MISC | Yield Management in Railways

[K_]

Originally Posted by Suburbanist

Yield management exists to maximize revenue, not ridership. If I can extract more net revenue from 100 passengers, why extract less money from 200?

Yield management exists so that you can transport 100 people at a high fare _and_ 200 people at a lower fare. The airlines (which you would like the railways to emulate) seem to have a preference for transporting as many people as possible...

When I travelled a lot in Italy in HSR I get used to see people arguing with the inspectors because they had lost their early train and didn't want to pay hefty penalties to change their fire-sale promotional ticket.

If they missed their earlier train because a connecting service was late than they should be accepted on board of an alternative train. If the ticket inspectors wouldn't let them they are proving that Trenitalia still is the worst railway company in Europe.

[K_]

Originally Posted by Suburbanist

I'm talking about free countriwide long-term transporation passes, like those avialabe in Switzerland, Netherlands or Germany. Interrail passes cater for tourists, cannot be sold for or used by residents in their country of residence railways, and do require reservations as you told. National transport passes, usually covering local transport too, are a completely different program and usually require longer subscriptions.

The Swiss "Generalabo" is a very convenient product. It allowed me to get rid of my car, so when deciding to buy one I compared the price of this pass to the yearls sunk costs of a car.
This is the advantage of a comprehensive, well coordinated system. A comprehensive system like the Swiss public transport system is no longer required to price its system to be competitive with the marginal cost of car travel, it competes with the total, sunk costs, and thus can price itself a lot higher. That means more revenue.

However, most reasonable people wouldn't offer such almost-free rides to their neighboors, but instead requiring them to pay usually half of the direct commuting costs like tolls, parking fees, gas and usually a token ammount for maitenance.

Reasonable people don't do yield management?

I don't like queuing on security lines, but I accept them because they help keep, to a certain extent, drug traffickers, terrorist and criminals on the ground.

Those whe are willing to trade freedom for (in this case interily imaginary) security usually end up with neither. It's people like you, who put up with the unneccessary security theatre that are allowing the terrorists to win.

As for stations, they would have to improve like airport terminals. Modern requirements make aiports an expensive facility that few cities and places can afford to have. I hope improvents in train stations, at least those served by high-speed services, set a new pattern where stations would be billions-worth state-of-the art facilities, where platforms and tracks themselves would be a mere detail in face of advanced body screening areas, food plazas, spas and baggage pre-screening, for instance. That in 2010 we carry our luggage to trains and store them in unsecured places, without any prior check, it is a pity. They should have long implement a system of checked-baggage with trays and so on, like airports: you hop of the trains, take a stroll, and go to the reclaim area.

What amazes me most in all your proposals is that at the one hand you keep on telling that railways should be more business oriented, and a the same time suggest they take measures that would lower the value of the product, and increase the costs. Why?
That we get on trains without check in is one of the big advantages of trains. I don't travel by plane anymore (at least within Europe) as I am increasingly having trouble maintaining my temper when going through to completely pointless security checks at airports.
The only thing I can imagine is that you really want rail to fail.

[K_]

Originally Posted by Suburbanist

Eurostar has 70% of passenger traffic between London and Paris, London and Lille and London and Bruxelles markets. Taking a ferry has never been a time-effective strategy. Eurostar agressively practices yield-management and it has still brought air competition to its knees, even considering that London and Paris are among the busiest air hubs in the World.

The lowest Eurostar fare is about a quarter of what the train-hydrofoil-train combination cost before the tunnel opened. They seem to be aiming for volume...
However, one of the problems Eurostar has are the ridiculous security measures imposed by the British government. These measure mean that people have to check in, be registerd, lowering the attractive and the efficiency of the operation. The yield management they practice is partly to overcome that. Thalys is a lot less aggressive here.

Thalys is another huge success, having literally shut down the air shutlle on the route Bruxelles-Paris - and posed to do the same in the Amsterdam-Paris route now that HSL-4/HSL Zuid has been completed. It is one of the most agressive companies pursuing yeild management and wisely turning away backpackers on chear European passes requiring them to pay hefty reservation fees.

Offering tickets for 20 euros isn't exactly "turning away backpac

However, I cannot see why travelling from, say, Milano to Roma or from Sevilla to Zaragoza, or from Philly to Boston, should be an entitlement.

A properly run railway (like DB or SBB) can offer such services without needing subsidies, and without needing complicated yield management. They do this by operating a well coordinated network.

