Subscribe to RSSKiwiRail Partner Sought For Overlander
KiwiRail has talked more about going into partnership with someone for its long-distance passenger rail.
Earlier this week, KiwiRail CEO Jim Quinn talked about his intention to look for a partner for our Tranz Scenic business.
Now he has confirmed that applies to all its long-distance travel business, including the Overlander.
“What we do know is that the Overlander service has proved its potential. But we can’t develop that potential without investment in new carriages and possibly benefit the whole long distance passenger business as well,” Mr Quinn said in an editorial in the KiwiRail’s latest weekly staff newsletter, distributed today.
Earlier this week, Mr Quinn revealed that KiwiRail is revising its financial targets downwards for the current financial year. KiwiRail’s end of year result would be around 12 percent or $15m below target.
He announced that the TranzCoastal rail service, between Christchurch and Picton – suspended because of the Christchurch quake- now will not run until August 15 to minimise the financial impact on the business.
And he added:”We are looking to partner with an entity who is interested in investing to assist the modernisation of our passenger fleet and also to grow this market.”
KiwiRail: Looking for partners
Since his statement, staff have been asking him what he means by this.
He says: “The answer is simple: we have a completely open mind on who the partner might be and how their participation could be structured. So it’s very early days yet.”
Mr Quinn insists this is not a new idea.
“It’s been part of the Turnaround Plan because we accepted at the outset that we could struggle to develop the passenger business on our own.We will work to develop the right model and look at potential partners who can bring the right attributes to a partnership.
Defending the delay to the resumption of the TranzCoastal until August, Mr Quinn says it’s one step KiwiRail could take in view of the economic downturn, made worse by the quake.
“I know it’s a service people speak very highly of but it’s hard to escape the reality very few have booked to travel on it since the Christchurch earthquake.We faced the prospect of losing significant money during the winter low season.
“It was important that we took steps to limit losses by suspending the service and then bringing it back in August in time for the uplift in travel that will accompany the Rugby World Cup.”
58 Comments
The TranzCoastal really is a great trip, did it a couple of years ago, ah the good olds days when CHCH was in better shape
I wouldn’t get too excited about an international partner coming into help.
They don’t need more experimentation. New carriages are due in the next few months, and most of the rest is to do with track and locomotive reliability, which is a wider Kiwirail issue.
Overlander patronage has been growing very well, imagine what an hour or 2 shaved off the time, and new carriages would do.
My money is on Serco
mine too. But the Overlander are very different trains to the Ghan, so I’m not sure what Serco could add. And they won’t come cheap!
Its becoming clear that Kiwirail has no idea of how to run a passenger transport business. They seem fixated on plant - rather than on customers and how to get and retain them. That said, if I were looking for a company to manage NZ long distance rail as a tourism business maybe they should look at Armstrong Group (Rocky mountaneer) or Matterhorn Gotthard (Glacier Express)
Toll was probably better - at least they grew the business! I would like to know what exactly they save from mothballing the Tranz Coastal. No wages I bet! More running around in cars for loco drivers to balance KR’s operating rostering imbalances I bet. More excess loco power on freighters - probably. Yet the brand is damaged and revenue lost. They don’t need a partner but a new operator all together who doesn’t have to pick up KR’s excessive overhead costs.
This train mothballing is sacrifise to show they are trying to save costs - tragically they probably won’t save any from this and continue to burn money through lack of commercial acumen in the freight and network business.
@Giel Toll shut down the Northerner and were on the verge of cancelling the now successful Overlander.
I think the decision the suspend the Coastal for a long time is silly, but a result of the pressure it is under from the govt.
What new operational inefficiencies have Kiwirail introduced that were not present under Toll?
@Luke - agreed, it is Steven Joyce and the National Parties huge squeeze on Kiwirail which is forcing this to happen. The Govt is not squeezing NZTA to cut Roads of Idiots Significance.
Luke - Yes Toll shut the Northerner (but that was due to cheap airlines travel making cheap overnight rail travel in NZ irrelevant) and West Coast Rail was about to shut it anyway before Toll took over in 2004. They refocused Tranz Scenic from a long distance passenger operation to a tourism focused business which was essential for survival and viable reinvestment.
