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Occasional Train Blogging: Zone Pricing

by DoDo Sun Apr 8th, 2007 at 04:43:57 AM EST

This diary is a byproduct of my research for the Central European Time diary, having found some nice quotes. It is also relevant to discussion in The Wonders Of Capitalism, so I fast-tracked it.

Let's get back to the last third of the 19th century. This was the era of railway nationalisations in much of Europe. Pioneers were Prussia and the Hungary half of Austria-Hungary. The former pursued it for strategic militaristic reasons. The latter wanted to catch up with Western Europe in industrial development, and even the Manchester capitalist liberals saw railways as essential infrastructure to be developed with central planning.

For a few brief decades, this government push propelled the Hungarian [Royal] State Railways (MÁV) into the forefront of railway development internationally. Other than CET, another development pioneered by MÁV which is commonplace today is zone pricing of tickets.

A restored 19th-century MÁV train, here as guest in Strasshof/Austria. Photo by Wolfgang Grafeneder from DEF

From over there => - afew


To briefly recap what was already told in the timezone diary: Ending the era of stiff imperial control in the wake of the 1848 revolutions, the so-called Compromise of 1867 turned the Habsburg Empire into the dual empire of Austria-Hungary, whose parts had wide-reaching autonomy. The Hungary half used its autonomy to push industrialisation, above all construction of new railways:

Network development within the Carpathian Basin (borders are that of the Hungary part of Austria-Hungary). Notice how the network developed from Vienna-centred to Buda/Pest-centred

The initial private railways were slowly bought up and merged into a national railway. I am no fan of the Great Men theory of history, but here one man with single-minded determination really had a central role.

Gábor "Iron Minister" Baross was state secretary and then transport minister from 1883 until his death in 1892. His primary focus was on railways, and in that field, against heavy resistance, he pushed through the bulk of nationalisations, accelerated construction, created railway officers' schools, pursued Central European Time – and he invented and introduced zone pricing of railway tickets.

Until then, most railways either calculated ticket price by multiplying travel distance with a fixed rate per unit distance, or set prices for every possible relation. Zone pricing, in contrast, means that ticket price is the same within certain distance ranges or within certain geographical areas.

For the traveller, zone pricing also brings the freedom of choice to board or leave a train at different stations within the same zone. For policy-makers, zones offer the possibility of non-linear pricing, to encourage (or discourage) certain kinds of travels. (And for cashiers, it reduces the variety of tickets.)

Here are two present-day examples:

Current 1st (green) and 2nd (blue) class ticket prices of the Hungarian State Railways: example of zones as distance ranges (1€ ~= 250 Ft, or one small tick in the Y axis of the diagram)

Zones A (white), B (light grey), C (grey) of the mass transit system of Berlin: example of zones as geographical areas. You can buy

  • €1.20 short-distance tickets (f.e. up to 3 stations on the subway),
  • €2.10 AB, €2.40 BC and €2.70 ABC multiple-zone tickets,
  • normal railway tickets (zoned according to distance range) in zone C

But back to the late 1880s, when the (private) railways in Hungary were having difficulties, and wanted to get back in the black by raising ticket prices. However, Baross wanted to do the opposite with his zone pricing. This first zone pricing had distance ranges, with the greatest reductions (up to 80%) for the shortest and longest distances. (There was also a regional element: to boost the then desired centralisation on the capital, travels via Budapest had to be priced as two successive travels.)

Baross argued that the operators' loss from price cuts will be more than made up by the extra income from boosted traffic numbers. This revolutionary idea was a mirror image of the now popular neo-liberal argument for tax cuts ("extra economic growth due to tax cuts will raise tax revenues back to the old level"): instead of counting on the sustained success and goodwill of the richest, it was counting on the poorest going off to try their luck on now affordable trains.

Baross's idea made both domestic and international furore. Some quotes, first strongly sceptical ones:

"...and here we see the theory of zone pricing in its full beauty, to open the railway to those, who were barred from it. This is the professed goal! But why stop half-way? The most ideal would be if everyone would travel at public expense..."
(Journal des Chemins de Fer)

The State can commit every madness, because it does so at the expense of taxpayers. Do they dare to claim that traffic will grow so much that it will make up for the giant income deficit?
(Journal des Transports)

Note the French sources: a reason for the special and especially negative attention may have been that one of the last major private railways Baross would go on to nationalise was held by French investors. Observers elsewhere were fearful in a different way:

"The country that is first to apply the cheap zone pricing will draw the flood of Europe's traffic closest to itself."
(Zeitschrift für Eisenbahnen und Dampfschiffahrt)

But at home, Baross won the policy battle, and his great gamble began on 1 August 1889.

And it was an extreme success.

