Components of fare charging: flagfall
- Blacktown Railway Station - taken by SITWWW hosted wikipedia
Blacktown is another one of these ‘over the top’ palaces that has been built to serve passengers changing vehicles or modes. Despite its multi-tens-of-millions cost, its value to the passengers is zero, and would not have been needed to be so vast if other obvious changes had been made, for example, making Seven Hills the junction.
This morning’s Sydney Morning Herald refers to the decision of the Independent Pricing Tribunal (IPART) to set higher fares for Cityrail. While some efficiencies are expected from Cityrail, the fare increase was announced in dollar terms but also in terms of what the “flagfall” is and the per-km rate.
This is an important first step in getting a system that can be easily priced by an electronic swipe-on swipe-off system, and also redirecting resources away from encouraging outer-suburban and interurban long distance commutes.
But what is, or should be, in the ‘flagfall’ and how does the consumer value it?
When I looked at “Value Proposition and Value Adding” I put the view that for some customers the value proposition is very limited: to get from point A to point B. Trimming such as nice stations, comfortable vehicles and lavish customer service are excessive and not required by the customer, who will resent having to pay for these in their fare. Other artefacts of the service such as tickets, machines, storage and so on are more for the operators’ benefit than the customer’s.
However the value propostion of getting from point A to point B needs to be unpacked. Just how is the operator to deliver on the value proposition? It is fine to say that items such as tickets or stations add no value, but is that strictly correct?
A platform certainly adds value, if climbing up onto a train (with a floor height of 1.5 metres) from the ballasted track is the alternative. A sign on the platform adds value to the customer who has never been there before (but no value to the customer who knows the area).
The cost of these things is not variable; it is fixed. A customer travelling one kilometre or one hundred still needs a platform. And the only appropriate point to charge for the platform is from the customer when they pay for their ticket.
This is one component of flagfall.
Does the operator charge for the vehicle?
No vehicle means no value, so yes they need to charge for the vehicle. Is the vehicle a fixed cost? Yes again, it can do only one short journey a day or a full day of long journeys and still cost the same in opportunity cost of capital.
What about the staffing? This is trickier and depends on what value the customer assigns staffing. Much of railway staffing these days is not actually part of the value proposition and adds no value, however, in a society where anti-social behaviour and crime is widespread, providing a staff presence adds value through the value proposition of travelling from point A to point B safely.
We also need to unpack the value proposition “getting from point A to point B” in terms of the service standard. Does the customer want to go right now?
If I need to catch the tram at lunchtime, I want it now. But my flight to Vietnam later this month, I will travel on the scheduled service because I’m not so worried what time it goes; I do not value and am not prepared to pay for a turn-up-and-go services.
Others might: this is probably why Malaysian Airlines have five flights a day to KL, because some business people are fussier on their timings than I am. Their value proposition is not just to get from point A to point B, but to do it at unpredictable timings.
So some contribution to frequency, if the customers value it, needs to be priced into the flagfall rather than borne by the variable charge alone. And to off-peak services, if the piece of mind of knowing that the service is there, even if you are unlikely to use it, is valued by the peak time consumer.
There is an element of ‘divisibility’ which arises when we compare different service standards. The turn-up-and-go customer expects a whole package of services, several runs a day including the ones they actually use. So if I leave work around 6pm but can’t be sure which of the next 6 services I will actually catch, in effect I am valuing the presence of all of them, and should pay accordingly. If, on the other hand, I value a single train a day to Ararat, and will adjust my timing around that schedule, then I would not value any other trains they run besides the one I wish to catch.
What about mode-changing? As I mentioned in the earlier post, the simple value proposition for the train-bus customer, going from Point A to Point C via Point B, is that the customer walks off the train and onto the bus. Ideally the bus is already there, is metres from the train and is obvious where it is, where it is going, and the fare is already paid. You simply leave on vehicle and walk onto the other.
Anything above that is not valued by the customer and it doesn’t matter how colourful the LCD passenger information display is, or how grand the station concourse is, or even how comfortable the seats are while waiting for the next vehicle; none of these things were sought by the customer and are only artefacts of the operation. Operators, planners and politicians frequently lose sight of this, and are often overcome by the ‘ribbon-cutting effect’ or non-transport related motivation such as creating construction jobs, or making communities seem grander than they really are. They are certainly something the customer would resent paying for as part of their fare.
