North Yorkshire Moors Railway General Discussion

I referred in an earlier post to Dr Pangloss, and his idea that “all is for the best in the best of all possible worlds”. Unfortunately, in the absence of hard data, these claims read similarly. Any of these points may be accurate yet it’s hard to understand how they could all be true and yet the railway still be so loss making.

 

The obvious point is that without innovative ideas like the Gift Aid initiative the operating loss would have been much greater. As has been said many times the traditional heritage railway business model no longer works. It's not just the NYMR that is facing that challenge. Fortunately it has a leadership team that is prepared to try new ideas. Their success has been noted by others in the sector. At least four other heritage railways are either in the process of changing to models that enable recovery of Gift Aid on fares or are seriously contemplating such a move. It seems sometimes as if some Jonahs on here actually wanted the initiative to fail. Sadly, for them. it hasn't.

 

My issue is not trying something new, and seeing how it works. It is more the lack of strategic clarity, and the difficulty in seeing a line from vision through strategy into tactics.

Let’s take one tactic, pricing. The original pivot to Gift Aid, which I do regard favourably, was predicated on the railway being within the scope of the concession for attractions, and relies in part on museum status. It was apparently successful to the tune of a net £400k, yet is now being replaced with an alternative, less generous scheme. Pricing remains “unchanged”, but is actually significantly less generous, after a c. 80% increase (against inflation of 35%) in the last decade. Numbers appear to have fallen significantly from previous levels, but how much and why is unclear - though I believe pre-Covid numbers were already falling, and had been shown to be price sensitive.

It’s hard to follow how this works and what the assumptions are that would allow this to work.

 

You continue to come out with all these glib statements but never back them up with facts and figures that cannot be disputed. How do you know that the operating loss would be greater? How many people travelling a second, third or more times for free wouldn’t have paid to do so? How many people travelling decided to make a shorter journey because they considered that £49.50 was too much?
Which four railways are changing to gift aided tickets using the 12 month pass option?

 

Sadly, this epitomises the type of unhelpful response Steve was alluding to!

 

If you read my post I didn't suggest any were adopting the free return within twelve months model, simply that they were following the NYMR's example of being able to recover Gift Aid on fares. Some may opt for the free return model or the 10% uplift with or without a voucher. The only railway that has publicly announced a intended restructure in which Gift Aid recovery is a significant strategic benefit is the SVR. Other have indicated, but not publicly, that they are considering following the NYMR and SVR's lead.

 

The problem is not Gift Aid, but pricing. Gift Aid merely raises the effective price per ticket sold.

That takes us back to the basic (but definitely not simple) question of the price elasticity of NYMR's customers, and where the sweet spot is for maximising long run profitability. Basic supply and demand will show a line between low price/infinite demand and high price/zero demand. That line will not be straight, and the shape of the curve may therefore surprise, especially when overlaid on a cost model.

NYMR appears to be putting it's eggs in a high price model, but its far from clear that this model is delivering more income than it is losing from reduced demand. Covid has changed things, but I think I recall a pre-Covid round of price increases leading to a double digit reduction in passenger numbers. Even if Covid plus cost of living has changed the absolute level of potential demand, there must be data around price elasticity to inform management decisions.

An anecdote. I am a middle class professional, with a decent job and a fully paid mortgage. Despite that, £50 admission/ticket per person for a day out is in a "big budget" pot, and not done lightly. For comparison, at £25-£30 per head, the conversation is about time, not money. Considering a day out last summer, where Whitby was a possible end destination, that price level immediately disqualified NYMR from consideration - had we gone (the trip was abandoned for other reasons), it would have been picnic only on the train, or drive plus fish & chips. That's for a returning customer, already willing to drive 2 hours, who already knows the railway and doesn't need to be sold to - a segment that is much more valuable marketers than new customers, who typically cost much more to acquire.

If my experience is in any way representative, there's an important question about the high price strategy. Gift Aided or not.

Edit. Added sentence about the shape of the price/demand line.

 

What form is the NYMR Trust? I’ve just tried all the usual bits of the internet without success…

Incorporated Charity, CIO or CCBS?

 

It's been an incorporated charity since 1973.

 

That would also mean less than £1.6m in annual pass ticket sales. The previous year's accounts state operating income was £4.7m, I'm guessing the vast majority of which was ticket sales. Even adding on £400,000 for gift aid, that's still nearly £3m less than the previous year. Obviously there'll be single and short journey tickets as well, but it does appear to be a massive shortfall - even more so if the wage bill is still around the £3.5m mark.

