VTEC Financial Performance

[WatcherZero]

If anyone is interested, VTEC was due to pay DfT a premium of £204.8m for the year 2015/16.
This is very similar to the payment made by DOR East Coast in its last 3 years.
Next year (ie now) the VTEC premium jumps to £271.9.
(Roger Ford, Modern Railways, Feb 2015).

Would require without inflation approx 6% increase in franchise revenue to cover.

 

[yorkie]

Does the discount on VTEC advance tickets when booked on VTEC still exist? I thought that had stopped or was in the midst of being stopped.

No, it was abolished.

If that is the case the savvy purchaser will no doubt take their money to another TOC who will offer cashback and Nectar in return for 10% of the ticket value this costing VTEC more.

Correct. No point using the VTEC site at all now, except when travelling with VTEC and the use of the seat selector is required (so... not when you have the last ticket(s) at that tier, or have 9 people travelling, or have a cycle reservation, as all these cause the seat selector to fail). Many people have made it clear they are using the site less. VTEC aren't fussed if people book elsewhere, so I assume VTEC don't get much money from commission on their site as there is no incentive to use it, so I doubt it has much impact on their financial performance. It will be other factors having an impact, I'm sure.

 

[causton]

According to this post which I have bookmarked as it comes up surprisingly frequently, it is 5% commission - whether that is large or small is not something I know though!
http://www.railforums.co.uk/showpost.php?p=2424402&postcount=11

 

[Pumbaa]

It all ends up a money go round - for accounting purposes TOCs pay themselves commission and receive it from themselves.

 

[HH]

According to this post which I have bookmarked as it comes up surprisingly frequently, it is 5% commission - whether that is large or small is not something I know though!
http://www.railforums.co.uk/showpost.php?p=2424402&postcount=11

The 5% is correct, however it omits the cost of selling the ticket. One issue is if you order it from a website, but collect it from somebody else's TVM, they will charge a fulfilment cost. In addition if you use a card, the TOC has to pay a charge to the card issuer. Finally the website itself is usually run by a third party, who probably make a charge for each transaction. Add that little lot together and it can easily outweigh the 5% commission.

--- old post above --- --- new post below ---
I'm going to re-open this, because I've heard some rumours on the grapevine:

1. Stagecoach did bid 8% growth in Year 1; I have no idea where they thought it was coming from.
2. They have been unable to make any meaningful cost savings (I presume that the Travel Centre closures were already in the bid).

Which leaves them with a big hole in their cashflow.

Interestingly, however, UBS upgraded Stagecoach to ‘buy’ from ‘neutral’ today. Do they know something, or have Stagecoach pulled the Perth wool over their eyes?

 

[Tetchytyke]

My understanding was also that Stagecoach were aiming for 8-10% revenue income in year one, with some cost savings being implemented.

My interpretation is that Stagecoach expected passenger numbers to rise in line with the rises DOR experienced, but that Stagecoach would be better placed to manipulate the Advance quotas to increase the price paid per passenger. They've certainly manipulated the quotas- each tier has remained unchanged, but finding the lowest tiers is all-but-impossible now- but that has had the impact on reducing passenger increases. Trains still have healthy loadings, but they are not any busier than they were two years ago. And pushing the fares too high for leisure trips doesn't work because the regulated fare acts as a price cap. Many of the AP fares are now only a couple of quid cheaper than the Super Off Peak return, I'm certainly using the walk up ticket more, which actually reduces VTEC income as ORCATS spreads the revenue further.

Interestingly British Airways are now very competitive on price from Edinburgh, Newcastle and Leeds/Bradford to London. Buying today for a business trip on Monday BA are undercutting VTEC by about £30. I'm flying to London more because BA are about the same price as standard class tickets and are significantly cheaper than first class tickets. BA didn't bother competing with DOR but they seem to be making an active decision to have a go at VTEC. Willie Walsh isn't a fool, it's interesting that they've made that call.
--- old post above --- --- new post below ---

Interestingly, however, UBS upgraded Stagecoach to ‘buy’ from ‘neutral’ today. Do they know something, or have Stagecoach pulled the Perth wool over their eyes?

I have a feeling that is down to significant growth in the bus business, which has always given Stagecoach most of their profit.

I also can't help but wonder if DafT will be giving Stagecoach revenue support due to Stagecoach missing their targets. After all, DafT gave over £100m in revenue support to Stagecoach when they overbid on EMT and SWT, and for ideological reasons DafT can't afford to see a third private operator on East Coast go to the wall.

