Amtrak Considers Reevaluating Corporate Discounting Thresholds

Amtrak is considering changing in the next 60 to 90 days the thresholds for corporate discounts on its Acela Express rail service due to service demand and increasing costs, said an executive.

"We're re-looking at where some of those thresholds are set because we want to ensure that we are competitive, yet recognize the demands of the marketplace right now," said Craig White, senior director of travel industry sales for Amtrak. "Trains are running very, very full. We want to make sure we're not diluting our own revenue. Our costs are increasing along with everyone else's."

With the change in market conditions and the fact that the discounts have been offered for several years, Amtrak decided it was time to reexamine the volume requirements.

"We would have reevaluated them regardless at this stage anyway. The further impetus was the other factors," White said. "We're looking at where we are right now with our loads and our costs and projecting out the next 12 to 18 months."

Amtrak has offered a tiered discount system to buyers that meet minimum volume requirements, White said. The discount is a percentage of a ticket price and is offered only on business-class Acela Express routes between New York City and either Washington, D.C., or Boston.

The company looks at total travel volume between citypairs, but companies must have a minimum Amtrak volume in order to be eligible for the discount. White disclosed neither figure.

"We are looking at increasing our marketshare in the Northeast Corridor," he said. "We have a pretty strong marketshare anyway in the Corridor. We carry more passengers between Washington and New York than all the airlines combined."

The subject of corporate discounts can be broached either by the corporation or Amtrak, although White said Amtrak is no longer "actively seeking" business because the trains are running full. Companies can bring in their travel agencies to show Amtrak volume or they can present the information themselves.

"The corporations generally know what their travel business is between citypairs, and if there is commitment to moving marketshare over to us, then we are able to come up with an agreement," White said.

The volume is evaluated on a quarterly basis, and if volume requirements are not met, the agreement can be terminated.

"Rail for the U.S. is the most effective in the Northeast Corridor," said David Balfour, director of ground services consulting for advisory services for American Express Business Travel.

"Amtrak is out talking to corporate accounts," he said. "They have a sales force in place and they do work closely with corporate accounts."

Balfour said the discount offering "trends toward the larger companies with high usage."

Amtrak also offers a reward program for businesses that do not meet discounting thresholds. Both the individual traveler and the corporation can earn points when traveling that can be redeemed for free tickets, White said.