Railway companies often revise fares as railway profits decline due to a decrease in users and others. The way of revising train fares are largely divided into "fare increase" and "fare cut". Here are the merits and disadvantages of both price increase and price reduction.
Train fare increase
“Train fare increase” is a word indicating the increment of the fares of the train line. For example, if the fare from A station to B station of 330 yen became 340 yen, it can be said that the fare was "increased".
Merit
The merit of price increases is that if you assume that the same number of passengers got on, profits will rise.
Considering the fare between A and B stations earlier, the fare has increased by 10 yen so railroad companies can earn more than 10 yen per passenger using these two stations. Also, depending on conditions such as traveling expenses, the effect of raising the price on profit and loss will be enormous
For example, in order to run a train from station A to station B, it costs a total of 10,500 yen, and between these two stations 100 passengers always ride each time. If the fare in this section is 100 yen, the railroad company will earn 10000 yen per train, but because it costs 10500 yen, the result is a 500 yen deficit per train. Therefore, if you raise the fare to 110 yen, you get revenue of 11000 yen, in this case it will be 500 yen surplus.
Demerit
The disadvantage is that there is a risk that the passengers getting away. In the example concerning the merit of price rise in the previous example, we did not consider the change of passengers, but in fact, by raising the price, the financial burden on the user increases, so that by using the route so far people who used to use the route do not use it, and it is conceivable that profit will further worsen as a result.
As an example of the most famous transportation which failed by price rise, JNR (Japan National Railway) can be cited.
In the 1970s, the JNR, which had become worse in profitability, increased the fare frequently, and in particular increased by 50% on average on average in 1976. A series of fare upsets aimed at improving income but as a result passengers who used the national rail have shifted to other transportation agencies as a result, resulting in management deteriorating more and more as a result, more The local railroads are encountering the annoyance of abolition.
Train fare cut
“Train fare cut” is a word indicating the decrement of the fares of the train line. For example, if the fare from A station to B station of 330 yen became 320 yen, it can be said that the fare was "decreased".
Merit
The merit of price reduction is that passengers may increase. Suppose Mr. Yamada lived near A station. Mr. Yamada frequently goes to a hot spring near the Ding station on a holiday, and assumes that he is using a car in that case. It is assumed that the fare between A and B stations is round trip 2100 yen (in this case, it costs no cost other than fare), whereas when Mr. Yamada goes to hot springs it will cost 2 kilometers highway fee (gasoline fee Do not consider costs other than expressway fees, etc). In this way it is cheaper to go by car, but if the railroad goes down and makes a round trip of 1,800 yen, the railway will be cheaper so Mr. Yamada may shift from car use to railway use.Demerit
The disadvantage of price reduction is a decline in revenue. As the fare goes down, revenues per customer will inevitably decline. It is fully conceivable that the effect of price cuts is not seen at all, or the profit due to the reduction in the number of passengers due to the price reduction may be lower than the loss due to the price reduction.