 

I think you are comparing the 2024 Operating income with 2023 turnover to get that £3m reduction, which isn't a correct comparison. 2024 accounts (i.e. 2023 year) operating income was £4.7m, against £3.9m the previous year. In other words, operating income was up, but so were costs to the extent that the stated annual loss was very similar both times, at around £600k. It’s not clear to me whether that £4.7m is before or after Gift Aid, but I can’t at a quick glance see anywhere else where the GA is included. Was the Gift Aid fare a thing in 2023, or does it only appear from the next set of accounts?

I come back to my earlier point though. If the core demand is Pickering - Whitby AM / return PM, then the core question is how do you drive traffic in the opposite direction, because that is where you can significantly increase fare revenue at negligible increase in operating cost - the trains are running anyway. So where are the imaginative ideas to drive traffic heading from Whitby / Grosmont in the morning, and returning to Grosmont / Whitby in the afternoon? A cheaper, part-line family fare for travel in the "wrong" direction must be worth investigating, not least to give the NYMR an offering at a lower price point. If even a committed enthusiast in a decent job like @35B is baulking at the £50 fare, you have a problem. The "£100 family day out" crosses a significant psychological barrier.

Edit to add: section about Gift Aid.

Tom

 

For something completely different…

the NE Electric Autocar on test on the NYMR

 

thanks - appreciate other options won’t have been on offer in 1973, but as an SVR member I think I’m a lot happier with the proposal to convert to a CCBS than I would be an incorporated charity.

 

I think I have referred to this in earlier posts too, and have not seen a response to them, so I think the comments are falling on deaf or unhearing ears. It seems that eyes are more firmly fixed on "pots of grant gold at the end of the rainbow", rather than being focused on building up the business!

 

Point of order; the baulking was Mrs and Miss 35B, for whom it was £50/head for something that would give them less time in Whitby and not appeal to them. And the difference in journey times means that Mrs 35B in particular wasn't keen on splitting forces (she still reminds me of a trip on WSR where she'd dropped off at Blue Anchor and was at Bishops Lydeard before the train had reached Washford).

 

I meant if gift aid last year was £400,000, then income from annual pass sales would in total be £1.6m + £400,000 in gift aid, so £2m. Ok, £3m was slightly too high a figure, but that £2m is still £2.7m less than 2023's operating income.

£400,000 is a decent amount of extra income, but it barely makes a dent in the operating costs of the railway, especially if income has reduced anyway. If only 32,000 people signed up for gift aid, how many couldn't or wouldn't, and how many were put off by the initial price? How many other passengers were carried? For a while it wasn't until you started searching the website that you could see other ticket options were available, the big headline was the annual pass. £99 for a family isn't a lot of money if you're in the area for a few days, but it's massively off putting if you only want a day trip.

 

Not all purchasers will want to or be eligible to Gift Aid their tickets - foreign tourists, those with complex tax affairs, those on limited incomes. That means that the maths of £1.6m + 25% will be too low.

In all other ways, though, I agree - every which way, the impression I'm getting is too few bums on seats, and not because there aren't enough seats.

 

Although being put off by the price does not make it wrong. If it costs x to run a train from Pickering to Whitby and £49.50 is the price point that means you do not lose money (when really you should be making money) then that price point is not wrong.
For example if I want a day out at the Bluebell from here in Swanage, the fare from my local station Wareham to East Grinstead is around £60 and 3 hours each way. I will not pay that, but I will pay the via Barnham fare which is way cheaper, but means I get less time at the Bluebell and both journeys are way longer.
So if I was on holiday in Yorkshire, yes I would travel once at £49.50, but if I say lived within a 2 hour drive it would probably not be my first choice for a steam fix.
But everyone has their own view of money, and what it is worth. For example I stopped following motor racing, not because I could not afford it, just not prepared to pay the entrance fees which I felt had become too high. In the same way I have stopped flying, even though I still get two free tickets a year because the cost of getting to & from and staying around LHR is more than I am prepared to pay, so I do not bother and have never used any of those free tickets since 2011.
What you choose not do after a while I find you do not miss. That of course is a big risk for any Heritage Line if many think like me.

 

The NYMR accounts Note 5 split out "Income from operation of railway" (which you quote) into "Traffic Receipts" (£3.925m for the 12 months to 29 February 2024, £2.958m for the prior period) and "Special events" (the balance). This is separate to "Other railway activities" Note 6. which chugged in another £3.25m (£2.634m prior year). The categories are all shown as income only (e.g. Diner £1.157m) and no information is given on profit contribution. The separation into Traffic Receipts is interesting as it suggests an attempt to isolate the income of the railway in acting as such.