North Yorkshire Moors Railway General Discussion

Given my question, I'm not sure that is comforting.

The tidy-up makes sense, but as Gift Aid was in consideration at the time, it'd be interesting to know:
a) Whether there was any realistic risk of challenge;
b) What consideration and analysis was given to the impact of this on Gift Aid pricing; and
c) How members were advised on the implications of this when asked to vote on the changes to Articles.

My sympathy is strictly limited, and I would have hoped that questions about the definition of "the site" were looked at closely before submitting paperwork to HMRC.

More generally, we keep coming back to the question of how NYMR maximises it's returns from the assets it has. And, given that the Northern Rail service gets priority, that means asking why the focus is set so strongly on the Whitby service rather than seeking to boost returns on the "internal" services - most of which can be run at minimal marginal cost because of the constraints around Whitby operation.

 

Agreed , but that assumes the one stop and two stop fares would stay at their current levels. As 21B has suggested chasing passenger numbers is not necessarily the answer. The optimal financial result may be achieved by carrying fewer passengers at higher fares and. sadly, by running fewer services on less operating days. That's not an outcome anyone wants to see but it's being encouraged by hard economic reality. Anyone can drive uptake by selling something cheaply enough but that's busy fools territory. The challenge is balancing demand and pricing to get the best financial result. Sometimes that may mean people deterred by high prices walking away but if enough pay the higher prices that will secure the better result.
For charities there is a problem because some, but not all, of their services should be available to "the poor". Unhelpfully there 's no guidance as to how "the poor" are to be interpreted but as long as there are relatively cheap options like one or two station fares ( or indeed the ability to view from stations and elsewhere free of charge) it seems that obligation is met. Overall the trend in the hospitality sector, and for charities like the NYMR, looks like one of reduced volumes and scaling back in activities but with higher prices.

 

The current Articles were approved by members long before the possibility of Gift Aid recovery on fares became a realistic opportunity.

 

I'm making no assumption about specific fare levels. My observation is from a completely different place, which is that I think the numbers of people visiting are a key metric, and that there is a fundamental question about the absolute numbers who make that viable. My concern is that the levels are falling to something near the critical mass required to permit a turn up and go operation.

If that changes, then I think that the charity status comes under serious threat, with the additional costs and foregone income that would result.

Without wishing to promote being a busy fool (been there, done that!), I think that there needs to be a sensible ability to travel and explore the area, not just focus on the remunerative Whitby traffic. That means promoting and backing "internal" services, to drive demand.

Again and again, I come back to my sense that the cost model of NYMR is acting as a form of self-sabotage. There seems to be an obsession with variable costs like coal, and a tendency to discount the importance of fixed costs. That screams to me of a management accounting mindset that puts too much of the overhead into the variable costs of operating, and as a result makes marginal revenue look bad value when it may well actually be bringing in cash that wouldn't otherwise arise. Once a locomotive is in steam, it is in steam - there is real value in utilising it if it can haul enough paying passengers to more than cover those marginal costs.

 

But as you carry fewer and fewer people, you end up spreading your fixed costs onto a smaller and smaller number of shoulders. The reductio ad absurdum of your approach might be to find a single person willing to pay £8m for a single return journey. The charity could survive doing that - provided every year you could find one such individual! Is that where you are heading?

You could reduce your service to zero and still find that your fences need mending, carriages need repainting, buildings need their roofs repaired and so on. So for many things in the heritage rail space, economy comes by having lots of passengers to spread the load. (Same applies on the big railway: why do you think mainline TOCs are so keen to boost passenger numbers with off-peak services? Because they know that their fixed costs are high and the variable ones rather low).

If I were managing the NYMR now, I'd be desperately looking for how to increase passenger numbers. Your timetable has a long gap in services while a dining train runs. So stick an observation car on and call it a "land cruise" at £25 a head, out and back. Do it on your evening trains in mid summer and market a magical opportunity to see the beautiful moors in teh warm evening light. If 20 people take you up on it, you've paid the coal bill for running the whole train at almost no additional cost, the train is running anyway. And if it doesn't work out - well, it hasn't cost you very much to find out.

Everything feels like a counsel of despair: somehow, your board seems to have convinced itself that not only are members a burden and volunteers expensive, but it would rather not have any passengers either as they require the provision of expensive services!

Tom

 

Or maybe put a couple of Mk1s on the rear of the diner, and have it in the timetable as a "restricted capacity" service, so that there's an option for non-diners who might not want to risk a long gap between trains.

 

Sorry the National Network does exactly that, hence split ticketing. Something I think should be scrapped btw.

 

Regardless of merit, the national network does that because there are different fare regimes in different places, generally the result of different fares setters* using different policies at different times. For a railway of less than 20 miles, creating that possibility would seem frankly crazy.

* - as an aside, this went back to before privatisation, for example where PTEs set fares

 

They used to have three of them on the back of the diner but stopped it a few years ago. I don't know the reason but would suspect lack of available coaches without taking out of another set. If that were the case you'd think there must be at least three teaks available out of that set?

