Short-term government policy change required a new network-wide fare structure
The redesign also offered an opportunity to overhaul complex legacy fares
Bus fares in England and Wales were capped at £2 for a period post pandemic to improve ridership. Government subsidies were provided for rides over the cap based on legacy journey mix. With the cap increased to £3, our client was tasked with modeling out the new journey mix and corresponding fares required. With journey lengths not accurately recorded and a significant discount being offered on longer rides, the initial assumption was journey mix had shifted significantly and therefore the risk of raising prices was significant.
Legacy fares were a complex origin and destination (O&D) structure; not easily understood by customers and complex to manage. The change was viewed as an opportunity to reflect on the overall fare structure design. The client wanted a future-proof strategy which considered shifts in customer behaviors, was understandable to a new generation of bus users, and also took into account regional variations.
Multi-source analysis captured customer behaviors and perspectives
The findings informed the modeling of multiple fare scenarios
Clear objectives were set with the management team to ensure the solution design would meet the overarching business goals:
Develop a clearer view of expected customer behaviors post-cap removal
Identify and compare strategic directions for future pricing
Model price scenarios to forecast demand and revenue impacts
Assess long-term implications of each strategic option
A multi-method approach was taken to achieve these objectives. The ticketing data was reviewed to identify observed ticket mix; this was supplemented by large-sfcale customer research targeted at bus customers to capture stated behavior and preferences for future ticket types. These inputs, alongside Simon-Kucher’s market benchmarks, were brought together to identify several strategic scenarios for the management team and regional representatives to review in structured workshops.
A simple, effective tiered fare model was developed and implemented
With double-digit revenue growth projected and improved customer perception targeted
The network was optimized across three fixed fares (short, mid, and long), defined at the depot level. An additional longer distance fare was identified to cover exceptional cases. Saver products designed to be offered on top of these structures to give time-based passes to provide more value to higher usage customers.
Route specific price recommendations identified across the network, and impact estimated in a detailed business case. Full O&D level recommendations handed over to the client team for direct implementation into ticketing systems.
Final recommendations rolled out within weeks, with double digit revenue growth estimated.
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