“Just buy them a discount plane ticket”...if you can

Amtrak critics argue that you can “just buy everyone a plane ticket” cheaper than the per-passenger “subsidy” of an Amtrak long distance train (per-passenger subsidy, of course, being a flawed argument to begin with).  Nevermind that discount air service is provided to only a fraction of America’s airports and only about 100 cities that Amtrak serves.  The “proliferation of discount airfares” makes long distance trains unnecessary!  Right?

The real question is what will travelers do if the much-vaulted model of discount air travel comes crashing down?  The end appears to be in sight.

“Mr. Boyd (Michael Boyd, president of the Boyd Group) notes the low-cost carriers are more constrained in how much they can raise their fares because their success - and profits - are dependent on extremely price-sensitive travelers, many of whom would rather stay home on the couch than pay too much to see relatives. Add to this the fact that Southwest would also be losing money were it not hedged out until 2009, and Boyd believes that analysts will be talking about a very different “Southwest effect” come 2007.

“They’re living on borrowed time, and they know that,” says Boyd, referring to Southwest. “The Southwest model today doesn’t work unless someone’s paying 30 percent of your fuel.

Earlier this week, Southwest announced increases of $2-$10 in the price of its tickets to account for fuel prices.