Railways how to make profit - take note

malc_b

I raise this with ATOC and got back a trite answer telling me what I knew as I had said in the email and not addressing the issue. My point was that the £8 min fare pre 9:30 on the 16-25 railcard is daft. FGW are currently offering £5 off presumable to get passengers yet at the same time ATOC are putting out rules that drive passengers away.

To explain my daughter goes to college some miles away (a few days a week so weekly season ticket is no use as it is more expensive, the usual suggestion). Our choice is drive one way and catch the bus, drive the other and catch the train. If the 16-25 railcard worked before 10 then the fares would be competitive but the £8 min fare knocks that on the head. If she was travelling long distance she would get the discount.

So those travelling long distance who would almost certainly use the train because of its speed get a discount, and those where the time advantage is not that great, short journeys, do not. I fail to understand the logic of that which is contrary to getting more passengers and hence more profit. Go cheap where you have the advantage and expensive where you don't. And plus the profit/mile is more for short journey passengers.

moonrakerz

malc_b wrote: »

the profit/mile is more for short journey passengers.

You've answered your own question there. The vast majority of pre 0930 passengers are work commuters, who usually have little choice. Therefore you screw as much as you can out of these passengers by restricting the use of advance/cheap/railcard fares. "More passengers" at lower fares do not mean "more profit".
You then offer cheap fares to try and get people onto those expensive trains that will be be trundling around empty until the evening rush.

dzug1

Peak hour trains are often so full they don't WANT any more passengers.

malc_b

You miss my point. The 16-25 rail card DOES give a discount pre 10am, but only for long journeys. Now I could understand no discount before 10am but not where you only give a discount to long journeys (and I might add the senior etc. rail cards don't have a limit). The point is that they don't compete on the journeys where a local bus is a near equivalent but they do where it isn't.

Fares get cheaper after 10am anyway so there is always the push to travel after 10am, whether you have a rail card or not. It is perfectly logic to try to spread the traffic throughout the day as much as possible. However, at the end the day, passengers = profit so I fail to see the logic in losing passengers entirely (to bus). Yes push towards travelling later but if that is not an option surely they still want the passenger and the profit. It does not make business sense to turn away customers.

enevel

If you are such an expert on the business of running trains, perhaps you should apply to the Department of Transport to take over one of their franchises. Then you could charge whatever you liked, whenever you liked.

KeithP

malc_b wrote: »

<snip>
I might add the senior etc. rail cards don't have a limit
<snip>

Errr...
Senior railcard has far worse restriction (for me). You cannot use it at all during morning rush hour in my area. See here.

Altarf

The point that you are missing is that if you reduce the prices, you reduce the prices for everyone and you have to recruit that proportion of new customers just to stand still. For example all the trains I use are not too bad, but there are never any empty seats. So if they cut the prices by 10% would they get 11% more passengers. I doubt it.

And if they targeted the discounts at certain groups, for example 16-25, then they may lose more of their full price passengers. In fact the train company I use has realised this and has just "reformed" its student discount scheme and have either increased prices by up to 170% or have withdrawn the scheme entirely. Why have a student paying 25% for a seat when you can have a commuter paying 100%.

malc_b

Odd the difference in senior then. I just noticed that thetrainline gave a discount with senior but not 16-25. Must be area specific then.

I could understand no rush hour travel but this is no discount for 2 people travelling A-B, B-C but one person going A-C does get a discount. What is the difference? It is still one seat taken from A-C.

You either want the extra traffic or you don't and isn't it a bit like hotel rooms. Some you sell at top price but when you can't get rid of the rest you discount in order to fill up the hotel. Trains are perhaps a bit different as you can add more rooms, more carriages, if you have them of course. Railways have a high fixed overhead and a small extra cost per passenger so it makes sense to carry as many passengers as possible to make the fixed cost per head as small as possible. If that means longer trains and discounts to get groups that would not travel otherwise then that would increase profits.

The 16-25 discount is 33% I think so they pay 67%, not 25%. And I don't understand why the card is 16-25? You can understand giving a discount to those without a wage, so OAP, family (i.e. children), students. But why 16-25 which includes those in work? In fact I'm on the London line so you end up with the daft situation that a city whiz-kid (<25) with Porche commuting to London would get 1/3 off his first class ticket, but unwaged students commuting A-B B-C etc. would pay full fare.

dzug1

You either want the extra traffic or you don't

In peak times you don't want more traffic. The trains are full anyway.

and isn't it a bit like hotel rooms. Some you sell at top price but when you can't get rid of the rest you discount in order to fill up the hotel. Trains are perhaps a bit different as you can add more rooms, more carriages, if you have them of course.

It is more like hotel rooms than you think - adding more carriages is the equivalent of building an annex or extension to the hotel, you can't do it at the drop of a hat. Even if you've got them, you are in many areas going to have to rebuild the stations to accommodate them. Look at the Thameslink programme, which is doing just that. Don't know when it started but it will be 2015 before it's finished.

malc_b

OK. But that's London are there are other railways not in London, the one near me being one of them. London probably a special case where the system is full. I know my local station does not have a packed platform even in the rush hour. But none of this explain why A-C gets a discount and A-B + B-C does not. Same seat usage.

Altarf

malc_b wrote: »

Odd the difference in senior then. I just noticed that thetrainline gave a discount with senior but not 16-25. Must be area specific then

It is. The Senior Railcard discount is not available on tickets on morning peak period services, Monday to Friday (not including Public Holidays), when journeys are made wholly within the London and South East area.

malc_b wrote: »

I could understand no rush hour travel but this is no discount for 2 people travelling A-B, B-C but one person going A-C does get a discount. What is the difference? It is still one seat taken from A-C.

Apart from the other argument that the trains are full so they don't need any other passengers, the A to C discount is only available for Senior Railcard holders and not 16-25 or Network card holders. There may be a historical social reason why they wanted to be more generous to elderly people, who may not want to start a long journey later and end up travelling late at night.

malc_b wrote: »

If that means longer trains and discounts to get groups that would not travel otherwise then that would increase profits.

And what do you do with these longer trains outside peak rush hours?

malc_b wrote: »

The 16-25 discount is 33% I think so they pay 67%, not 25%.

My TOC (First Capital Connect) inherited discounts that the previous TOC (WAGN) used to offer to schoolchildren and students, which was a 75% discount. This year it cancelled all the previous deals and re-introduced a new scheme that gives a 33% discount off season tickets (hence the 170% increase for some). As it is a season ticket it does allow schoolchildren and students to travel in peak time, but they only offer the discount over certain areas of their route, which excludes the busy sections into London. http://www.firstcapitalconnect.co.uk/Main.php?iCmsPageId=354

malc_b wrote: »

And I don't understand why the card is 16-25? You can understand giving a discount to those without a wage, so OAP, family (i.e. children), students. But why 16-25 which includes those in work? In fact I'm on the London line so you end up with the daft situation that a city whiz-kid (<25) with Porche commuting to London would get 1/3 off his first class ticket, but unwaged students commuting A-B B-C etc. would pay full fare.

Generally because those under 25 have less money than those over 25. You could use the same argument about why do we give reduced prices to the over 65's or free TV licences to those over 75. What about all the millionaire pensioners.

However to take your example the city whiz-kid can't use their 16-25 card to buy a season ticket to get to work, so if they did use their 16-25 card they would have to buy individual tickets and therefore pay more. Also they can't use a use their 16-25 card to get a discount on First Class.