Yield Management - evidence it works

[Haywain]

Further north, it's shocking that an off-peak return between Leeds and Manchester (any route) is over £27

And yet, those trains are both frequent and busy.

 

[modernrail]

I have been doing some digging for proper research papers on this subject bearing in mind there seems to be very little industry/Gov led research. There is a bit out there but not much.

I hope GBR have a proper look at this area. We currently have individual TOCs making individual decisions on what form of yield management works, using different theories and producing different and difficult to work out results. There are tonnes of routes where there is overlapping and there are tonnes of routes where there is less overlapping.

On the overlapping routes the ticket choices have become baffling as you have the standard open, the off peak, the super off peak, any variable of those for different permitted routes, any TOC specific fare, any TOC specific advance. That could be 8 plus fares available for a fairly simple journey. Even if you do navigate all that, it all falls apart when there is disruption, which is frequent and in itself complex with multiple TOCs taking multiple different perspectives. That is without starting to consider what the Treasury and the ‘rail as utility’ view should be on how well all of that is using the infrastructure, assets and subsidy available. It looks like no industry wide assessment or thinking of that has taken place, which is poor form when so much subsidy is being poured in. The industry does not appear to be able to demonstrate how its fragmented approach to all of this can be said to best use the resources. It may all be perfect, but there needs to be work undertaken to work that out.

On the routes with less overlap I would personally argue too much capacity is being reserved for earlier advance tickets leaving too little for later bookings. There does also seem to be a new trend of TOCs on longer routes giving up on advances all together and leaving half empty trains. I was on a London to Glasgow service yesterday with loads of empty seats but no advances available in the days before. I have struggled to find advances on loads of long distance services recently and found quite empty trains. Maybe it is because they are not on the hook for revenue any more so they have given up a bit.

Where is becomes incredibly frustrating for a very regular user of trains across the country, is the idea that you get all the above wrong by not understanding it - end up with some very overloaded trains and your answer is to price off customers. That massively reduces the utility value of the railway. As a taxpayer, I consider the subsidy I pay for to mostly enhance the utility value of the railway.

I am not against Advances. I am not against having some peak and off-peak signalling and I am definitely not against filling empty seats that have been subsidised. On the latter, a few people have argued on here that it is better for the railway to have fewer passengers paying more and then having an emptier train to enjoy - meaning they might come back for more. That is bonkers. Of course it can feel nice when you have trains that are sometimes a bit quieter. However, on a subsidised railway the main aim should always be to use the capacity.

 

[43066]

And yet, those trains are both frequent and busy.

That is a good example of an inconvenient truth!

== Doublepost prevention - post automatically merged: 25 Jul 2024 ==

I have been doing some digging for proper research papers on this subject bearing in mind there seems to be very little industry/Gov led research. There is a bit out there but not much.

I hope GBR have a proper look at this area. We currently have individual TOCs making individual decisions on what form of yield management works, using different theories and producing different and difficult to work out results. There are tonnes of routes where there is overlapping and there are tonnes of routes where there is less overlapping.

On the overlapping routes the ticket choices have become baffling as you have the standard open, the off peak, the super off peak, any variable of those for different permitted routes, any TOC specific fare, any TOC specific advance. That could be 8 plus fares available for a fairly simple journey. Even if you do navigate all that, it all falls apart when there is disruption, which is frequent and in itself complex with multiple TOCs taking multiple different perspectives. That is without starting to consider what the Treasury and the ‘rail as utility’ view should be on how well all of that is using the infrastructure, assets and subsidy available. It looks like no industry wide assessment or thinking of that has taken place, which is poor form when so much subsidy is being poured in. The industry does not appear to be able to demonstrate how its fragmented approach to all of this can be said to best use the resources. It may all be perfect, but there needs to be work undertaken to work that out.

On the routes with less overlap I would personally argue too much capacity is being reserved for earlier advance tickets leaving too little for later bookings. There does also seem to be a new trend of TOCs on longer routes giving up on advances all together and leaving half empty trains. I was on a London to Glasgow service yesterday with loads of empty seats but no advances available in the days before. I have struggled to find advances on loads of long distance services recently and found quite empty trains. Maybe it is because they are not on the hook for revenue any more so they have given up a bit.

Where is becomes incredibly frustrating for a very regular user of trains across the country, is the idea that you get all the above wrong by not understanding it - end up with some very overloaded trains and your answer is to price off customers. That massively reduces the utility value of the railway. As a taxpayer, I consider the subsidy I pay for to mostly enhance the utility value of the railway.