 

[hwl]

My understanding was also that Stagecoach were aiming for 8-10% revenue income in year one, with some cost savings being implemented.

My interpretation is that Stagecoach expected passenger numbers to rise in line with the rises DOR experienced, but that Stagecoach would be better placed to manipulate the Advance quotas to increase the price paid per passenger. They've certainly manipulated the quotas- each tier has remained unchanged, but finding the lowest tiers is all-but-impossible now- but that has had the impact on reducing passenger increases. Trains still have healthy loadings, but they are not any busier than they were two years ago. And pushing the fares too high for leisure trips doesn't work because the regulated fare acts as a price cap. Many of the AP fares are now only a couple of quid cheaper than the Super Off Peak return, I'm certainly using the walk up ticket more, which actually reduces VTEC income as ORCATS spreads the revenue further.

Interestingly British Airways are now very competitive on price from Edinburgh, Newcastle and Leeds/Bradford to London. Buying today for a business trip on Monday BA are undercutting VTEC by about £30. I'm flying to London more because BA are about the same price as standard class tickets and are significantly cheaper than first class tickets. BA didn't bother competing with DOR but they seem to be making an active decision to have a go at VTEC. Willie Walsh isn't a fool, it's interesting that they've made that call.
--- old post above --- --- new post below ---


I have a feeling that is down to significant growth in the bus business, which has always given Stagecoach most of their profit.

I also can't help but wonder if DafT will be giving Stagecoach revenue support due to Stagecoach missing their targets. After all, DafT gave over £100m in revenue support to Stagecoach when they overbid on EMT and SWT, and for ideological reasons DafT can't afford to see a third private operator on East Coast go to the wall.

But DfT just spend all the cash on TPE and Northern this time round and there is none left in the drawer

 

[FQTV]

My understanding was also that Stagecoach were aiming for 8-10% revenue income in year one, with some cost savings being implemented.

My interpretation is that Stagecoach expected passenger numbers to rise in line with the rises DOR experienced, but that Stagecoach would be better placed to manipulate the Advance quotas to increase the price paid per passenger. They've certainly manipulated the quotas- each tier has remained unchanged, but finding the lowest tiers is all-but-impossible now- but that has had the impact on reducing passenger increases. Trains still have healthy loadings, but they are not any busier than they were two years ago. And pushing the fares too high for leisure trips doesn't work because the regulated fare acts as a price cap. Many of the AP fares are now only a couple of quid cheaper than the Super Off Peak return, I'm certainly using the walk up ticket more, which actually reduces VTEC income as ORCATS spreads the revenue further.

Interestingly British Airways are now very competitive on price from Edinburgh, Newcastle and Leeds/Bradford to London. Buying today for a business trip on Monday BA are undercutting VTEC by about £30. I'm flying to London more because BA are about the same price as standard class tickets and are significantly cheaper than first class tickets. BA didn't bother competing with DOR but they seem to be making an active decision to have a go at VTEC. Willie Walsh isn't a fool, it's interesting that they've made that call.
--- old post above --- --- new post below ---


I have a feeling that is down to significant growth in the bus business, which has always given Stagecoach most of their profit.

I also can't help but wonder if DafT will be giving Stagecoach revenue support due to Stagecoach missing their targets. After all, DafT gave over £100m in revenue support to Stagecoach when they overbid on EMT and SWT, and for ideological reasons DafT can't afford to see a third private operator on East Coast go to the wall.

Broadly-speaking, these are my thoughts as well. Since last year, I've moved a lot of my ticket-purchasing away from VTEC; I'm personally actively favouring TP and GC on the ECML, even if it involves a change at YRK or DON (and I'm not in a huge hurry) and I have all but given up on 'buying-up' to First - not so much because of the fare differential but more because I find the First product increasingly 'grating'.

This isn't a purely VTEC effect; I think it was probably building with me under DOR, but now I find the brand marketing drivel to be so utterly divergent from the reality that the balance has definitely tipped.

I know it might sound First World problematic, but I don't want wine at 11am in First Class; I want to work, with a coffee. I don't want to be told that I can't have a coffee until after I have eaten; I don't want to be told when to eat, and I certainly do not want death by beetroot. If I do want to eat, I'd like the menus to have been put out, and the menu type (now it's all in a booklet) to be announced. I don't want to be barked at with a 'JAWANNA EAT' when I have no clue yet as to what's being offered.

It seems that First has increasingly become a premium leisure product, and that can't be good for yields.

