Technical Assistance Consultant’s Report
Project Number: 39673 December 2008
People's Republic of China: Managing Railway Passenger Operations More Efficiently
Prepared by SNCF International, France
In Association with IBM Global Services ( China ) Co. Ltd, PRC
Beijing Jiao Tong University, PRC
For Ministry of Railways
This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design.
TA No. 4864-PRC: Managing Railway Passenger Operations More Efficiently
Final Report December 2008
Presented to
Asian Development Bank
Ministry of Railways of the People’s Republic of China
Prepared by:
SNCF International, France
In association with IBM Global Services (China) CO. LDT. PRC, and
Beijing Jiao Tong University ADB Copy n° of 5 MoR Copy n° of 5 MoF Copy n° of 2 ADB TA 4864-PRC: Managing Railway Passenger Operations More Efficiently - Final Report
INTRODUCTION / CONTEXT OF THE STUDY
The Asian Development Bank contracted a consortium led y SNCF International (with IBM Global Services, China & Beijing JiaTong Transport University) to conduct TA 4864-PRC “Managing Railway Passenger Operations More Efficiently”. This Final Report has been prepared in accordance with the Terms of Reference (attached in Appendix 1), which precise that the TA should: i. review the current practices adopted by MoR for managing passenger operations ; ii. research best international practices and experiences ; iii. and recommend actions that should be realistic for the Government and MoR to implement.
The Team of international & domestic experts included specialists in the fields of: 1. Train Operation Planning; 2. Sales & Marketing; 3. Pricing & Tariff; 4. Transport Services; 5. and Railway Management Decision-Support System.
The TA has been realised with the following schedule and methodology:
Phase 0 : Inception Phase 1: Interim Phase 2: Recommendations Final Meeting 阶段0：开题 阶段1：中期 阶段2：建议 总结会议
Inception Meeting Interim Meeting Draft Final Meeting 2008 October 21 2007 July 9th 2007 October 17th 2008 October 14-15th 2008年10月21日
开题报告研讨会 中期报告研讨会 最终报告初稿研讨会 2007年7月9日 2007年10月17日 2008年10月14-15日
•Review of best Worldwilde High Speed practices •研究世界高铁运营的 最佳经验 1 month Training •Chinese current Rail session in France & PDL situation 为期一个月的赴法培训 •中国铁路运营和客运 专线现状 2008/03/22～2008/04/23 2008年3月22日～2008年4月23日
Exhibit 1: Schedule of the TA
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Exhibit 2: Methodology
Few photos taken during the different meetings or training sessions are attached in Appendix 7.
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LIST OF APPENDICES
Appendices attached in a separate document: 1. Terms of Reference 2. Executive Summary of Interim Report 3. Complete List of Recommendations proposed by International & Domestic experts (prepared for the Final Report, Beijing, December 2008) 4. Training Session 4.1. Training Program 4.2. Trainees Report (prepared by the 11 Trainees after their Training Session in France, March/April 2008); 4.3. Presentation made by the 11 Trainees for the Draft Final Meeting (Beijing / October 14&15); 4.4. Few comments from International experts on the Trainees report 5. Final Meeting Presentation 6. Few comments on Management Organisation 7. The TA in few photos
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ABBREVIATIONS
Acronym Full name
ADB Asian Development Bank
AVE Alta Velocidad Española (Spanish High Speed Trains)
BJTU Beijing Jiaotong University
BU Business Unit
CNO National Centre for Operation / SNCF (Centre National des Opérations)
COC Commercial Optimization Centre / SNCF (Centre d’Optimisation Commerciale)
COLT Operational Coordination for TGV HS Line / SNCF (Coordination Opérationnelle des Lignes TGV)
COT Technical Optimization Centre / SNCF (Centre d’Optimisation Technique)
CRH China Railways High- Speed
CRM Customer Relationship Management
CSI Customer Satisfaction Index
CTC Centralized Traffic Control System
CTCS China Train Control System
DB Deutsche Bahn / German Railways which operates the ICE HS trains
DSI Decision Support information
DSS Decision Support System
ESB Entreprise Service Bus
GDS Global Distribution System
HR Human Ressources
HS High Speed
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HSR High Speed Railways
IS Information System
IT Information Technology
JR Japan Railways
KPI Key Performance Indicator
KTX Korea Train Express
LCU Line Crisis Unit
MMS Multimedia Message Service
MoR Ministry of Railways of the People’s Republic of China
NFC Near Field Communication
O/D Origin/Destination
OLAP On Line Analytical Processing
PDA Personnal Digital Assistant
PDL Passenger Dedicated Line
PPP Purchasing Power Parity
PR YY CN Price Year over Year in China
PTRS Passenger Ticket Reservation System
PTSS Passenger Transport Service Systems
Q&A Questions & Answers
QA Quality Assurance
QRB Quality Reference Books
SCU Station Crisis Unit
SNCF Société Nationale des Chemins de Fer français / French Railways which operates TGV HS trains
SOA Service Oriented Architecture
SOC Station Operational Centre / SNCF
TA Technical Assistance
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TDCS Train Operation Dispatching Command System
TGV French High Speed Trains (Train à Grande Vitesse)
TMIS Transportion Management Information System
TPF Transaction Processing Facility
TRS Transport Reservation System
UIC Union Internationale des Chemins de fer (International Railway Union)
YM Yield Management
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TABLE OF CONTENTS
INTRODUCTION / CONTEXT OF THE STUDY ...... 2 LIST OF APPENDICES ...... 4 ABBREVIATIONS...... 5 TABLE OF CONTENTS...... 8 EXECUTIVE SUMMARY...... 10
0.1 TRAIN OPERATION PLANNING...... 10 0.1.1 Traffic flows and design of services...... 10 0.1.2 Line Capacity...... 10 0.1.3 Train-set availability and diagrams ...... 11 0.1.4 Actual Operation...... 11 0.1.5 Conclusion...... 11 0.2 MARKETING & SALES...... 12 0.3 PRICING & TARIFF ...... 13 0.4 SERVICES ...... 13 0.5 DECISION SUPPORT SYSTEM ...... 14 1 TRAIN OPERATION PLANNING...... 15
1.1 CONTENTS OF TRAIN OPERATION PLANNING...... 15 1.1.1 The purpose of Train Operation planning ...... 15 1.1.2 The implementation of recommendations...... 15 1.2 DESIGN OF SERVICES ...... 15 1.2.1 Needed Information from traffic forecast...... 15 1.2.2 Knowledge of traffic flows ...... 16 1.2.3 Design of services ...... 16 1.3 TIMETABLING...... 18 1.3.1 Line capacity...... 18 1.3.2 Mixed operation ...... 21 1.3.3 Capacity of lines / Conclusion and implementation...... 21 1.4 TRAIN-SET AVAILABILITY AND DIAGRAMS...... 22 1.4.1 Allocation of train-sets on services ...... 22 1.4.2 Diagramming the train-sets...... 23 1.5 ACTUAL OPERATION ...... 24 1.5.1 Adaptation of Transport Planning ...... 24 1.5.2 Real Time operation ...... 25 1.6 CONCLUSION ...... 26 1.6.1 All divisions/departments are involved...... 26 1.6.2 All are involved from the beginning of design ...... 26 1.6.3 Roadmap / action plan...... 27 2 MARKETING & SALES ...... 28
2.1 SUMMARY OF THE MAIN FINDINGS OF THE INTERIM PHASE ...... 28 2.1.1 Context ...... 28 2.1.2 Understanding the market, market knowledge tools...... 29 2.1.3 Marketing/business plans ...... 30 2.1.4 Traffic forecast...... 30 2.1.5 Yield management...... 30 2.1.6 Efficient sales system ...... 31 2.1.7 Distribution mix ...... 31 2.1.8 Pushing sales ...... 33 2.1.9 CRM and quality control ...... 33 2.1.10 Marketing and sales in the organization chart ...... 33 2.2 MAIN RECOMMENDATIONS...... 34 2.2.1 Overview...... 34
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2.2.2 Create a Marketing “Unit” (L1-1)...... 34 2.2.3 A distribution mix that banks on new technologies (L1-2)...... 40 2.2.4 Develop a Yield Management policy (L2-1) ...... 43 2.2.5 Implement a Customer Relationship Management policy (L2-2) ...... 46 3 PRICING & TARIFF ...... 49
3.1 SUMMARY OF THE FINDINGS OF THE INTERIM PHASE...... 49 3.2 RECOMMENDATIONS...... 49 3.3 CONCLUSIONS AND NEXT STEPS...... 56 4 TRANSPORT SERVICES ...... 60
4.1 THE MANAGEMENT ORGANISATION OF SERVICES...... 60 4.1.1 Management of services by line ...... 60 4.1.2 Management of the station: the “Escale” organisation...... 60 4.1.3 Management of trains services...... 62 4.1.4 Security/Safety Management...... 62 4.1.5 Special Crisis organisation for Incidents, disrupted situations…...... 64 4.1.6 Management organisation for peak hours in stations and trains...... 65 4.2 QUALITY ASSURANCE SYSTEM FOR SERVICES: ...... 66 4.2.1 Quality Reference Books ...... 66 4.2.2 Quality Audits...... 69 4.2.3 Customer Service and Contract of Punctuality ...... 69 4.3 FOCUS ON KEY-SERVICES ...... 70 4.3.1 Services in the stations: general principles of stations design and related services ...... 70 4.3.2 Services in the trains ...... 73 5 DECISION SUPPORT SYSTEM ...... 78
5.1 PREFACE ...... 78 5.2 DEFINITION ...... 78 5.3 BENEFITS FOR MOR FROM A DSS...... 80 5.4 RECOMMENDATIONS...... 80 5.4.1 Preface - As-Is Status of MoR’s IT systems ...... 80 5.5 ROADMAP / ACTION PLAN ...... 83
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EXECUTIVE SUMMARY
0.1 Train Operation Planning i. Some recommendations on Train Operation Planning which are applicable to China High Speed Rail operation have been identified thanks to:
worldwide experience of High speed operation; fructuous exchanges between international experts, domestic experts and MoR officers; Training Session in France.
0.1.1 Traffic flows and design of services ii. Train operation planning consists in a description of the rail services which is consistent with the foreseen traffic and the marketing plan. Consequently detailed traffic forecast data is very important to design the services and China needs urgently a traffic forecast model focused on O/D traffic flows. iii. A mandatory reservation system is recommended and once the PDL system operates, information on actual traffic flows will rely on it. For Train operation planning it is important that the system gives not only the traffic flows in the high speed trains but the traffic flows on all O/D(s) including those served by connections (where the passengers come from and where they are going to). iv. To design the services, it will be necessary to identify the major O/D(s) for which dedicated services will be operated. A major O/D is an O/D for which the traffic flow is sufficiently important to justify on its own at least an hourly service (around 15 frequencies per day). These O/D(s) are in general the O/D(s) on which the competition is tough and as, by definition, these O/D(s) justify full train capacity, it is recommended to serve the major O/D(s) with dedicated, direct and non stop services. The other O/D(s) will be served by:
long distance services serving several O/D(s) possibly running on several PDL(s); possible stopping trains when necessary; and connections in stations.
0.1.2 Line Capacity v. Due to the immensity and the population in China and as 12,000 km of PDL will be operated in China and as it is expected to serve all territories with important O/D flows, it is important to save line capacity when designing the services. For this reason, speed difference between trains on busy lines has to be avoided and timetable of stopping trains has be consistent with line capacity and robustness of the time/distance graph. Avoiding speed differences between trains means also that mixed operation lines have to be decided only on specific situations (when traffic flows allows for it and -when this could save investment (as an example long tunnels to cross mountains areas)).
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vi. For design of services, and for improving line capacity and associated timetabling, appropriate operating skills will be necessary from the beginning of infrastructure design (including track lay-out and signalling).
0.1.3 Train-set availability and diagrams vii. In order to improve train and line operation it is recommended to focus on:
train set capacity (including double deck train set) for major O/D services; acceleration and braking performance for stopping trains; a multi purpose high-speed train-set able to run on the whole PDL network for long distance services running on several PDL. viii. For better efficiency, organization of maintenance of train sets will have to be consistent with train-services (more maintenance off-peak and less on peak) in order to maximize availability when necessary and minimize the size of the fleet. It is recommended to design the diagrams on a weekly base (Size of the fleet is thus determined according traffic flows for a normal week). Seasonal peaks will be dealt with combining usage of yield management, appropriate maintenance planning and adaptation of transport planning. ix. In any case, Rolling Stock maintenance organization has to be traffic demand driven.
0.1.4 Actual Operation x. Thanks to mandatory reservation system, it will be possible to adapt the Train Operation Planning to actual demand for a specific day. xi. It is recommended to identify the roles of all real-time operators and the best organization, keeping in mind that the most important is the information which is given to them and not the location of possible control centre(s). In particular control command (which deals with safety rules and procedures) is very different from train circulation management (which deals with real time distance/time graph).
0.1.5 Conclusion xii. For an efficient operation, all types of skills (designers and operators) have their say on the future PDL operation so that they are in position to:
analyze the traffic flows; improve all designs; find the best organization and; train the staff. xiii. From now, all parts of the Railway have to be actual partners of the PDL(s) Project so that they can see with their own eyes how a high speed railway works. xiv. It is recommended that railway organization:
put in the same hand commercial and technical issues for better Cost/Revenue optimization; does not divide operational decisions between managers in charge of limited geographic areas.
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0.2 Marketing & Sales xv. To date, Chinese rail has operated in a “selling market” (demand exceeds supply), with a low frequency offer but high load factor. As a consequence, neither marketing nor sales have been a major concern. xvi. In coming years, the scenery will completely change:
on one hand, the quality of rail offer will dramatically improve (journey time, frequency, comfort); on the other, competition will become much tougher with the explosion of private car and air services1, while a rapidly increasing standard of living will result in more demanding customers, all the more as they will have more choice. xvii. If MoR wants to make best use of high-speed to optimize ridership and profit, it will have to base its policy on its potential customers needs, desires and financial possibilities, while considering the offer of competition. xviii. This is totally new for MoR. xix. On the basis of a review of what successful high-speed operators do worldwide on competitive markets, the Chinese and the International experts have selected process and tools that could effectively help MoR to master that new situation and presented them in the draft final report. xx. The two Marketing & Sales experts consider that 4 of these recommendations, also supported by the trainees in their report, are more essential than others and should be implemented in priority. They are presented in this report. xxi. The first priority for MoR is to create a marketing “unit”2 positioned in the organization chart of Chinese rail at a level that empowers it to give orientations to more “technical” services in charge of transport planning, transport operations, sales, stations operations… Appointing urgently a core marketing team that will outline organization and process and initiate first steps is the founding action of the new marketing based policy MoR should conduct. That marketing “unit” must have the capacity to master basis marketing process and tools, such as marketing plans, traffic forecast, market knowledge tools… xxii. The second recommendation is about distribution. To date, MoR has overwhelmingly relied on station ticket offices to sell its trains. It is recommended diversify the distribution- mix and take advantage of the very rapid progress of IT (internet, mobile phones…) in the Chinese society to: a. meet part of the increased demand; b. above all, gain new customers by making it easy to find information on CRH services and buy tickets without the hassles of queuing in stations, when not having to go specially to the station for information or advance purchase. a powerful website, call centers, automats (1 automat per station ticket office?), mobile phones should become pillars of the new distribution mix. xxiii. The third recommendation is to implement yield management (supported by mandatory reservation) to maximize revenue of a high frequency roaster, assuming that the pricing policy is flexible and differentiated enough to permit to fully optimize revenue.
1 Without forgetting bus services. 2 Its name, division, department, direction… depend on MoR and is not essential for this report.
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xxiv. The fourth recommendation is to implement CRM3 policy, to develop a “culture of the customer” that does not presently exist, while gaining the loyalty of the best customers on a competitive market.
0.3 Pricing & Tariff xxv. To be prepared for the future challenges of high speed railways in China, MoR needs a flexible and customer oriented pricing system for the fares of high-speed railways. This is especially important, as MoR is entering with high-speed trains a new competitive area: Now trains can compete with airlines on certain O/Ds. xxvi. To react quickly to market demands MoR needs to be empowered to define their tariffs on their own – within a legal framework. It is also necessary to consider different customer segments, as each target group has a specific buying behaviour which should be reflected by the tariffs. As a quick win the ratio between 1st and 2nd class tickets should be increased as currently on the Beijing – Tianjin O/D 1st class tickets are sold out earlier than 2nd class tickets. For travellers it is also convenient to have a single ticket for their trip – even when changing trains (e.g. starting with a classic train, and then changing into a high-speed train).
0.4 Services xxvii.The key recommendations presented hereunder for services in stations and aboard are based on the international experience and comparisons in the field of high speed services operated worldwide taking advantage:
of a fruitful contribution from the Chinese experts and rail management staff trained in France and from the MoR officers through the regular exchanges and open-sessions; of visits of the Chinese rail system organised and guided by the MoR or personally experienced by the experts in Beijing, Shanghai and on Beijing-Tianjin before and after opening the new HS line and stations. xxviii. The first issue to secure an efficient provision of high speed station on train services in the Chinese context of a high density of traffic and passenger volumes is the implementation of a Quality Assurance system prepared and handled by a convenient management structure giving a clear separation of responsibilities between Services and Security/Safety matters. Crisis situations require temporary Crisis Units at PDL and Station levels. xxix. The recommended management structures and tasks at the PDL level include:
a Head of PDL Services in charge of organizing/controlling the services with the support of 5 specialized assistant managers of:
o (i) Services in stations;
o (ii) Sales and After-Sales;
o (iii) Trains Preparation;
o (iv) Services on Board and;
o (v) the Information System for services.
3 Customer Relationship Management.
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A Head of PDL Security/Safety handling the issue in stations and trains and controlling the S/S Posts and the station video-surveillance system. xxx. At the Station level, a Head of Station Services manager is gathering the responsibilities of both Services and Trains Preparation while the Conductor supervises all services and staff (ticket officers, catering…). xxxi. The recommended Quality Assurance System includes 4 Reference Books at the PDL level (stations, trains, safety/security) and 3 for each station (services, trains preparation, safety/security), a Chart Services to Customers, and Quality Audits to be periodically achieved by external bodies in trains and stations. xxxii.Recommendations on Key-services cover connecting solutions, stations design and open-space organisation, waiting areas, catering solutions, Access to platforms, ticket sales, luggage and customer service. A special attention is paid to some key-customer dedicated services and in particular to disabled people and people of reduced mobility (the “important people” category for Chinese railways) for which a central call centre for booking train and station services is recommended. xxxiii. The present report finally highlights and details the strong and profitable potentials of public and private partnerships to design stations as strong City Poles and Multimodal Exchange hubs and to develop complementary services among which shopping areas should play a more important role.