Toll saved the Overlander from certain shutdown in 2006 after Cullen / Labour wouldn’t support it. They were a business and lobbied heavily to get political support for it from central government and got none! Cullen said something publically on TV in an interview in September 2006 like (and I paraphrase) “I doubt it very much if there is any future for a passenger train being hauled by a inefficient diesel locomotive carrying a handful of passengers through the North Island “. In deed Toll relaunched the Overlander in December 2006 and spent a good tidy sum on doing it up prior to that. It is also launched steam engine Saturdays (later Sundays) on both northern (for a while) and southern sections while and did a number of other innovative things like TV commercial campaigns which promoted the train in 2006, 2007 and 2008. It improved on Board service, appointed Logan and Brown of Wellington to re-design the food menu and catering using Wishbone as suppliers. They also improved other elements of on board service such as complimentary route booklets and magazines, installed half decent coffee machines on board, marketed the train offshore to wholesalers and formed lasting relationships with Regional Councillors through areas which the train runs eg District Mayor Sue Morris from Ruapehu District Council. What has Kiwi Rail done for the Overlander? Don’t count new carriages for the Tranz Alpine - Toll would have (were about to) done that anyway (even under capitalised West Coast rail as going to do that).
As for inefficiencies - Kiwi Rail has introduced a much higher cost and overhead base relative to Toll through added bureaucracy - some of which is imposed because of government compliant costs so it is not managements fault necessarily but some the owners fault. The point also is that Toll was commercially focused and whilst the current team says they are, as Max says above in reality they seem overly focused on plant and network assets rather than customer service eg closing networks for days at a time without offering alternative services. Sorry but the Engineers seem firmly in charge today!
Sorry but Joyce doesn’t do the day to day calls on the business but KR do and they would rather cease services as a publicity stunt that results in revenue loss than cut real costs and overheads as a commercial company would.
@J Reeves - Do you have a single shred of evidence that Steven Joyce is behind the decision to cancel the Tranz Coastal? I suspect not, but I was waiting for you to pop up with the claim! It was KiwiRail’s decision, 100%.
@giel Toll were seriously thinking about shutting the NIMT and half the other lines unless the govt stumped up with a hole lot of cash. Toll were wanting the govt to buy new locos, wagons etc. Thats why the former govt bought it.
The govt doesnt call the shots but they are the ‘shareholders’, and the style they push effects how Kiwirail runs things. If the engineers were running things they would not be shutting minor lines as they could see strategic long term value, this comes from the govt and the treasury ideologues.
@Luke, The highway between Napier and Gisborne is full of trucks. The only reason KiwiRail doesn’t use the railway is because their business plan doesn’t seek domestic freight outside the Auckland-Christchurch corridor. That is a continuation of Toll’s freight policy, and Tranz Rail before them. Has nothing to do with the government. The future of these threatened lines does not rest with KiwiRail, as they won’t be changing their policy. The lines need to be sold off or contracted out, so that a different freight policy can be applied.
Luke – Toll only used the “threat option” of the shutting of the NIMT to demonstrate that the astronomical increase in Track access costs that Ontrack was proposing, relative to that previously negotiated at the time of the Ontrack split off, was unaffordable to rails freight customers and that their customers would desert rail if those costs were passed on to them. What else could they do to make their point? What would you do? So they (Toll) suggested a $60 million subsidy a year to keep the network in full operation. Toll needed to bring the bullying by Ontrack over proposed track fees, directed by the then Government at the time, to a head. Funny thing is that the Kiwi Rail needs a lot more than $60 Million a year to keep the network open through its capital injections etc plus they paid $700 million to buy it of Toll as well. Work that one out financially.
The purchase of Tolls rail business by the Government was ideologically driven. The Government could have got the same outcome at lower cost by providing a subsidy to Toll with performance targets like they do in other parts of the world but no they wanted state ownership for ideological, rather than outcome reasons.
Toll did want the govt to pay/heavily subsidize any locomotives and wagons as well. Proposal was much more complicated than you suggest. Would have become very messy, with the govt providing large sums of money, and gaining very little control.
I agree with Giel.
I have always said, that KR couldn’t organized a party in brewery.
Toll did spend alot of money in getting the Overlander back into the public eye and the Northerner was cancelled by Toll because of cheap air fares, low passenger numbers but the main reason, was to preserve the life of the North Island carriages as there a no spare carriages left for the Overlander service except for the back up set in AKL & WLG.
