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Business

German Rail Introduces New Price System

With its new pricing system, Deutsche Bahn is hoping to get more people traveling by train in Germany. But the new prices will force spontaneous and business travelers to dig deeper into their pockets.

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Deutsche Bahn executives hope lower prices will bring more people back to the rails

Germany's national railway introduced a new pricing system on Wednesday, which Deutsche Bahn hopes will get more people off the roads, out of the skies and back onto the tracks.

“Rail travel for millions of people will cheaper than ever,” Bahn Chairman Hartmut Mehdorn declared at a press conference in Berlin.

A complex pricing structure

Currently, rail tickets in Germany are priced by distance -- approximately 14 cents per kilometer. Nor are there any savings incentives for booking in advance.

The system isn't terribly popular with the public, and train travel in Germany fell by 4.4 percent in 2002, according to an interim report released by the company in June. Deutsche Bahn is hoping to reverse its fortunes with the new pricing system as well as a much-hyped new high-speed rail line connecting the major hub cities of Cologne and Frankfurt in just over an hour.

The new system, which goes into effect on Dec. 15 and is modelled after pricing mechanisms used by the airlines, creates an incentive for passengers to buy their tickets seven days or more in advance by offering them considerible savings if they do. Like the airlines, Deutsche Bahn is betting the system will allow it to better fill empty seats.

Wiedereröffnung S-Bahn Ring Berlin

Hartmut Mehdorn (left)

Bahn is calling the new system “clear and transparent.” And Mehdorn (photo, left) believes it is more logical and intuitive than what he describes as the current “tariff jungle.”

“At the moment we calculate prices by the kilometer," Deutsche Bahn spokesman Andreas Fuhrmann said. "But it’s simply not clear for customers. They don’t have a map by which they can measure the distances out; it's not easy to work out which ticket is the best value for thier money. We want to make things easier for them with this new system.”

Winners and losers

Families will be the biggest winners. Children under 14 accompanied by their parents can travel free of charge. Under the old system, this offer only applied to children up to 6 years of age.

But for spontaneous or business travelers who require flexibility, travel costs will increase significantly under the new system. Travelers who can’t book in advance will, in many cases, be punished under the new pricing system.

It also deals a heavy blow to holders of the company's loyalty card, the "Bahncard," which currently entitles customers to a 50-percent discount off the standard fare, even if a ticket is purchased on the day of travel. The card will continue to exist, but the annual subscription rate will drop to 60 euro (from the current 140 euro) and allow consumers to save between 25 percent and 50 percent, depending on how far in advance they book.

Customers who do not possess the Bahncard and are able to plan their journeys in advance will be the biggest winners, reaping savings as high as 40 percent if they book seven days or more ahead, 25 percent three days before travel and 10 percent up to the day before travel.

Deutsche Bahn is also hoping that by reducing the cost of long journeys it can lure customers away from budget air carriers or their cars.

Journeys of more than 180 kilometers will be up to 27 percent cheaper under the new system. For example, a ticket between Berlin and Frankfurt will cost 86.40 euro -- 19 percent cheaper than before.

Critics unimpressed

Despite support from the German government for its new pricing system, consumer groups are less enthusiastic about Deutsche Bahn's new rules.

Walter Hirrlinger, president of VDK, an organisation which represents and cares for war victims and pensioners in Germany, called the reforms a "rip-off." The new pricing structure would hugely disadvantage the approximately 820,000 chronically sick, disabled and old people in Germany who currently posses a Bahn Card entitling them to a 50 percent fare reduction, he declared in a statement issued on Wednesday.

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