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Old February 7th, 2015, 02:49 PM   #1461
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EU is not mandating airline-style pricing at all. It is mandating competition and open-access, and rightfully so.

The evolution towards yield-managed pricing is just a consequence of a market, any market, that has rapid time-value decay on offers (obvious in the case of transportation), is capital intensive and prone to asymmetric competition.

EU is not going to force DB, ÖBB or else to adopt this style of pricing (though DB already does it to a great extent anyway). What will happen is that if these old-style railways don't jump on yield managed pricing, new competitors (open-access) offering only services on the busiest routes, days and hours will be able to skim the most profitable market share and leave the legacy operator unable to cross-subsidize the fixed price policy.

Trenitalia, for instance, was forced to be far more aggressive in pricing after Italo started to compete on its core high-speed axis (Torino-Napoli). It is rather cheap to travel in Italy by high-speed rail if you can plan in advance. That helps, a lot, people like students (who know for certain their start and end university dates), people planning visits to friends and relatives, tourists from abroad (who will already schedule hotels and the like, which are also moving towards this yield management practice as well, you can get significant discounts committing to a date foregoing refund if you don't show up). Gosh, even car rental companies now give big discounts if you pre-book in advance on a non-refundable booking.

So I think the move towards yield management goes far beyond rail transportation. It is part of a broader market change, I guess, enable by clever algorithms and dirty-cheap IT costs.

As for the issue of travelling at the last moment, that is usually the case of passengers who must travel anyway, in the sense they cannot postpone, like professionals on business trips, people with emergency reasons to move on the spur of the moment, etc. If the trip is not urgent or necessary, then people just do like Svartmettal: they stay put, or travel by other means, namely car (whose costs don't vary at all with anticipation in planning except for some ferries).

I know it feels bad, but on the other side there are a lot of people who are travelling and otherwise wouldn't if they couldn't get cheap tickets.

Yield management is all about maximizing total revenue net of operating expenses. I still believe rail companies will start introducing "last-minute" tickets sold like the night before at low prices to fill up unsold long-distance tickets, as the marginal costs of filling empty seats is small for a train already scheduled and confirmed.
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Old February 7th, 2015, 02:51 PM   #1462
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Originally Posted by Sunfuns View Post
Long time ago (before my time) airline tickets also had a hard price. The result was that they were very expensive (recalculated to today's money). Liberalisation of that market has been a boon for consumers. Just a few days ago I bought tickets from Zurich to Hanoi for just 700 franks and it might have been even less if our dates were less specific. It would have cost double or even triple as recently as 20 years ago.
Exactly. People whine about airline prices that always change, but they forget how expensive even intra-European flights were before the liberalization in the 1980s and early 1990s.

Peak prices for people just showing up at Heathrow on a Friday afternoon to catch the next flight London-Madrid were probably cheaper, everything else was way more expensive than now.
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Old February 7th, 2015, 02:54 PM   #1463
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Also, airlines are completely different. In most EU countries you have an incumbent rail operator that has little to no competition on particular routes meaning you have to choose a different mode to take the same journey. For air travel there are multiple operators flying the same route (unless it's an unpopular route). Not the same at all.
And that is exactly why we need more liberalization of rail passenger transportation, to allow more competitors on multiple lines, crushing monopolistic networks and breaking them down so that in 20 years there are multiple trains companies operating long-distance routes.

The problem is that some railway people try to think of the competition being prohibited on rails, and left only in terms of railways x airlines or railways x cars/buses.
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Old February 7th, 2015, 02:56 PM   #1464
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Right. Because British rail is so much better following privatisation isn't it?

I don't want to have to change mode, I don't want to have to drive (I cannot in Sweden thanks to their stupid laws anyway). I want to go by train, and I cannot because they've engaged in this retarded pricing system. It's quite simple, I'll just leave Europe and you can stick to your stupid yield management system and continue to make your rail systems worse.

