Ticket prices

houstyl · 10-05-2006, 12:36

http://www.economist.com/displaystor...ory_id=5603413

Economist, March 9 2006
All aboard for privatisation
Its long-distance and regional passenger routes are certainly profitable. But Mr Mehdorn's critics point to the sluggish growth of rail use. The Bahn scored an own-goal in 2002 by trying to sell tickets with demand-driven pricing—like a low-cost airline—misjudging totally the value its customers placed on flexible rail travel. Passengers deserted in droves. It took until last year to claw numbers back to 1999 levels. Mr Mehdorn insists there is lots of growth potential—half the German population does not yet use rail. Overall rail usage rose by 26% for passengers and 39% for freight between 1993 and 2005, he points out.

Variable pricing a la low-cost airlines was a disaster for DB. The flexibility of rail is a big attraction and people won't take too kindly to paying vast premiums if they turn up a half hour before departure. Train trips are not planned as far in advance as airline trips, and people for example travelling home on a Friday evening are unlikely to defer their trip from a high price peak fare to a lower price fare earlier in the day or the next morning - they will seek alternatives. Also, what will happen discount tickets like student fares and OAP passes at peak times, once ticketing goes fully online? Will they not be allowed travel on certain trains, given their revenue would be much lower than a person paying a premium?

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10-05-2006, 12:36	#11
houstyl New to the board Join Date: Dec 2005 Posts: 21	http://www.economist.com/displaystor...ory_id=5603413 Economist, March 9 2006 All aboard for privatisation Its long-distance and regional passenger routes are certainly profitable. But Mr Mehdorn's critics point to the sluggish growth of rail use. The Bahn scored an own-goal in 2002 by trying to sell tickets with demand-driven pricing—like a low-cost airline—misjudging totally the value its customers placed on flexible rail travel. Passengers deserted in droves. It took until last year to claw numbers back to 1999 levels. Mr Mehdorn insists there is lots of growth potential—half the German population does not yet use rail. Overall rail usage rose by 26% for passengers and 39% for freight between 1993 and 2005, he points out. Variable pricing a la low-cost airlines was a disaster for DB. The flexibility of rail is a big attraction and people won't take too kindly to paying vast premiums if they turn up a half hour before departure. Train trips are not planned as far in advance as airline trips, and people for example travelling home on a Friday evening are unlikely to defer their trip from a high price peak fare to a lower price fare earlier in the day or the next morning - they will seek alternatives. Also, what will happen discount tickets like student fares and OAP passes at peak times, once ticketing goes fully online? Will they not be allowed travel on certain trains, given their revenue would be much lower than a person paying a premium?