Category Archives: Travel

How traveling by rail has become a disgrace to our nation

I’m sat here in the misery of a First Great Western train carriage. We’re packed into a 35 year old train and I’ve got the armpit from a sweaty teenager in my face. It’s delayed, and everyone is clearly miserable. The cost for this misery: £51 for a one way trip, or £0.80 a mile.

When I first left university, I lived outside of London with my parents; I commuted into London every day and paid £9.80 for the pleasure. That’s approximately £0.17 per mile. It falls in line with what you’d expect: cheap, affordable rail travel. We’ve had a bit of inflation since then, and if you take that into account, you’d expect that journey to cost £13.50 or thereabouts today.

Well if you go on and try to buy a ticket, it will be £45. Pardon, you say? Yes, that’s 333% inflation. But that’s not the full picture of their profiteering. Passenger numbers have soared, 37% in that same period, if you believe this ATOC report. That means that for a given train, they are earning 457% more than they did 10 years ago – in real terms.

Ah, you might say, but they have been investing in the future, building out new shiny trains, wireless access and other amenities. I’m afraid the evidence suggests otherwise. First Great Western are still using the fleet of trains they inherited from British Rail in 1993, and the trains were built some time between 1977 and 1982. Most domestic flights now have wireless internet, but First Great Western operate a Bring Your Own Wireless policy, and stick you in a big faraday cage so you can’t get signal.

How does this make any sense?

Essentially it is an unregulated and anti-competitive market, which is all bad. The monopolised environment simply means that there is no incentive to improve. No incentive to provide a better customer service. No reason not to continue to push prices up.

And the stations?

I think that the stations are more offensive than anything else. I don’t know how many times I have been stood on a cold platform. You see, they used to have waiting rooms, but they realised that this was valuable real estate, so they sold them to minicab companies and rip-off coffee joints.

I was just stood for 20 minutes on a freezing platform with this exact problem. A WH Smith newsagent stands proudly where the waiting room used to be. But it’s OK – I can go and buy a packet of chips there for £0.90, 120% more than a supermarket. Who says they aren’t looking after their passengers?

My local station, Hampton, just retired the station worker that has been there since history began. He wasn’t a spring chicken, but he knew every cheap fare out there. To be fair, one of his replacements is pretty switched on, but the other can barely string a sentence together. It took me nearly 5 minutes to get my ticket today, with a growing line of passengers behind me.

Which brings me neatly to Revenue Protection

My favourite station is Kew Bridge. The ticket office burnt down some years back and for several years it was not actually possible to buy a ticket at any of the stations I went through from home to work. I’d be stopped, periodically, by revenue protection officers (it’s extortion, really). How, I would explain, would you like me to buy a ticket, when you can’t be bothered to have a ticket office at either station in my journey?

Andrew Gilligan wrote a good article on this a few years back. One operator made £32 million out of revenue protection, and financially incentivises its staff based on the amount of revenue they collect from unsuspecting passengers. I have one friend who was actually protected by police at Waterloo by one abusive revenue officer who would not let her buy a ticket, having travelled from the aforementioned Kew Bridge.

What can be done about it?

I really don’t know. Rail operators simply don’t care about customer service. They know that because they operate in a monopoly and most passengers don’t have a choice, they can afford to treat their customers like shit and they will keep buying. And passenger numbers keep rising as roads become more congested, so they keep putting their prices up.

For example, my regular ticket price just went up 6.5% last week, despite UK inflation being around 4%. And more to the point, salaries for most people aren’t increasing so the average person is spending more of their income, in real terms.

Perhaps we can lobby our MPs and our government. But I’m pretty certain they couldn’t care less. My local MP is Zac Goldsmith and I’m pretty certain he doesn’t give a shit. Zac – feel free to prove me wrong by commenting on this blog and tell me what you’re going to do about it.

In the meantime I will be thankful that I mostly travel for work purposes and my employer pays my expenses. Many others are not so fortunate.

Why the services industry is in turmoil, and British Airways are screwed

I was sat on the sofa this morning, trying to think of a truly amazing customer experience that I have had in 2011. And if I’m being honest, I’m not sure I’ve had one. I’ve lots of OK experiences. A few good ones. And plenty of terrible ones. Maybe I’m wrong in thinking that me, the customer, should be the focus during an interaction, because I so very rarely feel that way.

And it was so that I ended up today at The Cheese And Wine Company in Hampton. It sits on the site that has housed no less than four cafés in four years. Organic this, children’s that. Each was a failed business because they had no idea what their customers wanted – usually bad home-cooked cakes and muddy coffee. Really?

Steve, on the other hand, has created a simple and oddly unique value proposition. He selles cheese, wine, and associated paraphernalia. In the store, online, you can sit and eat it or take it home. He does tastings and parties and events and has engaged his audience very nicely. And what’s more, he’s not competing with the supermarkets because he sells stuff you can’t buy there. Stuff like Epoisses soft cheese and Binfield Brut sparkling wine, that comes from a few miles from where I was born in Berkshire.

It’s a simple value proposition and his customers love it. He’s sold out on every event and I had to settle for a rather nice stilton today, because he’d sold every other cheese in the shop. Trust me, he has a truckload coming tomorrow, on the next working day of the year.

