Asstra: la politica tariffaria in diverse città europee ed extraeuropee

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Altleutewitz 11 01157 Dresden phone +49 351 42440-0 fax +49 351 42440-15 info@probst-consorten.de www.probst-consorten.de

Bari, June 7, 2016

Increasing both, Yield and Number of Passengers!?

Recent Developments in Pricing of German and Austrian Public Transport

Case studies

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Pricing trends in German and Austrian Public Transport:

Flat rates, key account fares and electronic pricing.

‣ Complete tariff scheme relaunch in order to fulfil political goals

‣ Integration of PT pricing and parking management (esp. tariffs)

‣ Incentives for loyalty: attractive flat rate fares

Integrated pricing

reforms

Nürnberg

Innsbruck

E-pricing Key account pricing

‣ Integration of pricing with key account management techniques

‣ Performance instead of volume discounts

‣ Fee-based pricing

‣ Casual rider strategy: account-based

ticketing, mini-flat rate instead of traditional direction-based tickets, daily price cap

‣ Part-time flat rate

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Nürnbergs goals: increasing cost coverage and attractiveness without harming the integrated ticketing (Verbundtarif).

‣ Target: Reducing structural deficit of VAG by 4 Mio €/year without losing passengers

‣ relaunch of existing tariff scheme without harming the integrated ticketing: one Ticket for trains, busses and trams

‣ Fast execution: 6 months between start of project and city council decision

‣ deep quantitative analysis plus multiple interviews with all relevant political stakeholders

‣ Consensus-building with council parties and neighbouring councils in the

integrated ticketing area

Source: Consulting project PROBST & CONSORTEN MARKETING-BERATUNG, 2014-2015

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Price reductions in sensitive markets were financed by increases in less sensitive markets

Price cuts in price sensitive markets

matching funding quantity:

New pax due to price decrease &

simpler scheme

yield:

Capturing existing willingness to

pay

Revenue risks

Reduced short trip prices:

More than 10% reduction Reduced off-peak pass:

20% reduction

Radical price cut in passes for youngsters

Simpler: Abolition of ticket types, validity of

short trip tickets simplified, higher rebate

of multi-trip tickets

Remarkable increase of low

loyalty tickets:

e.g. 3 €/single trip, parking fee increase

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Nürnbergs results: increased patronage, more than 10,000 new pass subscriptions, revenue targets almost doubled.

Key learnings:

‣ Simultaneously optimising parking and PT fares:

Despite initial frictions widely accepted new public parking fees

‣ Incentivising loyalty pays off:

Higher rebates for pass subscribers led to a substantial increase in

subscriptions; same for multi-trip- tickets

‣ Price cuts for short-trip tickets, passes for youngsters & off-peak- passes generate new users: price sensitive markets react quickly with aggressive communication efforts

Source: consulting project PROBST & CONSORTEN MARKETING-BERATUNG, 2014-2015

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Analysis: Annual pass penetration differs widely - huge loyalty potential.

Source: PROBST & CONSORTEN MARKETING-BERATUNG, VAG data 2014

VAG market penetration adult annual tickets 2014

(without student and job tickets) remarks

Above average

penetration – how does this cohort develop?

0 % 3 % 6 % 9 % 12 %

21-26 27-39 40-54 55-59 60-64 65-74 > 74 7,2 % 5,6 %

8,9 % 11,8 %

9,1 % 8,4 %

9,5 %

1 2

1

2

Average penetration:

8,4%

Lower penetration around retirement:

Does this target group deserve an own ticket?

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Analysis: Nürnbergs price level was in the middle of comparable cities.

Erläuterung

Hamm

After how many journeys does a monthly pass subscription pay off?

Price level single ticket to monthly pass subscription in €

20 30 40 50 60 70 80 90 100

1,75 2,00 2,25 2,50 2,75 3,00 3,25

Single ticket (multi trip ticket if applicable) Zürich Hamburg Großbereich

Nürnberg

Wien Münster

Köln

Stuttgart PS 2

Dresden Bielefeld

Düsseldorf

Leipzig Kassel

Hannover

Frankfurt

Hamm München 2*

Bremen Stuttgart

PS 1

München 3*

München 4*

Source: PROBST & CONSORTEN MARKETING-BERATUNG, database 11/2014; *München differentiates passes in 3 different zones (2,3,4)

20

threshold

30

cheaper

more expensive

Nürnberg: a pass subscription pays off after 12 return trips

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Innsbruck: populism lead many Austrian cities to heavily subsidise annual tickets – Innsbruck tried a different way…

‣ Reason for reform:

new city council was

provoked by new reduced annual ticket in Vienna („a Euro a day“: 365 €)

‣ Task:

What could be the

maximal price cut for the annual ticket (465 €)

without further subsidies

and with a substantial

increase in passengers?

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Innsbrucks‘ new fare scheme is substantially simpler with remarkably clear incentives to increase patronage.