0.5 Decision Support System xxxiv. A decision support system delivers valuable information (as e.g. performance figures) for decision makers across the MoR organisation. For its successful implementation it is necessary to respect certain aspects, as implementing a data governance structure, data quality mechanisms, interconnection of relevant information sources and the consideration of access rights. xxxv. MoR has already recognized that their current IT infrastructure is not suitable for setting up a comprehensive decision support system. With the planning of a new IT infrastructure and architecture which can be used as a basis for a decision support system, MoR is heading into the right direction.
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1 TRAIN OPERATION PLANNING
1.1 Contents of Train Operation Planning
1.1.1 The purpose of Train Operation planning
01 Train operation planning consists in a description of the rail services which is consistent with the foreseen traffic and the marketing plan.
02 This description will bring all technical information needed in order to operate the railway to provide quality services at the best economic condition.
1.1.2 The implementation of recommendations
03 The recommendations can be progressively adapted:
According the accuracy of traffic forecast; According the progressive set-up of the PDL network.
04 For all recommendations, indication will be given regarding the possible implementation when the PDL network is developing.
1.2 Design of Services
1.2.1 Needed Information from traffic forecast
05 Train operation planning must be consistent with passenger flows. Traffic forecast are studied for all “Origin/Destination” (O/D) according a “zonage” which has to be consistent with the rail network. For every O/D, the services are described in terms of journey time, frequencies and possible connections.
06 A good understanding of the expected traffic for every O/D is necessary. This applies not only for city pairs situated on the new lines but for all territories possibly interested in high speed services, either with high speed trains running also on conventional lines (or conventional trains running on new lines), either with connections in stations.
07 Consistent data from traffic forecast is very important to design the services. This data has to be consistent with the high speed network. The services have to be described as they are input in the traffic forecast model for all O/D(s) served by high speed services.
08 Information on daily, weekly and seasonal peaks will be necessary.
Train Operation Planning / Recommendation n°1 – Traffic forecast: China needs urgently a traffic forecast model focused on O/D traffic flows (related to the territories served by PDL and conventional lines).
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In their report, the trainees agreed and held the same recommendation;” Full passenger flow investigation and demand forecast is very important….This work should urgently be carried out as soon as possible”,
1.2.2 Knowledge of traffic flows
09 Once the PDL system operates, information on traffic flows will rely on experience when a mandatory reservation system is in place.
10 Comparison between actual traffic flows and traffic forecast will allow for tuning the parameters of the traffic forecast model.
11 For Train operation planning it is important that the system gives not only the traffic flows in the high speed trains but the traffic flows on all O/D(s) including those served by connections (where the passengers come from and where they are going to).
Train Operation Planning / Recommendation n°2 – Mandatory reservation system: It is thus recommended a mandatory reservation system which will allow: very precise knowledge of traffic flows; knowledge of all traffic flows including those with connections.
1.2.3 Design of services
1.2.3.1 Identification of major O/D(s)
12 It will be necessary to identify the major O/D(s) for which dedicated services will be designed.
13 A major O/D is an O/D for which the traffic flow is sufficiently important to justify on its own at least an hourly service (around 15 frequencies per day).
1.2.3.2 Serving the major O/D(s)
14 These O/D(s) are in general the O/D(s) on which the competition is tough and as, by definition, these O/D(s) justify full train capacity, any intermediate stop: a. is not useful to fill the train; b. has an adverse impact on journey-time thus on competitiveness of the rail; c. has an adverse impact on line capacity; d. has adverse impact on cost (more time of train-set needed).
15 When possible, it is recommended to serve the major O/D(s) with dedicated, direct and non stop services.
16 Nevertheless, it is possible that: a. stopping in an intermediate station will help an O/D to become a major one with dedicated services; b. some of intermediate stations can only be served by stopping dedicated services. In this case it is important that a great number of services still remain non-stop to show the best journey-time.
17 It is also possible to extend the major O/D services to serve other territories (as an example extend Wuhan / Guangzhou services to Zhuhai); this will have no impact on the
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quality of service for the major O/D(s) (the journey time stays the same) and will offer direct services on secondary O/D(s) avoiding connections in station..
1.2.3.3 Design services combining several O/D(s)
18 It is possible to combine some O/D(s) to offer long distances services which are justified by the addition of traffic flows of all O/D(s) involved; this can be the case for trains serving major stations on different PDL(s) thus running on several high speed lines thanks to a network effect. As an example, these trains could run alternatively on “vertical” and “horizontal” PDL. Moreover, it would be sensible to look at the possibility to avoid passing by Beijing for some services between North and South of Beijing. As an example, thanks to the design of an appropriate link between Harbin/Beijing PDL and Beijing/Tianjin/Shanghai PDL, services from Harbin to Shanghai serving Changchun, Shenyang, Tianjin, Jinan and Nanjing could be justified. The services on the several involved O/D(s) will be greatly improved by avoiding passing through Beijing (and possibly avoiding connections); such long distance services would serve not only North/South O/D(s) but also O/D(s) like Changchun/Shenyang. Thus this will help also to avoid stopping trains for dedicated O/D(s) (see above).
1.2.3.4 Design services which call at intermediate stations on Passenger Dedicated Lines
19 For O/D(s) that cannot be served by those described above, stopping trains can be drawn in consideration of their traffic flows keeping in mind they have an adverse impact on capacity (see beyond).
1.2.3.5 Designing the services
20 To design the services it will be necessary: a. to identify the number of frequencies which are justified by the traffic flows; b. to identify where there is a discontinuity in needed capacity, (when there is such discontinuity, it will be necessary to terminate some trains (or train-sets) in order to adapt train capacity to traffic flow without overspending); design of track lay-out in these stations has to be consistent with this purpose; c. to draw connections when direct services are not possible or not justified; these connections will be designed case by case as these services will depend not only on high speed passenger flows but also of other passenger flows (i.e. local flows...).
1.2.3.6 Implementation
21 As the PDL networks develops and as new train-sets are delivered, it is suggested to: a. focus for major O/D(s) on dedicated, direct and non stop services; impact on customers will be greater than the solution consisting in an attempt to serve all possible O/D(s) from the beginning but in a degraded mode; b. extend the services as necessary when sufficient number of train-sets is delivered (if the economic evaluation justifies for these); c. design other services combining several O/D(s) when this first step is reached.
22 As the traffic develops on major O/D(s), number of frequencies can be increased, keeping in mind that above 20/25 frequencies, increasing this number will have:
no impact on customer attraction and; an adverse impact on line capacity.
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23 It will be then preferable to increase the capacity of the trains, either by multiple-unit operation either by increasing the capacity of the train-set itself.
24 Once the major O/D services are designed and as the PDL network develops, priorities go to designing the long distance services as some timetabling constraints rely in them because of the network effect (they run on different lines which have different constraints).
25 When setting-up operation of one specific PDL, it will be useful to have a global view of the long distance services which could run in the future coming from other PDL(s) not yet in operation in order to prepare for the final scope.
26 To ensure good operation it is important to bring operating skills in the project studies as soon as possible
Train Operation Planning / Recommendation n°3 –Major O/D(s) services: As the PDL network develops it is suggested to focus on major O/D(s) services before serving other O/D(s). The other O/D(s) will then be served by: long distance services serving several O/D(s) possibly running on several PDL(s); possible stopping trains when necessary; and connections in stations.
In their report, the trainees agreed and held the same recommendation; “use direct transportation mode in important O/D primarily, (focus on non-stop direct trains)”. They also appreciated: “an organisation model with services by-passing important cities (ie province to province services avoiding Beijing)”; “Itinerary tickets including connections”.
1.3 Timetabling
1.3.1 Line capacity
27 There are three main constraints for High speed line capacity: a. speed difference between trains; b. stopping trains at intermediate stations on line; c. interfaces between lines (network effect).
28 In Japan, as most of the train-sets on a line have comparable speed limits and as there is no network effect (PDL are isolated), there is only one constraint which consists in “stopping some trains on line”.
29 In Europe (France as an example), as there are very few stations on line and as train speed limits are identical on a line, there is also only one constraint which consists in the “network effect”.
30 Thus, all high speed network operators succeeded in reducing the constraints on line capacity; it is important to keep this in mind when timetabling PDL operation in China.
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1.3.1.1 First constraint; speed difference between trains
31 Speed difference is capacity consuming (on a 100 km distance, lost of at least three paths between trains 200 and 300 kph). The robustness of graph is affected as speed difference has a bad impact to recover when incident occurs.
Theoritical graph Consequences when T3 is delayed
T3 delayed Parallel T1 T3 T1 paths (no speed difference between trains)
T3 delayed Non parallel T1 T3 T1 paths (speed difference between
trains) The conflict occurs due to speed difference between trains
Exhibit 3: Effect on speed difference between trains
1.3.1.2 Second constraint; stopping trains on high speed lines
32 Stopping a train on high speed line is also capacity consuming (lost of at least one path per stop). Robustness of graph is affected when paths are not parallel as management of overtakings will be difficult when incident occurs. Too many stations on line do not comply with high speed operation
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Platform tracks T1 terminates flanking T1 T2 leaves the T2 through tracks
Platform tracks T1 between the through tracks T1 terminates T2 leaves
T2
Exhibit 4: Station tracks lay-out: in stations where trains terminate, it is suggested to draw the related platform tracks between the through tracks in order to avoid intersections when turning a train
1.3.1.3 Third constraint; Interfaces between lines (network effect)
33 At lines interfaces, it is important to mitigate the adverse impact on line capacity. To ease insertion on the distance-time graph, it is thus recommended deviation speed to be very high where there are line junctions on PDL (at least 220 kph).
34 Due to the immensity and the population in China and as 12,000 km of PDL will be operated in China and as it is expected to serve all territories with important O/D flows, it will be necessary to design long distance services running on several PDL(s) and possibly conventional lines (see above).
35 In China, the constraints coming from the network effect cannot be avoided. Thus timetable of stopping trains will have to be consequently adapted and speed difference between trains has to be avoided on busy lines. The suggestion is: a. to limit 200 kph train-sets operation where the speed limit for infrastructure is 200 kph, b. to run exclusively 300 kph trains on PDL where the speed limit is 300 kph,
Train Operation Planning / Recommendation n°4 – Speed Difference: Speed difference between trains on busy lines has to be avoided. Timetable of stopping trains has to be consistent with line capacity and robustness the time/distance graph.
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In their report, the trainees held the same recommendation; “only one speed level“(especially on the main PDL network at 300 kph).
1.3.1.4 Fixed intervals policy
36 Fixed Intervals policy has pros and cons:
Pros are simplification of timetabling, of connections and better memorisation for customers; But cons are non flexibility of the timetable and difficulty:
o to design services running on several lines;
o to adapt the timetable when infrastructure changes (as setting up a new PDL section);
o to meet the best journey-time on some O/D(s) when regular stopping trains are foreseen.
37 It is thus suggested pragmatism for implementation of possible fixed intervals policy. In their report, the trainees agreed and held the same recommendation: “we suggest that we could better not use fixed intervals policy. Maybe we attempt to use it in operation scheme of the middle and short haul intercity trains”.
1.3.2 Mixed operation
38 Design of infrastructure for high speed is different and more difficult when mixed traffic is envisaged. High speed trains do not fear gradients (no difficulty up to 3.5 %) but radiuses of curvature have to be very high (usually more than 4,000m for 300 kph operation) and conventional trains do fear gradients (especially freight trains) but accept tighter curvatures. Designing a new line for classic trains or for high speed is thus very different. Mixed new lines are more expensive and operation is more complex because of speed difference (see above).
39 It is thus recommended to be very cautious for running conventional trains on high speed lines. On the contrary, it is possible to run high speed trains on conventional lines but the speed on these lines has to be adapted even by running as a conventional train. The same logic applies for 300 kph train-sets to run on 200 kph PDL.
40 Avoiding speed differences between trains means also that mixed operation lines have to be decided only on specific situations; as an example the channel tunnel (operated by Eurotunnel) is mixed but access to it is not mixed.
Train Operation Planning / Recommendation n°5 –Mixed operation: It is thus recommended that mixed operation to apply on specific situations: when traffic flows allows for it and; when this could save investment (as an example long tunnels to cross mountain areas).
1.3.3 Capacity of lines / Conclusion and implementation
41 Operating skills are necessary right from the beginning of design in order to:
ensure design is compatible with operation (as signalling system, speed on junctions, station track lay-out…);
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calculate the line capacity; determine the maximum consumption ratio.
42 Constraints on timetabling are important when services are to run on classic lines and/or on other PDL(s), as incident on a system has an impact on others. Robustness of graph will be essential for success of operation and compliance with UIC leaflet 406 is recommended.
Train Operation Planning / Recommendation n°6 – Capacity of lines: As for design of services, and for improving line capacity and associated timetabling, appropriate operating skills will be thus necessary from the beginning of infrastructure design (including track lay-out and signalling).
In their report, the trainees agreed and quoted: “we should leave adjustment space for train operation”; “we suggest further studying effective calculation problem of network ability”.
1.4 train-set availability and diagrams
1.4.1 Allocation of train-sets on services
1.4.1.1 Allocation of train-sets for major dedicated O/D(s)
43 As shown above, when frequency on a major dedicated O/D is sufficiently high (say 20 per day), increasing the number of frequencies will have no impact on customer attraction. It will be then preferable to increase the capacity of the trains, either by multiple-unit operation either by increasing the capacity of the train set itself.
44 In Japan and France in order to save line capacity, capital costs on rolling stock and operational costs, the solution was found in designing double deck train-set which lowers capital and operational cost per km. As Chinese towns are very populated, it is recommended to consider this option.
1.4.1.2 Allocation of train-sets for services calling at intermediate stations
45 Even when line capacity allows for stopping trains, the impact on timetabling should be minimized; it is thus recommended to focus on acceleration and braking performance of the train-sets.
1.4.1.3 Allocation of train-sets for long distance services running on several PDL lines
46 As these services will run on all PDL(s), it is important to be able to “mix” the services and train-set diagrams on all lines in order to have the best efficiency of the train operation planning. Indeed when a train-set is able to run on all PDL (and not be used as a shuttle with the same way-in and way-back), it would be thus easier to re-use it when a train terminates. It is recommended to allocate on these services a multi purpose high-speed train-set able to run on the whole PDL network.
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1.4.1.4 Conclusion
Train Operation Planning / Recommendation n°7 – Train set: In order to improve train and line operation it is recommended to focus on: train set capacity (including double deck train set) for major O/D services; acceleration and braking performance for stopping trains; a multi purpose high-speed train-set able to run on the whole PDL network for long distance services running on several PDL.
1.4.2 Diagramming the train-sets
1.4.2.1 Sizing the fleet
47 Usually design of services associated with annual train operation planning takes into account weekly traffic flow variations. Weekly peaks are taken into account in the diagrams according the improved availability of train-sets at week-ends. In France and in Spain, the traffic demand ratio between week-end and weekdays is of the order 1.6 to 1.8. To face this situation without increasing the size of the fleet: a. availability of train-sets is increased (see above) which means that periodic interventions in “owner” workshop are mainly done in middle of the week, (as an example increase about 1.2); b. load factor is higher (as an example increase about 1.25); c. diagrams are tighter (as an example increase about 1.15).
48 From the examples, it is thus possible to face a 1.7 (1.2x1.25x1.15) traffic demand ratio.
49 Size of the fleet is thus determined according traffic flows for a normal week (see above) and for obvious business reasons, there is no railway operator sizing the fleet according seasonal peaks.
Train Operation Planning / Recommendation n°8 – Size of the fleet: It is recommended to design the diagrams on a weekly base (Size of the fleet is thus determined according traffic flows for a normal week).
1.4.2.2 Dealing with seasonal peaks
50 The main constraints for dealing with seasonal peaks rely on availability of rolling stock.
51 As it is not possible to size the fleet according seasonal peaks, it will be necessary to combine different actions to:
spread the demand using yield management (see area 2 Marketing &Sales); maximize the availability of train-sets with specific agreements with maintenance management mainly regarding planning in workshops; adapt the transport planning:
o by alleviating the business routes (less used in holiday peaks);
o by tightening the line diagrams (shorter time to turn a train…).
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Train Operation Planning / Recommendation n°9 –Yield Management: It is thus recommended that seasonal peaks are dealt with combining usage of Yield Management, appropriate maintenance planning and adaptation of transport planning.
1.4.2.3 Maintenance Organization
52 Whatever the maintenance organization is, train planning design needs to know how many train sets are available for commercial services. Rolling stock management is thus committed to provide, for every type of train sets, proper numbers of train-sets in accordance with the train set diagrams.
53 For better efficiency, organization of maintenance of train sets will have to be consistent with train-services (more maintenance off-peak and less on peak) in order to maximize availability when necessary and minimize the size of the fleet.
54 Short interventions on train-sets (servicing, emptying the toilets, safety inspection - no more than 4 hours long) can be executed during off-peak hours and included in train-set diagrams.
55 Further maintenance operations need to exit the train-sets from the diagrams, and it will be necessary to replace them in the diagrams. In case of rolling stock fault, a train-set will also have to be repaired or replaced. Thus it is suggested to locate the workshops according to the possibility to change train-set allocation in the diagrams.
Train Operation Planning / Recommendation n°10 – Rolling Stock maintenance: Rolling Stock maintenance organization has to be traffic demand driven.
56 As for design of services and timetabling, rolling stock has to be organized according train operation planning which reinforce the necessity of operating skills (including maintenance) from the beginning of design. In their report, the trainees recommended to deal with many factors including train-set maintenance.
1.5 ACTUAL OPERATION
1.5.1 Adaptation of Transport Planning
57 By comparison between historical data and actual reservation status, the mandatory reservation system will help not only for designing train operation planning but it will also allow a progressive good knowledge of passenger flows in each train for a specific date (including for seasonal peaks). Thus it will be possible to:
spread the demand and optimize load factor in trains (reserved seats versus total number of seats) thanks to possible yield management; maximize the revenues; decide necessary adaptations of the train operation planning (multiple units, additional trains,…) for this specific date.
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Train Operation Planning / Recommendation n°11 – Adaptation of Transport Planning: It is recommended when necessary to adapt the Train Operation Planning to actual demand.
In their report, the trainees recommended the same; “passenger flow investigation, especially the passenger flow change characteristic analyzes in the different time interval is important”.