Like I said, Japan manages to keep prices flat, keeps making a profit and captures a massive modal share with its HSR system. It works. Yield management seeks to do one thing, and one thing only. Make more money for the rail companies. It's got nothing to do with making things "better" for consumers, it's all about punishing those that are captive users (last minute business travellers for example) and rewarding those that fill trains that might otherwise be empty (planning far in advance). It's good for businesses, awful for users overall that don't just want to use the train for a "one off trip two months in advance".
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Old February 7th, 2015, 03:01 PM   #1465
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Quote:
Originally Posted by Svartmetall View Post
So it's now an EU requirement to have this nonsense?
Not directly. Yield management is a likely consequence of comeptition, which is what the EU requires.

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Originally Posted by Sunfuns View Post
In Switzerland prices are also constant and high. What helps us is discount cards and subsidised travel in the local area.
Swiss prices are low for frequent users which travel at random times and very high for occasional travelers who could plan in advance. Whith yield management it is the inverse. The first approach on regional scale (like in Switzerland) is far better.

By the way, in Switzerland it's every public transport vehicle that is subsidized except "long" distance trains, not fares themselves. There is a quite good integrated fare system, so you just buy a Lucerne-Zürich ticket, then you can take an IR (unsubsidized) or an S (subsidized) train, paying the same. You can also combine traibns and buses of different operators - revenue is spread among operators afterwhars according to traffic statistics, not by actual traffic counts.
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Old February 7th, 2015, 03:01 PM   #1466
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Right. Because British rail is so much better following privatisation isn't it?
Their franchise system doesn't provide much competition except on a few routes, which are not even the busiest ones. They needed to allocate far more slots to open-access service.

Quote:
I want to go by train, and I cannot because they've engaged in this retarded pricing system. It's quite simple, I'll just leave Europe and you can stick to your stupid yield management system and continue to make your rail systems worse.
Yield management curves are usually heavily left skewed, which means that if the vendor (railway) were to magically charge everyone the same fixed price equal to the average of the yield managed matrix, that fixed price would be closer to the highest fares than to the lowest fares. And we are ignoring the fact a fixed price structure imposed on a yield managed demand-curve of a regular service subject to price-elasticity will necessarily result in less people buying it (as strictly price-sensitive customers don't buy the service - tickets anymore).

So fixed prices = lower overall revenue. And fixed prices are likely to reduce total ridership as well.

Reduction of ridership on fixed prices would not occur only, and only if, the demand/price-elasticity at the lower fare levels were lower than the demand/price-elasticity at the higher fare levels, which, though not having empirical data to test it, I find highly implausible. In lay terms: it is very unlikely that more people are not travelling because highest fares for last-minute purchases are high, than people who are only travelling because they found very cheap advanced tickets.

I'm open to an emprical proof of the contrary though.
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Old February 7th, 2015, 03:11 PM   #1467
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Quote:
Originally Posted by Suburbanist View Post
So fixed prices = lower overall revenue. And fixed prices are likely to reduce total ridership as well.

Reduction of ridership on fixed prices would not occur only, and only if, the demand/price-elasticity at the lower fare levels were lower than the demand/price-elasticity at the higher fare levels, which, though not having empirical data to test it, I find highly implausible. In lay terms: it is very unlikely that more people are not travelling because highest fares for last-minute purchases are high, than people who are only travelling because they found very cheap advanced tickets.

I'm open to an emprical proof of the contrary though.
There is, over the page in the Japanese example comparing the TGV to Shinkansen. HSR is very profitable in Japan and has a high modal share as I have said a number of times here. Why would that be the case if it were not flexible and price competitive compared to other modes? Have you also seen how frequent it is there thanks to demand?
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Old February 7th, 2015, 03:22 PM   #1468
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There is, over the page in the Japanese example comparing the TGV to Shinkansen. HSR is very profitable in Japan and has a high modal share as I have said a number of times here. Why would that be the case if it were not flexible and price competitive compared to other modes? Have you also seen how frequent it is there thanks to demand?
You can't compare France and JApan like that, without controlling for a number of possible co-variates in the market agents.

