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Author Topic: Fares - down to get passengers but then bounce up?  (Read 2915 times)
grahame
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« on: May 06, 2020, 09:38:31 pm »

From The BBC

Quote
Air fares should fall when flights restart but then rise by at least 50%, warns a global airline industry body.

Airlines are keen to get planes back in the skies quickly which could lead to over-capacity, says the International Air Transport Association (Iata).

With passenger demand likely to remain low this should put pressure on carriers to reduce the cost of flights.

But if airlines are forced to keep middle seats free they will need to raise air fares significantly.

Under current social distancing proposals, airlines may be required to keep middle seats free which would have a major impact on their profitability, as they would be forced to fly with fewer passengers. Michael O'Leary, the boss of Ryanair, said keeping middle seats empty was "idiotic".

That's an airline story ... posting in fare's fair though because ...

Someone asked the question the other day "If we even out the peaks because of staggered start times, do we still need peak fares?". Interesting question - but should the question be "If we don't have peaks any more, do we simplify just to anytime tickets?"

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Robin Summerhill
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« Reply #1 on: May 07, 2020, 11:47:19 am »

That was me who posed that question.

We live in interesting times. It makes no difference is essence whether public transport is privately owned or state owned, at the end of the day it has to cover the cost of providing it, and ideally make a little extra for the shareholders or the Treasury. The price of anything, be it a rail ticket or an airline ticket or a can of peas in Sainsburys, cannot exceed the amount that people are willing to pay for it. If it does, the product stays in the virtual ticket rack or on the shelves.

There may well be a case from a railway perspective of abolishing peak and off peak fares, and just charging one rate as it used to be in the old days. However, if that route is gone down, then the fare charged will still need to be one that enough people will be prepared to pay to make the service viable. And as I write this I think especially about, for example, how much an anytime return from Chippenham to Paddngon costs (£183) and how much an anytime return costs if you split it at Didcot (£56.60 + £68.50 = £125.10) I don't know how many leisure journeys are likely to be made at a fare of £125.10 each, let alone £183, and especially if there is more than one in the party.

So in the fullness of time, when all this is over, things may (or may not) change. But if they do change, those fundamental economic facts regarding supply and demand will still remain,, and they will need to be addressed.
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grahame
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« Reply #2 on: May 07, 2020, 12:52:52 pm »

That was me who posed that question.

Fare fear came up again yesterday:

3pm - Kirsty Hoyle from Transport for All
what are the needs of disabled users as we move into the next phase?
Fear of fare hikes which will hit more transport dependent and poorer groups (higher proportion disabled)

We live in interesting times ...

So in the fullness of time, when all this is over, things may (or may not) change. But if they do change, those fundamental economic facts regarding supply and demand will still remain,, and they will need to be addressed.

Very much so.
* What does it cost to provide?
* How many people are using it and what are they paying / prepared to pay?
* How much of a shortfall is there (subsidy needed) / how much of a government profit to be made?

Suggestion 1 - "remove anytime fare" - Chippenham to London return becomes £76.70
Suggestion 2 - "remove off peak fares" - Chippenham to London return becomes £183.00
(also noting that a single fare tier would remove the £55.90 super off peak)

For those people still doing a 5 day week in London, weekly season is £290.20 i.e. £58.04 per day.

The Rail Delivery Group guy at yesterday's Webinar did not mention / get involved with fares.

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grahame
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« Reply #3 on: May 11, 2020, 07:01:33 am »

Institute of Fiscal Studies - quoted in The Guardian 6 days ago

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Use of public transport could be discouraged as lockdown ends – IFS

The price of a bus, train or tube ticket during peak commuting hours could be raised relative to the cost of off-peak travel to prevent crowding and the spread of coronavirus on public transport, according to a leading thinktank.

Setting out a menu of options to end the government lockdown as ministers consider ways to reopen the British economy, the Institute for Fiscal Studies said discouraging public transport use during peak times could limit overcrowding and reduce the risks to public health.

[snip]

Among its recommendations the IFS said the usual logic of promoting public transport use – to cut congestion and pollution – could be reversed in order to limit the spread of the virus on packed commuter trains and buses, especially in London.

