How increasing passenger numbers can mean offering fewer options
The pandemic has changed the behaviour of rail passengers, so the industry needs to understand and adapt too.
Given the changing patterns of passenger demand in industry, it can sometimes seem that increasing the number of options and services for passengers is necessary to increase sales. However, LNER’s work on single leg ticket pricing shows that sometimes it’s less choice that leads to more passengers.
The complexity of rail’s many different types of ticket offers to passengers has built up over time, largely as an unintended consequence of other changes. Rail has grown rapidly over the last few decades, and this has been accompanied by an increase in the range of different ticket pricing options.
The thinking behind each ticket pricing type was probably very well intentioned, aiming to give passengers improved options for cheaper tickets or return journeys, and encourage leisure travellers to use the network outside of peak hours. Behind this thinking was the assumption that choices that were more closely tailored to different types of passenger need would increase sales.
This means that individually a new pricing type was probably a good idea, but unfortunately over time the net effect has been negative. Rail now has what Paul Smith, Senior Programme Manager for Fares at LNER, calls ‘a bewildering array of fares’. There may be many effects we wish to have on our customers, but bewildering isn’t one of them. And there are other unintended effects of the many different ticket types too. If you offer a return ticket that is only £1 more expensive than a single ticket, not only are you encouraging customers to buy a return ticket that they don’t actually need, it can also make the single ticket look expensive.
Indeed, 80% of rail customers say they want to see changes to fares in UK rail. A survey for the Rail Delivery Group (RDG) found that the complexity of ticket pricing options was actually a barrier to sales, for both potential and existing customers. In fact, that survey found that 35% of people for whom rail travel is an option are put off from using rail because they find it difficult to find the right fare. Preventing repeat sales from existing customers or very likely prospects is never a good look, so it appears that change is very much needed. Certainly, 84% of respondents in the RDG survey wanted change. How would such a change work in practice?
In 2020, LNER ran a pilot project testing ‘single leg pricing’ with a simplified range of fares and no ‘return for only £1 more’ tickets, to see if reducing the complexity would really help passengers. They tested single leg pricing on their three biggest flows: London to Leeds, London to Newcastle, and London to Edinburgh. The results were overwhelmingly positive.
Independent online consumer research, commissioned by LNER, of LNER customers and non-LNER customers found that 61% of those customers favoured the extension of single leg ticket pricing. 55% of LNER customers agreed that single leg ticketing simplifies the way tickets work. Even better, for potential opportunities for revenue growth and converting non-customers over to rail, 45% of non-customers were more likely to travel for long-distance journeys with LNER in the future because of single leg ticketing. These results chime with research into real-world behaviour elsewhere. A famous study about jam purchasing behaviour in supermarkets by Iyanger and Lepper found that supermarket customers showed most interest in jam when 24 jams were on display. However, the situation in which customers actually bought more jam was the ‘six jams offer’ not the 24 jams version.
The overall result for LNER of its work on single ticket pricing is that the approach went live from Sunday 14 May 2023 with tickets for travel from 11 June 2023. LNER now offers a much improved, simplified set of fares: Anytime Single, Off-Peak/Super Off-Peak Single, or Advance Single. This means that customers can choose tickets far more flexibly to meet their needs, and without feeling bamboozled by too much choice. It’s really good to see LNER pioneering this new approach for rail, and it will be very interesting to see how the rest of the industry responds.
