HSTEd
Veteran Member
- Joined
- 14 Jul 2011
- Messages
- 20,281
But EMT couldn't hope to drop fares as low as the HS2 Operator.
It would lose money even on a marginal cost basis.
It would lose money even on a marginal cost basis.
But EMT couldn't hope to drop fares as low as the HS2 Operator.
It would lose money even on a marginal cost basis.
But what incentive will the HS2 operator have to offer cheap as chips fares?
They know they can get away with selling premium tickets in return for a quicker service. Just like every other high speed operator. And some will be prepared to pay and the rest will use the MML.
At the very least we'll see extremely low advance fares or other discounted offers/promotions.
With so much more capacity, nobody would want to run empty trains or even get to a point where trains might be cut back in frequency.
Because the marginal costs for HS2 services are far lower than conventional ones. They will improve the yields on their franchise by grabbing as many passengers as possible to fill the line.
Every other high speed operator has a higher cost base than the lower speed one on the same corridor.
The HS2 operator will have a lower cost base than the MML operator since the MML operator is going to cling to 125mph rolling stock to maintain the appearance of intercity operations, this will kill the capacity of the trains and put the operating costs through the roof.
I don't think the operator of HS2 could care less about empty trains providing they meet their contractural obligations to the DfT and satisfy their shareholders. Oh yes, remember them? Have no doubt that the DfT will seek to extract an absolute fortune from the operator of HS2 because they'll never learn!
But where are these customers likely to come from? In Sheffield it's hardly going to be a case of last one out turn off the lights. Or Leeds, Manchester and the East Midlands for that matter. Are you suggesting that industry based in the North will head south?
Well thats certainly not the case with the SNCF and it's LGV lines. And the SNCF charge a premium for their LGV services so why shouldn't HS2? It's inevitable that they will charge as much as they can.
But premium services almost never make money.
Piling it high and selling it cheap is how you make money.
And yet there is sufficient flows to support regular intercity operations with drastically longer journey times?
As far as I am aware the premium was only introduced relatively recently and has been balanced out by services that dump vast numbers of low cost advanced fares on major LGV corridors.
And the DfT could simply decree that there will be no premium so that it can cut back the subsidies for the paralleling intercity lines as they convert to cheaper to run outer suburban routes.
I can only assume that you are oblivious to the profits that the likes of BMW and Jaguar Land Rover make. And for goodness sake please don't go preaching to Tata Motors.
But with nothing like the numbers you are suggesting with the proposed Duplex services.
Well I'm sorry but you need to go back and research the fares charged on LGV / TGV services a little further. SNCF have been charging premuim rates on their LGV routes since they were introduced in the early 1980's.
Not only that but low cost advanced fares have only been introduced in the last year or so and only on selected routes.
As for the DfT, they couldn't care less about the ticketing policy of the HS2 operator providing they are able to pay a kings ransom.
I'm afraid that's the price we have to for privatisation. Not only that but a reduced service will do very little for the likes of Leicester. But hey who cares about Leicester?
The presumption will always be made that people will pay more for a quicker service and this won't change with the introuction of HS2.
And what is the cash profit they make?
Now go and compare the cash profit a mass market producer makes with a siilar amount spent on fixed infrastructure.
Perhaps not, but the Nottingham train just serves nottingham and Leicester, a Duplex set could get Derby/Nottingham, Sheffield and Leeds. And possibly Birmingham Airport too.
So the Socialist Government that was in power when the LGV Sud Est was costructed lied? The political position was very clearly that no premium should be charged.
Selected routes which include the busiest of the LGV lines? Sud-Est.
And despite the lower returns per passenger, going pile it high sell it cheap will still give greater returns since remember the cost of HS2 is the same in either case.
A clockface 4 trains per hour timetable is going to be bad for Leicester?
Why?
Heavens! Make sure nobody tells FlyBe that! I'd hate for them to stop selling me Southampton-Manchester flights that are cheaper than taking the train...
Then add in the higher usage from intermediate stations such as Milton Keynes, Grantham, Rugby etc and the new journey opportunities to London created by Lincoln, Burton etc and it all comes back about even.
Try booking your flight on the day you wish to fly. And then get back to me.
I don't think the operator of HS2 could care less about empty trains providing they meet their contractural obligations to the DfT and satisfy their shareholders. Oh yes, remember them? Have no doubt that the DfT will seek to extract an absolute fortune from the operator of HS2 because they'll never learn!
Oh dear. Go and look at the latest results for Tata Motors (who own Jaguar Land Rover) and than get back to me. Or indeed all the mass market producers in Europe.
And how big is the market for rail travel between Leeds and Birmingham? Bearing in mind that Cross Country make a loss on their services.
Again, pile it high but where are all these customers going to come from?
Because if you have your way they'll be running at 110 mph and stopping at every station between Leicester and London.
Land Rover is hardly a niche brand.
They sell ridiculous numbers of vehicles.
You would have to disentangle the results of Land Rover and Jaguar.
And what about Tata Motor's other mass market business in India and Europe (remember they own Daewoo as well now)?