Trenitalia is harvesting good money with their practices of yield management, I'm eager to see them expanded to all train services besides regionals.

Trenitalia is one of the least efficient railways in Europe. In stead of making life harder for their passengers they could try to reduce costs. Why do they still require two man engine crews, for example.

Now, a personal note: I don't mind paying some extra euros to reserve my seat on ICE services when I use them. However, it drive me nuts when one of those "drop by" passengers refuses to give up their isolated first-class seats I usually reserve. Germans usually get up at the mere approaching of someone with a ticket, but overseas tourists taking ICEs in Frankfurt usually protest having being asked to move out.

And I ignore their protests. However, as I usually board the ICE in Basel I don't have a problem here. I like traveling by ICE, especially because they run in the same interval and symmetry as the Swiss trains, which means I don't lose unnecessary time in Basel.

[LUCAFUSAR]

Originally Posted by K_

...

Trenitalia is one of the least efficient railways in Europe. In stead of making life harder for their passengers they could try to reduce costs. Why do they still require two man engine crews, for example.

...

And Trenidiot has to reduce their top managers wages, also, because they are absolutely indecent.

[Suburbanist]

The 2-crew requirement is outdated, but get the unions to understand that. I guess Trenitalia deals with 18 different unions, it is even more fragmented than the airline related unions.

Anyhow, I'd say Trenitalia is the "legacy" rail operator in better financial shape in Europe. They don't care anymore about providing "comprehensive" service if government doesn't pay specifically for it. When the price tab for fancy new EMUs for regional services came, some regions backed off and accept service cuts, fare increases or both.

Trenitalia is far more insulated from political pressure than its German, French and Spanish counterparts. They have a clear framework to work on: a train "x" doesn't make enough money to cover its expenses? Trenitalia can cut it unless it decides, discritionarily, that such train generate enough "feeding" revenue for other lines.

Meanwhile, people are migrating en masse to the freeways, because they are more convenient and, if you are travelling with other 2 or 3, definitively cheaper than the train. We, Italians, are resisting to "get drivers onto tracks" environwacky lobbists. Toll operators (mostly Autosdrade d'Italia) are not perceived as to be in great danger from Trenitalia, and Trenitalia are almost breaking even while transporting less than 8% of daily intercity travellers (commuting, occasional, seasonal etc.). Everyone is happy: those who want to pay have high-speed rail, those who want/need to drive have expanding freeways like we haven't seen since 1972, those who want to fly have new airport terminals and new airports themselves (indeed, Italy has the highest concentration of comercial civil airports in Europe per area and per population save form micro-states like Luxembourg).

[K_]

Originally Posted by Suburbanist

The 2-crew requirement is outdated, but get the unions to understand that. I guess Trenitalia deals with 18 different unions, it is even more fragmented than the airline related unions.

Yet according to you it's the passengers that need to be educated, not the unions?

When the price tab for fancy new EMUs for regional services, some regions back off and accept service cuts, fare increases or both.

Or they contract it out to a different operator tha manages to provide the service at a lower cost.

They have a clear framework to work on: a train "x" doesn't make enough money to cover its expenses? Trenitalia can cut it unless it decides, discritionarily, that such train generate enough "feeding" revenue for other lines.

You mean that they consider a train as part of a network? I thought you disapproved strongly of that...

[NCT]

When a train operator is 'insulated from political pressure', then it's free to exploit positive externalities for itself, which translate to negative externalities to the wider society. Government intervention MUST exist to internalise the externalities. When you take into account the positive social effects (which often translate to economic effects)of subsidisation, you will see that it DOES make sense.

I'll also tell you why a single loss-making train might contribute to greater profitability in the wider network. Passengers travelling on an early train might make onward connections to a better patronised train, and return at peak time. While this early train loses £1000 pounds, it might contribute to £2000 in profit elsewhere on the network. Do the sums.

Efficiency in the eyes of train operators might be costs to the wider society. When you raise barriers to travel you raise barriers to other economic activities. Governments and operators have done their homework before deciding upon the operational framework.

[Suburbanist]

Originally Posted by K_

You mean that they consider a train as part of a network? I thought you disapproved strongly of that...

Mr/s K., a train can be a feeder for long-distance high-speed service much like an commuter air shuttle can be a feeder for transcontinental flights. I never contradicted that.

Whenever I call to analyize a train's profitability, of course I'm taking into acconunt extra revenue its connecting passengers can bring to the company. Would be silly to ignore that.