I am not against Advances. I am not against having some peak and off-peak signalling and I am definitely not against filling empty seats that have been subsidised. On the latter, a few people have argued on here that it is better for the railway to have fewer passengers paying more and then having an emptier train to enjoy - meaning they might come back for more. That is bonkers. Of course it can feel nice when you have trains that are sometimes a bit quieter. However, on a subsidised railway the main aim should always be to use the capacity.

Most of the above is criticism of ticketing complexity, and of yield management being used incorrectly, rather than an objection to it as a concept. It’s an important tool and, if you imagine it won’t also be used by GBR, you’re going to be sorely disappointed.

 

[Tazi Hupefi]

I have been doing some digging for proper research papers on this subject bearing in mind there seems to be very little industry/Gov led research. There is a bit out there but not much.

I hope GBR have a proper look at this area. We currently have individual TOCs making individual decisions on what form of yield management works, using different theories and producing different and difficult to work out results. There are tonnes of routes where there is overlapping and there are tonnes of routes where there is less overlapping.

On the overlapping routes the ticket choices have become baffling as you have the standard open, the off peak, the super off peak, any variable of those for different permitted routes, any TOC specific fare, any TOC specific advance. That could be 8 plus fares available for a fairly simple journey. Even if you do navigate all that, it all falls apart when there is disruption, which is frequent and in itself complex with multiple TOCs taking multiple different perspectives. That is without starting to consider what the Treasury and the ‘rail as utility’ view should be on how well all of that is using the infrastructure, assets and subsidy available. It looks like no industry wide assessment or thinking of that has taken place, which is poor form when so much subsidy is being poured in. The industry does not appear to be able to demonstrate how its fragmented approach to all of this can be said to best use the resources. It may all be perfect, but there needs to be work undertaken to work that out.

On the routes with less overlap I would personally argue too much capacity is being reserved for earlier advance tickets leaving too little for later bookings. There does also seem to be a new trend of TOCs on longer routes giving up on advances all together and leaving half empty trains. I was on a London to Glasgow service yesterday with loads of empty seats but no advances available in the days before. I have struggled to find advances on loads of long distance services recently and found quite empty trains. Maybe it is because they are not on the hook for revenue any more so they have given up a bit.

Where is becomes incredibly frustrating for a very regular user of trains across the country, is the idea that you get all the above wrong by not understanding it - end up with some very overloaded trains and your answer is to price off customers. That massively reduces the utility value of the railway. As a taxpayer, I consider the subsidy I pay for to mostly enhance the utility value of the railway.

I am not against Advances. I am not against having some peak and off-peak signalling and I am definitely not against filling empty seats that have been subsidised. On the latter, a few people have argued on here that it is better for the railway to have fewer passengers paying more and then having an emptier train to enjoy - meaning they might come back for more. That is bonkers. Of course it can feel nice when you have trains that are sometimes a bit quieter. However, on a subsidised railway the main aim should always be to use the capacity.

As others are telling you - the strategies are largely working well. Trains are busier than ever, demand is being well managed.

Even on LNER which many criticise for their fare reforms have not had any adverse impact on their revenue or capacity - they're seeing absolutely astronomical growth, almost getting towards a situation where it is in excess of what their capacity can handle.

You're talking of "emptier" trains - there is rarely such thing aside from unsociable times of day where there wouldn't ever be demand, and is essentially running for operational convenience or to simply meet a franchise requirement.

Trains on both the WCML and ECML are regularly close to / at capacity now.

This seems to boil down to personal distaste for yield management techniques. They're not going anywhere, and they are actually going to get bigger and bolder, until it's at the point where there is confidence that the optimal revenue is being abstracted from the market. I forsee personalised pricing ahead, if TOCs can get enough data on you to understand what your personal price points are.

 

[yorksrob]

And yet, those trains are both frequent and busy.

That is a good example of an inconvenient truth!

== Doublepost prevention - post automatically merged: 25 Jul 2024 ==



Most of the above is criticism of ticketing complexity, and of yield management being used incorrectly, rather than an objection to it as a concept. It’s an important tool and, if you imagine it won’t also be used by GBR, you’re going to be sorely disappointed.

Or rather an illustration that the North needs Southern Region type train lengths and frequencies (the real inconvenient truth).

 

[43066]

Or rather an illustration that the North needs Southern Region type train lengths and frequencies (the real inconvenient truth).

