It may be the case that CIE understimated the effect of recent fare increases on demand. I don't know how sophisticated their modelling of demand is, but if they had simply relied on rules-of-thumb based on past experience, then I can see how they might have got it wrong.
It's one thing to look at the effect of a 5% fare increase when money (and maybe real) incomes are increasing, as they generally were up to 2008-9. But it's entirely different if the trend of income is downwards, which it has been recently. It's not rocket science: if people have less money then fare inreases can be pretty disasterous.
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