What would the SNCF be without its eternal controversies over prices? Regularly, the staff of the railway house is rattled by the flood of comments and attacks from its customers who rail against prices and delays. But while the public company was (finally) getting back on a good commercial trackwith increasingly full trains, the bad blow this time came from the sacrosanct master of French statistics, INSEE.
According to the National Institute of Statistics, which published its consumer price index a few days ago, train ticket prices have increased by 12.9% over one year. It was enough to trigger a storm in the media and on social networks, throwing away a year of reputational work on the subject. “I find it legitimate to wonder about the price of the train, but we should not forget the other modes of transport. In the INSEE study, air prices increased by 22% and those of car rentals by more than 40%”, points out Alain Krakovitch, the director of SNCF TGV-Intercités, particularly annoyed to be thus targeted.
“In June, we sold 2% more tickets but our turnover fell”
If it’s not the first time – nor the last! – that he must demine such a situation, the leader, renowned for his phlegmatic character, even points to a real economic misinterpretation since INSEE compares data with a 2021 exercise where the trains were absolutely not filled due to the pandemic . This is why he indulges in a confidence. “When you look at the figures for the month of June compared to 2019, which seems fairer to me, we sold 2% more tickets but our turnover fell by 3%. This clearly shows that the basket average has dropped”, explains Alain Krakovitch.
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A difference that the leader attributes directly to the new pricing policy implemented last summer and the capping of certain prices (eg: 79 euros maximum for journeys of more than 3 hours) thanks to the Advantage card. “Always keeping the comparison with 2019, our prices have thus fallen by 7%”, persists the manager. Moreover, taking the same statistical series from INSEE but with a point of comparison set at June 2019, the observed price increase would only be 6.75%.
Still, how can such a variation between the two calculation methods be explained? On the one hand, INSEE lists the prices it finds on the Internet. “Daily, a robot collects the prices of tickets with four purchase anteriorities (2 days, 10 days, 30 days and 60 days before departure of the train) for a sample of 250 journeys (one-way trips), which corresponds to more than 10,000 requests”, details INSEE in its methodology.
On the other hand, the SNCF, which markets its cheapest tickets up to 90 days before departure – sales which therefore escape INSEE – proceeds for its part to an average of the prices on the tickets sold and not on those that remain for sale as the Institute does. Consequently, despite the rigor of its method, INSEE cannot completely absorb the dynamic dimension of the tariffs which are applied according to the rules of the famous “yield management“, this principle of variation which causes prices to fluctuate according to demand and travel dates.
Internally, the pressure is very strong to readjust prices upwards
Indeed, when it sells its tickets, the SNCF sets price levels according to the number of seats sold. For example, on a 900-seat TGV, it reserves the first 300 tickets at its floor price of 29 euros, then raises the slider gradually according to demand. In 2021, its trains had fill rates around 50% (compared to 90% on certain routes today), “which mechanically lowered the average basket because we did not touch the levels of yield“, assures L’Express Alain Krakovitch. “When INSEE looks at the prices, it does not know how many places there are for sale at this price. If a train has a seat at 200 euros at a certain time and another seat at 100 euros an hour later, it will average 150 euros. It changes a lot of things. In addition, INSEE also has great difficulty in weighing the effects of reduction cards”, breathes Romain Charié, co-founder of N&C, a company specializing in yield management.
However, the SNCF, which claims to have sold more than 3 million copies of its new loyalty card, would sell “one ticket in three” thanks to it, according to an internal source of the company. This is not without consequences for its turnover. “The card guarantees a fare blocked until the last minute, so travelers can decide until the last minute, as long as there are places left. We can even say that if the trains are full like at the moment , is that in the end the price is not high enough”, clinically underlines a specialist in the sector. Moreover, within the railway house itself, the pressure is very strong on the management teams to readjust prices upwards, in order to absorb the inflation of production costs. This is particularly the case the electricity bill which is likely to soar by several hundred million euros in 2023. But management resists. This is why the current controversy is going very badly in high circles.
All these adventures which agitate the public company do not however hinder the good resumption of activity. The SNCF even expects to live “an exceptional summer”, according to the director of SNCF TGV-Intercités. “We are really on an interesting phase compared to 2019. Our sales for this summer are up 10% in number of tickets and 8% in turnover. We should experience our best summer”, even anticipates Alain Krakovitch .
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SNCF controversy: the truth about the price of train tickets