German Railway Re-tweaks Prices amid Complaints

Amid much fanfare in December 2002, Deutsche Bahn rolled out a new pricing system aimed at filling empty seats. The system used yield management pricing methods similar to those of airlines. It gave big discounts to travelers who booked far in advance, as well as to families with young children.

At the time, Deutsche Bahn Chairman Hartmut Mehdorn called the system “clear and transparent,” and said it was more logical and intuitive than the “tariff jungle” that preceded it. “Rail travel for millions of people will be cheaper than ever,” he said.

But under the new system, last-minute ticket buying and late-date changes were strongly penalized. At the same time, the Bahn Card formula was changed, costing less initially but offering only a 25 percent discount.

Only half a year later, the Bahn was forced to admit the new system had been a colossal failure, as passengers fled the railways in droves. In an effort to avoid further damage, Mehdorn on Wednesday announced the railway operator was re-tweaking the pricing system once again.

New “old” discount

While Mehdorn had previously said he wouldn’t change the new pricing system for at least a year, he gave in to consumer pressure after a mere seven months, reinstating the “old” Bahn Card, which will now cost €200 instead of €140 and offers 50 percent discount. The new Bahn Card 25 -- which costs an initial €60, offers only a 25 percent discount -- will also be continued.

Pro Bahn, a consumer group acting on behalf of train travelers, loudly cheered the reinstatement of the old Bahn Card. “Our group was bound and determined that the consumers using this means of price reduction shouldn’t be knocked around,” spokesman Rainer Engel said.

By reinstating the Bahn Card in its original form, Mehdorn hopes to lure back frustrated passengers, who are increasingly fleeing train travel for alternatives such as discount airlines.

Too many empty seats

The earlier-than-expected changes came as a result of steadily falling traffic figures. Deutsche Bahn lost 10.6 percent of its passengers in the first quarter of 2003, with revenue from long-haul journeys down 14 percent. The lower numbers are due at least in part to the pricing changes, government statisticians said.

For its part, however, the railway blames the unexpectedly low ridership on bad weather, the faltering economy, and a surge in low-cost airlines serving inter-German and other nearby European destinations.

The fare changes come amid growing signs that Mehdorn will have to postpone his ambitious plans to take Deutsche Bahn public in 2005. Behind closed doors, politicians expect the government, burned after its troublesome privatization experience with phone giant Deutsche Telekom, to delay any listing until at least early 2006.