Or certainly something closer to them. That’s a valid point, but probably for another thread.

 

[modernrail]

As others are telling you - the strategies are largely working well. Trains are busier than ever, demand is being well managed.

Even on LNER which many criticise for their fare reforms have not had any adverse impact on their revenue or capacity - they're seeing absolutely astronomical growth, almost getting towards a situation where it is in excess of what their capacity can handle.

You're talking of "emptier" trains - there is rarely such thing aside from unsociable times of day where there wouldn't ever be demand, and is essentially running for operational convenience or to simply meet a franchise requirement.

Trains on both the WCML and ECML are regularly close to / at capacity now.

This seems to boil down to personal distaste for yield management techniques. They're not going anywhere, and they are actually going to get bigger and bolder, until it's at the point where there is confidence that the optimal revenue is being abstracted from the market. I forsee personalised pricing ahead, if TOCs can get enough data on you to understand what your personal price points

Trains being full does not mean that the capacity is being used well. Two different, or at least not necessarily the same things in revenue, subsidy and utility terms.

Lots of trains are not full - far from it. I have probably caught 20 trains this month other than my day to day commuter journeys. Loads were half empty.

Passengers and taxpayers need more than those who work in the industry making thinly or non-evidence backed views that things are or are not working well.

 

[Haywain]

Or rather an illustration that the North needs Southern Region type train lengths and frequencies (the real inconvenient truth).

In which case, complain about capacity and not price.

 

[Bletchleyite]

Or rather an illustration that the North needs Southern Region type train lengths and frequencies (the real inconvenient truth).

It's not only TPE that is pricing people off - LNER is probably king of that, because there's far more demand to Edinburgh than they could provide at present.

One could of course debate whether pricing off is reasonable, and whether other deterrents (such as cheaper fares on genuinely quieter trains, and compulsory reservations - actually enforced - on specific, known very busy trains as BR did*) could be used instead.

* Rather than the present bodge of claiming reservations to be compulsory when they are not.

 

[yorkie]

Keeping an open mind though - what is the evidence that it has worked to increase revenue per train mile through better utilisation etc.

Anecdotally, I often see people doing York to London (on Advance tickets, with seat reservations) on the much cheaper "stoppers" which depart very soon after a non-stop. If all trains were the same price, the non-stop trains would be full & standing, while the stoppers would have more empty seats.

(Incidentally, LNER are themselves undermining their own yield management and distorting the market, with their Flex fares, but there's a separate thread for that!)

 

[Haywain]

Passengers and taxpayers need more than those who work in the industry making thinly or non-evidence backed views that things are or are not working well.

But it’s acceptable to have “thinly or non-evidence backed views” of the same sort from those not working in the industry. You appear to be saying that your view has a higher value.

 

[Snow1964]

Even on LNER which many criticise for their fare reforms have not had any adverse impact on their revenue or capacity - they're seeing absolutely astronomical growth, almost getting towards a situation where it is in excess of what their capacity can handle.

Yield management should be used to try and insensitive use of quieter trains, if struggling with capacity overall then need to move to longer or more trains.

There is a negative brand problem if go too blunt and try and price people off, and that is they don't travel with you in future so lose more revenue long term

 

[yorkie]

There is a negative brand problem if go too blunt and try and price people off, and that is they don't travel with you in future so lose more revenue long term

I think that doesn't bother many train companies; they will get revenue regardless. Companies like Northern, TPE, LNER seem to be more than happy to have a negative brand image, at least their behaviour suggests so!

 

[Haywain]

if struggling with capacity overall then need to move to longer or more trains.

It takes several years to source new trains, even if the finance and line capacity is available. Do you suggest nothing should be done in the interim?

 

[Bletchleyite]

I think that doesn't bother many train companies; they will get revenue regardless. Companies like Northern, TPE, LNER seem to be more than happy to have a negative brand image, at least their behaviour suggests so!

Certainly one would struggle to find a train company that doesn't have a poor rating on Trustpilot. There's an element of Ryanair there - haters gonna hate and there are more passengers where those came from, and in the case of London based TOCs they know they mostly have no real competition because driving is grim.

 

[Snow1964]

It takes several years to source new trains, even if the finance and line capacity is available. Do you suggest nothing should be done in the interim?

No, didn't say that, but that doesn't prevent yield management tool being used in reverse, to work out quieter trains, marginally thin timetable and move some trains to services struggling with capacity if can't get any more trains short term.