The question that would need to be asked is: if France had fixed-price (or Japan yield-managed) fares, would their total ridership levels change significantly?
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Old February 7th, 2015, 03:24 PM   #1469
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As I understand it what Suburbanist wrote is also not true if the potential demand for tickets is higher than capacity. That is almost certainly the case on most Chinese routes and perhaps Japanese as well. In simple terms if you have a train with 200 seats costing 100 euros and there are 200 or more people wanting to buy them at such a price and no easy way to expand capacity then fixed prices is the way to go.
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Old February 7th, 2015, 03:31 PM   #1470
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Quote:
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You can't compare France and JApan like that, without controlling for a number of possible co-variates in the market agents.

The question that would need to be asked is: if France had fixed-price (or Japan yield-managed) fares, would their total ridership levels change significantly?
That's a lot of blahblah business speak. You cannot predict something that has not happened. Even when yield management was not used in the past in a railway, the market was markedly different today when yield management is used so you cannot compare before and after either. By your reckoning you cannot compare anything at all ever then.

All we have is the closest possible comparison - HSR with HSR for same distance travel between a large city and a smaller one. Bluemeansgo even compared travel to a MUCH smaller city than Marseilles in Japan (Aomori) through an equally less populated area in Japan (the Tohoku Shinkansen doesn't travel the stupidly populated Tokaido corridor). If that isn't a somewhat fair comparison, I don't know what is. He showed that the price for the Shinkansen falls below the median of the French fares, thus showing your analysis of yield management being skewed to the left might actually be flawed...

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As I understand it what Suburbanist wrote is also not true if the potential demand for tickets is higher than capacity. That is almost certainly the case on most Chinese routes and perhaps Japanese as well. In simple terms if you have a train with 200 seats costing 100 euros and there are 200 or more people wanting to buy them at such a price and no easy way to expand capacity then fixed prices is the way to go.
No it's not. That is only the case in China during certain holidays, not on a day to day basis (due to the cost I imagine actually - http://www.chinadaily.com.cn/cndy/20...t_12966603.htm). I had no problems purchasing CRH train tickets in the holiday period between Beijing and Shanghai (for example) and there were still three carriages not sold on the premium service that I took (which is only one stop at Nanjing between Shanghai and Beijing). Occupancy rate is required to be 80% for services to continue so I'd imagine they hover between 80 and 90% on most services but there will be some spikes on the popular services of course like on the Fuzhou-Xiamen railway which does have occupancy rates over 100% (but that is the most popular in China if I recall correctly).

Japan, too, I have managed to purchase walk up tickets for even the most busy services, though I haven't tried to do this during rush hour admittedly. It's heavily used and the trains are running at a decent occupancy rate, but it certainly isn't the fact that there is so much demand that people cannot travel except during special events (golden week for example). The Shinkansen occupancy rate at present sits at around 80% according to the sources I have read. That is very enviable, but it certainly isn't crammed on every service.

Last edited by Svartmetall; February 7th, 2015 at 03:42 PM.
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Old February 7th, 2015, 04:22 PM   #1471
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That's a lot of blahblah business speak. You cannot predict something that has not happened. Even when yield management was not used in the past in a railway, the market was markedly different today when yield management is used so you cannot compare before and after either. By your reckoning you cannot compare anything at all ever then.

All we have is the closest possible comparison - HSR with HSR for same distance travel between a large city and a smaller one. Bluemeansgo even compared travel to a MUCH smaller city than Marseilles in Japan (Aomori) through an equally less populated area in Japan (the Tohoku Shinkansen doesn't travel the stupidly populated Tokaido corridor). If that isn't a somewhat fair comparison, I don't know what is. He showed that the price for the Shinkansen falls below the median of the French fares, thus showing your analysis of yield management being skewed to the left might actually be flawed...
Uh, not that simple again.