In airlines, those measurements already exist, every major airline in Europe has its feeder network to compete one against others, and a quick check upon prices would reveal that, whichever pair of N. American/Europe cities one choose, connecting flights are usually cheaper than direct flight, as airlines skim passenger from other's direct routes offering cheaper fares for more inconvenient connecting flights (KLM/Airfrance, who has two major not so crowded hubs - AMS and CDG - mastered this practice, and Iberia and TAP do the same for Latin America/Europe routes).

So, in train operations the still simpler fare structure makes it even easier to calculate how much money a "feeder" service bring to the company in spite of connecting passengers. However, there is a treshold: it might not justify to run DMU in a non-electrified, single track, 150km line carrying less than 300 passengers per day at a loss if only 10 or 20 of them, say, connect on expensive high-speed services. It is fair easy to calculate these network benefits and then decide if trains and stations themselves are profitable.

In its most recent round of negotiations with the regional governments, some of them opted to pay an increased service fee so more stations should be staffed for extended periods, while other regions, like Liguria, opted to drastically cut ticketing staff, for instance.

FYI: the new medium-term regional service contracts Trenitalia signed with every region besides Piemonte operates in a fairly simple fashion. Trenitalia offered a "menu" of service level items (covering from staff in stations to renovation/new rolling stock to frequency of service) and regions decided by themselves what kind of service they wanted. Then each region will pay Trenitalia an semi-fixed fee (with adjustments for cost-of-labor, energy etc.) and the region will "keep" all fares collected. So if a region later wants to change prices for regional sevices, it will bear all the economic effects of it. We might well see dramatically different regional services in Italy as some regions like Puglia, Emilia-Romagna and Toscana opted for higher quality rolling stock services while Lombardia, Campania and Lazio chose less expensive ones.

[K_]

Originally Posted by Suburbanist

In airlines, those measurements already exist, every major airline in Europe has its feeder network to compete one against others,

Actually they now seem to share a "feeder network" judged by the amount of code shareing going on...

[Suburbanist]

Originally Posted by K_

Actually they now seem to share a "feeder network" judged by the amount of code shareing going on...

There is a lot of code-share going on, albeit code-share in air industry is more like a back-door for much-needed consolidation, which is sensitive to many national governments.

If you take note, you'll realize code-share agreements are mostly done within the context of three major air alliances (Skyteam, One World and Star Alliance). In a few years, competition in transoceanic routes will be much focused on those mega alliances, while short-haul flights (where turnover times and ground services optimization are more importante) are becoming the domain of Ryanair, Easyjet and alikes.

That Ryanair has become the major intra-European carrier is indeed remarkable: they performed the art to extract benefits from governments interested in their service to an extent rail companies don't ever dare to dream (for instance: SNCF requiring Paris and Lyon municipalities to pay for extensive station renovation under the risk of service reduction). Cities that depend or are coming dependent on short-haul tourism and second-home markets will fight to death do have a low-fare airline operating in the nearest airport, because such serives are their lifeline.

Destinations like Trapani (Sicilia, Italy), Alicante (Spain), Faro (Portugual) and Bordeaux (Pepingran) heavily depend on the influx of passenger paying low-fares. Because Ryanair average net fares are so low, they would be unsustainable unless destinations steep in to fund airports, maitenance centers etc. at concessionary fees. It might be an overall bad policy (like NFL franchises extracting money from cities to stadium renovations under the threat to leave), but it works like grease for Ryanair's bottom line

Those low-costs arilines are very smart, they create dependency then extract value from it, and I can envision a day when Eurostar will start offering to expand its services to, say, Amsterdam, provided the Dutch build a sealed platform and agree to pay for part of the cost of setting up a Dutch-British border control - in this specific case, sealed platform have nothing to do primarily with yield management but with the way Eurostar works, with UK Border Control done at the departure stations by British officers instead of at arrival in London St. Pacras.

[sotavento]

Ryanair sucks... I prefer to pay 70e in my local carrieror in Lufthansa than to be dumped in a greenfield 100km away from the city nameplate of the destination printed in my ticket.