1.5.2 Real Time operation
58 For real time operation it is important not to mix up: a. train safety and control command which requires specific infrastructure skills including appropriate safety rules and procedures; b. train circulation management (priorities between trains and management of the distance/time graphs in real time); c. “business” management which includes all decisions necessary for passenger management and information.
59 Operators in charge of control command have to focus on safe train circulation in the area they are in charge of, in compliance with theoretical timetabling. When there is a change, they report to the “train circulation management” operator who will take the appropriate decisions regarding priorities between trains, incident management…
60 For this purpose, “train circulation management” operator needs a global view of the situation on the whole network (including conventional lines when High Speed trains are running on) and not only on a specific area in order to assess consequences of possible decision. Real time circulation data will be very important for him.
61 Once decisions regarding train circulation are made (possibly with discussion with the former), “business” management operator(s) will deal with consequences for customers (passenger information, management of connections…), for train-sets, drivers, on-board staff and for services in stations. For this purpose information data on all components of Train Operation Planning and status of reservation (to know how many passengers there are in all trains and where they are coming from and going to) will be very necessary.
Train Operation Planning / Recommendation n°12 –Real time operation: It is thus recommended to identify the roles of all operators and the best organization, keeping in mind that the most important is the information which is given to them and not the location of possible control centre(s). In particular control command (which deals with safety rules and procedures) is very different from train circulation management (which deals with real time distance/time graph).
In their report, the trainees appreciate the SNCF organization where the CNO (National Centre for Operation) does not deal with control command but with Railways Operation Management (infrastructure and train).
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1.6 CONCLUSION
1.6.1 All divisions/departments are involved
62 Traffic flows will determine revenues and costs of the HS business, the optimization of which relies on an iterative process between revenues from customers and costs mainly from transport planning. Managerial organization has to put in a same hand not only commercial issues but also decision on all technical related items in order to be responsible for both revenues and costs.
63 This involves: a. Marketing and Sales; b. Infrastructure design, timetabling and operation; c. Station design and operation; d. Train-set design, diagrams and Maintenance; e. Staff utilisation and training; f. Decision Support systems; g. Economics.
64 High Speed operation is different from conventional rail operation as a possible event on one part of the network expands very quickly on other parts and cannot be considered as isolated. Operational Management organization has thus to be designed at a large scale and not limited to a restricted area.
Train Operation Planning / Recommendation n°13 – Organization: It is recommended that railway organization: put in the same hand commercial and technical issues for better Cost/Revenue optimization; does not divide operational decisions between managers in charge of limited geographic areas.
1.6.2 All are involved from the beginning of design
65 As seen above efficient operation means that all types of skills (designers and operators) have their say on the future PDL operation so that they are in position to: a. analyze the traffic flows; b. improve all designs; c. find the best organization and; d. train the staff.
66 All parts of the Railway have to be actual partners of the PDL(s) Project so that they can see with their own eyes how a high speed railway works.
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1.6.3 Roadmap / action plan
At the time At the time of Urgently Time scale for an action plan for Transport Operation Planning of Design Operation
R1 Traffic Forecast Model with O/D R13 Clarify Management for better Cost/Revenue optimization R6 Associate all Operating skills
R3 Focus on Major O/D services R4 No speed difference between trains R5 Mixed operation to apply on specific situations R7 Allocation of train-sets R8 Sizing the fleet in accordance with weekly peaks R10 Rolling stock maintenance organization R12 Identify operating organization
R2 Mandatory Reservation System R9 Dealing with seasonal peaks R11 Adaptation of Transport planning to actual traffic demand
Exhibit 5: Roadmap for implementing the recommendations for Train Operation Planning
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2 MARKETING & SALES
2.1 Summary of the main findings of the interim phase
2.1.1 Context
67 To date, Chinese rail has operated in a selling market (demand exceeds supply). As a consequence neither marketing nor sales have been a major concern.
68 The PDL programme will represent a dramatic leap of the service offered by rail in China: leap in journey time shortening, in frequency, in travel comfort with the new rolling-stock and the new stations. MoR rightfully expects, as for existing HS services worldwide, a much higher traffic:
gained on competition; new traffic “created” by travel time reduction.
69 But the dramatically improved service does however not suffice to guarantee that passengers will automatically flock without limits to the new HS trains.
70 CRH will indeed face a very rough competition as, at the same time: rd Air: the Chinese air market, already the 3 air market in the world, is forecast to grow fivefold till 2025, the number of airports with a handling capacity of more than 30 million passengers increasing from 3 in 2008 to 13 in 2020; in order to fill up airplanes a cutthroat competition from airlines is to be expected on middle-long distances, with very likely dangerous (for rail) low cost offers. Road: in 2020 China should count 70,000 km expressway with a fleet of more than 100 million vehicles vis à vis 20 million in 2002; the danger, in particular on short distances, is obvious. And the lure of bus lines for cheap price seeking passengers should not be underestimated.
71 Meanwhile, the Chinese society will continue to evolve rapidly. In particular, with the rapidly increasing standard of living, consumption schemes will change and customers will become more and more demanding, all the more when they will have the choice between different offers.
72 This double context of dramatic improvement and of always tougher competition is the background of the future high-speed services marketing and sales policy, while MoR/PDL managers will have to consider financial results of their policy.
73 Marketing and sales spans a large section of a company activity and a complete detailed review of what all HS operators in the world are doing in that field would be completely out of the scope of the present ADB TA, all the less as lot of information is accessible only from the inside of the companies. It has therefore been necessary to focus on a few accessible priorities.
74 Moreover a useful contribution to MoR’s current thoughts on its future PDL policy cannot be a mere catalogue of what is going on abroad.
75 On the basis of the professional experience of the international expert and his understanding of MoR’s needs, in particular thanks to discussions with MoR for the
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preparation of the PTSS tender, and in accordance with ADB’s TA, priority has been given to what HS operators do worldwide in seven domains:
situation of marketing and sales in the organization chart and key components; marketing tools; marketing process; traffic forecast; revenue optimisation; sales process; distribution mix; and customer relationship management/quality control.
76 SNCF and its affiliated companies, in particular Eurostar and Thalys, provide the basis for the description and analysis of practices of HS operators in these priority fields, complemented by practices of other HS operators when they have been available4, and when they usefully complete practices of the SNCF group.
77 Lines below stress main features of international HS experience and main differences with the policy enforced for Chinese standard speed services. The objectives presently envisaged by MoR for its PDL policy meet several international process. Some are however missing and deserve to be reviewed.
2.1.2 Understanding the market, market knowledge tools
78 In a competitive market, understanding market needs and possibilities is the first prerequisite for designing a global policy that takes best advantage of HS technical performance.
79 Several market knowledge tools exist, operators resorting to most or some of them. A non exhaustive list includes (between brackets, names of companies we know they use the tool, some others certainly also do):
Strategic observatory: c.f. SNCF… Panel: SNCF… Questionnaires on board trains: SNCF (“photo” surveys), Thalys, Eurostar, Trenitalia… Questionnaires in stations: SNCF… Internet surveys: SNCF, Thalys; Market surveys by telephone: SNCF, Thalys; Face to face test groups: Thalys… Full size tests: SNCF, KTX…: experiments (try and learn) should be considered as a priority way for understanding the market; Analysis of sales data: all; Analysis of customer data bases: SNCF, Thalys, Eurostar, Trenitalia;
80 These tools complete each other, but are not interchangeable as they correspond to specific needs and contexts.
4 Information on DB traffic forecast or Trenitalia sales plans for instance is considered confidential by concerned operators
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81 All have to be handled with high professionalism: a dedicated structure must be set up within the marketing division in charge of controlling the whole market knowledge process.
82 The general tendency among the operators reviewed for the present ADB TA is to outsource more and more the market knowledge process.
83 But, before outsourcing, operators need a core team of market knowledge home specialists, who are able to do the work by themselves and thus to control the market knowledge action plan.
84 Presently questionnaire surveys in trains and stations are the main marketing tool at Chinese rail. For PDL, it is considered to resort to several tools. It has to be highlighted that, whatever the tools, a solid market knowledge is a prerequisite for any profitable policy in a competitive context.
2.1.3 Marketing/business plans
85 Mastering market knowledge tools is a prerequisite, but it is not sufficient. Findings must result in action plans: new time table, new comfort on board, new prices for all customers or only for only part of them… As resources and time for defining and implementing action plans are limited, consistency and prioritization are mandatory: professionally and strictly designed marketing/business/sales plans are essential too: they will be the framework and backbone for the whole marketing and sales policy and actions it support. Their periodicity depends on the context.
86 Marketing and sales plans are not presently part of MoR’s tool set. They are part of the objectives for PDL policies.
2.1.4 Traffic forecast
87 Traffic forecast models, based on market knowledge data, permit to assess the impact of major leaps in the service offered to customers, such as the launching of a new HS service, and hence contribute to outline future service, possibly with policy alternatives.
88 From the review made for ADB TA, the 2 major HS operators in the world, JR and SNCF (as well as Eurostar, Thalys, Trenitalia5), resort to traffic forecast.
89 As we had more information on the SNCF model, it is more precisely outlined in the appended interim report, but basis concepts for allocating traffic to various modes at SNCF and JR are common: results of the traffic forecast depend on: attraction (gravity) of connected zones, value of time for customers, total cost of a trip for a customer.
90 A lesson of the experience is that models are not only a matter of software and statistical formulas, but also of statistical skills, market knowledge and experience.
91 MoR does not presently use traffic forecast models. Mastering a model is an objective of the PDL policy.
2.1.5 Yield management
92 Yield management, a technique developed by the airlines industry, and intensively applied by all of them to maximize their profit, can perfectly be customized to a rail context (as it is to other distribution industries). All HS operators do not use it, JR for instance do not, but to those that do, it provides from 5 to 10% additional revenue for the
5 And very likely DB, but refused to communicate…
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same service and capacity, i.e. for the same costs (whereas rail, even HS, is not an industry that yields large profits on a competitive market and 5 to 10% additional revenue make a large difference).
93 In HS rail industry, SNCF has spearheaded the use of YM and after 15 years of use, continues to perfect it in a steady ongoing process. Its principles are outlined in the appended “interim report”. As practiced by SNCF, it can address long haul trains with intermediary stops, a complex pricing policy with several categories of tariffs, as well as a simple “one time of purchase, one price” policy, trains with a heavy load factor as well as ones with a low one, as “classic” air carriers do.
94 There is another type of YM, “low-cost” air lines like, but it does not support a large range of reduced prices: only one price at a time, depending on the moment the customer buys his/her ticket.
95 Most of the rail operators that apply YM base it on mandatory reservation, as airlines do; mandatory reservation per se is not a prerequisite to yield management, but inventory control, permanently controlling sales by train/date/class/segment is a prerequisite6 in order to optimize passengers/tariffs repartition train by train and global revenue. DB is a particular case that applies YM general principles without mandatory reservation: it does enforce mandatory reservation with seat assignment only on a very limited number of trains. But it practices tariff quotas per train/day, which enables it to control (initially determine and then adapt) the offered capacity.
96 Considering SNCF experience, it is clear that YM is indeed not only a combination of software and models, but also of experience (a solid support team of YM analysts is necessary). It should have strong links with distribution, market knowledge and pricing policy.
97 YM is not in use at Chinese rail today. MoR is considering implementing it for CRH.
2.1.6 Efficient sales system
98 On a competitive market, a quality HS service, well adapted to market needs, is essential, but it is not sufficient to meet the challenge, depending on situations, of aggressive low-cost airlines, bus lines or the lures of private car, whereas competitors steadily improve their offer and communicate.
99 An efficient distribution network supported by an efficient distribution system for putting proposed services at easy reach of customers, and a pro-active sales force are necessary.
2.1.7 Distribution mix
100 On a competitive market, distribution is no longer “only” a set of techniques and process for delivering tickets, but has become a powerful tool for developing sales and their profitability. Distribution channels are many:
Station ticket offices: all HS operators7 use them; Automats: all; Travel agencies: all; Internet: all;
6 Which does not prevent from accepting standing passengers, for instance at peak hours on short distances, but their number is controlled. 7 with a particular case for Thalys that does not directly manage its own stations.
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Call centres: all.
101 Distribution evolves with technology:
internet has become a major channel (at Eurostar, in a specific configuration, it is the first channel); new ticketing process - self printed ticket (DB, SNCF, Eurostar…), ticketless (Thalys, Trenitalia) have contributed recently to distribution evolution; their role in the distribution mix should increase rapidly; while the mobile phone is becoming a new distribution channel (DB, SNCF, Thalys, JR…).
102 On board sales are not part of the above distribution-mix. Indeed, for all operators that apply mandatory reservation (SNCF, Thalys, Eurostar, KTX, Trenitalia, Renfe), on board is not a distribution channel. For others, sales on board contribute, marginally, to the distribution mix. Be it for direct sales or only for regularization purpose, train managers/conductors are being equipped with PDA, that, in addition to their information and ticketing tasks, will become an essential component of the ticketless process (DB, Thalys, SNCF, Trenitalia...).
103 All HS operators have developed a multi-channels policy.
104 Their distribution mix policies vary according to their context, but they all share two same main objectives, and try to reconcile them as they do not always concur:
Make the purchase of a rail ticket as easy, “friendly” as possible, while the distribution policy is a key contributor to the sales “push” policy; Reduce costs: distribution, indeed is not for free, and its costs are often underestimated, if not ignored, whereas profit margins in the rail industry are low; this has lead operators to consider costs as a key issue in their distribution policy. And costs vary greatly from a channel to the other.
105 HS operators draw on technology progress as far as they contribute to these objectives and are adopted by customers. They also have to consider the role and evolution of their sales force (which can slowly evolve, but can also be an asset).
106 Besides, HS operators want to be sold abroad, even if, for most of them, foreign markets offer only a minor, or very minor, share of the global revenue: GDS and now more and more the web8 have been the favourite vehicles. In the interim report some insight is given into Railteam, a new cooperation scheme that has just been launched between European HS operators, for facilitating the distribution of each other products.
107 Another sign of the will of HS operators to expand their market is that their websites do not limit themselves to rail, but propose services of a full-fledged on-line travel agency: car rental, hotel booking, packages, air tickets.
108 In China, station ticket windows are presently the overwhelming sales channel for regular speed trains. It is worthwhile that MoR/PDL devote attention to the distribution mix, and distribution costs, and consider a diversification of the distribution mix with more emphasis on internet and automats, and consideration to emerging technologies such as self-printed ticket or ticket on the mobile (or at least consider these issues during the recommendation phase).
8 Some web sites are available in several languages.
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2.1.8 Pushing sales
109 To push sales means:
Give impetus to the sales force and make it pro-active: that necessitates a very structured process, as good will and even experience do not suffice. The appended interim report illustrates with the example of SNCF policy. Use customers data bases for push marketing: sending e-mail, SMS, paper mail… “Standard” push techniques: point-of-sale promotion, promotion on external sites promotion, advertising (all forms), public relations… Often, but not mandatory, these efforts are supported by special prices.
110 A lesson from experience is that precisely “targeted” operations are more efficient than “all purpose” campaigns.
111 To date advertising seems to have been the favourite tool for pushing rail sales in China. Putting more emphasis on the efficiency of the sales force could also be rewarding and should be considered.
2.1.9 CRM and quality control
112 Retaining their customers is a major objective for all HS companies that operate on a competitive market. Following the example of airlines, initially an initiative of “classic” carriers (now copied by some low-cost), all HS operators have developed loyalty programs, with the intent of personalizing the companycustomer relationship.(examples of SNCF, DB, Trenitalia are outlined in the interim report).
113 But loyalty programs are not sufficient for keeping customers, all the less as they concern only a minority of customers: quality must be there, and HS operators have developed schemes for controlling how their customers perceive the quality of their service: examples of SNCF and Trenitalia illustrate.
114 There is no CRM/quality presently at Chinese rail, and the control of quality as perceived by passengers seems to be “loose”. Ingredients for a CRM/quality policy seem to be considered for PDL: that has to be confirmed.
2.1.10 Marketing and sales in the organization chart
115 Market knowledge, traffic forecast, yield management, distribution mix, push policy, customer relationship management, marketing/business plans, …: fulfilling all these tasks in a professional way and ensuring a consistent global policy requires will, continuity, resources, capability to impose market oriented solutions. Organization chart and working process must be designed to meet these requirements:
in the organization chart, marketing and sales are on an equal footing with transport operation; timetable (and capacity), prices and services in stations and on board are set, inter alia, on the basis of marketing findings; organization chart and process have been designed to ensure a close cooperation between marketing, operation planning, sales, trains and stations management with mutual feed-backs.
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116 This is clearly the case, from the information collected for the TA, at SNCF, Eurostar, Thalys, Renfe, DB, KTX9
117 Presently, there is no marketing nor sales division at MoR. In the future it is essential that marketing and sales be positioned at a high level in MoR and PDL organization chart in order to efficiently support dramatic policy changes indispensable for taking advantage of the leap of performance brought by high-speed.
118 An other prerequisite for efficient marketing and sales is to rely on a solid and high- performance distribution and reservation system able to process on line very large amounts of data in a very short time frame, to search, compute and display information and pricing, to manage the inventory, to interface with distribution channels, to ticket. JR has “MARS”, SNCF has TPF based “Resarail”… The description of a distribution and reservation system is not part of a chapter on marketing and sales. What is part, is that an efficient system is needed, very powerful due to the very high traffic volume MoR may expect to carry on PDLs; this system has to be designed according to specifications prepared by marketing and sales divisions, in order to meet their needs (with regard to the profit/cost ratio).
2.2 Main recommendations
2.2.1 Overview
119 On the basis of the findings of the interim phase, international and national experts have drafted recommendations; after discussion with MoR experts at the draft final report session, and with regards to the comments and recommendations made by the trainees, 4 main recommendations have been selected. They are presented below. Main Recommendations for Marketing & Sales: Two «high priority», or Level 1 (L1) recommendations and two recommendations considered as important, but second in priority if MoR has to make choices, or Level 2 (L2): Level 1-1: Create a Marketing «Unit»; Level 1-2: Design and implement a distribution policy that banks on new technologies; Level 2-1: Develop a Yield Management policy; Level 2-2: Develop a CRM policy.
2.2.2 Create a Marketing “Unit” (L1-1)
2.2.2.1 Marketing «Unit»: background
120 All large successful existing HS operators in the world rely on a strong Marketing «Unit», that whatever the organization, designs the offer, whereas there is no Marketing division at MoR.
9 And very likely at other successful HS operators, but as we do not have their organization chart, we cannot assert it in this report.
