How to profit from no-show train passengers?

According to this NYT article, Amtrak is rolling out the system where conductors will be scanning passengers’ tickets with iPhones.

By late summer, 1,700 conductors will be using the devices on Amtrak trains across the country, the company said.

With the new system, passengers will be able to print tickets or load a special bar code on their smartphone screens for conductors to scan, and conductors will be able to keep track of passengers on board, Amtrak said.

A digitized check-in process for trains seems long overdue in a world of online concert tickets and flight reservations. But the industry faces a particular challenge in that passengers hop on and off at different platforms at different times, unlike at an airport, where people check in at one gateway to board a flight, and then stay there until the flight arrives.

Both airlines and railways profit from no-shows if they overbook. However, for a railway the above mentioned challenge of people hopping on and off at different stations might actually be a blessing in disguise, especially if one can track no shows in real time. That’s exactly what this new technology is doing.

Imagine a train departing from Boston to DC. If it is in the morning, by the time it reaches NYC, it is likely to be sold out and  full. However, if there is a no-show on the way to NYC, new technology makes this information available to the booking system and this seat can be re-sold to a last minute customer at Penn station.

Clearly, the potential revenue is there. The system will cost Amtrak $7.5M, given the average ticket price of ~$65 it takes about extra 115K tickets to break even. Monthly ridership for Amtrak is about 2.2 million, so it seems like the technology will prove itself worthy soon.

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