In just 11 months, passenger numbers grew by 7 million, more than doubling from the year before, and the fare reform brought a sizeable overall profit. In two more years, traffic doubled again, and a similar pricing was introduced for freight. The Hungarian Royal State Railways would stay profitable until WWI.

Zone pricing then quickly spread around the world, among the first to adopt it was the city of Prague. But Baross could only see the beginning of his success: shortly after presenting another landmark proposal (the draft of a law introducing workers' health insurance) he caught typhoid fever and died aged only 44.

:: :: :: :: ::

Check the Train Blogging index page for a (hopefully) complete list of ET diaries and stories related to railways and trains.

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A train diary shouldn't be without a train photo, so I added one.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sat Apr 7th, 2007 at 06:31:58 PM EST
Added €-Ft conversion and a finishing paragraph, I forgot both yesterday in my hurry.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sun Apr 8th, 2007 at 06:02:55 AM EST
[ Parent ]
Nothing to do with zone pricing ... though there is some application of zone pricing lurking in there somewhere ... but Express Speed Rail: Route Matrix Revolutions is my most recent train diary on dKos.

Yeah, I know Easter Weekend is a silly time to be posting it, but that's when I had the time!


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sat Apr 7th, 2007 at 09:43:25 PM EST
Great work!

One thing you could add is that trains can even be "branched": you could start a train in a city as two trainsets coupled together, and after a few stations, uncouple them, and let them continue in different directions.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Sun Apr 8th, 2007 at 07:04:43 AM EST
[ Parent ]
Yes, that's in the first YouTube clip, but not brought out in the diary. I touched on it a little in the "what about Detroit" thread.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Sun Apr 8th, 2007 at 11:38:50 AM EST
[ Parent ]
I am adding a train I rode last Friday:

I did not notice any zonning in Japan. Train tickets are typically sold in vending machines which have (at least) as many buttons as the number of distinct trip prices.

by das monde on Sun Apr 8th, 2007 at 04:09:02 AM EST
For the hell of it, here is other perspective of the same train:

by das monde on Sun Apr 8th, 2007 at 04:11:17 AM EST
[ Parent ]
The question is, are the number of distinct trip prices lower or equal to the number of distinct trip possibilities?

If the train is JR Kyushu's Dc72 (which I came across when writing the Hump-Nosed Trains diary), you must be in Kyushu/Japan? At any rate, when I check JR Kyushu's English train fares page, prices are given for specific relations with km distances displayed, but the pricing is clearly zoned -- for example, 1080 yen for normal trains in the 50-60 km range.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Sun Apr 8th, 2007 at 05:51:11 AM EST
[ Parent ]
Yes, I am in Kyushu. (The URL link I gave "says" the same!) This page shows 3 "Yufuin-no-Mori" trains (which is logical, since they go almost every hour). Now I can see that the two trains in my pictures are not the same. The second picture is taken from this blog; that train has golden stripes. From  what I can google, two (of the 3) trains are numbered as KIHA 71 and KIHA 72. (See also adjacent Wikipedia page.) A slide show with the third train is here.

On the ticket pricing: The distance spectrum appears to be approximately zonned. But as you notice from table prices, they do not give a single distance/price table. The prices are zonned from each individual station - usually, the same price holds for a few consecutive stops (of a local train). So there are fewer distinct prices than (near enough) destinations. I suppose that they adjust zonning for all directions from a single station simultaneously, so to need a "finite" total number of buttons at that station. I can imagine a bright newcommer, or a veteran JR emploee, solving this puzzle of regional price adjustment :-)

On internet, I found this example of a ticket vending machine (in Hiroshima):

by das monde on Sun Apr 8th, 2007 at 06:53:44 AM EST
[ Parent ]
Ah, I overlooked the link. Thanks for the many links! From them, the third train doing "Yufuin-no-Mori" service is the one I have been looking for for the 'Hump-Nosed' diary, Dc/KIHA183-1000, see on Wiki and here.

KIHA 71 and KIHA 72

So "キハ" reads "kiha"? Could it be the abbrevation of a literal translation of "diesel car"? Because the Japanese sites I browsed two months ago often used the latter, abbreviated "DC", sometimes it is even written on the vehicles like on this Dc/KIHA/キハ58:



*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Sun Apr 8th, 2007 at 08:14:40 AM EST
[ Parent ]
Yes, "キハ" reads "kiha". It is in the phonetic katakana alphabet, usually used for transcription of foreign words. I do not know a translation. The JR Kyudai line (through the mountain resort Yufuin, and a waterfall of 30 m) is not electrified, so diesels run. You will enjoy this picture. The Yellow One Man Diesel Car is Kiha 125.
by das monde on Sun Apr 8th, 2007 at 08:31:57 PM EST
[ Parent ]
Oops, the "this picture" link is this.
by das monde on Sun Apr 8th, 2007 at 08:36:40 PM EST
[ Parent ]
Baross argued that the loss from price cuts will be more than made up by the extra income from boosted traffic numbers. This revolutionary idea was a mirror image of one argument for tax cuts used by neolibs today, that economic growth will raise tax revenues back to the old level: instead of counting on the sustained success and goodwill of the richest, it was counting on the poorest to go trying their luck on now affordable trains.

