Fare policy for long distance passenger services at SNCF

Fare policy
for
long distance passenger services
at SNCF
Michel LEBOEUF
Head of Development Department
for long distance passengers
SNCF
Juin 2006
1
1937-2006
The fare policy
for passenger services
is strongly linked
to the history
of the company
Juin 2006
2
Evolution of the fare policy
3 fare policies
have been successively
applied, based on
- the production cost,
- the customer,
- the value for money on the market
Juin 2006
3
1 – The fare policy based
on the production cost
1937:
Creation of SNCF
by socializing
the former private companies
Juin 2006
4
1 – The fare policy based
on the production cost
Pf2 = P0 + d*p
Pf2 = full fare 2nd class
P0 = constant
d = distance (km)
p = unit price per km
Juin 2006
5
1 – The fare policy based
on the production cost
Pf1 = 1.5* Pf2
Pf1 = full fare 1st class
Pf2 = full fare 2nd class
Juin 2006
6
1 – The fare policy based
on the production cost
Customer ticket price:
Pc = Pf1 or f2*(1-discounting rate/100)
Juin 2006
7
1 – The fare policy based
on the production cost
2 types of discount:
- Social discounts
- Commercial discounts
Juin 2006
8
1 – The fare policy based
on the production cost
2 main issues:
1 – Which part of the production cost
is fixed and which part is variable?
2 – What is the most relevant parameter
for the variable charges?
Juin 2006
9
1 – The fare policy based
on the production cost
« Abstract of the Governmental
Fare Committe» (1943):
« … The fare policy must
enhance the traffic development
facilitating exchanges across the country.
The fare policy has also
to allow the rail sector
to meet its costs. »
Juin 2006
10
1 – The fare policy based
on the production cost
Main features of the price formula:
- Equality between all routes and regions
- Degressivity to distance,
- The level of price is based on the long term
economic viability of the rail sector,
- Elasticity of traffic to price
is calculated on a long duration period.
Juin 2006
11
2 – The fare policy based on
the customer
Amsterdam
Den Haag
Rotterdam
London
Oostende
Antwerpen
Calais-V.Dunkerque
1981/1983:
Calais Frethun
Lille
Boulogne
Lens
Arras
Köln
Bruxelles
Liège
Namur
Valenciennes
Charleville-Mézières
Le Havre
Rouen
Granville
Commissioning
of the new
high speed line
from Paris to Lyons
Meuse
Paris
Massy TGV
Brest
St Brieuc
Le Mans
Le Croisic
Tours
Bourges
St-Pierre-des-Corps
FuturoscopeArgenton/Creuse
Poitiers
Niort
Besançon
Montbéliard
Zürich
Dijon
Mouchard
Dole
Bern
Chalon
sur-S. Lons-le
Lausanne
-Saunier Évian
Brig
Bourg
Bourg
-en-B.
Mâcon TGV
en-B. Genève St-Gervais
St-Gervais-les-Bains
Bourg-St-Maurice
Lyon
Saint Exupéry
Bourg-St-Maurice
Lyon
TGV
Milano
St-Étienne
Nantes
Les Sables
-d'Olonne
Nevers
Strasbourg
Strasbourg
Sélestat
Colmar Mulhouse
CulmontChalindrey
Mulhouse
Belfort
Montbard
Vendôme TGV
Angers
Lorraine
Toul
Nancy
Troyes
Marne-la-Vallée
- Chessy
Melun
Orléans
( LesSens
Aubrais)
Rennes
Lorient
Vannes
La Baule
Metz
Champagne-Ardenne
Chars
Vernon
Lannion
Quimper
Sarrebrücken
TGV Haute-Picardie
Reims
Le Creusot TGV
La Rochelle
Angoulême
Modane
Bordeaux
Valence Ville
Libourne
Grenoble
Valence TGV
Torino
Arcachon
Montélimar
Agen
Orange
Montauban
Dax
Toulouse
Bayonne
Hendaye
Pau
Oloron
Tarbes
Buzy
Lourdes
Lignes à grande vitesse
Lignes à grande vitesse en construction
Lignes classiques empruntées
par les TGV
Juin 2006
Nice
Avignon Centre
Nîmes
Avignon TGV
Montpellier
Arles
Aix-en-Provence
TGV
Béziers
Carcassonne
Narbonne
Ventimiglia
Marseille
Toulon
Perpignan
12
2 – The fare policy based on
the customer
Amsterdam
Den Haag
Rotterdam
London
Oostende
Antwerpen
Calais-V.Dunkerque
Calais Frethun
Lille
Boulogne
Lens
Arras
PROFIL DE LA LIGNE ANCIENNE PARIS-DIJON-LYON
Köln
Bruxelles
altitude ( en m )
Liège
500
Namur
Valenciennes
400
TGV Haute-Picardie
Le Havre
Rouen
Meuse
Paris
Lorraine
Massy TGV