In fact many excuses are given, from town planning, to disabled access, to heritage, to the excessive cost, to avoid doing what the customers would actually like: to have the bus waiting right where the trains pull in, as I have seen done in so many country stations, but seems so difficult to achieve in urban areas.
When I went to Echuca the buses waited in the forecourt and the train was not 10 metres (through the side gate) from the bus. The passengers board through the door and the driver places the luggage underneath. A simple solution which addresses a simple value proposition. The customer, buying their ticket to Moama from Melbourne is expecting no more and does not need to pay for passenger information displays, fancy kerbing and bus layover areas, or excessive staff.
Maintenance is a semi-fixed, semi-variable component, with some of the wear and tear on the vehicle attributable to distance, and some simply to age and the need to stay ready for use. Flagfall needs to cover the age and ‘readiness’ element of maintenance.
I will look at per-km charging in a later post and its relationship to zonal fare structures, as well as a future post on cost-recovery levels.
Heh, that’s my photo (took that last year). Good to see it’s being used for something useful.
Have to love how Blacktown has such a large station with bus terminal and separate platforms for the Richmond Branch 100m away, yet they can’t even get something as simple as having the same ticketing system for the trains and the feeder buses done.
A bit off topic Riccardo (I just didn’t know where else to ask it) but recently on a trip from Belgrave to Flinders street my train was delayed from entering Flinders Street due to congestion. Would retaining the three platforms at Princes Bridge have reduced this problem or would there be a better solution
An interesting article, as always.
My thoughts are similar but also qualified by assessing the relative value against other options. How does making the journey compare with driving for example. If it’s priced roughly the same as fuel costs, but less than total variable car operating costs I’ll consider it. If it’s just as fast (often the case during the peak periods) I will likely use it. If the case is compelling (e.g. avoiding expensive CBD or airport parking fees) I’ll certainly use it. If it’s of marginal relative value I might (depending on my outlook) be swayed by factors like park’n'ride facilities, the opportunity for integrating some exercise into my day walking to and from stations, my perception of safety/security, what the weather is like, the likely state of station toilets, and whether the Cityrail website says there are any delays on my line.
Some of those factors can be quite subjective (e.g. people like me with IBS put a lot of value on having clean toilets readily available), but the compelling objective advantages of using rail for CBD trips are reflected in its higher patronage figures. Which prompts me to ask the question, “Should the fare structure also charge a premium for more cost-attractive destinations, like the CBD?”
Station signs would be of value to some regular users of trains because they are reading or some other distracting (no negative connotation intended) activity which means that they are no paying much attention to which station they are at for much of the journey. This would be particularly the case where there are several stations in a row with a similar appearance such as Malvern-Hawksburn.
Sorry SITWWW – I forgot to attribute the photo. I normally only attribute to wikipedia if that is the source as the photo provider is often posting under pseudonym.
Tom. Well put! Yes, looking up at the train at Hawksburn, Armadale etc it is not immediately apparent which one is which. BTW I am not proposing to get rid of signs! Only that there are some aspects of the value proposition which are relaxed when you are a regular, such as signage. Another is ease of obtaining tickets; not an issue if you hold a yearly.
Oldfart – you’ve also alluded to an understanding of the cost structure of owning and operating a motor vehicle, which has a very high ownership cost and therefore much smaller proportion of variable cost. And taxis are the other extreme, and there is not much in the middle (I notice these hourly carpools are becoming popular in the inner city. I hope they succeed as they fill a useful gap).
I should also mention that I am definitely not saying that stations should be pulled down, toilets removed and so on. They are public facilities and should be used by the public.
The thrust of my comments would be something to the effect of: what facility (say at Blacktown) would meet the needs of the local walk-up rail commuter (a much smaller station than Blacktown is), the customer arriving by bus (a full bus deck above the platform with escalators down would be ideal), and facilities for changing trains (again, from a customer rather than operator or engineering view).
Blacktown, like it or not, is a major junction and becoming more so, so in the long term having a big station may not be a bad thing. It does puzzle me though how big the station is compared with its actual role.
