Train fares used to be predictable with the lowest fares available for passengers booking in advance and conversely, rocket high if you were to buy a ticket on the spot.
However the Canadian VIA-rail has recently adopted a model similar to that of the airline industry, which means that some tickets go high and others low depending on the demand. The aim of this revenue management is to get as many people on a trip as possible, at the highest fare possible in each category. Since VIA implemented the system last year they have seen an increase in ridership of 10.4 per cent between the Montreal-Ottawa-Toronto route.
This type of computer software price optimisation is based on several variables such as current market conditions and historical booking data. The revenue management allowed VIA to eliminate advance purchases discount fees and introduced a new economy fare to attract customers who otherwise would have travelled by car.
Pricing management is increasingly used by car rental agencies and hotels and this pricing strategy is now accepted by the general public as it gives more flexibility, a win –win situation where customers can adjust their budget and time according to the various options available.