In Standard, at least with a table, I find the whole thing to be generally less 'hassled' and I get on with my work on a dongle connection, with a Costa at the start of the journey and the trolley passing part way through.

Other things that I have noticed too, apart from the disappearance of certain ADV fare levels from key trains, is that GC Standard fares to and from York are apparently firming-up, so I do wonder if more people are voting with their feet for a more realistically-marketed product. Their services 'feel' busier than ever to me.

I also note that, say, the 17:57 fast YRK>KGX to London is very light from York, but the 18:02 stopper is rammed. For next Friday (and this is the normal pattern as far I can see), the former is £73 ADV and the latter is £28.50 so, again, they seem to be running for the masses of low-yield, while shunting 410 tonnes of expensive fresh air down the line just ahead of it.

So, I'm only one person, but the majority of my spend is actually for others. According to my records, spend in the last six months was £11.5k with VTEC, but £16.5k in the previous six, so that's a just over 30% drop in 'top end' revenue. How much of that is me guiding business away, and how much is passengers themselves trading away and/or down, I'm not sure. I'm certainly not encouraging more business.

Whilst I may be an edge-case then, it's still not going to help them get to the growth figures that they reportedly need.

 

[yorkie]

I also note that, say, the 17:57 fast YRK>KGX to London is very light from York, but the 18:02 stopper is rammed.

Strange. A couple of hours earlier the 1557 is rammed and the 1602 is - relatively - lightly loaded (but still busy with a lot of turnover at most intermediate stations)

 

[gimmea50anyday]

The 07:08 TPE service from Newcastle to Liverpool connects in nicely with the GC service at York and is the first service that off-peak tickets are valid on into London, if I am correct the following VTEC doesn't accept off-peak tickets which makes the TPE service very busy from the outset and there is quite a high turnover of pax at York. if VTEC want the business, they are going to have to undercut the TPE/GC service and start accepting off-peak tickets on the scotsman which leaves Newcastle just 4 minutes earlier but is often only half full. With TPE's AT300's coming on stream along with GC capacity increases in two years this could get interesting.....

 

[Marton]

The 07:08 TPE service from Newcastle to Liverpool connects in nicely with the GC service at York and is the first service that off-peak tickets are valid on into London, if I am correct the following VTEC doesn't accept off-peak tickets which makes the TPE service very busy from the outset and there is quite a high turnover of pax at York. if VTEC want the business, they are going to have to undercut the TPE/GC service and start accepting off-peak tickets on the scotsman which leaves Newcastle just 4 minutes earlier but is often only half full. With TPE's AT300's coming on stream along with GC capacity increases in two years this could get interesting.....

The 0831 does take off peak. The cut of is arriving 1008.

 

[CdBrux]

The 07:08 TPE service from Newcastle to Liverpool connects in nicely with the GC service at York and is the first service that off-peak tickets are valid on into London, if I am correct the following VTEC doesn't accept off-peak tickets which makes the TPE service very busy from the outset and there is quite a high turnover of pax at York. if VTEC want the business, they are going to have to undercut the TPE/GC service and start accepting off-peak tickets on the scotsman which leaves Newcastle just 4 minutes earlier but is often only half full. With TPE's AT300's coming on stream along with GC capacity increases in two years this could get interesting.....

isn't competition a wonderful thing?

 

[Starmill]

isn't competition a wonderful thing?

In-market competition for rail travel? No, it's a terrible thing which increases costs and makes exceptionally poor allocation of capacity, while facilitating cream-skimming. I thought we had had this debate...

Anyway, in this particular case, I'm not sure you would call the £206.40 Newcastle to London Off-Peak Return that gimmea50anyday refers to 'competitive'.

Even if you do think that, the price and conditions are set by Virgin Trains East Coast, not TransPennine or Grand Central.

 

[47271]

I use them a lot but not with any real pattern, so one week I could be between Newcastle and Edinburgh at 3pm, the next on my way to York from Kings Cross in the mid evening. For that reason its difficult for me to spot changes in either fares or loadings.

Negatives for me: I used to book all of my travel through East Coast's website but, for the reasons well rehearsed on here, there's no longer any incentive for me to do that. Rewards got me a free case of wine every so often and a very handy annual lounge pass (I'm irritated by the loss of convenience that's come with them doing away with that) and I just ignore Nectar as I have done with every other business that operates it. The PR flimflam gets on my wick but it's easy enough to tune out of it.

