Rail Operators Need a More Intelligent Approach Toward Ticket Pricing Otherwise They Risk Revenues Coming Off the Tracks, War...
June 05 2012 - 9:00AM
Business Wire
JDA® Software Group, Inc. (NASDAQ: JDAS), The
Supply Chain Company®, today warned of the need for the rail
industry to adopt a more intelligent approach towards pricing and
revenue management, otherwise it risks reduced revenues as people
look at alternative modes of transport. Overcrowding and increased
prices continue to be the major challenges of today’s rail
passenger. A recent report by the Association of Train Operator
Companies (ATOC) found that one-third of United Kingdom (UK) rail
users were dissatisfied with fare value, while one-in-two
passengers felt they had insufficient room to sit or stand on
certain journeys. This isn’t an issue just isolated to the UK, as
it is clear rail operators worldwide need to be able to better
react to, and satisfy, customer demand.
In order to address the pricing and capacity pressures facing
today’s rail operators, JDA Software proposes the following
recommendations:
- One price doesn’t fit all – Rail
operators need to move towards smarter and more targeted pricing,
which will benefit passengers across the board. This in turn will
help create a more self-sustaining business model for the industry.
Rather than a one-price-fits-all approach, fares should better
reflect expected demand with higher prices during the super-peak
compared to normal-peak trains. In order to manage capacity more
effectively, operators should use historical and external data to
predict demand and see where overcrowding or under-capacity will
occur.
- Take a leaf out of the airlines’
book – The airlines have had a more dynamic approach to pricing
for a number of years and have seen the benefits of becoming more
financially viable and offering better value to passengers. Higher
prices for fuller trains will give rail operators the opportunity
to better spread out capacity across their journeys. This isn’t all
bad news for passengers travelling at peak times. By pricing fares
at super-peak and peak hours differently, those passengers who are
on flex-time or can afford to take a train 20 minutes later will be
motivated to do so, meaning that more passengers are likely to get
a seat and have a more comfortable journey.
- Get smart with technology –
Smart card technology is being increasingly used across the rail
industry. The more forward-thinking and innovative rail operators
could look to allow their prices in the future to be set by train
departure. This would allow customers the choice of paying more to
travel immediately or saving money by delaying their travel,
without having a long wait for an off-peak train.
“Rather than setting a flat pricing structure where price
increases impact all passengers, price increases should be more
intelligently spread. Rail operators must use price-sensitive
forecasting to better understand what customers want, when they
want it and how much they are willing to pay,” said Peter
Shearer, vice president, passenger transportation, JDA
Software. “In gaining this level of insight, rail operators
will then be in a far better position to set more agile rates,
allowing them to better shape demand and ensure revenue leakage is
kept to a minimum. At a time when there has been a lot of
investment in new high-speed routes and rolling stock, it has
become more imperative than ever that rail operators are in a
position to quickly recoup revenues.”
Tweet this: .@JDASoftware offers recommendations for
addressing the pricing and capacity pressures facing today’s rail
operators. http://jda.com/twrail
About JDA Software Group
JDA® Software Group, Inc. (NASDAQ: JDAS), The Supply Chain
Company®, is the leading provider of innovative supply chain
management, merchandising and pricing excellence solutions
worldwide. JDA empowers more than 6,000 companies of all sizes to
make optimal decisions that improve profitability and achieve real
results in the manufacturing, wholesale distribution,
transportation, retail and services industries. With an integrated
solutions offering that spans the entire supply chain from
materials to the consumer, JDA leverages the powerful heritage and
knowledge capital of acquired market leaders including i2
Technologies®, Manugistics®, E3®, Intactix® and Arthur®. JDA’s
robust services offering, including complete solution lifecycle
management via JDA Cloud Services, provides customers with
leading-edge industry practices and supply chain expertise, lower
total cost of ownership, long-term business value, and 24/7
functional and technical support. To learn more, visit jda.com or
email info@jda.com.
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