Plane, Train, or Automobile (or Bus)

Amtrak has announced that they are upgrading the infrastructure on their Detroit-Chicago line:

A $196 million grant will reduce train travel time by 30 minutes between Detroit and Chicago. U.S. Transportation Secretary Ray LaHood awarded the grant to the Michigan Department of Transportation for track and signal improvements between Detroit and Kalamazoo. The improvements will allow for speeds up to 110 mph on 77 percent of Amtrak’s Wolverine and Blue Water services between Detroit and Chicago, resulting in a 30 minute reduction in travel time between those destinations.

If someone were planning to travel between Motown and the Windy City for the holidays, how would faster trains alter their decision with regards to transport mode?

A quick calculation gives us a rough idea for a one-way trip.

•  A flight between Detroit and Chicago costs at least $70; the flight itself takes ninety minutes, but DTW recommends travelers show up two hours before their flight time, for a total travel time of three and a half hours.

•  A train ride on December 23 costs at least $32 and currently takes five hours forty-five minutes; after Amtrak’s upgrades it should take five hours fifteen minutes.

•  A trip on the Megabus for December 23 costs $39 and takes five hours forty minutes.

•  Driving has costs and benefits more complicated than other modes. (For example, car ownership represents a high fixed cost but each trip represents a low marginal cost, particularly with passengers.) We can simplify the calculus behind driving considering only the cost of gas: the average gas price multiplied by the average fuel economy of a car multiplied by the length of the trip in miles. The average price of gas at the end of November is $3.30. The average fuel economy of a car is 27.5 miles per gallon. The driving distance from Detroit to Chicago is about 300 miles. So the cost of driving from Detroit to Chicago is about $36 and takes about five hours.

So for our hypothetical holiday travel, a train ride is the cheapest, but other options are faster. A traveler decides which mode to use by weighing the time savings against the difference in price.

•  To make the car an equal or better value against current train service, you need to value your time at only $5.33/hour or more; after Amtrak’s upgrades, you would need to value your time at $16/hour or more. (In other words, if you are willing to pay at least $5.33 to save an hour of your time, driving is worth its price; however, after Amtrak’s upgrades, driving would be worthwhile only if you’re willing to pay at least $16 to save an hour.)

•  Air travel requires a traveler to value their time at $16.89/hour currently, and $21.71/hour post-upgrade.

•  The bus faces the steepest competition from the train: currently it’s slightly more expensive for the same travel time, and the train will be both faster and cheaper after the infrastructure upgrade.