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121 The marketing process is a comprehensive process that should be a pillar of PDL’s policy and cannot be diluted among several departments/divisions, under several hierarchies.
122 A department (or division) especially in charge of the marketing process is therefore indispensable: it is a prerequisite if MoR wants to conduct a market oriented policy, or at least a policy that considers traveller needs and competition.
123 It is essential that this unit be located in the Chinese rail organization in such a position that it is really decision empowered, and can give orientations to more “technical bodies” such as transport planning, operations, sales...
2.2.2.2 Recommendation Marketing & Sales / Recommendation n°1 – Marketing Unit: Create a Marketing «Unit» that: designs the principles of the offer policy (for time table, prices, services, distribution/information…); whatever the organization, directly reports to a level empowered to impose marketing orientations; masters necessary marketing tools and process.
In their report, the trainees fully support that recommendation: «it is recommended that directly under MoR, an independent marketing department be set up”.
124 The Marketing «Unit» will be in charge of:
Understanding the market and its evolutions and the position of high-speed services on that market; Designing the strategy, and then the principles for trains services, pricing and yield management, distribution/information, CRM, on board services, services in station, intermodality, communication; Measuring and analysing the results.
125 There is no standard “copy-paste” organization that could perfectly address MoR needs as the organization depends on the “culture” of the country, of the company, and of the objectives it strives towards. In the draft final report is presented an example of matrix organization that MoR could adapt.
126 It is however necessary to state one point, as to the repartition of marketing functions between “central MoR” and PDL,whatever the scheme adopted: a. It is recommended that long term strategy and high-level orientations remain at MoR’s level, high in MoR’s hierarchy. b. In case a large part of marketing “operational” functions were shared out between PDL, it is also recommended that MoR:
o ensure consistency between main policies (for example, pricing policy);
o facilitate exchanges of experiences and results between PDL.
127 The Marketing Unit will rely on and have to master essential marketing tools, sketched below: a. Market knowledge tools to understand the market and approach the impact of possible initiatives: market observatory, panels, analysis of sales data provided by the reservation (mandatory reservation) and distribution system, «photo» surveys in trains and stations, traffic forecast tools, customer satisfaction index;
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b. Marketing plans to organize and control actions designed and decided with the support of marketing tools.
2.2.2.3 Samples representative of the populations served by PDL (panels)
128 The objective is to track travel habits and their evolution of populations served by PDL. The sample would be “limited” to the sole population directly served by high speed CRH.
129 Panels should be progressively set up for each PDL and their members interviewed every 3 years on their trips, all modes.
130 Interviewing methods could be diverse, mirroring the diversity of concerned populations:
Internet; Telephone; Mail questionnaires.
131 Size of the samples will be determined by MoR statisticians. For instance, for a 95% confidence interval a 1,000 people sample is necessary and sufficient whatever the size of the observed population.
132 For the selection of the interviewees, quotas would be useful, depending on available statistics:
at least quotas based on the population of areas served by PDL; if possible quotas by large market segments: old, young, business… within each quota interviewees would be selected at random.
2.2.2.4 Knowledge and follow up of PDL customers
133 A major source will be the analysis of sales data provided by the reservation and distribution system (TRS, PTSS…).
134 For marketing purpose, it is at least necessary to register and store for each ticket sold:
Origin-destination, legs, tariff(s), revenue, travel date, distribution channel. Regular standard sales analyses are necessary: for PDL for a marketing purpose; monthly sales analysis per main OD (origin-destination)/traffic/tariffs is the minimum prerequisite10.
135 As soon as possible that minimum should be completed by a cross analysis by trains (when mandatory reservation (or inventory management)) and distribution channels.
136 MoR should:
review the content of their sales results data bases and traffic analysis presently done; think on possible necessary improvements to better support the future PDL marketing policies; if necessary, initiate IS developments (software/hardware) and process to collect and exploit data.
137 In addition, “photo” surveys should be carried out for each PDL, in order to create the basis of PDL customers knowledge. These “photo” surveys will consist in printed questionnaires filled in on board (when necessary with the help of rail staff), with
10 Exploitation of sales data is the basis for other applications such as accounting, finance, with their own requirements, but they are out of the scope of present marketing recommendations.
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questions on personal features of the travellers (age, residence, occupation...), and on their trips during last 12 months (OD, mode, tariffs/prices paid, reasons for travelling...).
138 Surveys11 will include questions on the perception customers have of the quality of services and the adequacy to their needs, customers being invited to rate services (see also recommendation on “customer satisfaction tracking”).
139 On each surveyed train, interviewees may be chosen according to a predetermined interview plan, aimed at avoiding biased results due to interviewer’s damaging initiative.
140 At least during the first years of PDL operations, these surveys should be performed on a yearly basis. After a few years of PDL operations it will be possible to reduce the periodicity (for example every 2-3 years).
141 Later on, MoR will also have the capability to apply “lighter” or more precisely focused methods.
142 Forecast tool for major changes of the offer. Mastering such a tool is necessary with regards to the upheaval brought by PDL in the Chinese railway scenery in the coming years. At international level, each main HS operator has its own tool.
143 In order to consolidate the current traffic assessments for future PDL, it is recommended that MoR consider the control of a traffic forecast model as a priority, and, to start with, buy an existing traffic forecast model and customize it or develop a new one.
144 Traffic forecast is not only a matter of software that can be purchased “on the shelf” from a software house or railway operator, but also of statistical skills that MoR certainly has, and of market knowledge and experience, that he has not yet. It is therefore all the more necessary to carry out as soon as possible samples and trains surveys mentioned above.
145 Solidity of traffic assessments for the future PDL is essential as these assessments should impact the entire policy: number of train sets and, very high level, timetabling, pricing orientations.
146 Models are used for brand new services; they can also be for meaningful modification of existing services: time table or prices.
147 Approach of the possible impact of marketing initiatives. For more “limited” initiatives such as the creation of a new tariff that concerns only some market segments, or light modification of the time table, models are not sensitive enough: ad hoc mini-samples of concerned populations should be extracted from the sample or from passengers having answered questionnaires for PDL customers knowledge, and submitted to face to face or group interviews.
2.2.2.5 Customer satisfaction tracking
148 In a competitive market, it is essential to know the perception the customer has of the service (or product) offered to him/her for the simple reason that he/she can compare with what competition offers. More particularly in China with the change for better of the living standard, customers will, very naturally, become more demanding towards the value for money of services and products they will buy.
149 That culture of “listening to the customer”, which does not mean that the provider must do what the customer wants whatever the cost, is not yet prevalent at Chinese rail, although MoR and Railway Bureaus have already made customers satisfaction surveys.
150 With PDLs, it will be necessary to develop that culture of “listening to the customer”.
11 Notice: if MoR implements the recommendation on loyalty programs (see beyond), it will rely on an additional source of information on part of its customers.
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151 Furthermore “listening to the customer” will contribute to that knowledge of the market, MoR will be short of for the design of the first PDL services.
152 The matter is not to create a brand new process but to capitalize on previous experiences at MoR and Railway Bureau and create a basic tool, that can be rapidly and systematically implemented by MoR without specific market knowledge prerequisites
2.2.2.6 Principle of a CSI - Customer Satisfaction Index
153 Questionnaires are distributed to travellers on board CRH and in PDL stations:
on a yearly basis; during a limited sample of days, representative of main traffic periods; the station questionnaire is specific.
154 With regard to the CRH questionnaire, in order to limit the work load for MoR, at least in the beginning while the marketing department/division will not be fully operational, it is proposed to merge it with the “photo-survey” questionnaire, part of the questions bearing on the perception travellers have of the quality of service, Questions are simple and directly connected to the experience the passenger has in “this” train, in “this” station.
155 Passengers give a mark for each item from X to Y (MoR to decide a good metrics adapted to Chinese perception).
156 Results are analyzed by train and station, grouped together by PDL, section, train type, item... The analysis of the results, including the comparison of the evolution of the marks, or of the differences of marks between stations, PDLs, groups of CRH... is a powerful tool for the definition of the service and for the management of the PDL in general.
157 Dashboards summarize and visualize results.
2.2.2.7 Market observatory
158 In addition to information provided by the sample and the PDL customers follow up, a small team should be full time dedicated to the observation of the evolution of the market, in charge of searching information on:
offer, traffic, projects of competition (air, bus, car); policy of HS operators worldwide and evolution.
2.2.2.8 Policy definition and marketing plans
159 MoR has to draw-up complete and consistent policies including timetable, prices, services, work organization, staff training, distribution channels, communication.
160 Marketing plans are the appropriate tool:
for ensuring consistency; for being the frame for the implementation of decided action plans, tracking results and; adopting possible corrective schemes.
161 It is recommended to design marketing plans:
an overall marketing plan that draws the big picture:
o main objectives;
o main milestones;
o resources;
o expected high-level results.
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marketing plans by markets.The list of plans has to be determined by MoR/PDL, for example:
o main routes: ex Beijing-Shanghai...
o main categories of customers: ex business travels, seniors, frequent travels Shanghai-Nanjing...
162 Each marketing plan should, include:
clear definition of targets; analysis of available data (c.f. samples, follow up of PDL customers as soon as data are available); when necessary recommended necessary studies/surveys; encompass involved components of the offer (schedules, services in stations and on board, prices, distribution…); promotion, after sales; action plan with milestones, necessary means/resources, budget, expected financial results, process for tracking results.
163 For a start, a 3 year duration for the marketing plans, with a yearly update, seems reasonable.
2.2.2.9 Marketing «Unit»: action plan
Time scale for an action plan for Marketing & Sales Year 1 Year 1 / Year 2 Year 2 / Year 3 MARKETING UNIT
1 Create a core team: q outlines the target "unit": tasks, organization chart, resources (numbers, qualifications…); q drafts the theoritical content (components, actors, tasks, links) of marketing plans.
2 Drafts a first rough overall marketing plan: q on the basis of data (scales data, market data) that are already available at MoR or that can be very easily reached; q it is important that the first overall marketing plan be endorsed at MoR upper decision level. Designs an action plan to set up necesserary marketing tools. 3 Starts working on functionnal specifications of necessary IS 4 developments.
Set up tools, including the functional design of necessary IS 5 development when the existing IS does not support such tools 6 Test simplest tools, for instance:
q a Beijing - Shanghai panel;
q "photo" surveys on Beijing - Tianjin;
q CSI on Beijing - Tianjin (CRH / Beijing South station, Tianjin station…)
First update of the overall marketing plan on the basis of first 7 results 8 Initiate first plans by markets
Exhibit 6: Roadmap for implementing the recommendation for Marketing Unit
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164 Should MoR retain only one unique result of the TA for area 2, experts recommend that it adopt Recommendation n°1 / Marketing Unit (L1-1).
2.2.3 A distribution mix that banks on new technologies (L1-2)
2.2.3.1 Distribution: background
165 All HS operators rely on a large range of distribution channels for developing sales and their profitability: station ticket offices, automats, travel agencies, Internet, call centres and take advantage of up-to-date technology: mobile phone, ticketless, USB key...
166 In China: station ticket windows are presently the overwhelming sales channel.
167 But meanwhile, a part of the Chinese society is very ”IT oriented”: nd Chinese is already the 2 language on the Net; in July 2007 China had 135 million Net surfers; st China is the 1 mobile phone market in the world, with 700 million subscribers anticipated in 2010.
168 Giving customers the possibility to easily find out about train schedules, tariffs, services and buy them at home, from the office, indeed from everywhere thanks to internet and the mobile phone, is an asset in the competition with private car (that waits for the driver on the parking place) and air (that with the electronic ticket has largely simplified procedures).
169 Besides, automated channels are cost savings for the companies.
2.2.3.2 Distribution: recommendation
Marketing & Sales / Recommendation n°2 - Distribution: Bank on «new» technologies to make information and purchase easy for customers + cost efficient for operators + push information and sale trough: a powerful website; call centres; automats (1 per ticket office?) tickets on the mobile when the technology is mature. in order to: meet traffic increase; contribute to gaining and satisfying new customers through easy informing and buying.
2.2.3.3 Distribution policy
170 While still relying on station ticket offices, it will be necessary to develop new distribution channels, resorting a priori, with a variable intensity, to all available channels: automats, call centres, internet, mobile phone, thus banking on present strong points offered by the present economic and technical very rapid development of China.
171 Although new technologies emerge, such as NFC (Near field communication) for, but not only, mobile phones, it is recommended that MoR begins the diversification of its distribution mix with mature technologies and process that can be easily mastered by large numbers of customers.
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172 Beyond are outlined recommended priority orientations for the future distribution policy.
2.2.3.3.1 Call centres
173 In a country so “(mobile) phone friendly” as China, call centres should be a privileged information vehicle12.
174 They are also a sales channel. They offer an excellent vehicle for sales to customers who own a bank card; the advantage is more limited for customers who do not. For customers who have a bank card, from the moment that the payment problem is solved, the simplest way is that the customer gives his/her credit card references to the call centre agent, with two options:
tickets are sent to customer’s home; ticket references are sent to the customer (by phone, SMS, paper mail), who has then just to withdraw his/her tickets on an automat just by keying in references.
175 An alternative when withdrawing tickets on an automat, is to pay with the bank card when withdrawing instead of when booking through the call centre: customers get a reference number when they book and key it in the automat. In that last solution, customers have to withdraw their tickets in advance in order to permit to re-inject in the system unpaid tickets and limit the number of missed sales.
176 Whatever the solution, MoR has beforehand:
to make necessary agreements with banks; develop necessary IS, and IT interfaces with bank systems.
177 Another solution can be considered: the withdrawal of unpaid tickets at a station ticket office that solves the payment issue, but does little for solving the queues issue,
178 A partial solution being however then to specially dedicate some ticket windows to the withdrawal of already booked tickets (through call centres (see above) or the internet (see beyond).
2.2.3.3.2 Develop Internet sales
179 As with call centres, an important issue will be the ticket issuance: several solutions are theoretically available:
for customers who have a bank card, as for internet sales, ticket can be sent to home or withdrawn on an automat. Payment process is similar to that with call centres: on line payment is recommended, with then a very simple dialogue: just key in bank card references. In addition, there is, technically, the possibility for the customer, once the ticket paid online, to print himself/herself the ticket at home, or at the office (on that possibility, however, see comment beyond); for customers who do not have a bank card, withdrawing at station ticket offices would not really alleviate the hassles of long queues; as already mentioned, allocating some ticket offices to already booked ticket (see above) could however partly solve the problem.
180 Self printed ticket: that solution is still very marginal at international level; Its implementation, that will imply that the access to trains be checked by devices able to read 2D bar codes: automatic gates or PDA held by agents, should be considered only in a second stage.
12 A by-advantage of call centers, is that they do not necessitate to «push the walls» of the stations, and can be located in whatever place.
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181 As a first step the withdrawal on automats or mailing to home of prepaid tickets is recommended13.
2.2.3.3.3 Banking on the mobile phone wave
182 To start with, a system that has already been proven at international level should be tested: with regard to the success of MMS mobile phone ticketing at various high-speed operators, a first experiment of sending the MMS image of the ticket to the mobile, including a 2D barcode, is recommended.
183 Ticket could be naked-eye checked at access control (or on board by ticket inspector), but that does not protect from unscrupulous customers who would tamper with the MMS text.
184 To prevent that risk of fraud, agents checking access to the platforms and/or train ticket inspectors should be equipped with handheld computers able to read the barcodes.
185 Another solution would be to install access control terminals able to read barcodes. Passengers who could not display the MMS due to an empty battery would be considered as without ticket.
186 More recent techniques such as:
contactless NFC, in spite of their advantages (for instance possibility to read the ticket even when the battery is empty); direct payment with the mobile thanks to bank data stored in the SIM card; loading the ticket in the SIM card of the mobile; should be considered only subsequently when they will be totally mature (except for experiments).
2.2.3.4 General comments:
187 Development of diversified distribution channels heavily depends on the development of bankcard payments, even if, in a first stage, specialising some station ticket offices to payment and withdrawal of ticket booked through internet or call centres can offer a partial solution. It is important to control each single transaction, not only to combat fraud, but also for after sales and customer service issues. This control is even more important if payments by foreign cards, i.e. Visa or MasterCard, are possible.
188 Trainees in their report support the recommended distribution mix, but rightly insist that electronic payment be used when it is mature. That does not prevent from developing information on the internet or through call centres. It does not prevent either from buying tickets on the internet or through call centres, but then either getting them by post mail or withdrawing them on automats.
189 Online payment would then be considered only in a second phase.
190 Intense and widespread communication - TV commercials, advertising in newspapers, in stations, on board trains - will be necessary, in order to inform Chinese customers of the advantages of the new channels, and on how to use them, then to convince them to adopt them.
13 Notice: as MoR/PDL website(s) will be better known and more used, it can be for MoR/PDL a source of additional revenue, if they decide to use it also as a vehicle for advertising by companies that operate on competitive markets.
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2.2.3.5 Distribution: action plan
Time scale for an action plan for Marketing & Sales Year 1 Year 2 Year + DISTRIBUTION Design a global distribution policy and distribution-mix with 1 regards to: q pros and cons of the various possible channels, their technical and economic feasibility; q the expected attitude of Chinese customers: an analysis based on present and anticipated situation of the Chinese market and society, of present situation in Chinese stations, of MoR strategic objectives. Design functional specifications and initiate IS developments 2 to enable Internet sales; Launch preparation (premises, IS, staffing…) for information 3 and sales through call centres; Initiate discussions with the banking system and prepare 4 functional specifications of related IS developments.
5 Launch call centres and Internet services for information; Launch sales without on-line payment possibility on the Internet and through call centres in a tes area, and then 6 generalize; Multiply sales automats in stations, as an additional selling tool and to facilitate the withdrawal of tickets booked on the 7 Internet or through call centres; Design specifications and initiate IS developments for enabling a "dialogue" between mobile phones and the central system, MMS with 2D barcode for a first experiment (for instance limited to Beijing area for the purchase of full fare 8 tickets in CRH trains).
9 Launch remote sales with on-line payment when mature.
Exhibit 7: Roadmap for implementing the recommendation for Distribution
191 Comment: resorting more and more to new distribution techniques does not mean the vanishing of station ticket offices: even if their share in the distribution mix declines, they will remain indispensable for a (very) long period in order to:
Contribute to meet the increased demand; Serve customers who are not at ease with “modern” techniques or even call centres.
192 A scheme to develop the efficiency of the sales force, with a high value for money is presented in the interim report.