One of the "fathers" of supply-side economics, Bruce Bartlett says this:

The original supply-siders suggested that some tax cuts, under very special circumstances, might actually raise federal revenues. For example, cutting the capital gains tax rate might induce an unlocking effect that would cause more gains to be realized, thus causing more taxes to be paid on such gains even at a lower rate.

Some tax cuts, very special circumstances... Certainly not always.

The way modern Bush advisors (or "knowledgable" supporters) argue to cut taxes more, can be used every few years, under any taxing regime. Why not cut taxes down to zero at once? The double irony is that that the same "knowledgable" supporters argue that the government should not spend much at all. In effect, the government does not need higher revenues. So why argue that tax cuts are needed to increase revenues? The third dimension of irony is, of course, that presicely the "supply-side" US administrations turn out to be biggest spenders.

by das monde on Sun Apr 8th, 2007 at 04:09:19 AM EST
Don't comment on these threads/discussions too often ... but a short note of appreciation.  

This is excellent and informative work.  And, to be honest, the value of Eurotrib -- I doubt that I would have ever considered / seen anything about this without this community.  And, I value that.  Thank you.

A question ... taking it to today ... How does the explosion of information technology and reduced price for it change the value/approach of tiered/zone pricing?  It makes it far easier to play with timed prices and be far more specific in terms of those prices without overburdening the train / railroad employees while maximizing (potentially revenue) while likely confusing (at least some) riders.  Your thoughts?

Blogging regularly at Get Energy Smart. NOW!!!

by a siegel (siegeadATgmailIGNORETHISdotPLEASEcom) on Sun Apr 8th, 2007 at 11:46:25 AM EST
Absolutely. Nowadays in most places tickets are printed by computers, and there are a great variety of special tickets (family/retiree/summer/3-day/rush-hour etc.). For major railways, zone pricing is now just one small part of a complex pricing. The problem is no more storing, sorting and finding the right ticket, but figuring out what special offers are applicable to a customer...

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sun Apr 8th, 2007 at 05:49:22 PM EST
[ Parent ]
I have heard from someone who worked for the SNCF ticket pricing software that developing the software handling the special offers for employees and family of the SNCF, ended up costing more than the sale of those tickets brought in...

Un roi sans divertissement est un homme plein de misčres
by linca (antonin POINT lucas AROBASE gmail.com) on Sun Apr 8th, 2007 at 06:18:05 PM EST
[ Parent ]
To plug that deficit, SNCF should hire cashiers from DB. German pro-rail groups regularly conduct test ticket purchases and then complain that cashiers very often won't tell of all the price reductions applicable... ;-)

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sun Apr 8th, 2007 at 06:47:55 PM EST
[ Parent ]
You believe SNCF cashiers are any better? :)

Actually, a more annoying aspect of time-pricing (early seats cheaper than later one) is beginning a transaction at a certain price, only to find that by the time you are ready to pay, the seat isn't available anymore at that price...

Un roi sans divertissement est un homme plein de misčres

by linca (antonin POINT lucas AROBASE gmail.com) on Sun Apr 8th, 2007 at 07:26:01 PM EST
[ Parent ]
The time based ticketing in New South Wales is just peak / off-peak pricing, but if you are still paying for the ticket, you are not on the train, so you weren't supposed to be buying an off-peak ticket anyway.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Sun Apr 8th, 2007 at 11:33:42 PM EST
[ Parent ]
Unfortunately. The pricing system Germany introduced a few years ago is an example of that, and it is maddening. It also in effect penalizes people who don't plan well ahead, meaning that cars become more attractive for that spontaneous weekend daytrip or unplanned meandering sightseeing vacation.
by MarekNYC on Mon Apr 9th, 2007 at 04:56:03 PM EST
[ Parent ]
There was a big public outcry when that new pricing was presented and introcduced, and it is still problematic after some improvements. But we are now in the era of non-railway railway managers who look for maximised profits not passenger numbers, no surprises here... (Current DB CEO Hartmut Mehdorn was earlier manager for a press-making company and an aerospace company, and sat in the board of software giant SAP and energy giant RWE.)

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Mon Apr 9th, 2007 at 06:13:36 PM EST
[ Parent ]


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