I think I read that some companies like LNER are only using about 70% of their agreed network capacity, so ought to be some unused timetable slots.

 

[Haywain]

No, didn't say that, but that doesn't prevent yield management tool being used in reverse, to work out quieter trains, marginally thin timetable and move some trains to services struggling with capacity if can't get any more trains short term.

I think I read that some companies like LNER are only using about 70% of their agreed network capacity, so ought to be some unused timetable slots.

But that most likely requires more trains - the quieter trains are usually only quieter in one direction, which needs to run to have the rolling stock in place for the busier train, and much the same will apply for staffing.

 

[43066]

Yield management should be used to try and insensitive use of quieter trains, if struggling with capacity overall then need to move to longer or more trains.

Yield management is used for that as well
(hence advance fares). Some trains will never be busy due to the anti social times then run. You also can’t easily move to “longer or more trains” - that isn’t an option absent a massive change in government policy which we are as unlikely to see under the new government as we were under the last.

There is a negative brand problem if go too blunt and try and price people off, and that is they don't travel with you in future so lose more revenue long term

But if you charge anything more than a very low price you are always going to price some people off! Unreliability may cause a poor brand image, but I’m not sure pricing does, in and of itself; indeed many of the world’s best regarded brands charge very high prices!

I’m also not sure the above statement reflects consumer behaviour. Eurostar, for example, tend to be more expensive than the competition, but take up most of the London - Paris market. Similarly LNER carries greater than 50% of the London - Scotland market despite fares going up significantly in recent years and exceeding air fares in many cases.

People make travel decisions based on a number of factors, including price, convenience etc. and experience shows they tend to have fairly short memories. There’s no evidence that people will “punish” operators by inconveniencing themselves to avoid them in future (see how passengers return to the railway even after periods of extensive disruption).

The harsh reality is that the railway is likely to always be too expensive for very price sensitive people to use. That doesn’t mean there’s anything intrinsically wrong with the pricing, or that any of the OP’s other assertions are correct, however.

I agree with the suggestions above that the criticism is based on people feeling aggrieved that fares don’t suit them personally, rather than legitimate criticism of pricing methods.

 

[Tetchytyke]

Certainly one would struggle to find a train company that doesn't have a poor rating on Trustpilot.

Agreed. Rail travel for most people is still a distress purchase and so people are at best only ever going to be ambivalent about a train company.

Incidentally, LNER are themselves undermining their own yield management and distorting the market, with their Flex fares, but there's a separate thread for that!

Aren't they just. What's interesting is that, since the Flex fare came out, the availability of really cheap advances on the 2200 London-Newcastle has gone through the floor. It's now often no cheaper than the 2000 and 2100 London-Newcastle trains. I wonder if the Flex ticket has had an impact on that?

 

[Haywain]

Rail travel for most people is still a distress purchase and so people are at best only ever going to be ambivalent about a train company.

As far as Trustpilot goes, most people don't get anything more than was advertised, and therefore don't see anything special. The other side of that coin is that things can easily go wrong and it appears that the train companies will get blamed whether things are in their control or not (one complaint I saw blames the TOC for the weather, alongside the frequency of trains at a time after midnight!)

 

[yorksrob]

In which case, complain about capacity and not price.

Well no, not when people are using the lack of capacity - and consequent busyness as a justification for extortionate pricing.

== Doublepost prevention - post automatically merged: 25 Jul 2024 ==

It's not only TPE that is pricing people off - LNER is probably king of that, because there's far more demand to Edinburgh than they could provide at present.

One could of course debate whether pricing off is reasonable, and whether other deterrents (such as cheaper fares on genuinely quieter trains, and compulsory reservations - actually enforced - on specific, known very busy trains as BR did*) could be used instead.

* Rather than the present bodge of claiming reservations to be compulsory when they are not.

LNER is unusual because its off-peak fares aren't that unreasonable for some of the longer distance services. Because of that distance, a lot of people will naturally gravitate towards advance purchase (Of course, as we know, they're trying to get rid of that !)

But is it even acceptable for them to cry "overcrowding" when the route's capacity is being underused (5 carriage Lumo's for example).

But journeys like Leeds - Manchester aren't even in the realm of being "long distance". They are day trips. I think it's one of many journeys in the area deserving of a "cheap day return" but if memory serves, this doesn't exist - which is what leads to the overpricing.

 

[railfan99]

How do Northern's short distance Advance fares compare per mile/kilometre to 'normal' bus fares?

(I'm assuming the cut price £2 single fares won't last forever).