Friday, January 04, 2013

What is a Premium service?

The Transport Minister Norman Lamb justified the rising cost of commuter rail travel by saying that customers are paying for a "Premium Service". I don't think that Mr Lamb understands the concept of what "Premium" means - so let me help him.

Products and Services can be segmented by the "extras" over and above the functional commodity that they offer. Let's take a couple of examples. When I go to the theatre I can decide to pay as little as possible for my ticket and watch the performance from the Gallery. Or I can decide to pay more and watch it from the Stalls. The performance I see is completely unaffected by my personal choice. It is my call whether I pay a "premium" for a better view and a more comfortable seat. Similarly with Air travel. If I'm flying on a particular airline's scheduled flight from London to New York I probably have three ticket options. "Economy" ( or "Coach), Business Class (or "Club") or First Class. The latter two classes offer benefits over and above the basic deal in Economy. But in all three classes the plane arrives at the same time at JFK!. It's my call whether I pay more for the "Premium" advantages of the higher two classes.

In both of these examples (and one could add thousands of product or service related offers which make the same point) the basic offer is functional, affordable and (in the horrible cliche) they "do what they say on the tin". With commuter rail travel the same does not apply. True there are some longer journey commuter lines where First Class is available as a premium offer. But the vast majority of commuter rail travel is single class with no alternative to the standard available - even for those who can afford it. There is nothing "Premium" about the service at all. Indeed arguably many commuter rail lines offer the bare minimum. Crowded trains where standing is the norm. Unreliable performance with delays and breakdowns common. The prices may be "Premium" - but the service certainly isn't !