Relative Pricing
Posted by Fred Jandt
Editor, Mass Transit
As I was traveling this week I heard that Midwest Airlines (our local carrier) was cutting flights and laying off personnel citing gas prices as the main culprit. As I checked in at the airport and looked at the new prices being levied on customers — $25 for an extra checked bag, for example — I wondered how bad gas prices had gotten for airlines.
As we laid over to refuel I found out. The pilot informed us that we had just loaded about $11,000 of fuel. This translated to about $168 a passenger. In relation, the cost for the crew taking us to our destination came out to be about $12 a passenger.
That’s a ratio of 14 to 1 for what they spent on fuel versus crew. How much are you spending on fuel? How much in comparison to your operations staff? Of course with the dramatic rise in fuel prices in the last few years, it’s hard to not end up with a ratio like that.
This got me to thinking. What kind of price can we put on good customer service? Many agency directors I speak with tell me that they are (if they haven’t already) switching from hiring people who can drive a bus to people who are good with customers. The logic is that they can teach them to drive a bus — they can’t teach them to be good with customers.
This is true in almost any position. We’ve all had that person at the checkout who really doesn’t want to be there and let’s you know it. You can teach a person to run a register, you can’t teach them how to be good-natured around customers.
Service is key in the transit industry. If riders aren’t happy about their service they will walk — sometimes literally.
Thanks for reading the MT Position updated every Friday,
July 25th, 2008 at 12:45 pm
Good point. With today’s buses that are equipped with automatic transmissions and power steering (I’m a “senior citizen” in passenger transportation — I drove buses that had to be double-clutched to shift gears, and had no power steering) most people can be trained to drive a bus safely. Good “people skills” seems to be something most people either have or don’t have — it’s hard, if not impossible, to train this skill.
July 28th, 2008 at 12:18 pm
Mass transit requires fuel also and the cost will soon be felt by the riders. Although most forms of land transportation are more fuel efficient than aircraft, it will be necessary to raise fares for buses, light rail, and heavy rail trains also. The freight railroads are already jacking up prices in response to increasing fuel costs.
However, many users of mass transit are opposed to raising fares to cover the increased fuel costs. This is counter productive and if these costs cannot not passed onto the riders, it will lead to cuts in service. In fact, many transit agencies will need to increase their fares by at least 100% or cut service.
Riders cannot expect to get something for nothing and it has been said that “Mass transit has been built down to a price rather than up to quality” and “Riders are getting what they pay for”.