 

Question is of course does the demand exist at all now post Covid. I read in Steam Railway (that for once my Dad let me see despite paying his subscription for him) and accepting the source, that day UK tourism day trips were down 12% last year.

I know we on NP seem to like to "pick on a line to berate for the year" was the WSR, followed by the Swanage (mainly over Wareham and dieselisation) and now the NYMR. But this weekend the Bluebell report and accounts arrived, which I rarely look at but took more notice of this year. I see mentioned, with the exception of using NR metals and Gift Aid all the issues that are discussed on his thread, many of them listed in the Principal Risks and Uncertainties section.
I do feel at times the NYMR which I would not like to see fail, but have no chance to visit these days so no personal impact to me, is being expected to magic up solutions to problems that many lines have.
They tried something different, maybe it has not worked or caused more problems, but at least they tried, I know in my work life we would have been criticised for not doing something to make things better.

 

I think what tends to happen is that general problems get discussed with a specific line as exemplar. I think you’re right that the Moors is not particularly unusual.

My impression is that actually things are brighter this year on the whole. I watched Easter im Beddgelert (and since) and it has been busier for visitors than ever. Those who have lived here all their lives tell me Easter was the busiest they had ever seen the village. Anecdotally the trains look fuller and that’s true in Hampshire as well.

I think we need to watch developments.

 

I think the individual lines discussed are frequently exemplars of challenges in the sector. I have no problem with trying Gift Aid (and where I'm concerned about issues I will freely admit that these were not problems I'd seen). On the other hand, I observe NYMR following a combination of strategies that seem not to have worked (choking demand, boosting prices to increase yield per seat) and going harder and deeper on that strategy.

 

There was an interesting press article the other day about the problems facing so many pubs. Their costs have shot up so they have had to raise prices substantially. Who would have imagined a £7 pint only a short time ago? The response of many erstwhile customers is "I'm not paying that" so patronage dwindles. Reducing prices just means making a loss because the cost drivers are unchanged. That's the pub equivalent of "we're running trains anyway" i.e. the pub's open anyway so even beer sold at zero margin or worse will help. A better response may be to reduce opening hours and days and aim to sell at £7 a pint ( or more) to fewer less price sensitive customers. It's no surprise to find pubs closed some days and calling last orders much earlier. As Tom points out the problem then is that fixed costs are carried disproportionately by a smaller group but that may still be a better option. The challenge for the whole hospitality sector, pubs and heritage railways included, is whether there's a realistic alternative?

 

Only to find ways to attract A LOT more customers,
And/or take out a lot of costs.

 

That's a fair question, but it begs two major questions.

The first, narrow, question is about the relationship between fixed and variable costs. The point about a pub is that the sales relate to a variable cost (the beer), and need to cover the fixed overheads. The railway is different, where the fixed costs are a much greater proportion, and therefore the ability to make marginal profits on additional sales is much greater. That, incidentally, is why I am so focused on the question of how costs are attributed to operations - get that right, and it focuses minds; get it wrong and it distorts the view of costs.

The second is the assumption that there is a sweet spot where you can raise prices and still make a profit, bearing in mind you still have those fixed costs to cover. My experience of pubs that reduce their opening hours in this way is that they are on the way to closure, and doubly so if they push their prices up high.

This is where I and others keep coming back to the very high ratio of staff cost to turnover. That's not about paid staff being bad, but that the benchmark for "necessary" costs seems set very high and in a way that forces discussion down the road of luxury pricing. NYMR isn't Belmond, and the suggestions about passenger volumes (reinforced by discount initiatives) this year suggest that the pricing has found the limits of public tolerance.

 

I wonder ..
1) What proportion of psssengers to Whitby are gift aiding and how that compares to last year (in both percentage and real number terms )
I suspect substantially lower.
2) How reduced visitor numbers (and therefore local spend from customers in the area ) will affect future grants when the next bridge is unexpectedly found to be life expired and needs urgent replacement for the line to survive ?

 

£7 pints!!! Bitter has just gone up to £4 in my local. Talking to the landlord, who only took over the closed and run down pub 18 months ago, he is happy at the way things are going and business is good. His only downside is chefs, as they come and go.

 

Indeed! However, the signs are that the size of the LOT required is not going to materialise from providing traditional heritage train services at whatever price. It needs other reasons to visit which can attract people who would otherwise never have considered visiting a heritage railway. Fixed cost reduction by reducing employee numbers risks affecting the railway’s ability to operate with a negative financial impact greater than the cost saving. Similarly there's little scope for the biggest headache of all……infrastructure costs ……..without reducing the length of the railway ( and before anyone jumps in with abandon Whitby that’s probably the least helpful thing to give up as the big infrastructure costs on that section are borne by Network Rail).

It’s not easy!

 

You mean like the one over the road at Moorgates which has now joined the club with a 5MPH restriction over it.

Peter