How are you going to disentangle all that?
Cross Country could fill every train to the gunnels between Leeds and Birmingham and make a loss. The franchise is a disaster.
As to the marginal cost of a train stopping at Birmingham International.... it is rather low.
Slashing travel times has produced drastic increases in custom everywhere else. The last time travel times dropped this much is probably the WCML electrification project.
Which means they will be ten minutes slower than the fastest train is now and the same speed as one of the current trains is?
It is hardly a disaster.
Remember the ruling line-speed on the MML is 110mph right now.
The disadvantage to the passengers on Leicester-London have to be weighed against the advantage of other passengers on the route that barely get a look in now.
I know you want to live in a world where no new railway lines are ever built and no service pattern changes which ever disadvantage anyone are introduced.
But world does not exist.
Service pattern changes are inevitable unless you want to throw away many of the advantages of the new line, and even if you did require that some mythical upgrade would still give worse value for money than it.
It is either this or we do nothing while the lines overflow and we arrest the growth of rail travel permanently.
The DfT can't win with some people.
When a TOC gets a subsidy then people complain about taxpayer money being used to subsidise profits.
When a TOC pays a premium then people complain about the TOC being "squeezed" (and why are the premiums going back to central Government rather than keeping fares down on that franchise - as I've seen ECML users moan about).
Would you rather that the HS2 provider pays a premium to the Government (in which case some of the infrastructure costs are being repaid etc)? Is that really a bad thing?
Because the alternative is that the HS2 provider gets a subsidy, in which case people will complain that there's clearly no business case (because it still requires subsidy).
Can't win.
I'm also very much in favor of HS2 although I have my concerns regarding the business plan and the need to serve more destinations in the East Midlands
I think its absolutely right that the company running HS2 pays a premium to the Government given that they will have a brand new railway and brand new trains. I was simply referring to the high premiums that have been paid in the past.
The point I was trying to make was that as the premium is likely to be on the large side this will surely be reflected in ticket prices. Which may well mean that travelling on the MML is cheaper. For the punters it then comes down to cost v travel time
If it served more destinations then it would be SLOWER not faster. That's the point. That's why there's only one in the west midlands, one in the east midlands, and one in south yorkshire. If they started adding in stops every 10 minutes then the business plan would go out the window cuz it wouldn't make things much faster than they are now.
So so many posts on here object to HS2 because it doesn't stop right on their doorstep. Tough sh*t! Get over it.
There will be no way onto the HS2 North legs from the Classic Lines south of Birmingham.
Unfortunately such a chord is not in the programme.
As to the MML undercutting the HS2 tickets.... wouldn't the DfT, if it was so concerned with max returns, simply write into the MML franchise specification that no TOC specific tickets from London to Nottingham-Derby-Sheffield would be permitted?
Ditto with ICEC and ICWC.
HS2 will almost certainly offer lots of very cheap advance fares. Their flexible tickets will likely be the same price as the current ones, or possibly with a 5% "via HS2" markup. That'll leave the classic TOCs room to offer cheaper flexible tickets via the slower routes, just like LM and Chiltern do against Virgin now.
I think for classic TOCs the core target market will be mostly be the stopping and semi fast services because these are a captive market and can be charged accordingly. Trying to compete for passengers against HS2 which will have lower running costs will not be a good business plan. Having some advance tickets at a low price just to fill trains and get some extra revenue would work but the classic TOC are not going to lease extra trains just to fill them with cheap tickets that won't provide enough revenue to make a profit.
I don't think it's nearly as clear-cut as that. Just look at London Midland's range of SuperOffpeak fares, designed to compete with Virgin. There are some really cheap Euston-Birmingham or Euston-Crewe walk-up fares, but try getting a cheap walk-up between Birmingham and Crewe. You'll struggle, since LM have a captive market there.
However, LM are progressively introducing restrictions on EUS-Crewe/Brimingham Super Offpeak tickets as the trains are too busy
There will be no way onto the HS2 North legs from the Classic Lines south of Birmingham.
Unfortunately such a chord is not in the programme.
If HS2 was to remain the same, but with the Totton stop changed to one in central Derby, would that satisfy you?
The size of the subsidy/ premium shouldn't affect ticket prices - you (as the HS2 operator) try to maximise ticket revenue based on managing peak capacity and maximising revenue from quieter off peak services.
Whether you are paying a billion pounds in premium or receiving a billion pounds in subsidy, the economics of maximising revenue from a relatively fixed number of seats doesn't change.
The important factor to ticket prices is how elastic the demand is likely to be for tickets, not the size of the premium/ subsidy.
If it served more destinations then it would be SLOWER not faster. That's the point. That's why there's only one in the west midlands, one in the east midlands, and one in south yorkshire. If they started adding in stops every 10 minutes then the business plan would go out the window cuz it wouldn't make things much faster than they are now.
So so many posts on here object to HS2 because it doesn't stop right on their doorstep. Tough sh*t! Get over it.
Given that I live in Richmond the rather limited destinations on HS2 isn't a major issue but it might be more advantageous to continue to use the MML rather than have to change at Toton.