Talking about low cost High Speed Rail ... this was just came in our news ...source in portugese only (sorry for the inconvenience):

A RAVE- Rede Nacional de Alta Velocidade vai lançar concurso de material circulante de Alta Velocidade “low cost” ainda este ano, revelou o administrador da empresa, Carlos Fernandes, ao jornal “Diário Económico”. O responsável adiantou que os comboios a adquirir para as linhas Lisboa – Madrid, Lisboa – Porto e Porto – Vigo sejam “acessíveis no preço, quer de aquisição quer de manutenção”. O administrador da RAVE acrescenta que o mercado europeu de alta velocidade é dominado por dois conceitos: o espanhol, já em operação há aproximadamente duas décadas, que contempla três classes – preferente (executiva), primeira classe e classe económica –, e o francês em que o comboio de Alta Velocidade é basicamente um suburbano de longa distância. Carlos Fernandes defende que os “comboios a adquirir sejam muito aproximados ao que é o modelo francês e para que caminha o espanhol”. “Queremos comboios sem grandes luxos, mas confortáveis,” acrescentou.
Um comboio de Alta Velocidade “low cost” permite transportar mais 500 passageiros em vez de 400, uma vez que não tem salas de reuniões nas carruagens, uma solução que possibilita aumentar a capacidade e a rentabilidade da operação, permite baixar as tarifas dos bilhetes.
O concurso para fornecimento de material circulante prevê dois tipos de comboios: de bitola europeia, preparados apenas para circular na rede de alta velocidade e fazer as ligações internacionais; de eixos variáveis, para circular nos dois tipos de bitola, permitindo fazer a ligação entre um troço de alta velocidade e depois passar para a rede convencional.

fonte:transportes em revista

Single class "low cost" comuter HS Trains in the "fench" stile ...

[sekelsenmat]

Originally Posted by Suburbanist

Trenitalia is far more insulated from political pressure than its German, French and Spanish counterparts. They have a clear framework to work on: a train "x" doesn't make enough money to cover its expenses? Trenitalia can cut it unless it decides, discritionarily, that such train generate enough "feeding" revenue for other lines.

Meanwhile, people are migrating en masse to the freeways, because they are more convenient and, if you are travelling with other 2 or 3, definitively cheaper than the train.

Someone thinking exactly like you managed the train network here in Brasil. Except that it turned out that no passanger trains were making more then the Minimum Expected Return (in real business noone cares about just not having a deficit, if it's not having more return that the minimum expected return it's useless). So they just scrapped 99% of them and now we have no trains at all!!!

Acording to you the effect should have been wonderful, but in fact it's a complete disaster. What do you have to say about the 40.000 people that die each year in car accidents in Brazil? If half of them were travelling by train instead a lot of them would be alive.

What about the 11 thousand deaths per year in the 6 major capitals of Brazil because of car and truck polution? source : http://ultimosegundo.ig.com.br/brasi...o+3721936.html

Are cars still wonderful?

[Suburbanist]

I won't engage in this populist rage you are trying to bring here. People die in train accidents too... As for the passenger rail network in Brazil, the situation is completely different that the situation in Europe. It was sCRAPped because it was CRAP anyway, slower than buses, a money-losing machine.

[K_]

Originally Posted by sekelsenmat

Someone thinking exactly like you managed the train network here in Brasil. Except that it turned out that no passanger trains were making more then the Minimum Expected Return (in real business noone cares about just not having a deficit, if it's not having more return that the minimum expected return it's useless). So they just scrapped 99% of them and now we have no trains at all!!!

In another thread someone posted pictures of the train network around Sao Paulo, and that looked quite good...

[aab7772003]

Originally Posted by Suburbanist

I won't engage in this populist rage you are trying to bring here. People die in train accidents too... As for the passenger rail network in Brazil, the situation is completely different that the situation in Europe. It was sCRAPped because it was CRAP anyway, slower than buses, a money-losing machine.

"Populist rage," really? Everyone knows that car accident fatalities are MUCH higher than other modes of transport. Your preaching on automobile is pure "populist rage."

[Suburbanist]

I do not dispute that. Mortality rates for car transportation are 1.200 times higher per km-travelled than air. However, the car is far more than a mean of transportation: it is a freedom-enabling "device", one that gave members of more advanced countries mobility and brought down the sick cramped industrial city paradigma of the late 18th Century with its epidemics, riots and excessive density. Car increases people mobility, allows them to expand the notion of "surrodings" from one they can walk to (2 km if you are healthy?) to one they can easily drive to (40/50 km), dramatically increases your privacy (no need to deal with strangers while moving from point A to point B, dealing with other drivers is far less privacy-disrespectful than having a fetid follow citizen exhalating his odors in your subway car), etc.

Sure we should word to reduce reasonably car death rates (and they have never been so low as now), but the "mortality" argument shall not prevail. If it would, what about, per analogy, fast-food? Shoudl we "ban" fast food because unwise comsumption of it makes you unhealthy?