Jahres-

Ticket Monats-

Ticket

462,- 46,20

4-Fahrten- Ticket

6,10

4,40Kinder ab 6 Jugendliche unter 20 SchülerInnen Lehrlinge GrundwehrdienerInnen Zivildiener Family Light Menschen m. Handicap SeniorInnen ab 61 (1,525 pro Fahrt)

Wochen- Ticket 24h-Ticket

24h- Ticket Einzel-

Ticket Halbjahres-

Ticket

Halbjahres-

Ticket Einzel-

Ticket

Ermäßigt Ermäßigt Ermäßigt

Ermäßigt Ermäßigt

14,20 4,50

1,80 231,-

2,90

11,-Gruppe bis 5 Personen

1,30 Kinder ab 6

Jugendliche unter 20 SchülerInnen Lehrlinge GrundwehrdienerInnen Zivildiener Menschen m. Handicap SeniorInnen ab 61

Family Family Light Plus SeniorInnen ab 61 SchülerInnen Menschen m. Handicap

Semester- Ticket

127,50

Studierende unter 27.

Gültig für 6 Monate (September bis Februar oder März bis August)

Kinder ab 6 Jugendliche unter 20 SchülerInnen Lehrlinge GrundwehrdienerInnen Zivildiener Family Light Menschen m. Handicap SeniorInnen ab 61 Family

Family Light Plus SeniorInnen ab 61 Menschen m. Handicap Family

Family Light Plus Menschen m. Handicap

+€ 0,20 bei Ticketkauf im Fahrzeug

Innsbruck-Tickets

sind VVT Tickets für Fahrten mit Bus, Bahn und Tram in Innsbruck (Kernzone)

Jahres-

Ticket SeniorIn SchulPlus-/LehrPlus- Ticket

VVT Tickets für ganz Tirol

inkl. Innsbruck (Kernzone)

240,-

SeniorInnen ab 61

120,-

SeniorInnen ab 75

96,-SchülerInnen und Lehrlinge bis 24 Jahre

Wochen-

Ticket Jahres-

Ticket

Jahres-

Ticket

462,- 46,20

4-Fahrten- Ticket

6,10

4,40Kinder ab 6 Jugendliche unter 20 SchülerInnen Lehrlinge GrundwehrdienerInnen Zivildiener Family Light Menschen m. Handicap SeniorInnen ab 61

Wochen- Ticket 24h-Ticket

24h-Ticket Einzel-

Ticket Halbjahres-

Ticket

Halbjahres-

Ticket Einzel-

Ticket

Ermäßigt Ermäßigt Ermäßigt

Ermäßigt Ermäßigt

14,20 4,50

1,80 231,-

2,90

11,-Gruppe bis 5 Personen

1,30 Kinder ab 6

Jugendliche unter 20 SchülerInnen Lehrlinge GrundwehrdienerInnen Zivildiener Menschen m. Handicap SeniorInnen ab 61

Family Family Light Plus SeniorInnen ab 61 SchülerInnen Menschen m. Handicap

Family Family Light Plus SeniorInnen ab 61 SchülerInnen Menschen m. Handicap Kinder ab 6

Jugendliche unter 20 SchülerInnen Lehrlinge GrundwehrdienerInnen Zivildiener Family Light Menschen m. Handicap SeniorInnen ab 61 Family

Family Light Plus SeniorInnen ab 61 Menschen m. Handicap Family

Family Light Plus Menschen m. Handicap

+€ 0,40 bei Ticketkauf im Fahrzeug +€ 2 bei Ticketkauf im Fahrzeug

+€ 2 bei Ticketkauf im Fahrzeug +€ 0,50 bei Ticketkauf im Fahrzeug

Innsbruck-Tickets

sind VVT Tickets für Fahrten mit Bus, Bahn und Tram in Innsbruck (Kernzone)

Jahres-

Ticket SeniorIn SchulPlus-/LehrPlus- Ticket

VVT Tickets für ganz Tirol

inkl. Innsbruck (Kernzone)

240,-

SeniorInnen ab 61

120,-

SeniorInnen ab 75

96,-SchülerInnen und Lehrlinge bis 24 Jahre

Wochen-

Ticket Jahres-

Ticket Semester-

Ticket

127,50

Studierende unter 27.

Gültig für 6 Monate (September bis Februar oder März bis August)

Jahres- Ticket

330,-

129,50

8,- 5,10

6,- 14,-

3,40

2,30 19,90 49,90

125,-

250,- 96,-

1,70

(1,60 pro Fahrt)

5-Fahrten-Tick et

Tages-Tick et

5-Fahrten-Tick et

Tages-Tick et Tages-Tick

et

Ermäßigt Gruppe

Emäßigt

Before Fare reform 2014

After

Fare reform 1.2.2015

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Innsbruck: the fare reform doubled the number of annual tickets, increased revenues and passengers without

further subsidies.

https://www.facebook.com/like.ivb/photos/pb.349273561835063.-2207520000.1456255629./922370091192071/?type=3&theater

‣ Simplifying fare scheme:

Abolition of rebates and tariffs not consistent with clear incentives to buy the annual pass

‣ Targeted price cut of annual pass to 330 € (but no

transferability of ticket)

‣ Substantial increase of single tickets (2,70 € at bus driver), weekly and monthly tickets

‣ Aggressive sales promotion:

All points of sale were used to promote the new simplicity and the price cuts

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Münster: Instead of a distance-based pricing we

introduced a 90-min mini-flate rate replacing single tickets.