Positives: I do find the 2000 to Sunderland a very handy way to avoid a grim GC 180 at that time of the evening, but that's probably the only thing they've done to change my travelling behaviour with them. The well overdue stock refurbs are good and I don't blame VTEC for the remaining ropey interiors, they were ropey under East Coast. The lounges have been perked up a lot as well, with the exception of Kings Cross they were getting very tired.

So they've done nothing in their first year to make an extra 8% out of me, the direct Sunderland train might have added 0.2% pa to my annual spend!

 

[HowardGWR]

I do find the 2000 to Sunderland a very handy way to avoid a grim GC 180 at that time of the evening

That's another very denigrating opinion on GC (there were others here, I think, on the cleaning thread).

You are clearly a big spender (possibly not personally) so I hope someone, for its sake, reads this and the posts about the cleaning.

 

[Starmill]

Uncleanliness isn't the biggest problem with the 180s, it's their general tattiness, clashing seat covers, worn out fittings and fixtures (especially the loos and the tables with the stupid socket arrangement). HT 180s are so much nicer - and have actually had the seat covers replaced.

 

[47271]

Ha, I said 'grim' not 'grimy', my displeasure with 180s is even more wide ranging than you think!

On the subject of grimy, and to be fair on GC, frankly the internal state of unrefurbished VTEC First Class stock is now little better than that in a GC 180.

 

[FQTV]

Strange. A couple of hours earlier the 1557 is rammed and the 1602 is - relatively - lightly loaded (but still busy with a lot of turnover at most intermediate stations)

That very possibly does even more to reinforce the hypothesis that they're not revenue-managing terribly well across the day as a whole.

The PR flimflam gets on my wick but it's easy enough to tune out of it.

I agree, but is it also potentially the case that it's 'costing' Stagecoach 10% of the franchise for a PR pap-generator that's at best being ignored, and maybe at worst is turning customers away?

On the subject of grimy, and to be fair on GC, frankly the internal state of unrefurbished VTEC First Class stock is now little better than that in a GC 180.

I think I've only been on a GC 180 once, but I can't say that my overriding impression of it was any more or less grubby than anything else on the long distance ECML. Perhaps the generally-airier GC saloons allow passengers to see more tattiness in one eye-sweep than is generally-possible from the confines of a Mallard vertical coffin

 

[WatcherZero]

As an update on this they are saying ticket reservations are up 15% onwards from the day when the increased frequencies start.

 

[Starmill]

The increased frequencies? You mean the extra 4 trains a day to Edinburgh?

 

[47271]

I read the story this morning and found their claim hard to believe. If they counted the extended booking horizon then I could see it, but they're quite clear that the figure only includes the two months from today.

I can't think of anything else driving it. Maybe they had a systems fault limiting advance bookings this time last year.

 

[Chrism20]

Nothing to do with the fact that they had adverts and a big online campaign with £30 standard and £60 first class returns from Edinburgh to London of course.

These tickets being flat fares and available on every service I could see for travel up to the end of July but have to be booked by the end of this month.

£30 each way first class singles on services such as the 1700/1730/1800 every night from KGX will encourage anyone to buy a ticket.

 

[47271]

Nothing to do with the fact that they had adverts and a big online campaign with £30 standard and £60 first class returns from Edinburgh to London of course.

These tickets being flat fares and available on every service I could see for travel up to the end of July but have to be booked by the end of this month.

£30 each way first class singles on services such as the 1700/1730/1800 every night from KGX will encourage anyone to buy a ticket.

Good for them. So effective were their ads that they completely passed me by, and I'm buying off them all the time. Neither have I benefited from their generosity, even at random.

 

[Chrism20]

Good for them. So effective were their ads that they completely passed me by, and I'm buying off them all the time. Neither have I benefited from their generosity, even at random.

It was called "Instant plane relief" IIRC and was launched at around the same time as David Horne was interviewed and stated they were going to take on the airlines etc etc.

There were adverts for it in Edinburgh and I also saw it a lot on Facebook and Twitter.

I have never been emailed anything adhoc but must admit I now don't purchase any tickets from them unless I'm getting a discount which I mainly get from the virgin red app, they tend to appear every five or six weeks.

 

[route:oxford]

Good for them. So effective were their ads that they completely passed me by, and I'm buying off them all the time. Neither have I benefited from their generosity, even at random.

Sometimes it's worthwhile not mentally blocking out adverts.

It was one offer per *email* address.

 

[Chrism20]

Sometimes it's worthwhile not mentally blocking out adverts.

It was one offer per *email* address.

Yes it's amazing how many email addresses one can accumulate.