2.2.4 Develop a Yield Management policy (L2-1)
2.2.4.1 Yield Management: background
193 All airlines resort to Yield Management to optimize revenue.
194 Among HS operators, SNCF, Eurostar, DB (partly)...resort to YM; JR do not.
195 If MoR wants to take full advantage of HS investments and to reach its traffic targets, it will move:
from a situation where a few heavy trains offer a number of seats insufficient to meet the demand; to a situation where trains completely fill in the distance-time graph.
196 Simultaneously, as PDL will develop, the improvement of the standard of living in China will increase the number of cars and favour air traffic, all the more as low cost will continue increasing their offer.
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197 As a consequence, rail will no longer be in a position with “few” trains, most of them full, but in a position with much more trains, with the risk for several of them to run with a low load factor: a Yield Management policy would overcome the risk.
198 There are 2 prerequisites for applying Yield Management:
enforce mandatory reservation, or at least on line inventory control, with indication of the tariff for each seat sold. We did not have the opportunity to review it in details, but MoR’s experts said during the draft final report meeting that the present inventory control for CRH meets this prerequisite; a pricing policy with several types of prices (level/conditions) and quotas that can be nimbly adapted to meet market and sales conditions and changes: the present pricing policy at Chinese rail does not meet that prerequisite.
2.2.4.2 Yield Management: recommendation
199 With regards to above considerations, Yield Management is recommended. YM will not ensure, alone, the success of PDL (adequacy of the time table, pricing policy and service quality are essential contributors), but it will permit:
to entice passengers who have less time constraints but more budget constraints to take low load factor trains, thus releasing seats for high contribution prices on peak traffic trains; on long haul trains with several stops, to protect as necessary most contributory O/Ds.
Marketing & sales / Recommendation n°3 – Yield Management: Assuming that the pricing policy is differentiated enough and that the inventory control really permits to manage quotas of reduced prices: Implement a YM policy on PDLs that controls quotas by tariff/OD; Starts with a small number of reduced tariffs, grouped in a few classes of service open on trains/legs that are supposed to be comparatively less loaded; Very short distance trains (ex: Beijing-Tianjin) would not be Yield managed, but short distance legs on long distance trains (ex: Beijing-Tianjin on Beijing Shanghai trains) will be Yield managed.
2.2.4.2.1 Type of YM
200 As MoR already applies reduced prices, even in a very limited scale depending on some passenger segmentation (young, disabled…), and, more, as it may need to protect capacity for business customers on the PDL, a “low cost airline”-like yield management (at a purchase time, only one price is available, and price increases as departure date nears, no flexibility14) is not recommended.
201 Instead, a “classic airlines-like” YM, as applied by European HS, is recommended: it enables to differentiate, and thus when needed protect/favour or restrain, tariffs and O/D. The above recommendation does not mean that the policy should be initiated with a large number of “classes of service” (a “class of service” regroups, for a plane or a train, tickets with similar levels of revenue), but the possibility to manage differently main O/D and large tariff categories is essential in PDL case.
14 No exchange, no refund.
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2.2.4.2.2 Mandatory reservation
202 Except DB15, all HS operators that resort to YM base it on mandatory reservation.
203 It is recommended to base YM16 at Chinese rail on mandatory reservation, as it is the only way for exactly controlling train occupation by revenue (tariff/OD), and thus for optimising passengers repartition between trains in order to maximize global revenue.
204 YM does not either prevent from overbooking: overbooking indeed is recommended as it contributes to increasing the load factor, but overbooked passengers should finally travel seated.
205 If there is no data base limitation, it is recommended to open sales/reservations at least 2 months ahead of departure date.
2.2.4.2.3 Experiment on Beijing-Shanghai
206 A line such as Beijing-Shanghai, where all types of PDL traffic can be encountered, is a good candidate for such an experiment:
Business as well as leisure traffic; Middle distance legs, where road is the main competitor (Nanjing-Shanghai, 300 km); Long distance legs, where air is the main competitor (Beijing-Shanghai, 1,300 km) and where night trains may continue to run; And even OD such as Beijing-Tianjin (110 km) that, depending of the type of exchanges between the two cities, may be closer from HS suburban traffic than from a “true” high-speed line.
207 Indeed it is recommended to not yield manage short distance CRH trains running only between Beijing and Tianjin; on the contrary Beijing-Tianjin legs on Beijing-Shanghai or Beijing-Nanjing trains should be yield managed.
208 As it will be the first yield management for MoR and for Chinese travellers, it is recommended to do it simple: a limited number of reduced tariffs, grouped in a few classes of services open in trains/legs that are supposed to be comparatively less loaded. Clear communication on the process and its advantages for both MoR and customers will be necessary.
15 But DB controls on line the number of tickets sold at reduced tariffs
16 Reminder: applying YM does not prevent from carrying standing passengers, but their number is under control, and OD where “standing seats” are open can also be controlled (i.e, for example, possible on Beijing-Tianjin, but not on Beijing-Shanghai).
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2.2.4.3 Yield Management: action plan Assuming the 2 prerequisites are fulfilled:
Time scale for an action plan for Marketing & Sales Year 1 Year + YIELD MANAGEMENT
1 Create a small core team, in charge of:
q outlining the YM policy; q designing the functional specifications of the software (functions, capability…); q then considering the alternative: to buy an existing YM software and customize it to PDL needs vs develop a new one. Start collecting as many data as possible on the Beijing - 2 Nanjing - Shanghai markets; Recruit YM analysts and prepare their training; 3 Consider the value of getting support from seasoned YM 4 specialists:
q to help to determine main tasks and main necessary resources; q to outline the main characteristics (in particular the content of "classes of service") of the future Yield Management;
q to train the first analysts that will be in charge of operating the software.
5 On the basis of the achievements of Year 1:
q Enforce on Beijing - Shanghai when CRH are in operation.
Exhibit 8: Roadmap for implementing the recommendation for Yield Management
2.2.5 Implement a Customer Relationship Management policy (L2-2)
2.2.5.1 Customer Relationship Management: background
209 Following the example of airlines, all international HS train operators have developed loyalty program schemes.
210 PDL operators will operate on a market characterized by the rapid increase of the standard of living of city dwellers and the development of competition, with rail travellers courted by airlines and carmakers, and, for some of them, more and more used to marketing process such as push marketing and loyalty programs.
2.2.5.2 Customer Relationship Management: recommendation
Marketing & sales / Recommendation n°4 – Customer Relationship Management: On the basis of existing “frequent flyer” programs (air/rail/companies), define and implement a 2 level loyalty system: For business travellers and travellers who – although they travel for private purpose – want status recognition; For other travellers, for leisure or other private purpose.
Trainees report: « CRM is recommended for the operation of PDL since the very beginning »
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2.2.5.3 Principle
211 There are diverse possible loyalty schemes: free membership or participation submitted to an entry fee, scheme for only one enterprise or for a group of associated companies (airlines, hotel chains, car rentals, department stores…). Choice between the various possibilities depends on MoR.
212 All schemes have a common point: the more a customer consumes, the more benefits he/she gets (free air or train tickets, free hotel nights, free meals ….). Choice of benefits depends on MoR.
213 The program for leisure travellers will be a classic “earn at travelling” program, benefits depending on possible partnerships between PDL operators and other providers. It is proposed that membership be free.
214 The program for business travellers will:
include the features of the program for leisure travellers, with possibly more miles (or points) per travel expenses; in addition, put the emphasis on specific services and status recognition: as indicative list of services: access to business lounge, dedicated telephone line for information and ticket booking, dedicated spaces in trains, special parking areas, reservation of taxis…
215 Membership can:
be free, but then with a minimum level of consumption to benefit from specific advantages; or submitted to an entry fee.
216 If MoR wants to stress the “recognition” side of the offer, the “business” program could be reserved to the 1st class.
217 Loyalty programs necessitate a software application that can:
either be a software purchased “on the shelf”, and, very likely customized to MoR needs, linked to the reservation and distribution application (TRS/PTSS); or a specific development appended to it.
218 Consumption results and personal data on members of the programs will be stored in dedicated data bases that will support push marketing (ad hoc information, promotions… sent by SMS, e-mail, paper documentation), ad hoc questionnaires, and market analyses.
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2.2.5.4 CRM: action plan
Time scale for an action plan for Marketing & Sales Year 1 Year + Year ++ CRM Design main features of the PDL loyalty programs. Specify 1 and set up necessary: q software developments (buy an "on the shelf" CRM software and customize it vs develop a new one);
q data bases on frequent travellers profiles & consumption.
Initiate the first program for business travellers on the 2 occasion of the launching of Beijing Shanghai PDL services.
3 Extend the program to other PDL
Exhibit 9: Roadmap for implementing the recommendation for CRM
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3 PRICING & TARIFF
3.1 Summary of the findings of the interim Phase
219 The assessment of the major international high-speed railway operators revealed one big commonality: All of the operators were flexible in setting their tariffs and offers for the high-speed railway operation.
220 Some of them have to respect legal restrictions e.g. for the maximum increase of their tariffs per year. This means, in some countries railway operators may only raise their tariffs in a bandwidth of +/- 2% of the annual increase of the average consumer prices.
221 The offers and tariffs of the different Railway operators vary in a broad way. This makes a direct comparison not easy. All of them have special offers for certain target groups / segments, as e.g. students, business travellers… During their training session at SNCF in Paris, the Chinese trainees developed several ideas, which are all considered in the following recommendations.
3.2 Recommendations
222 The nine recommendations in this chapter were developed taking the following vision for the pricing and tariff system for PDL as the basis:
223 Introduce a flexible, affordable and customer focused pricing and tariff system for PDL that ensures the short-term, mid-term and long-term economic success of MoR’s PDL operations.
224 We have identified three key players that are involved in defining the new pricing and tariff system. Those are besides MoR, the Chinese Government and other operators of public transport like regional bureaus and local public transport authorities.
225 Furthermore some requirements need to be fulfilled in order to implement the recommendations. Those are not pricing specific, so they are not detailed within the pricing and tariff workstream.
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Chinese Government MoR: PDL division Partners for Combined Transport
Decision for a framework Decision on the actual tariffs 1 MoR / Regional Bureaus of rules for railway tariffs within framework Combined Tickets for PDL and Classical 7 Trains 3 High standard tariffs in combination with discounts for off-peak travelers, frequent travelers, speical user groups Local Public Transport Framework includes 4 Higher Uplift for 1st class ticket Authorities
rules for the regular 5 Afftractive Package Prices 8 Combined Tickets with local public 2 adaption of tariffs to the transport 6 Season tickets for commuters general price development
Provision of Financial resources Introduction of Links between different in case of discount rules tariff controlling system means of transport (stations, requested from State Council timetabling)
Requirement Requirement Requirement Exhibit 10: Overview of Recommendations
Pricing & Tariff / Recommendation n°1: Framework of rules for railway tariffs for PDL
226 Currently Chinese railways operate a profitable business. But the revenue per passenger kilometer (pkm) rose much slower in the past years than operational costs. Revenues per pkm rose only by 0.9% annually while operational costs rose by 3.8% per pkm annually.
227 As currently the maximum prices are set by the people’s congress the process for price increases currently is quite complex and time consuming.
228 On the other hand intermodal competition rises by more airline connection between metropolitan areas in China and increased capacities on Chinese airports. Individual transports (cars) get more and more important for shorter distances (< 400km) in combination with a good motorway infrastructure.
229 In order to have the capabilities for a quick and flexible reaction on changes in competition and traveller demands, MoR needs the freedom or a framework of rules to define their railway tariffs on their own. By setting a framework of rules the Chinese Government still has influence on the pricing and tariff system of PDL, but the PDL division has the flexibility to react to competition and market demand quickly.
230 This recommendation is a prerequisite for all the other recommendations. The rules of the framework have a substantial influence on the formulation of the other recommendations as well and might even prohibit some of the recommendations.
Pricing & Tariff / Recommendation n°2: Regular adaptation of tariffs to the general price development
231 The prices and tariffs for classical lines and CRH have been stable for many years and have not been aligned to the general price development in China (cf. Exhibit 11).
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7,0%
6,0%
5,0%
4,0%
3,0%
2,0%
1,0%
0,0% 2005 2004 2003 2002 2001 -1,0%
Pr YY CN Intercity Traffic Fare YY CN
Exhibit 11: Consumer Price Development China (Source: National Bureau of Statistics of China)
232 The standard tariffs have not been changed for years. Occasional price increases during peak times like the Chinese New Year led to intense discussions about this policy in the Chinese public.
233 We recommend a regular increase of railway fares, which takes the general price development as a point of orientation. This recommendation helps to keep railway fares aligned with the development of operational costs. It also helps in terms of communication of price increases, which is a sensitive topic. A sudden strong price increase is usually less understood by the public than regular small increases.
Consumer High price readiness / Low price readiness / willingness Willingness Additional benefit not Price increase not existent or not to be Price increase possible possible communicated Price increase Additional benefit existent Communicate (automatically) Focus or to be communicated Price Increase successful
Intl. tourists Today’s situation in China
• Higher speed • More comfort
Exhibit 12: Special Requirements for price increases (Source: IBM)
234 As most consumers’ spending capabilities are low in China, it is necessary to communicate the reasons and the benefits combined with a price increase. This could be the improvement of quality and speed of the trains or the frequency of certain O/Ds. If this communication fails, and people do not see any benefit with increased prices, the railways risk to lose market share to competitors like airplanes, busses or individual car traffic.
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235 So communication is key when increasing railway fares and this recommendation helps to communicate such a pricing measure to the public.
Pricing & Tariff / Recommendation n°3: High standard tariffs in combination with heavy discounts
236 As mentioned previously, the standard tariffs of CRH are quite low compared with the standard tariffs of other high-speed train operators17. But China has only a low price level for the standard tariff – as soon as discounts of international railway operators are considered, the tariff level of China becomes relatively high.
237 Exhibit 13 illustrates this finding for the case of the TGV in France. While the standard tariff for CRH is lower than the “Tarif Normal 1” and the “Tarif Normal 2” of the TGV, the tariffs of “Prem’s” are lower than the tariff for CRH. The ticket of the “Tarif normal” are exchangeable and refundable, while the tickets for “Prem's” are not exchangeable and not refundable. Prem’s tickets need also to be purchased online.
238 Since there are quotas on the Prem’s tariff in peak times this tariff is sold out pretty early, while in off-peak times it is easy to get this tariff. But the transportation service in terms of O/D, speed, service on board etc. is the same. It is also not required to hold a railcard in order to get the reduced tariffs. Flexible and price sensitive passengers will usually buy a ticket for the Prem’s tariff, inflexible (and more wealthy ones) will pay the standard tariff.
0,0900
0,0800
0,0700
0,0600
0,0500
0,0400
Adjusted price for0,0300 inhabitants
0,0200
0,0100
0,0000 TGV: Prem's 3 TGV: Prem's 1 TGV: Prem's 2 Standard Tariff TGV: Tarif TGV: Tarif Normal 2 Normal 1
Exhibit 13: Tariff Comparison by Income per inhabitant adjusted by PPP (Source SNCF Website)
239 We think this type of pricing policy helps to penetrate the market very well, since it offers tickets for passengers, who have a high willingness to pay and need flexible tickets. At the same time passengers with a low willingness to pay have the possibility to take a train, when there is less demand (price differentiation).
17 This comparison considers different purchasing power and different income levels of the population.
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240 So we suggest a relatively high standard tariff in combination with heavy discounts for PDL. That way a larger part of the Chinese population can afford to purchase a ticket for a PDL train. From a psychological point of view it is more favourable to reduce prices heavily in off-peak times instead of increasing them in peak periods.
Pricing & Tariff / Recommendation n°4: Higher Uplift for 1st class tickets
241 During our research for the interim report of this project we found out that usually railway operators use a multiplier of 1.5 in order to calculate the price difference between a first and a second class ticket. Also considering different purchasing powers and income levels China has by far the lowest price for 1st class tickets (cf. Exhibit 14).
242 We recommend an increase of the multiplier for PDL for first class tickets from currently 1.2 to 1.5, since we think that the current price difference for the two classes does not reflect the difference of service in an adequate way.
243 This recommendation also secures the availability of seats in the first class for passengers with a high willingness to pay and high requirements in terms of comfort and service. This recommendation is easy to implement and has an immediate impact on the financial situation of Chinese railways.
0,1600
0,1400
0,1200
0,1000
0,0800
0,0600 Adjusted price for inhabitants
0,0400
0,0200
0,0000 China Italy Japan France Spain Germany
Exhibit 14: First Class Tariff Comparison by Income per inhabitant adjusted by PPP (Source: Websites of Operators, IBM Analysis)
st 244 The effect of cheap 1 class tickets can be currently seen on the O/D Beijing – Tianjin, where 1st class tickets often are sold out earlier than 2nd class tickets.
Pricing & Tariff / Recommendation n°5: Attractive Package Prices for business travellers
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st 245 Often business travellers look for more comfort and service than usually in 1 class is offered. In this area railways can learn from airlines, where business class passengers get free drinks, meals and newspapers on board. DB introduced a similar service for certain O/Ds (like Frankfurt – Berlin), where 1st class passengers get a free newspaper and breakfast on specific trains (“Sprinter”). These services are all included in the supplementary fare of the ticket.
246 Package prices are a common practice in industries like telecommunications or travel. The special advantage for the provider of the service is that he gets always the full fee for the package, no matter whether the customer uses all the services that are included or not. Since all the first class passengers purchase the same services, the operator can provide those services for reasonable costs (economies of scale).
247 The advantage for the customer is more convenience and more comfort, since he or she does not need to order and pay for each additional service extra. Such packages will enhance the competitive position of railways, since passenger can get now on the trains the same service level than on airplanes.
Pricing & Tariff / Recommendation n°6: Season tickets for commuters
248 Before deciding on the introduction of season tickets, a decision needs to be made, whether commuters can be a target group for PDL at all. Commuters also have special requirements in terms of seat reservation, travel frequency of trains and capacities during peak times. These items are dealt with in other workstreams.
249 For CRH currently commuters seem not to be a target group, since no season tickets have been introduced for this customer segment so far. So commuters need to buy single tickets for each trip, which makes it relatively costly for them to use CRH for travelling to their workplaces (cf. Exhibit 15). If commuters become a target group for PDL, season tickets for this customer segment need to be introduced.
250 We see a potential for this customer group for PDL mainly in the metropolitan areas of Beijing and Shanghai. PDL can be an attractive offer for commuters with a long travel distance to their workplace every day. International operators of high-speed trains usually offer special tickets for commuters. The tariff level of such tickets varies substantially across the countries. In Japan commuters need to pay a relatively high price for such a ticket and so are an attractive customer group for the operator, the tariff level is substantially lower in Italy, Spain and Germany.