The shop next door to him shut down a few months back. As far as I can tell, Harry and Paul’s I Saw You Coming took this store to run a parody. As they say, “It’s basically a bunch of crap that I’ve tastefully displayed. And a bunch of candles”. And now it’s been replaced by a store called OhSo. Which as far as I can tell sells the same rubbish that the old store (which went bust) sold. It’s sad, but they won’t be open in Christmas 2012.

And this neatly brings me to British Airways. The airline industry is in trouble. Their consumers have less disposable income than ever before. Fuel prices and taxes are rising year-on-year. A bunch of low-cost airlines have cropped up, cutting margins further and increasing competition. And consumers are better informed than ever before, with better price comparison sites.

They have two potential differentiators to choose from: either price, or quality of service. With airlines like the US domestics (US Airways, Delta etc.) and European budget airlines like Easyjet and Ryanair, you know what you are getting. Very little, for the lowest price possible. A return trip from London to Madrid is £37 by Easyjet in January, and £114 with BA.

So BA try to compete on perceived quality of service. But they have a serious problem here too, because their staff hate them. They are used to being given a platinum pay package for the last 30 years, and the market can no longer support it for the reasons explained before. What’s more, the delays to Boeing’s Dreamliner planes mean that BA are operating a tired fleet of ageing planes.

And in reducing their salaries and making the shifts and perks more similar to other competing airlines, BA have made their staff hate their jobs – and they take it out on the customers in many cases. In 2011 I have experienced the following:

  1. Being charged for a ticket change after I was told I could have it for free because I was changing flights at their convenience.
  2. Being charged for a ticket change after an administrative fault
  3. A nice coat I left on a plane never made it to lost property – in a small airport
  4. My bags vandalised and my property stolen on a flight from London to Madrid
  5. Nearly missing a flight because of computer security check problems
  6. Having my complaint letter opened by the crew that I complained about – they then confronted me
  7. Flights with no water, broken heating systems, broken seats or rest rooms

And no one gives a crap. Their customer complaints department certainly don’t and from what I hear, the management team isn’t any different. When you talk to staff at the airport on a flight, they are invariably unhappy and disaffected.

And the share price shows it. They are down from 243p at the beginning of this year to 150p at the time of writing. To be fair, this is more or less in common with the rest of the industry – but what is not in common is they are barely breaking even. Lufthansa, for example, has an operating margin of 4% compared to the International Airlines Group (which owns BA and Iberia), which made 0.7% last year. I’ve not looked into it, but it wouldn’t surprise me if there were some creative accounting going on there.

Now last week, FedEx got in trouble on YouTube, when a disaffected customer uploaded a video titled “FedEx Guy Throwing My Computer Monitor”:

Now this video already has nearly 7,000,000 views and 22,000 comments. Fedex Senior Vice President Matthew Thornton III turned this into a fantastic opportunity and apologised to the customer, as a YouTube response, here:

And if BA want to survive, I believe they need to apply some customer-centricity. I’ve been told by some senior people in BA that they have a program in place to try to ensure retention of frequent flyers and offer them a good quality of service.

Now, I get a fantastic quality of service from Carl and his team at BA in Philadelphia International Airport and this is probably the main reason why I fly BA (along with the rewards points, and the convenience of London Heathrow Terminal 5). But I think this is a pocket of excellence caused by a good manager and it is not representative of my overall experience.

The risk to BA seems so obvious – there will be some major casualties of the recession. I’m already tempted to switch to US Airways, who have a very generous upgrade system (they always fill business class, upgrading passengers by order of seniority). The fact that US Airways don’t give you access to their lounge, even if you are a frequent flyer, is the reason I’ve not. It costs $375 a year.

During a visit to the NASA space center in 1962, President Kennedy noticed a janitor carrying a broom. He interrupted his tour, walked over to the man and said, “Hi, I’m Jack Kennedy. What are you doing?”. The janitor responded, “I’m helping put a man on the moon, Mr. President.”

It sounds corny, but having a company with a single vision may have something to be said for it. I work with a lot of large global organisations and it is often a problem that IT functions do not serve the wider needs of the business. One company that this is not true in is Howdens Joinery (previously the wholesale arm of MFI), which is a very interesting organisation.

For a start, everyone in the organisation is remunerated based on the same criteria. This shared sense of purpose is very visible in the CIO, David Hallett. We were talking about depot outages and he explained that they don’t operate on the basis of an acceptable failure rate: a depot which is not operating, is margin lost, and that is unacceptable.

What’s more interesting is that it appears that because everyone has a shared and common goal, they work as a team. The results are clear. Revenue in 2009 was 769m with 6.5% profit after tax. This was up to 808m and 8.2% profit in 2010. 2011 Interim results are available here but they aren’t very relevant because Howdens does much of their business in the run-up to Christmas. What is interesting is the first few pages which explains their business model.

If you do so, you will understand that Howdens is 100% customer-centric. They know who their customer is (the small builder) and know exactly what is important to them – and they deliver it, surrounded by a viable commercial model. Their massive market share is testimony to getting that right.

For my money, there will be airlines that figure out that being customer-centric first and foremost builds long-term sustainable success. And there will be those that will roll over and die. And from where I’m sitting, British Airways may be a Very British Institution, but I’m not convinced it can survive this recession.