Swanage Railway General Discussion

Or has this more to do with passenger numbers falling short of the sales projections? If you can't make money in mid-summer then you can't make money.

 

It certainly is unusual to discount your product at the time demand is expected to be highest. Given that levels of secondary spend are known to be low on Swanage Railway the company must be pinning their hopes that it brings in patronage who would not normally have graced Swanage Railway or they believed would not have visited this year. I wonder if a more tactical approach would bear more fruit?

 

Many businesses are offering incentives to attract maximum custom at present. My local restaurants are offering children's meals for a quid. It's a tough time for tourists and hopitality businesses at present. <BJ>

 

The NYMR have gone even further with kids going free. I've no idea whether that has been a success, or not. I'm told that the gift aided 12 month ticket has had a take up rate of about 75% which is considered to be good. If correct, that ups fair revenue by about 19%.

 

If too many businesses offer incentives then those offering the discount may not attain "competitive advantage" and gain additional patronage but simply see the same level of patronage but with reduced income.

 

Well what are steam railways supposed to do?
Coal is more than twice the price it was before Russia invaded Ukraine.
There is a limit to how much railways can increase fares to cover such increased coal costs.
Many railways have already thinned out their steam services by less trips per day and/ or diesel haulage.

Promotions such as children for £1 may very well attract families who would not have visited if child fares were 1/2 rate.
Some adult fares with children at £1 is better than no fares at all.

 

It's a catch-22. Discount too much, and you set the expectation that the discounted price is all that anyone will pay. Don't discount enough, and you won't get custom. Promotions like kids for a quid hit quite a good spot, encouraging business but not undermining the basic fares model.

 

But equally if the family would have visited anyway then you lose the difference between the normal child fare and the £1 collected.
You can use a relatively simple mathematical formula to show the revenue improvement / deterioration of varying responses to the offer compared with the status quo of no offer.
SRC should have enough historical data to have a reasonable estimate of elasticity of demand and the underlying sensitivity levels.

 

I doubt it, unless they have tried this sort of thing before, with the country in similar circumstances. It will likely be a 'suck it and see' situation.

 

They have run kids for a quid previously. They have also put fares up in previous years and therefore they should be able to get some idea of how this has impacted passenger numbers. One of the benefits of moving to a ticketing system (replacing the Edmundson ticket system previously employed) was that it would enable analysis of ticket sales and inform pricing decisions.

 

Thanks. I hand't realised they had trialled it before. They should have some idea of the effect.

 

Seems pretty standard on many Heritage Lines is it not the £1 kids fare for some or all dates.

 

Possibly. But railways have largely fixed costs, so the down side of not reaching your revenue target for the week / month / year is actually more important than the upside of maximising your revenue over and above your target.

So a degree of risk management would make being fairly confident of meeting a target better than a possibility of a big upside but equal possibility of a shortfall.

Suppose you work out your annual budget and cash flow and it says you need to make £500k in revenue in August. You have two pricing options in front of you:

Option A comes with a 90% likelihood you make at least £500k but only 5% chance that you make more than £600k (big smiles from the Finance director). There’s a 5% chance it goes really wrong and you make less than £400k (FD seen mainlining whisky and horse tranquillisers to try to sleep at night).

Option B comes with a 20% chance you make over £600k but a 30% chance you make less than £400k (because you’ve dissuaded too many people on price grounds).

I suspect most Railway boards, where the primary goal each year is survival, would choose option A. In other words, a strategy that has a high likelihood of meeting your budget is preferable to a riskier strategy that might lead to a higher profit but could lead to an existential loss.

Tom

 

Agreed heritage railways are financially risk averse and this heavily influences the decisions made.

However it is still unusual to discount your fares / pricing at the height of the season. It may be that of course this does indeed give a better overall financial result. I certainly would be most interested to see the actual financial results.

What is surprising then, in the context of being financially risk averse, is operating Project Wareham over a greater number of weeks (by virtue of operating 4 days a week compared to 5 days a week on the 2017 trial) when inevitably that would involve more low season weeks. Of course it could be that C23 weeks not including Sunday as an operating day was thought to be financially preferable to 18 weeks including Sundays. Again it would be most interesting to see the data.

 

I would comment on a couple of things there.
In 2023 the with many families (i.e. not the grey pound at other times of the year) that are likely to be cash strapped surely two fares at £18 plus £2 is way better than that family saying we are not paying £54 for a one hour round trip when you get nothing. With Wareham the issue becomes even more pronounced of course.
Not doing Wareham on Sunday seems a very sensible move post Covid to me. I was trying to look at trains in case I decided that I may be able to steward some tours from London. Apart from the fact that the first train from London does not arrive at Wareham until 11:03 which in theory is fine, but experience shows SWR timekeeping is not great even on a non Sunday. Then of course add all the Sunday's where the trains are on diversion via Havant, or Staines or have bustitution on part of the route, then it makes the risk high for perhaps little reward.
In non school holiday time most families would travel at a weekend, which for example is when the Bluebell do kids for a quid most of the year.
The risk to me is that if the economy recovers "kids for a quid" has by osmosis become the norm, and folks do not want to pay a child's fare.

 

Surely there is also the question of demand - and whether promotions are being run in response to demand being softer than assumed when budgets were being set.

 

Is that the right way round? Option B is the one with the greater risk.

 

Yes, other way round. Corrected …

Tom

 

33 out on the 15.20 from Swanage.
Does anyway know if a steam loco has failed or have they decided to cut costs (very short notice) and replace the steam with the 33 due to the expected bad weather ?

 

The 33 now off and steam resumes. Still raining but nowhere near as bad as last Friday week when we travelled behind 34070 after an appalling drive from east Devon in heavy rain which went on all day. The profits of doom wrong again as only a relatively small amount of rain today and even the Test Match saw some play