The introduction of flexible fares on First in Berkshire’s Green Line buses raised revenue by 70%, but average fares fell by 20% says Matthew Wooll of First Berkshire.

I was very interested to read John Segal’s article about rail fare policy (PT025). The ability to influence customer behaviour by charging different prices at different times of the day (rather than just the traditional ‘peak/off peak’ periods) was the motivation behind the introduction of ‘Rainbow Fares’ on First Berkshire’s Green Line operation in 2004. The service was popular with commuters to London and tourists to Windsor, but for much of the day the vehicles ran around almost empty. Improving the financial performance of the service was not easy, as demand was concentrated at peak times but additional peak journeys were expensive to operate.

Just as John suggests for rail, communicating ‘Rainbow Fares’ to passengers is achieved on the Green Line by colour coding journeys in the timetable (the seven colours of the rainbow). Currently, adult single fares range from ‘Red’ journeys at £11, to ‘Violet’ journeys at just £1 (the lowest ‘walk-up’ fare in London?). Passengers who are flexible enough to travel on the cheapest journeys save a lot of money and also free up capacity on the busiest journeys, therefore making more room for those willing to pay the highest price. Customers surveyed on the cheapest journeys from London admitted that they had changed their travel habits just to take advantage of the low price.

The maximum fare did not increase in 2004, which resulted in the average fare dropping. However, year-on-year passenger growth percentages quickly reached double figures and revenue growth was also impressive. All this was achieved without any additional resource, and with the same (elderly) 53-seater coaches.

Just imagine what this could do to the railways in and around the UK’s major cities, where pressure on rolling stock and train paths restricts the use of longer trains and improved frequencies at peak times.

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