251 International railway operators also offer different types of tickets for commuters. While commuters can buy classical season tickets like monthly or annual cards in Germany, commuters in Spain can buy special passes that allow them to travel in AVE for a predefined number of times.
252 Integration with other means of public transport is a key requirement for commuters (cf. Recommendations 8 and 9).
253 On the new origin-destination Beijing – Tianjin already several commuters use the train for the trip which lasts less than 30 minutes.
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3,0000
2,5000
2,0000
1,5000
1,0000 Relative price for inhabitants
0,5000
0,0000 Italy Spain Germany China - CRH Japan
Exhibit 15: Second Class: Tariff Comparison by Income per inhabitant for monthly tickets (Source: Websites of Railway Operators, IBM Analysis)
Pricing & Tariff / Recommendation n°7: Combined Tickets for PDL and Classical Trains
254 The linkage between classical trains and PDL is very important for the future success of both classical trains and PDL. PDL transports passengers from A to B at a high speed, but does not serve all stations. Those stations are served by classical trains and so classical trains play a very important role in taking passengers to PDL stations and to their final destinations. For those passengers it is more convenient to buy one ticket for the whole trip. It is also less costly for them, since tariff systems are usually constructed on a diminishing scale.
255 The advantage of railways is the reduction of sales costs and a better utilization of capacities, above all, in classical trains. Since a combined ticket is an attractive offer for passengers, this recommendation will also enhance the competitive position of railways in China.
256 A prerequisite for this recommendation is the easy and fast changing of trains in the stations.
Pricing & Tariff / Recommendation n°8: Combined Tickets with local public transport
257 The possibility to purchase combined tickets which are valid on PDL and on other means of local public transport is very important for commuters, but also for the standard traveller. Usually the trip does not end at the railway station, but the passenger needs to go to another place at the destination. The purchase of an additional ticket for local public transport is not convenient, since it involves:
to find the ticket office or the ticket machine; to wait in a queue; to understand the tariff system of the local public transport.
258 Railways and local public transport can promote each other by offering combined tickets. Usually commuters will need to pay less for the combined season tickets than for the
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single season tickets for the train and for the local public transport. Another option is that the season tickets for the train already includes the right to use local public transport.
259 DB offers the so-called “City-Ticket” for holders of the BahnCard, which means that BahnCard holders who purchase tickets for a certain O/D can use local public transport to get to their final destination free of charge. If a BahnCard holder buys a return ticket, he or she can also use local public transport free of charge to get to the railway station on the return. This is a very attractive offer for German passengers, since local public transport is quite costly and the traveller does not need to buy a separate local transport ticket at the ticket machine.
260 Certainly this recommendation requires good linkages between PDL stations and local public transport and an agreement between MoR and local transport authorities on how revenues will be shared.
261 Considering these aspects, it should be evaluated, if the existing and successful Yikatong cards for the Beijing urban transport could or should also be used as an electronic ticket for railways.
Pricing & Tariff / Recommendation n°9: Use a market oriented tariff calculation formula
262 The current cost-plus-oriented pricing system should be moved to a market oriented pricing in order to take into account:
Changes of the competitive situation (airline tariffs vs. railway tariffs); Changes of traveller behaviours; Consideration of a balancing of capacities.
263 This means, in addition to the price per km, the uplift for first class tickets and RMB/km, additional factors have to be considered for calculating market and customer oriented tariffs. These could be e.g.:
Speed; Comfort level; Competitive situation to other means of transport.
264 In addition to these factors a distance-diminishing formula should be used to make long distance trips even more attractive. This is important, as the length of high-speed train trips varies very much in China (Beijing – Tianjin vs. Beijing – Shanghai), which means that a linear price per km could make long distance journeys very expensive and not competitive e.g. compared to airline fares on the same O/D.
265 If all the mentioned factors are considered the calculation formula could look like this: fare km ( price / km speed factor comfort factor competitive factor) N.B: The square root in the formula above illustrates the diminishing scale.
3.3 Conclusions and Next Steps
266 As described above we identified five strategic imperatives which the pricing and tariff system for PDL needs to fulfil in order to meet the specific requirements of the Chinese railway market. In this chapter we assess all the recommendations regarding their suitability to support the strategic imperatives.
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Balancing Affordability Managerial Competition Financials Flexibility
1) Framework of pricing rules for PDL o o + + o
2) Regular increase of fares o - + - ++
3) High standard tariff / heavy discounts ++ + ++ ++ o
4) Higher Uplift for 1st class tickets o + o - ++
5) Attractive package prices for business o o + + + travellers
6) Season tickets for commuters - ++ o ++ o
7) Integration with Tariffs for Classical o + o ++ - Trains
8) Combined tickets with local public o ++ o ++ - transport
9) Market oriented tariff calculation + + ++ ++ o formula
Legend: + + very positive impact + positive impact o neutral impact - negative impact
Table 1: Impact of Recommendations
267 Table 1 gives an overview on each assessment. These assessments were performed on a qualitative basis only, since the quantification of the impact of each recommendation on each strategic imperative was not within the scope of this project.
268 Balancing: In our view high standard tariffs, which would be most relevant for peak times, and heavy discounts for off-peak times is the most important recommendation for the achievement of a better load balancing.
269 Affordability: This strategic target is supported by recommendation 6 (“season tickets for commuters”) and recommendation 8 (“Combined tickets”), since they both tend to lower the price for travelling by train for commuters. We also regarded recommendation 3 (“high standard tariff / heavy discounts”) and recommendation 4 (“increase uplift for 1st class tickets”) as beneficial for this objective, since both recommendations reduce the risk that less wealthy customers need to cross-subsidize with their tickets wealthier and more
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demanding passengers. A regular increase of fares is, of course, not beneficial for affordability.
270 Managerial Flexibility: Recommendation 1 (“Framework of pricing rules for PDL”) sets the basis for the room for manoeuvre of Chinese railways. So the assessment of the impact of this recommendation depends very much on the rules themselves and cannot be qualified finally at this point in time. If this framework allows a high standard tariff and heavy discounts than this recommendation would support this target most.
271 Competition: All recommendations have an impact on the competitive position of Chinese railways. Heavy discounts, season tickets, integration with tariffs of classical trains and combined tickets with public transport are regarded as most beneficial for the market position of Chinese railways. Regular increases of fares and a higher uplift for 1st class tickets have a negative impact on this strategic imperative. In our view, the positive impacts of our recommendations outweigh the negative ones by far.
272 Financials: While having a negative effect on competition recommendations 2 and 4 are in our view necessary in order to keep the finances of Chinese railways intact. Since the offer of “integrated” tickets with either classical trains or other means of public transport” usually reduce the price for the complete trip, we considered the impact of those tickets as negative for the financials of Chinese railways.
273 As indicated above, the recommendations are partly interdependent and interrelated. A legal framework for the pricing and tariff system for PDL sets the basis for all the seven remaining recommendations. So the roadmap for the implementation of those recommendations needs to start with this framework. After that we can define three phases, in which the recommendations can be specified and implemented (cf. Exhibit 16). We suggest to start with recommendations that are relatively easy to implement and which offer quick wins. Those are the uplifts for 1st class tickets and the introduction of season tickets. In phase 2 we propose to realize recommendations, which are more complex to implement and which take more time for delivering results (regular increase of fares, integrated tickets with classical trains). In phase 3 finally we suggest to implement recommendations that can only be implemented after certain requirements had been fulfilled (like integration with other means of public transport, introduction of certain transport services).
274 The following action plan shows the recommendation and their order for short term, mid term and long term activities.
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Short term Mid term Long term Time scale for an action plan for Pricing & Tariff
R1 Framework of rules for railway tariffs for PDL R4 Higher uplift for 1st class tickets R6 Season tickets for commuters
R9 Use a market oriented tariff calculation formula R2 Regular adaptation of tariffs to the general price development R3 Higher standard tariffs in combination with high discounts R7 Combined tickets for PDL and conventional trains
R5 Attractive package prices for business travellers R8 Combined tickets with local public transport
Exhibit 16: Roadmap for implementing the recommendations for Pricing & Tariff
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4 TRANSPORT SERVICES
4.1 The Management Organisation of Services
4.1.1 Management of services by line
275 Experience in France shows that managing the services on high speed lines (as well as on regional organising/controlling the production of services in stations and on board, their quality (including punctuality) and their costs, and to design and implement the appropriate solutions to improving the ratios of performance.
Transport Services / Recommendation n°1 - PDL Services management: The production of services to passengers provided on each PDL should be granted to a “Head of Line Services” responsible of the performance results of services along the line, of their “follow-up” and of the preparation of the appropriate solutions to improve them.
276 The “Head of Line Services” should not be in charge of the real-time production of services but should support the operational units and staff in charge of stations on the one hand, of trains on the other hand.
277 The Head of line (upper staff) should be supported18 with 5 assistants in charge of organising/controlling services production and information:
Head of services in stations; Head of Sales and After-Sales (Customer Service); Head of trains preparation: making trains available to customers: technical preparation and movement to their right place; Head of services on board; Head of IS: the transverse information system and its real-time data base provision.
4.1.2 Management of the station: the “Escale” organisation
278 To secure the right management of the wide range of services in the station (see here after in this report), the solution implemented by the French Railways for its important stations during the last 5 years was derived from the practice of many airports worldwide, named the “Escale” management organisation that obviously helped SNCF to make important progress in services quality.
279 It is based upon the principle of: a. a separation of the traffic control (circulation agent and switchman) from the customer-oriented station-management put under the “Escale” responsibility and;
18 Remark: the here-above recommended global organisation of each PDL is independent from, and compatible with different solutions of upper-level management of PDLs that could be decided by the CRH authorities, either under the MoR responsibility or through a specific PDL organisation.
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b. the common handling by the latter of both the services to customers and the trains preparation/departure that were in the past as in most railways associated to traffic control.
Transport Services / Recommendation n°2 - The Station management: The management of the stations on PDLs should take a great advantage to be organised in an “Escale” form in charge of: the provision of services to passengers and more generally to all the station customers; the preparation of trains (train marshalling, technical and commercial preparation and supply (seats preparation, cleaning, heating, pre-conditioning…) and the train departure.
280 A Station Operational Centre (SOC) should support the management of the Station and operate the services to customers and the trains preparation.
281 A SOC (‘Station Operational Centre’) centralises the tools and staff to help the Head of Station to coordinate all actions of agents in the station building and on the platforms and to inform passengers. Some preparation-train areas under the Station control (a train cleaning machine…) may be located outside the station itself.
282 The “Train-crew” room (for drivers and conductors/ticket inspectors, catering waiters etc) of a major station is preferably located close to the SOC.
283 The Security Post in important stations (see below) with its video-surveillance post is also preferably located in the immediate vicinity of the SOC and perfectly connected to it for messages and data-transmission by all means (telephone, intranet cable and WiFi).
284 The Fire post (see below) should be also located near the Station SOC but the First-aid post (see below) should preferably be placed close to the stations customers, visible from them inside the public area of stations’ building.
285 The SOC also includes screens with a selection of sights from the video-surveillance for operation purpose and control.
Exhibit 17: SNCF Figure to illustrate the management of the Station operation Centre
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4.1.3 Management of trains services
Transport Services / Recommendation n°3 - The Train management organisation: When the train is stopped in a station, the conductor remains under the responsibility of the Head of Station. But the management of every staff providing services in a given train should be put under the sole responsibility of the train conductor all along the train course (or part of course) they are in charge to serving.
286 The train conductor and the ticket-control officers are hierarchically attached to a territorial Train Commercial Staff Unit (the Depot). The conductor and ticket-control officers of a train should come preferably from the same Depot.
287 A coordination meeting of all on-board staff (including catering, cleaning,…) should be held by the conductor to brief them before they take one’s post, indicating in particular the means of communication available on board to join him. A short de-briefing should be done by the train conductor during his final round-visit before the team leaves the train.
288 The conductor should make a complete round-visit of the whole train just after the train departure, attentive to passengers demands, possible dysfunctions, and staff remarks.
289 Every dysfunction should be reported in detail on the train “logbook” always staying aboard.
Transport Services / Recommendation n°4 - The catering organisation: In order to privilege a railway PDL focusing on its High-speed system core-business and specific know-how, solutions to externalise their management should be explored upon tenders to be launched by PDL towards professional bodies securing quality and a reasonable sales price.
4.1.4 Security/Safety Management
4.1.4.1 At the PDL level
Transport Services / Recommendation n°5 - The PDL Security/Safety organisation: Security/Safety matters should be dissociated from services ‘operation’ matters. Each PDL should have a central post and its “head of Security/Safety” in charge of those issues in all stations and all trains along the high speed line, totally independent from the “Head of PDL Services” and entrusted to take all security and safety measures justified by critical situations. Safety includes fire and medical protection and assistance.
290 Each PDL “Head of Security/Safety” should be assisted with a centralised video- surveillance post in charge of remote-control of all video cameras in small stations and of a selection of cameras in main stations (selection modifiable according to circumstances).
291 The video-surveillance system must give a good sight of every place in each station (even in crowdy situations), with a cross-sight from 2 camcorders for critical places.
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4.1.4.2 At the Station level
Transport Services / Recommendation n°6 - The Station Security/Safety organisation: The PDL Head of Security/Safety (and not the Head of Station) is in charge of controlling in each main station a security/safety post hosting a security brigade, a safety fire brigade and a first-aid medical post to secure the protection of the station’s occupants (gests and staff) and installations. The security/safety post should host the video-surveillance central post of the station and of its attached surrounding smaller stations.
292 The Head of Station may sollicitate interventions from the Security brigade, the fire brigade or the first-aid medical assistance.
293 Some cameras of the video-surveillance may be devoted mainly to the needs of services management of the Head of Station, the images being also transmitted to him.
Transport Services / Recommendation n°7 - Security/Safety Decision Support Information (DSI): The efficiency of the Safety and the Security in stations and trains is mainly based upon the quality of the Decision Support Information System
294 . A special care should be given to its data base, to the data access organisation and dissemination tools, as well as to its updating in real time by the relevant staff at the best observation point of each data, in ordinary situation but also in crisis emergency situation (not necessarily the same people).
295 The video-surveillance system under Security management is part of this DSI. A selected access to images shall be granted to the Escale Operational Centre.
4.1.4.3 At the Train level
296 The Conductor (the Head of train) is in charge of safety and security protection of passengers on board, including the task to go and protecting a train in distress on the tracks if required.
297 Safety is often secured with doors automatically locked when a train stops with only the conductor having the decision power to unlock them. Doors are automatically closed and locked just before the train leaves, but the conductor may stop or delay the departure.
Transport Services / Recommendation n°8 - Organisation of Security/Safety aboard: Under the authority of the PDL Head of Security/Safety, the conductor remains responsible of the safety-security on board, mainly to protecting the train if stopped in open-track, to deciding closing/locking/unlocking/opening the doors, to order the train departure and the emergency stopping, or to stop the train at any time or when leaving if doors must be re-opened.
298 The PDL Head of the Security/Safety should support the conductor upon demand and be allowed to organise special security brigades in some trains or for emergency interventions.
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299 A video-surveillance system is recommended in coaches and on extremity platforms, visible from the conductor’s compartment and centralised at the level of the PDL Security Post.
300 Special first-aid kit should be available to the conductor who may stop the train if required or call for a doctor aboard.
301 Open doors between coaches (only one closed door between 1st class and 2nd class) should also contribute to secure people.
4.1.5 Special Crisis organisation for Incidents, disrupted situations…
Transport Services / Recommendation n°9 - The temporary Crisis Units: It is recommended for special “emergency situations” to implement temporary Crisis Units.
302 The Line Crisis Unit (LCU) should gather the 5 assistants of the PDL Head of Services (see above) or their representatives in order to coordinate the measures required in the stations and the trains to facing unusual critical situations.
303 The LCU also includes when required a representative of the Head of Security/Safety and his/her video-surveillance centre.
304 It is installed in a special room reserved and equipped for that purpose.
305 In emergency cases it should be also implemented in each important concerned station a Station Crisis Unit (SCU), to supporting the Head of Station and its Station Operational Centre (SOC).
306 The tasks of the Station Crisis Unit should be:
to manage the real-time crisis events, people and decisions (information and assistance to passengers, ticket sales, follow-up of resources… . to prepare the return to the normal situation and for that purpose having previously
o prepared and validated the evacuation plan;
o prepared the plan of resources reinforcement (technical and human);
o prepared the ‘temporary transport plan’ for the return to normality. to order, in the appropriate time, the trains staff and reinforcements and control their implementation. to organise and control the contents and timing of the information on trains and movements given to passengers; to prepare solutions for passengers in breaking of connection (major issue in some station).
307 A special document should describe the SCU management organisation, the information/data links, the missions of each one, the tools made available.
308 The Station Crisis Unit is mainly in charge of coordinating the different operational units at the local level (traffic operation, trains –drivers and conductors- and infrastructure) with the regional and national level as well, and to provide the right information on time to the Head of Station.
309 The Head of Station is in charge of managing the crisis activity and of reinforcing the SOC and the station staff if required. For example reinforcements may be decided for managing the Information to passengers, for giving announcements, for managing the assistance to passengers, for the follow-up of resources...
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310 The SCU possibly includes a representative of the station security/safety bodies and video-surveillance control in case of risks of crowd movements. They are installed in a special room reserved and equipped for that purpose.
311 The Station Crisis Unit receives in main stations the support of a “partners” unit (representatives of the management of trains, infrastructure, rolling stock, on-board staff, etc) also located in the SCU or a special adjacent room.
312 In stations, the conductor is under the responsibility of the Head of Station and his/her Station Crisis Unit.
313 But the conductor has also to relay the information to the Head of security/Safety and the Crisis Unit at the PDL level, to implement the measures that they may require, and to facilitate the tasks of security/safety agents that may be dispatched to secure the train.
4.1.6 Management organisation for peak hours in stations and trains
314 The good functioning of the station in peak hours depends on:
The separation of the different flows; the right dimensioning of spaces of flows and spaces of “slows” (people having time, shopping, waiting, resting, purchasing tickets)…in peak hours; the right distribution of people in the whole station, avoiding any concentration in some areas in some periods with the others much less occupied; the appropriate number of staff in peak hours (reception staff, ticket sales, …), the sufficient number of automatic ticket machines as well as drinks and food distributors generously distributed in the different areas.