“The government could alter the relative prices of different types of commutes to better reflect this new reality. Examples would be to increase the relative price of commuting at peak times on the London tube and bus network, or to suspend the London congestion charge for drivers,” it said in the report.

Raising the relative price of public transport at peak hours could be done one of two ways. Ticket prices at busy times could be raised, or off-peak fares could be cut. Both options would raise the relative price of peak travel. The IFS did not say which option it recommended.

However, raising the price of public transport would deliver a financial blow to people who cannot change their working hours or are unable to commute by car. The IFS said that while off-peak prices could be cut, it would incentivise public transport at a time when commuting should be limited.
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Robin Summerhill
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« Reply #4 on: May 11, 2020, 09:26:55 am »

What an absolutely fantastic idea - I wonder why nobody else has thought of it...

People have spent the last couple of months on limited income, if indeeed on any income at all. And then a group of economistss/ accountants and sundry hangers-on come up with the brillliant wheeze of charging them more to get to their jobs when they are finally allowed to go back to them.

There is the real world, and there is a place where people who live in Cloud Cuckoo Land go to get away from it all. It's probably best if I leave my response there...  Roll Eyes
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stuving
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« Reply #5 on: June 02, 2020, 03:15:53 pm »

What an absolutely fantastic idea - I wonder why nobody else has thought of it...

People have spent the last couple of months on limited income, if indeeed on any income at all. And then a group of economistss/ accountants and sundry hangers-on come up with the brillliant wheeze of charging them more to get to their jobs when they are finally allowed to go back to them.

There is the real world, and there is a place where people who live in Cloud Cuckoo Land go to get away from it all. It's probably best if I leave my response there...  Roll Eyes

I did comment on the IFS paper a couple of Zooms ago, but never posted that here. When I went to the IFS and looked at their briefing note, I found they had changed the offending sentence just enough to stop it being a tempting text-bite. The paragraph now reads:
Quote
Finally, given the temporary change in the externality calculus of different modes of commuting, the government could alter the relative prices of different types of commutes to better reflect this new reality. Examples would be to reduce the relative price of commuting at off-peak times on the London Tube and bus network, or further measures to financially incentivise cycling. The government should, however, be mindful of the political economy of reversing temporary policies when they are no longer optimal. For example, if on balance it were judged that the relative social desirability of driving relative to public transport use had temporarily increased, we would still be hesitant to recommend temporary cuts in fuel duties, given that recent history suggests the government would find it very difficult to increase fuel duties again in the face of inevitable lobbying post-crisis.

Of course it was always about relative pricing, so Robin should perhaps blame the Guardian for any extra green ink consumption. What is to my mind more of a problem with the report is that its economic analysis seems to be so simplistic. For example, that paragraph is about the use of pricing to square a very different pattern of  demand with the transport capacity which is hard to alter quickly. (Or slowly, come to that.)  It would make sense to look at the economic impact of other measures that look more like explicit rationing of transport capacity, but that was not done.

It does, however, have some results about travel to work patterns, produced from a variety of data sources, looking at the combinations of where people live and work, and how they travel, and whether they can work from home. I have no way of judging whether they have got the numbers right, but it is clear that the combination effects are very important. So it's step up from just taking the statistical results one by one and trying to combine them afterwards.
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Bmblbzzz
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« Reply #6 on: June 02, 2020, 05:07:58 pm »

So what should a peakless fare be? A mathematician will probably tell you it should be the mean of all fares currently paid. An economist would echo Robin Summerhill's first post above, an epidemiologist's answer is along the lines of the Institute of Fiscal Studies (something wrong here! Shocked), a sociologist would talk about the balance between crowding and solitude, a psychologist would talk about fear of infection competing with the need to get to work, and me? I'm going to say there's no such thing!