There was a cross-section study about high-speed rail vs. aviation on certain key routes like Madrid-Barcelona, Paris-Marseilles, Roma-Milano, Berlin-Frankfurt. Adjusting for all factors (price, income, distance, availability of flights, position of airports etc), they still couldn't find a simple model that explained the share captured by rail.
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Old February 7th, 2015, 04:30 PM   #1472
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So there we go. In your mind there is no way to compare so we have no way to judge whether yield management is better or worse. If you cannot accept a rough comparison example then there is nothing we have to talk about here. To put it in the context of my work, I'm trying to treat the world like an in vitro experiment where one can control as many variables as possible. As every good scientist knows, interpersonal variability and other externalities make extrapolation to the situation in vivo very tough. That doesn't mean that the in vitro experiments don't shed light on the mechanisms by which things occur in vivo and aren't informative in their own way. Much like the simplified example that bluemeansgo gave over the page, it does show that in this example at least that yield management is likely to have a net negative effect for consumers, but probably works out to be positive for businesses.
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Old February 8th, 2015, 08:12 AM   #1473
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So it's now an EU requirement to have this nonsense? Hate. Seriously hate. Japan, don't change on this. I would rather have a situation whereby I don't get "special deals", but I have a known amount that it will cost at all times.
Interesting that you think that. Actually, I lived in Switzerland for 5 years and I thought that the train prices are quite low, considering the cost of living and the level of service.

Yes, the price of the plain ticket sis high. But almost no resident pays this, the vast majority have either cards or at least the very reasonably priced Half-Price card. As a result, one can pay 35 CHF for a Lausanne-Zurich train, which I find a fair deal.

On the other hand, in the UK for example the tickets are more expensive in a country with lower salaries. Oh, but they have "competition".
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Old February 8th, 2015, 12:19 PM   #1474
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I would call train tickets in Switzerland affordable for those living here, but cheap? Nothing is cheap in this country by any global standards particularly after the recent exchange rate fluctuations. In fact it's a serious worry that businesses will try to move out of the country and a recession awaits us. Productivity is high here, but not so sky high to justify salaries double and triple of those across the border in Germany.

Anyway back to a happier subject of Japanese railways
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Old February 8th, 2015, 12:52 PM   #1475
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Okay, let's keep the subject in the context of train fares. Talking about train fares relative to Japanese fares is on-topic, but let's not take this discussion too far away from the main focus of the thread.

Thanks.
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Old February 8th, 2015, 08:25 PM   #1476
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By the way what's the cheapest mode of transport for medium distance travel in Japan. Is it a bus? As in every country in Japan too there are people for whom price is more important than speed...
I don't know what you mean by medium distance but overnight bus is the cheapest, and for shorter distances busses and "commuter" rail are.
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Old February 9th, 2015, 06:07 AM   #1477
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Speaking of the Shinkansen, I wonder has anyone considered the economic effect of the opening of the Hokuriku line on 14 March 2015?

Personally, I think the cities of Kanazawa, Toyama, Itoigawa and Jōetsu could enjoy a short economic boom, since it is now much easier to visit these cities (no need to fly there or having to change trains when travelling from the Tokyo area). The Kanazawa area could see a major influx of tourists, especially since Kanazawa--like Kyoto--was never bombed during World War II and as such, has many historic buildings that predate the Pacific War. And we will have better understanding of the culture of the Hokuriku region, since more people will be visiting there.
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Old February 9th, 2015, 01:26 PM   #1478
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Quite likely indeed, it also provides fast access to many ski areas in the region thanks to the Iiyama and Joetsu-Myoukou stations. I have just taken the E7 today and the ride is noticeably better than the old E2 trains. It'll be great when express services run the route, skipping smaller stations like Sakudaira and Ueda and providing a very fast service into Nagano from Tokyo
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Old February 9th, 2015, 03:12 PM   #1479
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JR East has said they are keeping the old Asama service (both limited-stop and all-stop) between Nagano and Tokyo. In fact, the original E2 Series trainsets built for this route in the late 1990's are being rebuilt with new interiors and updated running gear to keep them going probably well past 2020--similar to what was done with a small number of 200 Series trainsets to keep them running on the Jōetsu and Tōhoku lines until just recently.
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Old February 10th, 2015, 03:30 PM   #1480
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Quite likely indeed, it also provides fast access to many ski areas in the region thanks to the Iiyama and Joetsu-Myoukou stations. I have just taken the E7 today and the ride is noticeably better than the old E2 trains. It'll be great when express services run the route, skipping smaller stations like Sakudaira and Ueda and providing a very fast service into Nagano from Tokyo
Have you been to Gala Yuzawa? I heard it is beginner to intermediate class
Gala Yuzawa station and gondola are connecting.



Shinkansen at Gala yuzawa




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