I’ve had reason in the last few weeks to take both the Delta Shuttle from NYC to DC/Reagan, and the Amtrak Acela from Pennsylvania Station/NYC to Union Station/DC.
I just found out something shocking. The Delta Shuttle is more than $ 100.00 cheaper than the Acela. Now, I will admit that I just loved taking the train. Simple to load into, located in mid-town in both cities. I took the darned Metro from 17th and Massachussettes to Union Station on the way home ! It was amazing.
So, flying is cheaper? I don’t get it. With all of the pissing and moaning about going broke, how can the Shuttle sell a round trip for that little amount of money? How can it be that the Acela is pricier? It takes almost 3 times as long by train. The Acela is basically an airplane cabin with a food coach next door. Right down to the enclosed overhead compartments, it is laid out identically to an aircraft cabin.
How can this be? Isn’t Jet-A Fuel a lot more expensive than electricity? Isn’t the increased costs of security and the near-bankruptcy of all airlines driving prices higher? How can they AVOID bankruptcy if they are slashing prices this way?
Paint me confused and help me out with theories here?
Cartooniverse
Well, here’s the theory that airlines operate under. Those shuttle fares are “loss-leaders” - they know that they will lose money on the fare, but they at least want you buying a ticket on their airline. Why, you ask?
The Delta shuttle doesn’t just compete with Amtrak - it competes with American, United, USAirways and their regional feeders. The competition on that NY/DC route is fierce. This drives down prices, with everyone doing whatever they can to get you on THEIR airplane.
So why would anyone want to get you on their airplane if they KNOW that they will lose money on the transaction? Because if you fly on their airline, you get frequent flyer miles and will be more likely to book on them again for your next trip. The airlines can’t offer the discounted fares only to customers who actually will become “brand-loyal” to them - they have to offer them to everyone. So if you fly this trip only once, you get a great deal. If you fly it a lot, you will likely fly the same airline, accumulate a lot of miles, and then buy other, more profitable tickets on that airline.
That’s the theory, anyway. Sometimes it works, sometimes it doesn’t! 
If I accumulate lots of miles on the Delta Shuttle, and I get let’s say, 30,000 miles then…I get a FREE TICKET !!
No wonder they are all filing for bankruptcy. What kind of business model is that??
I’ve been doing a lot of flying on Southwest - conjugal visits and all. I’m about to earn my 4th free round-trip ticket. Since I book on line, I get double points, so I get a freebie after every 4 round-trips.
Southwest is making money, so their business model appears to be sound. Makes one wonder what their secret is…