‣ Reason for reform:

State funded new ticketing technology (smart card)

‣ Task:

Using new technological means for an intelligent fare scheme in order to increase patronage in bike-centric Münster

‣ Results:

90-min mini-flat rate instead of single tickets or a distance-based pricing (Check-in only): more then 40 thousand cards active

‣ Part-time flatrate „FlexAbo“:

aggressively priced off-peak monthly pass with an extra fee for peak usage:

3 thousand subscriptions

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Key Account Management in PT means a distribution channel as well as a reason for price differentiation.

‣ SSB, Stuttgart case study sales promotion at

Daimler-Benz plant in Stuttgart:

„Job-Ticket: The convenient way for your commute“

See the licence plate: saying

„S-Tau“meaning: traffic jam

Source: consulting project PROBST & CONSORTEN MARKETING-BERATUNG, 2014

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From economic theory to PT practice: reforming job tickets in order to capture employer subsidies.

4 } Leveraged revenue via

demand increase and employer subsidies

4

Demand curve with employer subsidy

demand 1

} PT rebate incentivising

employers to pay a PT ticket subsidy, e.g. 7 €/month

1

remarks

Demand without employer subsidy Regular pass

price PT revenue

Perceived end user price tag

price

} Price cut by employer, e.g. 10 €/

month

2

2 } Demand increase due to

employer subsidy

3

Demand with employer subsidy and PT rebate

3

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Replacing traditional volume discounts by performance discounts motivates employers to subsidise PT passes.

‣ Own key account management as an independent distribution channel

‣ Employees ask for employers‘ subsidy

‣ Pressure within companies

‣ Tax advantages for employees and employers

‣ Low face price for end users increases usage and pass ownership

‣ Crucial question:

relation of PT rebate vs. employer support to leverage elasticity

‣ P&C evaluation:

net revenue increase of over 20%!

„PT rebate only if employer subsidizes PT passes“

PT rebate Employer

support

Economic impact

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Final hint: Don‘t forget distribution and communication

and your most important channel: your employees!

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Probst & Consorten Marketing-Berating: Marketing consultancy

Wir sind ein interdisziplinäres Team aus Ingenieuren, Geographen und

Ökonomen.

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references and consulting focus

We focus on passenger and revenue orientation in the public transport industry – we work for authorities, companies and railway companies.

Kundenbeispiele

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Diplom-Volkswirt GERHARD PROBST Managing Director

} g.probst@probst-consorten.de } Tel. +49 351 42440-0

Competencies Competencies Competencies

} Development of marketing strategies in public transport } Loyalty management } Pricing strategies and

implementation } Distribution strategies

Asstra: la politica tariffaria in diverse città europee ed extraeuropee

Increasing both, Yield and Number of Passengers!?

Recent Developments in Pricing of German and Austrian Public Transport

Pricing trends in German and Austrian Public Transport:

Flat rates, key account fares and electronic pricing.

Integrated pricing

reforms

E-pricing Key account pricing

Nürnbergs goals: increasing cost coverage and attractiveness without harming the integrated ticketing (Verbundtarif).

Price reductions in sensitive markets were financed by increases in less sensitive markets

Nürnbergs results: increased patronage, more than 10,000 new pass subscriptions, revenue targets almost doubled.

Analysis: Annual pass penetration differs widely - huge loyalty potential.

1 2

1

2

Analysis: Nürnbergs price level was in the middle of comparable cities.

Innsbruck: populism lead many Austrian cities to heavily subsidise annual tickets – Innsbruck tried a different way…

‣ Reason for reform:

new city council was

provoked by new reduced annual ticket in Vienna („a Euro a day“: 365 €)

‣ Task:

What could be the

maximal price cut for the annual ticket (465 €)

without further subsidies

and with a substantial

increase in passengers?

Innsbrucks‘ new fare scheme is substantially simpler with remarkably clear incentives to increase patronage.

Before Fare reform 2014

After

Fare reform 1.2.2015

Innsbruck: the fare reform doubled the number of annual tickets, increased revenues and passengers without

further subsidies.

Münster: Instead of a distance-based pricing we

introduced a 90-min mini-flate rate replacing single tickets.

Key Account Management in PT means a distribution channel as well as a reason for price differentiation.

‣ SSB, Stuttgart case study sales promotion at

Daimler-Benz plant in Stuttgart:

„Job-Ticket: The convenient way for your commute“

See the licence plate: saying

„S-Tau“meaning: traffic jam

From economic theory to PT practice: reforming job tickets in order to capture employer subsidies.

Replacing traditional volume discounts by performance discounts motivates employers to subsidise PT passes.

Final hint: Don‘t forget distribution and communication

and your most important channel: your employees!

Probst & Consorten Marketing-Berating: Marketing consultancy

Wir sind ein interdisziplinäres Team aus Ingenieuren, Geographen und

Ökonomen.

references and consulting focus

We focus on passenger and revenue orientation in the public transport industry – we work for authorities, companies and railway companies.

Contact