More on Fares!

A comment on Friday’s post from Cogidubnus on fares as a competitive tool is worth further reflection.

The early years of deregulation are littered with examples of failed competition based more-or-less upon the single strategy of fares. Fares competition is a blunt instrument that produces short-term gains for passengers but weakens the base of both the competitor and incumbent. In short, it isn’t sustainable for either party.

As Cogidubnus puts it, “Unless the corridors are truly exceptional, there aren't many long-term winners in a fares war that reduces the ‘take’ too far.”

The result is a short-term passenger gain without any possibility of investment, in vehicles or frequency. The decade to return fares to sustainable levels about which Cogidubnus talks can only be shortened at the expense of price hikes that threaten to snap fares elasticity formulae. Such rises tend to (a) cause passenger resentment, (b) lead to calls of abuses of a monopoly and (c) choke rather than reduce demand.

There’s an argument that, now we are in the world of free travel for elderly and disabled people, fares are actually far less important than once they were. This certainly is a Wilts & Dorset view in withdrawing its £2 maximum on more. There’s a temptation for free travel to drive operators’ fares policies.

Longer term sustainable passenger growth revolves not around a single factor such as fares but an overall confidence in the product – to Cogidubnus‘s list of accessibility, frequency, reliability, fares, refunds and PR, I’d add image, capacity, training & customer focus, comfort, the waiting environment, published performance standards and probably more besides. (Not sure, though, whether real time information counts on not – it probably does.) The overall “feel” of the product needs to be right.

Both W&D and Transdev Yellow Buses are exemplars for more or less all of this and although neither can control every aspect of their businesses, they have a reputation in trying hard to. While TYB with its promotional fare may be cashing in on W&D’s more fares reversal, the competition between the two on the 1a/b/c corridor (including more services) is more akin to Oxford Bus versus Stagecoach and has moved forward considerably from the competition previously witnessed in the Poole & Bournemouth area.