Brest
St Brieuc
Melun
Rennes
Quimper
Colmar
Sens
Le Mans
Angers
La Baule
Tours
Sélestat
100
Mulhouse
Montbéliard
Besançon
St-Pierre-des-Corps
Le Croisic
Belfort
Montbard
Vendôme TGV
200
0
Zürich
Dijon
FuturoscopeArgenton/Creuse
Poitiers
Niort
Dole
Chalon
sur-S. Lons-le
-Saunier
Le Creusot TGV
Mâcon TGV
La Rochelle
Lyon
St-Étienne
Angoulême
300
400
500
distance ( en km )
512
Bern
Lausanne
Brig
Bourg
en-B. Genève
Lyon
Saint Exupéry
TGV
PROFIL DE LA LIGNE NOUVELLE PARIS-SUD-EST
St-Gervais-les-Bains
Bourg-St-Maurice
Milano
Modane
Bordeaux
500
Torino
400
Montélimar
Tarbes
Nice
Avignon Centre
Nîmes
Avignon TGV
Montpellier
Arles
Aix-en-Provence
TGV
Béziers
Buzy
Lourdes
Juin 2006
Perpignan
Narbonne
200
100
Marseille
Toulon
0
Paris
Lignes à grande vitesse
Lignes à grande vitesse en construction
Lignes classiques empruntées
par les TGV
Carcassonne
Ventimiglia
SAÔNE
Toulouse
Pau
300
Orange
Montauban
Dax
100
200
300
distance ( en km )
400
425
13
Lyon-Part-Dieu
Agen
altitude ( en m )
Combs-la-Ville
Valence Ville
Libourne
Grenoble
Valence TGV
Arcachon
Oloron
200
Mouchard
Nantes
Bayonne
Hendaye
100
Paris
Lorient
Vannes
Strasbourg
Nancy
Marne-la-Vallée - Chessy
Lyon-Perrache
300
Metz
Champagne-Ardenne
Lannion
2 – The fare policy based on
the customer
A 20% shorter
Route:
The issue raised
By the
new high speed
offer:
A much better
service
for a lower price?
Juin 2006
14
2 – The fare policy based on
the customer
Of doors and windows
in the fare policy
Juin 2006
15
2 – The fare policy based on
the customer
Benefits brought by
the seat booking obligation
for the customer:
- Better sizing of the production means,
- Service guarantee for the client ,
- Better knowledge of the market,
- Possibility to adjust the fare
according to the departure hour.
Juin 2006
16
2 – The fare policy based on
the customer
1983:
SNCF specifications document
(art 14):
1°) The price paid by the customer
A new SNCF
is determined by SNCF
and
according to
a new transport a general basic fare to be applied
regulation
for a 2nd class passenger;
2°)The basic fare
will have to be be agreed
by the State...
Juin 2006
17
2 – The fare policy based on
the customer
On the Paris-Lyons route,
the TGV ticket
Is proposed at the same price
than the ticket
with conventional trains
Juin 2006
18
2 – The fare policy based on
the customer
Amsterdam
Den Haag
1993:
Rotterdam
London
Oostende
Calais Frethun
Antwerpen
Calais-V.Dunkerque
Lille
Boulogne
Lens
Arras
Commisioning
of the Northern TGV
Köln
Bruxelles
Liège
Namur
Valenciennes
TGV Haute-Picardie
Le Havre
Rouen
Metz
Champagne-Ardenne
Lannion
Meuse
Paris
Strasbourg
Lorraine
Massy TGV
Brest
St Brieuc
Nancy
Marne-la-Vallée - Chessy
Melun
Rennes
Quimper
Lorient
Vannes
Colmar
Sens
Le Mans
Angers
La Baule
Tours
FuturoscopeArgenton/Creuse
Poitiers
Zürich
Dijon
Nantes
Niort
Montbéliard
Besançon
St-Pierre-des-Corps
Le Croisic
Mulhouse
Belfort
Montbard
Vendôme TGV
Sélestat
Le Creusot TGV
Mâcon TGV
La Rochelle
Lyon
St-Étienne
Angoulême
Mouchard
Dole
Bern
Chalon
sur-S. Lons-le
Lausanne
-Saunier
Brig
Bourg
en-B. Genève
St-Gervais-les-Bains
Lyon
Saint Exupéry
TGV
Bourg-St-Maurice
Milano
Modane
Bordeaux
Valence Ville
Libourne
Grenoble
Valence TGV
Torino
Arcachon
Montélimar
Agen
Orange
Montauban
Dax
Toulouse
Bayonne
Hendaye
Pau
Oloron
Tarbes
Buzy
Lourdes
Lignes à grande vitesse
Lignes à grande vitesse en construction
Lignes classiques empruntées
par les TGV
Juin 2006
Nice
Avignon Centre
Nîmes
Avignon TGV
Montpellier
Arles
Aix-en-Provence
TGV
Béziers
Carcassonne
Narbonne
Marseille
Toulon
Perpignan
19
Ventimiglia
2 – The fare policy based on
the customer
Adaptation of the fare policy:
Various extra charges for TGV trips
function of the departure time
Juin 2006
20
1 – The fare policy based
on the production cost
Two improvements of the fare policy:
- Trains with extra charges
- Blue-white-red fare policy
