get this -- charging higher fares:

Travel on Amtrak's northernmost line is getting an upgrade -- including complimentary sparkling wine and cookies on passengers' pillows -- with the goal of attracting riders willing to pay a bit more for a different level of service.

The "Empire Builder" -- a route that travels between Illinois and Washington state -- faces many critics in Congress and the administration who see it as a money-loser in tight fiscal times. So Amtrak officials are working to save the line by charging customers for a new set of amenities.

"Our plan is to measure what economists call the elasticity of the demand," said Marc Magliari, a Chicago-based Amtrak spokesman. "That is, we improve the service and raise the fares, thereby improving the performance of the train."

First, an Econ. 101 moment. When you change the price and the quality of a product or service, you are not measuring the "[price] elasticity of demand." By definition you must keep the product the same, in fact you must keep every other variable fixed except price. The Amtrak bureaucrat may be measuring something, but it isn't an elasticity.

Moving on, notice the bait-and-switch in the maneuver regarding the Empire Builder. The idea is that Amtrak wants to entice higher-end travelers to choose Amtrak because of its new and improved luxury service, with emphasis on the word "choose."

But remind us again why the system needs a $1 billion annual taxpayer subsidy in the first place?

Sen. Conrad Burns, R-Mont., a member of the Senate Appropriations Committee, praised the improvements Tuesday and said he would work to maintain Amtrak funding in his chamber. "We are talking about a transportation system folks depend on in areas where they have no other options," he said.

So we need (taxpayer-subsidized) Amtrak because people have no options, but we also want to tweak the service (and charge more for it), because people, um, have options. Go figure.

POST SCRIPT: Did you notice that Senator Burns is a Republican? Pork is bipartisan.