Analysis of the French Public railways company strategy

Vincent R.

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Analysis of the French Public railways company strategy

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Résumé
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Résumé du document

The SNCF (Société Nationale des Chemins de fer Français), the French Public railways company has implemented revenue management for the high speed trains. In this study, we will analyze the key factors to succeed in the railways business in relation to revenue management. To achieve this goal, we will examine the context and the environment where the SNCF evolves, and it's response to customers' expectations and requirements and finally highlight the keys factors for maximization of its profits.

Sommaire

Why has the SNCF introduced the revenue management ?
1. The specificities of the SNCF
2. An increasingly competitive market
3. The lack of capacities optimisation
4. The revenue management, as an answer to customers' expectations
5. Is the introduction of revenue management at SNCF realistic ?
The different offers, adapted answers to each type of consumers ?
1. The 'Business Class' customer
2. The 'Leisure' customer
3. The establishment of new strategic partnerships
4. The failure of supplying well adapted products
The key factors that enable the SNCF to maximize its profitability and keep a competitive strategy
1. The capacity constraint and its management
2. The impact of capacity management technologies on the maximization of profits for the SNCF
3. The flexibility of the supply and the different level of services provided, a response to the perishability of the product, the uncertainty of demand and the segmentation of the market
4. Following the evolutions of customer behaviour is the best way to be successful in the railway business

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Extraits

[...] This system influences the behaviour of students for instance that will buy tickets to travel on Mondays in the morning to escape from higher prices. The SNCF can then get a higher number of customers on weekly trains than if there was no price differentiation. A major point in the revenue management of the company is then to take benefits from the seasonality of journeys: tickets are more expensive on week-ends, holidays and most of the time, there are no last- minute tickets for peak periods. [...]

[...] Globally, this module can analyse the impact of a change in scheduling on the profits of the company. The feasibility module: this module checks that the work set provided by the other modules are compatible with the capacity constraint of station storage, trains availability and schedule imbalance. Indeed, the work set would not be possible if there is no train available, if when arrived it cannot be stored properly in the arrival station or if there are two much trains leaving a specific station in the same time, or using the same railroad segment in the same time. [...]

[...] But as she is taking a train over the week-end, she will pay a higher price if she leaves after 1 pm on Friday and comes back before 8 pm on Sunday. Thus, if there are no seats left for 12-25 cards and cheaper trains are full, it becomes as much interesting for her to take a 25% seat in second class or to get a 50% seat in first class. If she does not have the 25-50 card, she can benefit form the same reduction with the system called Découverte 12-25, which has the aim to make customers discover the advantages of the 12-25 card. [...]

[...] Appendix Operations research contributed greatly to the development of yield management systems From Schedule Optimization at SNCF: From conception to Day of Departure. Nejib Ben-Kheder, Josephine Kintanar, Cecile Queille, William Stripling(1998) Appendix 5 From Schedule Optimization at SNCF: From conception to Day of Departure. Nejib Ben-Kheder, Josephine Kintanar, Cecile Queille, William Stripling(1998) Appendix 6 From Schedule Optimization at SNCF: From conception to Day of Departure. [...]

[...] Moreover, the SNCF noted a slight increase of the TGV traffic facing its main competitors, the airlines companies. For instance, since the launch of these offers, the TGV traffic has risen by for a Paris-Côte d'Azur journey, by 11% for a Paris-Marseille journey and by 37% for a Paris-Perpignan journey. That proves that the SNCF manage to be more competitive than the airlines companies on domestic journeys thanks to the introduction of the revenue management. That is why the introduction of revenue management at SNCF is very positive because the SNCF ensures an appropriate service to its customers and competes in an effective way its main competitors, the airlines companies. [...]

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