[sekelsenmat]

Originally Posted by Suburbanist

I won't engage in this populist rage you are trying to bring here. People die in train accidents too...

It's just pure logic and reality, not rage. You can check accident statistics:

USA Statistics from here: http://www.lawcore.com/car-accident/statistics.html

"On an average, there are more than 6 million car accidents on the roads of the US, annually.

More than 3 million people get injured due to car accidents, with more than 2 million of these injuries being permanent.

There are in excess of 40,000 deaths due to car accidents every year. Although this is a very high number by itself, some heart can be taken in the fact that statistics show that car accident fatalities have been witnessing a downward trend in recent years."

Cars are immensely more dangerous then trains and cause much more deaths. If you have millions of people traveling and they all use cars you may get 40 thousand dead per year. If half of them were using trains you would maybe get 21 thousand dead per year (because half are still using cars + a tiny amount from train accidents). So our society looses 19 thousand people each year because we choose a car-only transport system system.

How much do all those car accidents cost in hospital bills for the governament? How much taxes does the governament loose from those 19 thousand extra deaths each year?

It's all about in which kind of world you want to live in and the whole effect of the choices you make. Not just the $$ people are making.

As for the passenger rail network in Brazil, the situation is completely different that the situation in Europe. It was sCRAPped because it was CRAP anyway, slower than buses, a money-losing machine.

So, according to your logic, if something is bad, the solution is to destroy it instead of investing until it is better? Acording to your logic, if highways were bad in Italy, they shouldn't have build new highways, but rather destroied the existing ones ...

Originally Posted by K_

In another thread someone posted pictures of the train network around Sao Paulo, and that looked quite good...

Those are metropolitan trains, they all travel inside the metropolis of São Paulo (which is huge). There is not a single regional train line in São Paulo State.

[sekelsenmat]

Originally Posted by Suburbanist

Sure we should word to reduce reasonably car death rates (and they have never been so low as now), but the "mortality" argument shall not prevail. If it would, what about, per analogy, fast-food? Shoudl we "ban" fast food because unwise comsumption of it makes you unhealthy?

I propose that we have an extensive governament backed regional train network covering a large portion of the country (Like DBahn in Germany). This way people can choose if they want to travel by car or train and the good externalities from trains will come naturally when a lot of the people choose to go by train because the service is very good and the rest is still free to go by car.

Your proposal on the other hand will likely result in the destruction of the train network as I pointed out about what happened in Brazil, because it is not profitable enough. I don't propose to destroy the road network, just to have both options.

[Suburbanist]

So we have a common ground. You wouldn't support shutting roads down, but also you wouldn't support government running car-rental agencies, for that matter.

I do not suppose shutting down the tracks themselves, but indeed having a public agency/corporation run them, then private operators running the trains and being the owners/leasees of the rolling stock, like the airports: government own the airports themselves, providec traffic control, oversee safety and airlines decide, on a purely economic basis, when, where and with what fleet provide service to cities in an integrated-network context.

I do not opposte government maitaining tracks, but I fiercily oppose monopolistic train operators, let alone companies that own tracks AND rolling stock. It would be like having Hertz or Avis build a highway than forbid every car except those rented from them to run over it. Inneficient, anti-economic and against free market principles.

I can even accept government using general tax money to fund the track and common station areas construction/maitenance, provided government don't own train, engines and, under no circumstance, operate passenger train services directly. I'd make an expection for metropolitan and urban commuting services only, provided they are compeltely segregated, physically, operationally and especially financially form medium and long-distance services (including paying trackage fees competitively).

Anyway, majority of road accidents do not occur on long distance travels for which drives prepare themselves well, have their car checked etc., but in urban traffic collisions. Let's not forget that almost half of deaths are from people outside the cars. Sure, some hits happen when a driver violates a red sign, or a stop sign, but others when a stupi pedestrian don't dare to cross the street on apporpriate strip crossings, or when crazy cyclists treat major thorughfares like countryside trails, or when kids are too distracted, for instance, and run directly into a car paths without any chance for the drive to slow down and avoid the hit.

[K_]

Originally Posted by sekelsenmat

Those are metropolitan trains, they all travel inside the metropolis of São Paulo (which is huge). There is not a single regional train line in São Paulo State.

I suppose they'll return when the Brasilian economy has grown to the point that they can afford them. (Which might be quite soon...)