Planners need to focus more on service improvements (frequency, navigability, seamless interchange) and less on facilities for waiting around, being impressed by scale, or electronic do-dads.
GH – Yes, I never supported the removal of platforms at FSS. They are minimal maintenance and even if a platform is only used during peak or at the end of the day (when trains are being put away) it adds flexibility that should not be wantonly removed.
I assume there are many such platforms still in Melbourne eg St Albans, Macleod, Oakleigh, Lilydale back platform, Cheltenham, Sunshine that really don’t get a lot of use but I don’t see that as a failing. If nothing else, they can be helpful for out-of-course running, maintenance stoppages and so on.
Does anyone have any thoughts on whether a Perth or Box Hill style interchange, with all buses above the station, is preferred to a Moss Vale or Blacktown version, with the buses in the centre of the platform?
I suspect the Moss Vale version is very heavy on land costs, but would suit the customers best, as they can see the bus from when they arrive, and walk straight to it. The Box Hill or Perth version is most suitable for built up areas.
Perth does have one bus station in the middle of a train station at Kelmscott which doesn’t look too wasteful – there’s much more space used for car parking. It’s not a particularly built up or busy area though. The overhead style is used on our freeway lines where buses being on the same level isn’t a good idea because a) bus routes would be forced onto the freeway b) lack of space in the freeway median c) the customer has to go up to get over the freeway anyway.
The issue of how people perceive the relative cost of public transport to driving is interesting. The fixed costs of car ownership are certainly high, but in a society where car ownership is common, valued and strongly promoted, the cost dimension of choosing to use public transport is usually compared only to the incremental cost of a journey (variable costs only) rather than the total costs of operating the car. The mentality is, “I already have a car and have ‘already paid’ the fixed costs anyway”. In a society where car ownership was not common and buying a car was relatively more expensive (e.g. Australia before the 1950s) the mentality was, “Do I really need to have a car at all?” or “I simply can’t afford one and I can get around OK on PT anyway”. It is possible that, with looming peak oil, we will return to much higher car ownership costs. Which suggests there might be a ‘tipping point’ where people start to compare PT fares with the total cost of owning a vehicle, producing an unexpected non-linear demand for PT and a willingness to tolerate significantly higher fares. This will probably be first noticed in how couples regard having a second vehicle which essentially is only used by one spouse to travel to and from work. Monitoring the trend of whether couples choose to continue to have second vehicle or opt for PT might be a useful leading indicator of future PT demand patterns.
Do we have any fans here of these hourly car pools?
Great post Riccardo – sorry I haven’t had the chance to reply yet. When I get this damned assessment finished I’ll post a more in depth reply, especially on the merits of distance vs zonal fare structures (I should really write a post on that too). Just on the car pool issue – I have to say that as much as I support carpooling, I can’t see it being a widespread success – especially given the trend to more dispersed working hours. It simply doesn’t offer the flexibility the car provides in having zero wait time (although I may have misunderstood the specifics of the particular scheme). A mildly related (and perhaps mildly amusing) anecdote – people (usually drunk) occasionally try to flag down my car as a taxi late at night. It is a bright yellow Renault 12 though – so I suppose I can’t blame them…
On the fixed need for a platform i do know of a number of stations where this was skipped and the stations that do have platforms they are at track level and the rolling stock has steps instead.
On SRT rail all platforms are track level but some minor stations have just a sign and you just stand track side and wait for the train to come.
For example
Thanks Thaitransit
I suspect when Thailand gets a general disability access law it will be unable to continue offering improvised solutions.
I see that China is improving disability access as part of a general push – according to the media the Paralympic Games has helped raise the profile.
My work hosted a Thai Government delegation some while ago. I recall one of them saying that after the 1998 crisis there was a problem where young people were moving from the country to the city (a global case) and only sending money home to their elderly relatives.
But come 1998, that easy money dried up. They were looking at nursing homes, previously regarded badly in Asia, as a solution, so that elderly family members could be cared for while the young ones were in the city working. You end up with the same solutions as the ones that western countries have tried.
The supply of cheap labour for home care will be aronud a long time, nevertheless I suspect people will start pushing for improved access to transport and other facilities.
That said, I am no fan of these giant palatial stations, especially ones like Glass House Mountains that might have 10 trains a day if lucky.