Juin 2006
21
2 – The fare policy based on
the customer
1994:
Change
in the SNCF
specifications
document
Juin 2006
The state government
agrees upon
the abandon
of the distance based fare policy
22
2 – The fare policy based on
the customer
1994:
SNCF
revamps
its
booking
system
Juin 2006
and starts
yield management
23
2 – The fare policy based on
the customer
D-90
100%
Train
capacity
where
discounts
are
allowed
50%
0%
1
6:30
2
3
4
5
6
7
8:00
8
9 10 11 12 13 14 15 16
15:00
Train number
18:00
9:00 10:00
Juin 2006
24
2 – The fare policy based on
the customer
D-30: low demand
100%
Train
capacity
where
discounts
are
allowed
50%
0%
1
6:30
Juin 2006
2
3
4
8:00
5
6
7
8
9 10 11 12 13 14 15 16
15:00
Train number
18:00
25
2 – The fare policy based on
the customer
D-30: strong demand
100%
Train
capacity
where
discounts
are
allowed
50%
0%
1
6:30
Juin 2006
2
3
4
8:00
5
6
7
8
9 10 11 12 13 14 15 16
15:00
Train number
18:00
26
2 – The fare policy based on
the customer
1996/1998:
A new range of fares
« a cheap and easy train »
Juin 2006
27
2 – The fare policy based on
the customer
Generalization of market prices
Season
tickets
Frequent travellers
12/25 discount 3
card
Casual travellers
2
« Discovery »
Road/air/non mobile
Juin 2006
1
28
3 – The value for money
on the market
Amsterdam
Den Haag
Rotterdam
London
Oostende
2001:
Calais Frethun
Antwerpen
Calais-V.Dunkerque
Lille
Boulogne
Lens
Arras
Köln
Bruxelles
Liège
Namur
Valenciennes
TGV Haute-Picardie
Le Havre
Rouen
Metz
Champagne-Ardenne
Commisioning
Of the
TGV Méditerranée
Lannion
Meuse
Paris
Strasbourg
Lorraine
Massy TGV
Brest
St Brieuc
Nancy
Marne-la-Vallée - Chessy
Melun
Rennes
Quimper
Lorient
Vannes
Colmar
Sens
Le Mans
Angers
La Baule
Tours
FuturoscopeArgenton/Creuse
Poitiers
Zürich
Dijon
Nantes
Niort
Montbéliard
Besançon
St-Pierre-des-Corps
Le Croisic
Mulhouse
Belfort
Montbard
Vendôme TGV
Sélestat
Le Creusot TGV
Mâcon TGV
La Rochelle
Lyon
St-Étienne
Angoulême
Mouchard
Dole
Bern
Chalon
sur-S. Lons-le
Lausanne
-Saunier
Brig
Bourg
en-B. Genève
St-Gervais-les-Bains
Lyon
Saint Exupéry
TGV
Bourg-St-Maurice
Milano
Modane
Bordeaux
Valence Ville
Libourne
Grenoble
Valence TGV
Torino
Arcachon
Montélimar
Agen
Orange
Montauban
Dax
Toulouse
Bayonne
Hendaye
Pau
Oloron
Tarbes
Buzy
Lourdes
Lignes à grande vitesse
Lignes à grande vitesse en construction
Lignes classiques empruntées
par les TGV
Juin 2006
Nice
Avignon Centre
Nîmes
Avignon TGV
Montpellier
Arles
Aix-en-Provence
TGV
Béziers
Carcassonne
Narbonne
Marseille
Toulon
Perpignan
29
Ventimiglia
3 – The value for money
on the market
The value for money
of the rail offer:
Yield management techniques
are based on the assumption
that all customers
do not price
at the same level
a product or a service
Juin 2006
30
3 – The value for money
on the market
The value for money price level
Makes the synthesis of the various
components and strengths
acting on the market
Pr
od
in real time
co uct
st ion
s
an
em
D
in
ts
O
ffe
r
Co
ns
tra
d
Juin 2006
31
3 – The value for money
on the market
Competition from« low costs »
air companies:
A simple, even simplistic fare model
Juin 2006
32
3 – The value for money
on the market
165 €
97 €
39 €
25 €
Easyjet
Prem ’s
25 €
TGV
Comparison of the width of the scale of fares
of Easyjet and TGV
on the Paris-Genève route
Juin 2006
33
3 – The value for money
on the market
One train operating company
One train, two trainsets, two classes
iDTGV:
a revolution
One yield management system
Provision
of a range of services
One or two train operating companies
Two yield management systems
Juin 2006
34
3 – The value for money
on the market
Are we going
toward
the creation
of low-cost
Rail companies?
Juin 2006
35
3 – The value for money
on the market
All this amounts
to the crucial issue
of
fair competition
Juin 2006
36
3 – The value for money
on the market
Thank you
for your attention!
Juin 2006
37