Responding to competition in passenger services with new operating practices

Competition in long-distance passenger services heated up in the summer of 2014 as many of the agreements covering the transitionary period in bus and coach traffic expired. VR has responded to the competition by launching a large number of discount campaigns and is studying how to restructure pricing and traffic planning.

Even though the price competition resulting from the deregulation of bus and coach services was anticipated, the substantial increase in the number of services and the sharp drop in ticket prices nevertheless came as a surprise. In addition to tougher competition, the long-drawn-out economic downturn is also posing challenges as it has caused a decrease in the demand for passenger services. The price campaigns were one reason why the number of passengers carried by VR only decreased slightly compared with the previous year.

According to Maisa Romanainen, Senior Vice President, Passenger Services, trains have three advantages over buses and coaches: comfort, speed and customer service. On long journeys train is a good choice - you can work in a pleasant environment, carry large pieces of luggage and enjoy refreshments. Conductors are on hand all the time and provide assistance whenever necessary. You can also take pets on board or book a hypoallergenic seat.

Customer-oriented pricing

The tight economic situation and increasing competition has made consumers more price conscious. This means that in addition to excellent customer service, pricing must also be transparent and customer-oriented. According to Romanainen, VR has already taken steps to make pricing more customer-oriented but changing price images requires more work.

Because of the tough competition, VR decided not to increase fares at the start of 2015. It has also introduced additional discounts, multi-tickets and weekend tickets for such groups as price conscious students. According to Romanainen, the offers have been well received by students and they have proved highly popular.

Even though VR offers a broad range of different tickets, finding the cheapest alternative may be difficult. In addition to offers and discount tickets, there are also advance, flexible and basic tickets and the options of Eko and Ekstra classes. The differences between all these are not always clear to customers. VR will examine how to clarify offers and pricing during 2015. In early 2015, VR started work to put offers and pricing in long-distance services on a clearer basis.

Customers have priority

Digitalisation is making progress in passenger services and the aim is that in the future, the threshold for testing new solutions is lower than now. Listening to the feedback received from the customer service staff and the direct feedback provided by customers plays a key role in this process.

Romanainen points out that the prize-winning Veturi customer loyalty programme already has more than 700,000 members. More than 60 per cent of all tickets are purchased through self-service outlets and the demand for mobile services is increasing at a particularly rapid pace. Digital channels are a good way of directing offers at members of the Veturi programme in particular. Considering customer feedback helps us to offer the best possible service at competitive prices, explains Romanainen. Interaction with passengers also helps VR to develop service offerings on trains, such as the wlan network, catering services and comfort. A good example of this is the new DuettoPlus restaurant car.

A full train is in everybody's interest

Competition in public transport can be seen as a positive development because it helps to make public transport more attractive. Private motoring is the main competitor of trains. It still accounts for two thirds of all journeys of more than 100 kilometres inside Finland. On the one hand , the aim is to persuade Finns that have not yet travelled by rail to try the train, while on the other hand VR must give better consideration to the needs of its existing customers.

Train is a natural way of travel in a country like Finland that is undergoing structural change. It is an excellent way of carrying large numbers of people between urban centres. At the same time, however, the costs arising from maintaining train services are high and running empty trains is not a profitable business. It is in the interest of both VR and its customers that trains with the right capacity run on routes where the demand is high. During 2015, VR will examine how traffic planning should be changed so that it can better meet its customers' wishes.