Transport Services / Recommendation n°10 - Management organisation for high- peaks: Reinforcement of the station staff by specialized temporary support team
315 For the peak hours, special events, long incidents or disrupted situations, the SNCF “Head of Escale” usually calls for the reinforcement of the station staff by the temporary support of a pool of “red jackets” employed, trained and provided by a specialised subsidiary.
316 The red jackets are under the authority of the Head of Station and his/her “reception” management team.
317 It is recommended to implement such solution on PDLs that provides the required flexibility to adapt the service to peaks.
318 The employees of the subsidiary are people accepting flexible employment (often students) but also a number of permanent staff in charge of recruiting, training or heading “red jackets” teams.
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Exhibit 18: The PDL Management organization
4.2 Quality Assurance System for Services:
319 The management of the services provided on a PDL should be based upon a Quality System as it is progressively implemented by the majority of High Speed Railway operators abroad.
320 The final stage is the “certification” according to an official Standard of Quality (ISO 9001 or national standards for Services Quality).
321 The certification (the Quality target) is periodically controlled and renewed by an independent external Quality Auditor.
4.2.1 Quality Reference Books
322 The Quality System starts with a clear identification of “key items” and of the more detailed “modules” they shall include.
323 The Quality Reference Book is an official “Quality Assurance” document that details:
The key items and the “modules” for each one (see below detail in each station); The set of “promises”;
o The general “promise” for each “key item” and
o The detailed promise for each of its module and, for each detailed promise the quality-control package:
o the related means (equipment, services) to complete the promise;
o the system to control the quality of the service: the responsible staff, the at controlled criteria with their measure units and standard levels, the unacceptable situation and attached immediate measures to take, the control tools and frequency. The procedures, documents and follow-up software to refer to:
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4.2.1.1 Four QRBs at the PDL level
Transport Services / Recommendation n°11 - The Quality Reference Books at PDL level: Four Quality Reference Books (QRBs) should be implemented at the PDL level: Two QRBs under the responsibility of the Head of PDL Services: o The QRB of Services in the Stations, a set of guidelines and common standards for all stations; o The QRB of Services in the Trains (there is no QRB of Services for each train). Two QRBs for Security and Safety under the responsibility of the Head of PDL Security/Safety: o The QRB of Security & Safety in the Stations, a set of guidelines and common standards for all stations; o The QRB of Security & Safety in the Trains (no QRB for each train).
324 The following classification is proposed as a starting point by the consultant to define the “keys items” of service in the stations (10) and in the trains (8):
Quality Key Items for Services in Stations Quality Key Items for Services in Trains19
1. Ticketing (purchase and ticket withdrawal) 1. Access to the coach 2. Accessibility / Intermodality 2. Access to the seat 3. Information / Orientation 3. Train and seats cleanness 4. Comfort 4. Train equipment (air conditioning, lighting, toilets, sound system, seat orientation, sheets 5. Reception / Assistance & pillows for night trains, curtains, night 6. Ticket exchange / validation / access lights…) 7. Luggage/lost and found 5. On-board crew services except catering 8. Image-legibility-advertising 6. Catering services 9. Shopping 7. Punctuality 10. Security & Safety 8. Security & Safety Remark: Security/Safety in QRBs of Services include emergency services to provide in case of high traffic peak, incident or disrupted situation, and selected requirements and procedures placed here under the operational control and implementation of the Head of station or Head of train by the PDL Head Security & Safety.
19 Example of possible “promises of services”: Key-item “access to the coach”: o Promise: the passenger can find by himself or with the help of his accompanist or of a staff member the number of the train and final destination of the train set visible from outside each coach, and the list of all stopping stations of the train set visible from inside each coach. o Unacceptable situation: the passenger installs oneself in the part of train that does not go to one’s destination in the case of a multiple-unit HS train. o Means: special devices are installed outside and inside the coach close to each door and the train crew is standing along the train proposing their services to check the coach number and orientate people as qell as collecting demands of regularisation of the ticket to be then carried out on board. key-item “train-equipment” o Promises: The customer will find every equipment in working state and every dysfunction identified in the train that cannot be solved by the train staff shall be reported by the conductor on a special document to allow a repair in the shortest possible time. o Means: the train preparation includes the equipment checking before the train should be put alongside the platform; the conductor makes a complete round-visit of the whole train just after the train departure, attentive to passengers and dysfunctions, and proposes alternative seats if necessary.
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4.2.1.2 Three QRBs at the Station level
Transport Services / Recommendation n°12 - A Quality Reference Book of Services in each station: Each PDL Head of Station should design and implement, in the frame of the guidelines of the QRB of Services in Stations designed at the PDL level, a Quality System for Services dedicated to his station and its peculiarities with a more detailed Quality Reference Book of Services.
325 The QRB of Services in the Station is the main basis on which Quality Audits would then grant or not a quality certification to the station.
Transport Services / Recommendation n°13: A Reference Book of Trains Preparation in each station
326 Following the same principles as for the Services above the Head of Station should prepare a Quality Reference Book of Trains Preparation20. It covers the whole area of the station and its neighbouring installations to govern and secure the quality of trains to be proposed to customers. It is designed according to:
the items and standards defined in the “QRB of Services in the Trains” prepared at the PDL level; the requirements attached to the traffic control and timetable.
Transport Services / Recommendation n°14: A Reference Book of Security/Safety in each Station
327 In the frame of his guidelines prepared at the PDL level (see above) in the QRB of Security and Safety in the Stations, the PDL Head of Security and Safety should prepare in each station with his Heads of post a detailed “Quality Reference Book for Security and Safety” for the station, with the following particularities: 1. define a “zoning” of the station areas (geographical and temporal); 2. build a list of identified risks (ex: violence, fraud, robbery, degradation of installations, arson, fall in stairs or fall on the tracks, fainting fit or breathing difficulty in the crowd, crowd movement of fear…) 3. define the security and safety promises for each zone; 4. detail them into “expected security and safety functions”; and, for each expected function: 5. identify the possible sources of dysfunction and associated risks;
20 The nature and importance of this document depends a lot on the category of the station. Intermediate stations with few tracks for example will have neither tasks of marshalling / coupling trains nor of seats rotation or cleaning as in terminal stations that, for some of them, will have also in charge a brakes checking and a pre-air- conditioning after several hours stopping in summer time…
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6. define (as for each “promise of service”) the related means (equipment, services), the control tools, standard levels, unacceptable situations, procedures-documents- software.
4.2.2 Quality Audits
Transport Services / Recommendation n°15: Periodic External Audits of Quality Assurance
328 The Quality Assurance Audit checks the relevance of the detailed promises of service or of security and safety issues and the adequacy of the quality-control package of the Reference Books (at PDL or station levels), as well as the actual implementation of the practices in the day-to-day operation.
329 Quality Audits are to be achieved periodically by external independent and specialised bodies at the PDL level as well as in trains and stations. The recommended periodicity is 2 years that gives time to design and implement solutions to solve problems identified by the Audit.
330 The right completion of all requirements from the Quality Assurance (QA) system is the QA certification of the concerned station on the one hand, of the PDL in its globality (including trains) on the other hand. The latter can be restricted to certified stations if some stations are excluded by the Audit, but must cover every train and all management methods and tools at the PDL level.
4.2.3 Customer Service and Contract of Punctuality
Transport Services / Recommendation n°16: A Chart of Services to the Customers
331 Upon the basis of the QRBs of Services and of Security/Safety detailed above, the PDL Head of Services should prepare a “Chart of Services” proposed and widely spread to all customers. The “Chart” should include a selected panel of 10-12 promises of Quality and Customer Service (After-Sales) on which the PDL commits publicly itself vis-a-vis its clients.
332 One of those promises will consist in a ‘contract of punctuality’ with customers. The system must be simple, “demonstrative” enough and satisfying the customer, but financially reasonable for the company preventing it from important financial losses in case of an incident generating chained delays on many trains21.
333 A voucher for every delay over let’s say 30’ or 20% of the scheduled travel time (i.e. 12’ for a one-hour trip), should be granted to each customer proving his regular usage of the
21 The Chart of Services and its Contract of Punctuality are proposed by several high speed railway opeators worldwide and are an important communication tool to enhance the image of the company and to highlight the capability of the Chinese Railways to providing a highly reliable service as already observed on CRH offer and on quite every specialised ‘soft’ train. The Spanish AVE system offers a refund for more than only 5’ of delay, what the Japanese system could also propose without severe financial risks. But the probability of exceeding 5’ of delay is too high to implementing such solution in reasonable financial conditions. Another consideration is that the task of refunding a % of the ticket will cost more than offering a voucher, and is less ‘commercial’ as it “cuts” the ticket-link with the customer instead of rebounding on it as does the voucher.
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considered train. The value of the voucher shall be calculated from the % of delay, for example 3, 4 or 5 times it, with a maximum of 100%.
334 For example, a delay of 1 hour for a normally 5-hours ride shall provide a voucher of 60% (3 times the % of delay) or 80% (4 times) or 100% (5 times) the ticket value. Above 1h40’ of delay (3 times) or 1h15’ (4 times), or 1h (5 times) the amount of the voucher shall be equal to the ticket price.
4.3 Focus on key-services
4.3.1 Services in the stations: general principles of stations design and related services
335 The station service functionalities may be classified into 3 main categories: City interface, Commercial contact and Transport Services, each one including three major functionalities.
Exhibit 19: Station=City Interface + Transport Services + Commercial Contact
4.3.1.1 The station as an open-space to customers
336 International railway stations more and more appear as an harmonious combination of all the functions above, where the open-space and various activities contribute to the quality of transport services in the station, to improve the experience of passengers, to attract visitors and new customers, and to increase the global business of the station.
Transport Services / Recommendation n°17: Open-Space rather than waiting rooms
337 The consultant recommends to abandon in PDLs the principle of organising the railway stations like old-fashioned airports “around” the boarding rooms a “boarding gates” considered as the “hart” of the system. The PDL operators should make free the diversity of station customers to move and visit as they want all places, activities and shops made available to them in the station for “investing” their available time. The waiting room should become nothing more than a facility among others to rest in a comfortable place for those who choose it. Therefore the size and number of waiting rooms should be severely reduced in favour of commercial and strolling areas.
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338 The space organisation and design of the station should allow any customer to easily understand from anywhere the diversity of service facilities offered all over the different levels of the station.
339 Many open places may include seats to rest comfortably in more pleasant environment than waiting rooms, over the “living” places and terraces of the stations (of course outside the flows of people), and in cafés, restaurants and other refreshment rooms.
340 In order to avoid people crowds on departure waiting in front of their departure gate a long time before it opens instead of taking pleasant time in the different station areas, it is recommended to announce the n° of the gate only 15 to 20’ before the train departure.
341 The information system on train departures and arrivals should be widely spread in the station (displays and loud speakers) to allow each one to check periodically the situation of his/her train and “time-space” adequacy.
342 The city/railway interface is of mutual interest for both parts often leading to deep partnerships for co-financing new station projects, mainly in the station roles of:
A city “shop-window” to reflecting a positive image of the city (an important “public monument” in the city) and services to welcoming visitors (tourist information, hotel reservation…); A“crossroads of activities” in the city for business, shopping and entertainment; A necessary “bridge” over the severe cut in the city created by the rail tracks, with a “bright” side in façade and a “dark” side (shanty town) behind; An inter-modal exchange hub where all modes are in synergy for the benefit of all partners and the city.
343 The efforts observed on new railway stations in China to integrate in the “monumental” building itself the inter-modal facilities and the bridge over tracks, (e.g. Beijing West and Shanghai South for conventional trains, Beijing South and Tianjin for the PDL) open the way for new PDL stations (as well as for modernising older conventional stations).
344 But it is regrettable that new stations were yet not strongly connected to some major metro node and bus platform of the urban transport system.
Transport Services / Recommendation n°18: An Open-Station in stronger synergy with the City
345 It is recommended to strengthen the fantastic potential presented by the key-role of the station in the city:
Open the station to the City, open all areas of the PDL stations to passengers, accompanists, people preparing or purchasing a travel, visitors, people coming for shopping:
o Access can be subject in some areas to fulfilment of specific conditions (for example a valid ticket on a platform, the right ticket in the first class lounge, a consumption in cafes or restaurants, a coin in the rest room…);
o The security controls at the entrance of the station should be limited to special events, high-peak periods or punctual requirements of Security Authorities… and always dissociated from the ticket control (commercial purpose)22;
22 Apart during the Olympic Games period, there is no security control at the entrance of Beijing airport.
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o The security issues should privilege the video-surveillance solution for of all areas in the station to be remote-controlled by the Security post;
o An automatic checking of the ticket compatibility to access to a platform is acceptable, but a human access control should be limited to periods of specific safety or security risks (New Year, high-peak times…) in favour of a normal service of ticket checking and welcome at the trains doors23. Give more importance to the immediate strong connection of each new PDL station to the core-transport system of the city. In strong partnership with local authorities and transport companies, an actual multimodal exchange hub should be created without waiting for the city to connect itself to the station. All public transports are essential to reach or leave the station in a fast way, and become essential for a sustainable development. Implement “shopping centres” inside the stations as observed in international developments, opened to inhabitants and accompanists (and not only to passengers), calling for public/private partnerships for investments and private concessionaires through tenders. The latter should grant keen attention and requirements to:
o the diversity, complementarity and attractiveness of the panel of proposed shops24 the consistent design of the shops and of their signs, particularly their lighting signs that should remain strictly controlled;
o the quality and ‘reasonable’ pricing of the products made available to the station’s customers by the selected shop-keepers;
o the dissemination in commercial areas of displays of trains departure and arrival.
Transport Services / Recommendation n°19: Open Ticket Sales in the station
346 It is recommended to implement inside the ‘core’ station building comfortable open ticket- sales office(s) and automatic ticket distributors, in substitution (or even in complement) to old-fashion ones often located in the neighbouring station’s wings. Never leave people queuing outside in open air, even below a shelter.
347 In open sales offices, one queue line for three to five sales-desks should be set up with modifiable handling-line systems (as in airports).
348 It is highly recommended to abandon, like in every modern private commerce (banks, supermarkets, travel agencies, cinemas…) the principle of ‘sales windows’ with a glass and hygiaphone separating the agent and the customer, whatever be the quality of the “box”.
349 Security (of staff and cash) or heating issues shall be solved through other modern solutions25.
23 It should be paid attention here on the fact that the access-control to platforms cannot replace the ticket control on board that only allows verifying that the ticket corresponds to the occupied seat and and to the presented personal characteristics and rights of the passenger (age, owned reduction card, etc…).
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350 The automatic ticket machines should be spread in large number in the station, including “borderline” of the passenger flows. Some machines should be installed inside the sales- office itself to offer an alternative to customers in rush-hours and to train them in ‘low’ times.
351 The ticket-machines should allow modifications/exchanges of train reservations and validation of tickets.
352 The railway station should also ‘host’ a number of automatic ticket-machines from local transport modes (metro, bus, tramway …) under their responsibility (subject to reasonable conditions of space renting to those operators).
353 The ticket sales for PDL high speed trains should be generalised in all sales desks and automatic machines of the long-distance classic railway system.
354 In addition, but not in substitution, special sales desks reserved to CRH tickets may be created in important stations, that should be equipped to sell also complementary tickets for connecting classic trains.
4.3.2 Services in the trains
4.3.2.1 Number of classes of services
355 Conventional trains in China propose 2 classes of services (Soft and Hard) for day trains and also 2 classes of Services for night trains (Couchette Soft and Couchette Hard).
356 CRH daily trains Beijing-Tianjin also offered 2 classes of services (Soft and Hard) similarly to quite all HSR systems worldwide (1st and 2nd class)26, but the new line was launched with trains adding a VIP compartment of 8 seats.
357 But due to the long distances in China and unlike most international HSR systems, a large part of high speed trains will ride a time long enough to make effective to proposing night HS trains on many relations.
358 The classes of services correspond to different levels of tariffs. But additional dedicated services are attached or not to the customer’s “loyalty” towards the company, his ticket “flexibility” (in relation to the price) and eventually his yield-managed ticket-price. The commercial risk is of course a lack of legibility for many customers totally mixing up which conditions provide which services.
359 The obstacle gauge of the lines in China authorizes five seats de front in second class and four in 1st class for a single level train, as well as double deck trains. But in both cases and for the same reason as in other countries, the 17 T maximum axle load of a HS train limits the density of seats in a coach. Such limit may affect the operation cost per passenger but conversely allows designing places for luggage and a comfortable space between two rows of seats. That space also permits swivel seat rows to put all of them in the train’s direction at the terminal stop and large-inclination reclining seats, both possibilities answering a strong demand of many customers.
24 by answering needs of travel provisions (food, drinks, sweets, pastry, newspapers, magazines…) for passengers on departure, needs of daily provisions (bread, milk, water, sodas, fruits, …cash money and other pharmaceutical or cosmetic products) for arriving passengers, and needs of useful, comfortable and pleasant pastime for all (window-shopping, restaurant or café-terrace, cyber-café, business office…) while taking care of not killing the shopping centre with too many banks, insurance or employment offices for example. 25 The solutions should include special devices to be used only for critical periods with very few sales staff (one or two people) in the station, as it has been developed by SNCF. 26 Only Eurostar and AVE also include an intermediate class: Business Premier/Leisure Select/Standard class for Eurostar; Club/Preferente/Tourist for the Spanish AVE.
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Transport Services / Recommendation n°20 – Classes of services: 2 in day trains; 3 in night trains.
360 It is recommended that the Chinese high speed rail system should offer the 2 classes of services in day trains27 that are currently operated on Beijing-Tianjin and have been shaped in a convenient manner with comfortable space offered in reclining and orientable seats in both classes. But it is recommended to progressively increase the difference of ticket prices that currently does not reflect the difference of comfort and the strong need of differentiation of the 1st class customers. rd 361 Adding a 3 class in day trains as for Eurostar or AVE (Spain) might introduce an excessive complexity both for the customer and the services operator.
362 This comfort standard is good enough to recommend the same train sets and 2 classes of coaches for night trains (eventually subject to slight adaptations (as footrests in 2nd class). Catering services at the seat may be easily adapted to long night courses with similar refrigerating and heating solutions as in planes. The great advantage is the full operational compatibility for day courses allowed by those ‘night-adapted’ trains. rd 363 Nevertheless a 3 class of “hotel trains” (with 2-beds rooms including shower and toilets) should be added on proposed night routes. There is no room in particular for a night service similar to the classic “hard” train couchettes with 6 people per compartment (a solution that will become totally “obsolete” from the marketing standpoint after 1 decade, maximum 2)28.
