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MARTA: Revenue Management

MARTA: Revenue Management. Group 8: Clay Bence, Dennis Dube, Matt Karp, Frank McLeod, and Shantea Stanford. Situation. The Metropolitan Atlanta Rapid Transit Authority (MARTA) is facing a $12 million deficit in its operating budget and is seeking ways to make ends meet. Our Charge.

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MARTA: Revenue Management

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  1. MARTA: Revenue Management Group 8: Clay Bence, Dennis Dube, Matt Karp, Frank McLeod, and Shantea Stanford

  2. Situation • The Metropolitan Atlanta Rapid Transit Authority (MARTA) is facing a $12 million deficit in its operating budget and is seeking ways to make ends meet.

  3. Our Charge • Suggest ways to Governor Barnes and the MARTA board that Revenue Management can be used to improve the revenue picture at MARTA without reducing service or using state funds to bail out MARTA.

  4. Focusing on Revenue • Identify customers by micromarkets • Price according to these micromarkets, and go away from commoditizing service • Use new price focus, rather than cost to balance supply and demand (yield/load factor) • Develop knowledgebase to make pricing decisions • Use increased knowledge to optimize future pricing decisions and continuously reassess • Keep in mind the needs of low income passengers

  5. Focus on price rather than costs when balancing supply and demand When is my supply the greatest? -Early Morning/Late Afternoon & Evening. -When other travel options are limited or non-existent. Where are the most popular destinations? How can I make my “product” more valuable?

  6. Replace cost-based pricing with market-based pricing Identified micro-markets as follows: • Businesspeople • Airport Riders • Event Patrons • Tourists • Low Income • Students

  7. Competitors • Taxi Services/Limo Services • A.C.T. Express • Cobb Community Transit • Gwinnett County Transit • Clayton County Transit • Personal Vehicles/Car Dealerships

  8. The Marketplace Metro Atlanta: • Fulton County • Dekalb County • Cobb County

  9. Sell to segmented micromarkets, not to mass markets Micro-markets • Businesspeople • Airport riders • Event patrons • Tourists • Low income • Students

  10. Save your products for your most valuable customers • Leisure Events • (Braves, Falcons, Hawks, Circus, weekend travel) • Tourists/Visitors • Travel to/from work

  11. Make decisions based on knowledge, not supposition Data based on internal MARTA information including: • High-travel routes • Passenger traffic by station • Parking spaces/usage • Pricing Plans/Corporate discounts • Bus routes • Out of District Travel • Overall usage

  12. Exploit each product’s value life cycle - Current Pricing Situation

  13. Current Pricing Situation - Visitors

  14. Current Pricing Situation - Parking *Secured Lots hold 9,000 Spaces, other lots have 13,000 spaces

  15. Current Pricing Situation - Other

  16. Exploit each product’s value cycle Parking Pricing Plan (13,000 Free Spaces) RM Pricing Adjustment – Charge $3 for any 24-hour parking. Current Revenue Stream: $0 RM Revenue Stream: $234,000 Assumes a 50% daily usage, with 50% of those spaces being used overnight one day/month.

  17. Exploit each product’s value cycle Parking Pricing Plan (9,000 $3 Lots) RM Pricing Adjustment – Charge $6 for any 24-hour parking. Current Revenue Stream: $0 RM Revenue Stream: $162,000 Assumes a 50% daily usage, with 50% of those spaces being used overnight one day/month.

  18. Visitor’s Passes (Scenario 1) RM Pricing Adjustment – Increase from $10 average for unlimited travel to $25 – average taxi price per destination. Current Revenue Stream: $21,653,640 RM Revenue Stream: $54,134,100 150% price increase, 5% quantity decrease Visitor’s Passes (Scenario 2) RM Pricing Adjustment – Increase from $10 average for unlimited travel to $20 – average taxi price per destination. Current Revenue Stream: $21,653,640 RM Revenue Stream: $43,307,280 100% price increase, 0% quantity decrease Exploit each product’s value cycle

  19. Georgia Dome Route (Scenario 1) RM Pricing Adjustment – Currently experiencing 30% ridership. Current Revenue Stream: $216,822 RM Revenue Stream: $216,822 50% price increase, 5% quantity decrease Georgia Dome Route (Scenario 2) RM Pricing Adjustment – Currently experiencing 30% ridership. Current Revenue Stream: $216,822 RM Revenue Stream: $325,232 50% price increase, 0% quantity decrease Exploit each product’s value cycle

  20. Turner Field Route (Scenario 1) RM Pricing Adjustment – 81 Home Games, based on adjusted live data. Current Revenue Stream: $255,150 RM Revenue Stream: $363,589 50% price increase, 5% quantity decrease Turner Field Route (Scenario 2) RM Pricing Adjustment – 81 Home Games, based on adjusted live data. Current Revenue Stream: $255,150 RM Revenue Stream: $382,725 50% price increase, 0% quantity decrease Exploit each product’s value cycle

  21. Out-Of-District Routes (Scenario 1) RM Pricing Adjustment –Based on adjusted live data. Current Revenue Stream: $29.200 RM Revenue Stream: $55,480 100% price increase, 5% quantity decrease Out-Of-District Routes (Scenario 2) RM Pricing Adjustment –Based on adjusted live data. Current Revenue Stream: $29.200 RM Revenue Stream: $43,800 50% price increase, 0% quantity decrease Exploit each product’s value cycle

  22. Scenario 1 Revenue Enhancements

  23. Scenario 2 Revenue Enhancements

  24. Revenue ManagementOpportunities • Increase fares for airport travelers/visitors • Increase fares for shuttles to Dome and special events • Increase fares to “Popular” Destinations • Discount 10am-2pm daily (off-peak times) • Discount weekends (off-peak times) • Increase fares for 6 am-10 am and 3 pm-7pm daily (peak)

  25. Revenue Management Opportunities (cont.) • Discount low traveled routes • Charge daily commuters for parking and increase overnight/daily fees • Charge combination parking/travel passes

  26. What has MARTA done so far? • Considered slashing bus routes, but revised plan due to public backlash • Raised college and university passes from $3/$8 to $37.50/$42 • Maximum discount on bulk purchases of 8% - compare to 5% in D.C., Philadelphia

  27. Continually re-evaluate your revenue opportunities Additional Revenue Management Options • Partnerships with local hotels and Delta for trade advertising and promotions • Self-managed Starbucks, or other coffee and bakery shops, at major stations • Advertisements at airport/popular destinations to increase awareness to incoming/frequent travelers • Luxury cars with guaranteed seat/perks at a premium price • Express Shuttles to Airport • Evaluate overlapping routes

  28. Questions?

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