Tuesday, October 03, 2006

Price discrimination

Study this table (borrowed from Wikipedia), and you'll learn why ERL's the masters in price discrimination.

SentralBTSPutrajayaSalak TinggiKLIA
Salak TinggiRM12.50RM8.30RM3.00RM3.20

With too much time to spare, one can ride on the trains for cheap! Although I don't recommend you do it.

I hope that Rapid KL and other train operators can sit together to harmonize train fares (not a cartel please!).

Most importantly is the problem of "starting fares".

Then, there is the enormous potential benefits to routing plenty of traffic from down south into KL via the LRTs and the ERL. Much faster travel. And relieves all the headaches on the KTM lines.

Simple logic. Scrap the KLIA Express (28 vs 36 minutes!?). Currently per hour, 4 trains doing the Express, 2 the Transit. Meaning 6 per hour. Or once every 10 minutes.

Retain check in facilities and other premium KLIA Express frills, but introduce "standard class" by either adding additional rolling stock or ripping out the furnishings/upholstery of one (or two) carriages to make it "standard". More standing room?

On all trains, allow premium services to continue on normal (except scrapping EXPRESS services). Let ERL price these services as ridiculously as they like (like in the table above).

Regulate services on "standard class". How about Rapid KL paying a fixed annual compensation fee for the use of this carriage? Do the same with KTM Komuter, except the Komuter does not have a "premium" category.

Have Rapid KL treat KLIA Transit as a loss leader.

  • Consumers - choice is good!
  • KTM - less passenger congestion; focus more on operations
  • Rapid KL - economies of scope from being able to supply many different types of public transport solutions (e.g. previous KLIA Transit users now able to continue journey in KL using same ticket/pass)
  • ERL - minimize business risk i.e. constant flow of income; able to focus more on operational aspects as marketing/ticketing delegated back to Rapid KL
Harmonize fares such that same journeys cost same price on any mode. E.g. Bandar Tasik Selatan to KL Sentral costs the same on all modes. And unfortunately, I think that would mean ERL lowering their fares, while Komuter raising theirs. :(


Anonymous Rajan R said...

ERL can do all that, but the question is - how many commuters would take a cheaper ERL ride to, say, Salak Tinggi or Putrajaya? How many actually stay in those areas - do the population size justify turning Malaysia's only profitable rail company into a regular public transport company?

11:10 AM  
Blogger commuter said...

Whether we like it or not, Rapid KL's mandate includes Putrajaya.

Design a contract such that Rapid KL guarantee a fixed periodic payment to ERL, over and above what ERL receives from current TOTAL ticket revenue.

In other words, Rapid KL can "sewa" the ERL services like how it currently "sewa" the LRTs and buses from SPNB. And Rapid KL pays a periodic sum to ERL. So ERL becomes a leasing company, or a train operations company. And Rapid KL markets and handles the passengers.

ERL runs scheduled train services in a very stable environment. Electricity is negotiated long term. It runs fixed schedules. Hence it is not very difficult for Rapid KL to calculate a payment to ERL to pay it for all these operational cost + profit, so that Rapid KL can take over sales and marketing and bear the risk and reward (which it is in a better position to due to its bigger size).

With cheaper rides, Rapid KL can attract more passengers, and added with its ability to cross subsidize and cross sell tickets over the whole system.

1:00 PM  

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