364 But the names of the classes should be also modernised to give a more positive image to the customer. A “hard” class is no more acceptable for a very modern rail system that will obviously offer, even in the second class, a good standard of comfort .The consultant suggests the names of “1st class ”, “2nd class and “Hotel trains” that might be the more appropriate, subject to a possible professionally-driven ‘research of name’. st nd st 365 The train design should preferably separate 1 class from 2 class with 1 class at an extremity of the train and the bar between the two classes when both classes are in the same train.
4.3.2.2 Catering
Transport Services / Recommendation n°21: Catering on board
366 The passengers of a short-distance trip (less than 1h) do not need any catering, even if some automatic snacks & drinks distributors in the trains may be appreciated by the customers.
367 For long-haul trains, the consultant recommends automatic distributors along the train for hot and cold drinks and snacks.
27 Even some day trains, as hotel night trains, could be exclusively organised in 1st class. 28 Subject to a special survey to be carried out by the MoR, the consultant recommends not to add a sleeping solution for 2nd class that will not correspond to a market need strong enough to justify it for economic reasons. But If that one would arise as a necessity, the recommended standard should be of 4 beds per compartment. And to avoid a high supplement of fare while preserving a reasonable profitability, the density should be risen and the double-deck could become the best (even unique) acceptable quality/cost solution.
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368 But long-distance customers’ expectations also include a place where to go, to eating or drinking something more substantial but not only, also for a significant number of them to “moving” in the train to stretch his legs a bit or to grasp opportunities to make new acquaintances, to exchange with other people… This place should be preferably a bar coach for each 8 coaches (located between 1st and 2nd class) with one or two waiters and automatic machines.
369 Restaurant coaches are not advisable as they are source of too important problems for the railway operators: high operation costs, structural deficit and difficulties to secure food hygiene.
370 Even with automatic distributors aboard, trolleys offering snacks, cold tray meals, and hot & cold drinks, are recommended... st 371 The service in 1 class may also, in addition to trolleys, include hot tray meals at the seat at lunch/dinner time but only if included for all passengers in the 1st class ticket price in the concerned trains and not upon customer’s demand (serving everybody is the only mean not to lose a lot of money).
372 Opportunity and solutions of externalising catering should be explored.
4.3.2.3 Information on connections and occupation/entertainment
Transport Services / Recommendation n°22: Connection information on board
373 It is necessary but not sufficient to display information about train connections on every platforms of the station (It should be underlined here the necessity for connecting passengers to grant them the possibility to easily pass from the arrival “exit area” and its people flows to the departure area of the station).
374 The most important information to provide to passengers aboard is related to the train stops and connections that should be announced by the train conductor. But detailed information on the exact time and platform of departure of the connecting trains in the next station is also required by the passengers.
375 That information can be provided by sound announcements from the conductor in simple cases but more effectively by displays inside the train for the commonly complex cases.
376 Data should be provided by the real-time data base of the “Head of line” office and its Information system.
377 In case of “emergency” crisis situations (incidents or disrupted traffic), finding solutions to re-organise the connections of passengers in a train and to inform each one of the solution “tailed” to his needs become a very critical issue. It requires a special organisation and special means to overcome the problems.
378 The mandatory reservation of the trains between the Origin and Destination of a passenger should be considered as an essential mean to support an efficient provision of solutions to the concerned customers in such crisis situations. Those ODs of passengers present in each train shall be part of the real-time information system made available to the railway staff in charge of services on board and in the stations.
379 But faced to the complexity of informing many passengers aboard of their specific solutions, the only reasonable solution is to call for the use of modern media allowing automatic formulation, transmission and consulting of dedicated messages to the concerned passengers. Solutions of interactive individual touch screens and messages by SMS should be soon explored.
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Transport Services / Recommendation n°23: Entertainment on board
380 Connection Information needs are joining here the needs of passengers for entertainment during long-haul trips. The consultant recommends to make available to passengers of long-haul High Speed Trains interactive touch screens (as in well equipped planes), a device that will become soon a “basic” requirement from travellers. Personal headphones should not be provided free but personal headphones of common standard should be accepted by the system.29
381 In addition, it should be possible to get a Wifi internet connection in all trains from one’s place (free or not) and to find sockets at one’s seat (at least in 1st class but preferably in both ones) to charging mobile batteries.
4.3.2.4 Services to special categories of customers
4.3.2.4.1 People of Reduced Mobility (in stations and on-board)
382 In China, railway departments pay a special attention to the old people, the children, the sick, the disabled, the pregnant, the short-educated peasant workers… called “important passengers”, a category that is not exclusively designating disabled people but also people with a variety of obstacles to their mobility. Foreign people for example (“disabled” out of their country) are even considered.
383 Special services in Chinese stations may include (not all of them) a special assistance and waiting services even "special services booking" and "kind service vehicle".
384 For CRH trains, facilities to change babies shall be proposed in some HSR stations as well as in every train while wheelchair space with adjacent seat and adapted lavatory facilities will be part of the trains’ facilities.
385 Lifts for people of reduced mobility shall be offered in most PDL stations as currently in Beijing-South and Tianjin, but their generalisation is not planned yet.
386 Finally, there is no modification currently envisaged to the current CRH services policy towards ‘important passengers’.
387 Therefore, the consultant underlines that an important need of “People of Reduced Mobility” remains unsatisfied: the necessity for the ‘important people’ to secure in advance the availability of dedicated equipment and staff through the booking of specific assistance services - for example a wheelchair and accompanist -, the adapted seat(s) on-board, the assistance to boarding or leaving the train, even a possible request to exceptionally prolong the duration of a train-stop...
388 European companies have opened for such customers a common telephone centre (with a common number) to collect demands and to book and organise the corresponding assistance.
389 The other lack of services for many passengers of reduced mobility is related to their need of autonomy for moving inside the station, and more specifically to change of level.
29 Headphones rental could be applicable to the catering staff at a reasonable price but upon a deposit covering the purchasing price.
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Transport Services / Recommendation n°24: People of Reduced Mobility
390 It is recommended to keep the current Chinese notion of “important passengers”.
391 A special telephone “call centre” for “important people” should be created to booking special support and assistance services in stations or on board, including the possibility to obtain an accompanist for a travel.
392 Also Technical permanent solutions and equipment for an easy accessibility (lifts, ramps etc…) should be systematically provided in all HSR stations for “important travellers” to allow them to becoming (as far as allowed by their problem) self-sufficient in their mobility.
393 Special space for disabled people in wheelchairs should be offered in several coaches of each train upon free reservation with an adjacent seat reserved in priority to an accompanist.
4.3.2.4.2 Passengers with Luggage
Transport Services / Recommendation n°25: Luggage services
394 Left-luggage as currently offered (often through lockers) is a very useful service to passengers having time to spend in the station, making them free to have useful or pleasant pastime occupations. It is recommended to keep such important service in PDL stations.
395 The time-table constraints of a high speed system are not compatible with the required time to load/unload numerous and/or heavy and voluminous luggage and a large number of bags or cases for each passenger cannot be accepted for the same reasons.
396 Therefore, only a limited number of hand-luggage (2, or 3) should be accepted aboard CRH trains.
397 Registration should remain possible for luggage of a CRH passenger and for the same destination but through a dissociated carriage using other trains or trucks and with a postponed delivery after either 24 or 48h.
398 The modern design of luggage with small wheels makes no more necessary to provide caddies to passengers. But porters for departing or arriving passengers are a useful service for certain categories needing some more personalised assistance (see above).Therefore porters should be authorised and even organised and controlled by the station organisation. Only authorised porters selected by the PDL operator, wearing a special uniform with their licence and photo visible on their breast, should be allowed to operate inside the station and on the platforms (but never in the trains).
4.3.2.4.3 Privileged customers st 399 Dedicated services should be strengthened in station for frequent travellers, 1 class, VIPs...
400 A wider range of improved services should be proposed in PDL stations or aboard in special areas lounges, bars, business centres…, or via internet Wifi dedicated access, but also through remote-controlled services of information, ticket-purchase or exchange by phone or SMS. Dedicated services should take advantage of the CRM approach (Customer Relationship Management) above-detailed (Marketing & Sales / §2.2.5).
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5 DECISION SUPPORT SYSTEM
5.1 Preface
401 The following recommendations should be seen as a summary of activities and benefits delivered by a decision support system for the operation of high-speed trains. During their visit in France at SNCF the trainees from MoR had the possibility to see different performance management systems for the daily operation of trains. The suggestions the trainees developed are fully covered by the following recommendations.
5.2 Definition
402 A Decision Support System (DSS) is a comprehensive IT solution to support decision makers to take the right action at the right time. This means – contrary to the other four areas of this report – the DSS describes not a single set of processes. This chapter describes an IT solution which may support all the other areas by providing valuable information for decision-making and performance management.
403 A DSS at MoR is an IT solution which:
collects data from different sources; analyzes and transforms data into information; deploys suitable information to certain departments within MoR’s organisation.
404 It is usually being used on top and middle management level for providing valuable information about business performance and supporting decision making by providing profound data as a basis for their operational, tactical and strategic decisions.
405 To “learn” from the past, it is essential for the DSS to have access not only to operational data but also to historical data. This data is being used by the DSS to perform simulations to forecast certain events.
406 For the analysis of data a DSS uses multidimensional databases (OLAP) and provides results and KPIs often in a “cockpit”-layout (also known as “dash board”), which enables a quick overview e.g. of the current performance of the enterprise.
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Exhibit 20: Example of a Performance Cockpit / Dash board
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5.3 Benefits for MoR from a DSS
Forecast of revenues Quota definition Forecast of Determination of Passenger Volumes „valuable“ customers
Customer oriented Customer focused Offer definition Product definition
Definition of certain policies Tariff definition
Capacity management Information about Service Quality Optimization of Creating Policies for Train Operation Planning passenger flows Service disruptions Sales & Marketing Pricing & Tariff Transport Services
Exhibit 21: Examples of Activities, a DSS may support (per work area)
407 All departments of a railway operator benefit from a DSS. In detail, DSS brings value to all of the areas covered by this report (Train Operation Planning, Sales & Marketing, Pricing & Tariff and Transport Services).
408 It is essential for the information quality, that the DSS has access to data and information from different sources across organizational boundaries. This aspect enhances the value of information and performance indicators provided by the DSS.
5.4 Recommendations
5.4.1 Preface - As-Is Status of MoR’s IT systems
409 Applying information technology to railways in order to support railway transportation, especially to increase its efficiency and raise the level of management, it has always been a goal that the railway staff engaged in information technology and all railway departments strive to achieve. In the last 30 years, railway information technology saw a development from scratch to the construction of TMIS, TDCS and PTRS, and is now taking shape and giving strong support and assurance to railway transportation. Following diagram shows the key IT systems of MoR:
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列车调度指挥系统 客票发售与预定系统 Trraiin Diispattchiing Command Passengerr Tiickettiing and Systtem ((TDCS)) Reserrvattiion Systtem ((PTRS)) 运输 货运营销辅助决策系统 客运营销辅助决策系统 FrFreiightt Decciissiioonn Supporrtt Transportation Management Passseengerr Deecciisiion Supporrtt Information System (TMIS) Syysstteem Syssttem 铁路货运大客户管理信息系统 Key Account Management 客运服务系统 货票系统 货运营销及技术计划管理 行车组织策划系统 Passenger Service Transportation Planning Passenger Service Waybill 系统 Sales and Marketing Transportation Planning Systtem Systtem 综合调度管理系统 车站系统 Dispatching System Station System 车号自动识别系统 货车动态追踪系统 AEI Freight Tracking System 段级机车管理信息系统 特货运输管理系统 Locoommototiivee Mananagemeentnt 18点统计系统 Specciiall Freiigghhtt Mananaggeemenntt System System System Statistic System System
调度集中系统 列车运行控制系统 调度集中系统 列车运行控制系统 行车安全监控系统 Cennttrraalliizeed TrTraffffiic Cononttrrol Chhiinesse TrTraiin Cononttrrol Systtem Saffeettyy Moniittoror Systteem ((CTC)) ((CTCS))
财务会计管理系统 统计分析系统 人力资源管理系统 清算系统 FFiinannccee Managegement Sttattiisttiicc Anallyysiis Systteem HR LLiiquiiddaattiion
Exhibit 22: Current IT infrastructure at MoR
410 However, through the analysis of the as-is status of the MoR’s IT systems, we realize that the foundation for a DSS is not established yet. There is still a gap between information technology currently used for railways in China compared to the IT being used by railway operators in countries with advanced railways.
Data: There is not a well organized data governance in MoR. The quality of source data is not good. There is no a unified enterprise data model and no data standard. Integration: Most of the MoR IT systems are independent from each other. There is only limited integration between the systems. Information sharing is very difficult. Centralized: Most of the MoR IT systems have a decentralized architecture. The source data is separated in different layers. It is very difficult to manage the data.
Decision Support System / Recommendation n°1: Define KPIs about the information to be provided and identify all the possible sources of information, classify them and build a standard interface with them
411 First of all it is necessary to define the key figures MoR wants to track and the frequency of tracking. Then the sources have to be identified, where the figures should be derived from. Usually different sources (often even from different organizational entities) have to be used to derive and/or calculate the figures (KPIs) in a proper way. To get frequent and automatic access to these KPIs, interfaces have to be implemented. Through these interfaces the DSS is connected with the different IT systems within MoR.
412 To minimize the complexity and the amount of interfaces, it is important to standardize them, otherwise a DSS is hard to handle and future enhancements become complex and costly.
413 For providing marketing analyses, a DSS often needs access not only to MoR internal information but also to external data, as e.g. statistical information about the market, population development, purchasing powers, etc. Therefore the DSS should support also the use of external data. This aspect needs to be considered when designing interfaces.
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Decision Support System / Recommendation n°2: Identify a data collection period and take a snapshot of situation from live system. Use the snapshot for analysis scope
414 To perform simulations based of past events and situations it is essential for the DSS to continuously collect and analyze data. For an initial load it is beneficial to feed also historical data into to enable the DSS to “learn”.
415 Usually the data fed into the DSS is done by providing regular snapshots of a certain situation (e.g. punctuality of trains at the end of each day, number of passengers in a certain station at 7 am, 1p.m. and 6 p.m.).
Decision Support System / Recommendation n°3: Treat Data as a Corporate Asset and let the information flow to the right person/organization that needs it. MoR has to protect the key information assets providing access control on role-base and mitigate the risk using data-centric security.
416 As the DSS should be implemented and capture data across organizational boundaries, it may be used by all decision makers of MoR. Therefore two important aspects should be considered: 1. The information provided by the DSS may be highly confidential; 2. The DSS provides a lot of information which is not suitable / necessary for all users.
417 Regarding these aspects, the implementation of a DSS should consider the following rules:
The access to the DSS and its data should be restricted only to an audience, which really needs the information. Therefore a comprehensive user, role and access model has to be developed to prevent unauthorized access to the information A role-based user model also helps to customize the reports and KPIs, which does not overload the user with information he or she is not interested in. This means, the user interface (e.g. the “cockpit” as described in chapter 5.2 should look different and provide different information for marketing people and for traffic forecast planners).
Decision Support System / Recommendation n°4: Produce data definitions and business rules that reflect the railway processes as a whole entity. Get a 360-degree view of business and do not limit it only to the vision of a single department.
418 The information provided by the DSS can only be as good as the quality of the data being used as input. This means, data quality mechanisms need to be established to ensure a reliable data basis.
419 As described in the previous chapters and recommendations the DSS should not be limited on a single department. It may bring the opportunity to offer valuable information across organisations which may lead to better decisions and better products. E.g. marketing people could benefit from traffic and utilization analyses to optimize their offers, products and tariffs.
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420 A well implemented DSS should be used as a “single point of truth”. At several railway operators the calculation of certain KPIs refers to different independent sources, which often leads to inconsistent (and sometimes even contradictory) information. This aspect reduces the quality and the reliability of KPIs for a thorough decision making.
5.5 Roadmap / Action Plan
421 According to the recommendations described above, we suggest the future IT architecture with Decision Supporting System should be as following:
Decision Supporting System (DSS) 决策支持系统 Infrastructure Operation & Train Station Customer Market and Management Maintenance Operation Service Service Products 基础设施管理 运营维护 开行方案 车站服务 客户服务 市场与产品 Nettworrkiing Trransporrtt Custtomerr Demand Sttattiion Serrviice Brrand Sttrrattegy Pllanniing and Sttrrattegy Sttrrattegy Managementt Sttrrattegy Optimization Passenger Optimization Maiinttenance Passenger Marrkett Anallysiis Planning and Tiimettablle Service and Demand and and devellop Consttrructtiion Planning and Service and Management Pllanniing Resources fforrecastt Product Pllan Management Resources Product Planning Revenue conttrroll Sttrrattegy Resourrce Operrattiions Planning demand Prriiciing demand Conttrrolllliing CRM KPIIs managementt Sttrrattegy
DataData I Integrationntegration L Layerayer (e.g.(e.g. withwith SOASOA t technology)echnology) 数据整合据整合层
TicketingTicketing a andnd PassengerPassenger SalesSales a andnd TransportationTransportation S ReservationReservation MaintenanceMaintenance Existing ExternalExternal ServicesServices MarketingMarketing DispatchingDispatching SystemSystem SystemSystem Systems datadata T S SystemSystem SystemSystem SystemSystem 综合维修系修系统 (e.ge.g. marketmarket PTSSP 客票客票销售与预销售与预定系定系统 既有系统 旅客服旅客服务系统 市场营销场营销策划系统 综合调度系度系统 researchresearch)
Exhibit 23: New To-Be IT infrastructure at MoR
422 The following action plan shows the major steps for the implementation of a decision support system.
423 In a very early stage it is essential for a successful implementation of a decision support system to optimize the organization and to implement a data governance structure in order to assure the correct exchange of data and information across organizations.
424 Without a detailed analysis and scope definition it is not possible to design a specific timeframe for the implementation. Therefore Exhibit 24 should be seen as the logical sequence of the activities to be performed for a successful implementation of a decision support system.
425 The last activity, called “continual optimization” in the road map is essential, as the DSS will not remain in the initial stage, it needs a high degree of flexibility for continuous modifications, as targets may change and therefore new KPIs or new measurement criteria need to be used.
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time
Organization Optimization
Business design
Data Govenance
KPI Definition
Data Integration
ESB Build
DSS System Design
DSS System Build
DSS System Test
DSS System First Release, Pilot Project
DSS Continual Optimization
Exhibit 24: Roadmap for the implementation of a decision support system.
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