Well, sort of... Even if commuting traffic flattens out, there will still be a difference between night and day passenger volumes and between week and weekend. Perhaps peak will just be (say) 5am. to 10pm Monday to Friday, with evenings and w/es off-peak? Or perhaps volumes and therefore prices will be made to balance per train? Maybe we could look at places like Luxembourg and Estonia which have made all(?) public transport free and see what effect that has had on the peak v off-peak balance.
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broadgage
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« Reply #7 on: June 03, 2020, 11:01:12 pm »

A great many passengers consider that current fares are too complex. I hope that the coronavirus emergency will not be used as an excuse to add an extra layer of complexity.

Many passengers consider fares to be excessive if compared to those charged overseas, or for services considered to be getting worse not better. I hope that the coronavirus emergency will not be used as an excuse to further increase fares.
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grahame
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« Reply #8 on: June 04, 2020, 07:11:10 am »

There are foundations on which fare policy is based, and under which fares are set ...

Do you want to maximise passengers?
Do you want to minimise private car traffic?
Do you want to minimise subsidy / maximise profit to government?
Do you have a set target proportion of income you want from fares?

Do you have a social, a wider economic target, or environmental targets?
Do you have money to invest if your fare system generates too much extra traffic?

Do you want to use other controls such as differential pricing to even out demand?
Do you want any uniformity across the network?
DO you want a stable system where the price is the same each time passengers travel?
Do you want to offer loyalty or bulk purchase options?
Do you want differential fares for different passenger groups?

There will be a balance between the answers to these, and some interesting modelling to do; inputs to the models and factors within them may be varied post-covid .    "Mathematician" mentioned above, and I guess I'm one of those - but really you need an expert in many fields so that you have the right inputs to the right model as all these factors interact.

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GBM
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« Reply #9 on: June 04, 2020, 09:04:31 am »

As a very infrequent traveller, I am in basic agreement with member broadgage.
There are too many variations, and variations of variations.
In planning ahead, I need to look at the basic fares shown on the NR fare website.
Then search a few sites for split ticketing options plus coming onto this site to ask for further guidance.

I know I need to do some homework before travelling.  It shouldn't be that complicated.

Air travel also involves homework before booking.
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Trowres
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« Reply #10 on: June 04, 2020, 05:21:01 pm »

"Mathematician" mentioned above, and I guess I'm one of those - but really you need an expert in many fields so that you have the right inputs to the right model as all these factors interact.

A large wallet is needed to access the rail industry's own guide on demand/revenue forecasting, but for the rest of us a 238 page report on demand forecasting is available:

https://trl.co.uk/reports/TRL593

In spite of the length of the report, there are a couple of areas for which evidence is very thin:-
a) Changing the frequency of infrequent services
b) Long-term effects of changes

(a) is probably due to the relative lack of real-life examples to study ( Until Transwilts  Wink )
(b) is probably because studying anything for 10+ years takes a lot of dedication and because cause and effect get lost over time as many other external factors affect demand.

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grahame
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« Reply #11 on: June 05, 2020, 04:09:52 am »

"Mathematician" mentioned above, and I guess I'm one of those - but really you need an expert in many fields so that you have the right inputs to the right model as all these factors interact.

A large wallet is needed to access the rail industry's own guide on demand/revenue forecasting, but for the rest of us a 238 page report on demand forecasting is available:

https://trl.co.uk/reports/TRL593

In spite of the length of the report, there are a couple of areas for which evidence is very thin:-
a) Changing the frequency of infrequent services
b) Long-term effects of changes

(a) is probably due to the relative lack of real-life examples to study ( Until Transwilts  Wink )
(b) is probably because studying anything for 10+ years takes a lot of dedication and because cause and effect get lost over time as many other external factors affect demand.


Indeed ... I recall we were asked for 'industry standard method approved' evidence at the time of the LSTF trial service proposal ... but then told we couldn't use 'new station / service' methods because we already had a service. And we couldn't use 'frequency change' methods because the proposed change was such a large one. A real catch 22 situation!

We are also moving now towards seeing the long term effect of changes.  I am only going out very occasionally around the town and the nearby countryside, but I keep bumping into people (or, rather, their 2 metre buffer) who raise with me travel / transport issues.  Just last night at around 8 p.m. discussing with a couple who have no car when and whether they can take a trip out of the town.  Np essential physical reason, but an emotional / mental one building.
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