Difference between Toll & KR, Toll is an aggressive commercially focus business that doesn’t take no for an answer. Whilist KR is SEO company, that seems to be some what weak, indecisive & keeps agreeing with Steven Joyce.
If anybody has been reading between the lines in the various media releases, you will notice, that KR wants to become a rail freight business only and particularly does not want operate any of other ‘Divisions’ except for Interislander which is part of the AKL/CHC rail freight link.
Tranz Scenic has always been the poor cousin and never has been fully marketed properly, which is a shame, as the product is an unique local and international tourist travel experience.
Unfortunately, the idiots in Tranz Scenic marketing section haven’t a clue in the concept of marketing.
Despite the hype from Jim Quinn, Tranz Scenic doesn’t have much support from its wholesalers, as it made a commercial decision in early 2008, to compete against them and is happy to spend thousands of dollars in legal costs to to prevent perceived ‘Competition’ to get ‘Bums on Seats’ for the TranzAlpine, TranzCoastal & the Overlander.
The Government has given KR $55 million for ‘New’ refurbished carriages for the 3 long distance trains and I think having a more professional rail operator operating Tranz Scenic would be good for the long distance passenger train services and would restore faith and confidence to Tranz Scenic annoyed and frustrated wholesalers.
So, why don’t we all put some dollars into a kitty, take over Tranz Scenic & run our own train set
We will probably do a better job than KR.
Geoff, the evidence is there for us all to see. KR has it’s belt tightened so much that it has no spare “fat” left to run the Tranz Coastal at present.
The question you need to ask yourself is….who does KR answer to and who holds the lead around its neck? One Steven Joyce is the person holding that leash. Who deals with the trucking lobby for funding of the National Party? One Steven Joyce. Who is actively backing every hairbrained RoNS project? One Steven Joyce.
Well as a potential customer I see no signs that KR are doing a very good marketing job. The website is very poor, there are no seductive visuals or maps…. no sign that they know what customer they want, no indication of food quality or indeed any kind of customer focussed attention at all. It certainly looks like a freight company reluctantly putting on a couple of passenger services. It would take investment but this route could take off. First thing I would do is reintroduce a class system with a real premium service up front [I know anti democratic] get some envy going. Focus on quality of journey, you’re not competing on speed. Like slow food….. and I would show the board this vid [watch it to the end]: http://www.ted.com/talks/lang/eng/rory_sutherland_life_lessons_from_an_ad_man.html
i’d love to be in a position to do it…. but you would need control over quality of service, desperately needs funking up. Make it good then it will get business; not the other way round.
there is a ‘first class’ car being introduced on the Tranz Alpine.
@Patrick R What an exciting idea. Funking up is certainly needed and you are the person to lead the funking up project!
OK let’s do it, any venture capitalists out there? Ones that aren’t only interested in net 2.0 ideas….. Actually that’s a point, every passenger service should have free wireless broadband…. How to do that? a login on your ticket/monthly pass? Like at the Koru club. 10 hours to WGTN; no problem about a single charge on your iPad…. There’s your campaign sorted…. That and waiters with crisp aprons, get Dizengoff to run the cafe….and the front section can be the Pinot and iPad express…. or perhaps let’s revive the Limited brand, I always loved that, so not over promising. Definitely get the old RNZ crockery going again… just have really good tea, coffee, and wine though….. who do we call? Mr Quinn are you there?
@Giel
I hear the sound of history being rewritten!
If you replace “Toll only used the “threat option” of the shutting of the NIMT to demonstrate that the astronomical increase in Track access costs that Ontrack was proposing” with “Toll refused to pay the access charges that it had agreed with ONTRACK, threatening partial closure of the railway instead”, and substitute references to ONTRACK’s bullying of Toll with precisely the reverse, you’d be nearer what was actually happening at the time.
As truck operators who’d never run a railway or a passenger service (and it showed!), Toll was purely about making money; the Government was about keeping a railway network. Simple.
I have to agree with Giel - Toll did a much better job than KiwiFail in respect of freight, Tranz Metro and Tranz Scenic. Indeed, Toll’s turaround of Tranz Scenic was nothing short of masterful, being without taxpayer support.
What happened? The old Toll NZ management team was paid to perform and had strong core of rail operational and management expertise. They have now all been replaced by overpaid government appointees that do not get paid for results and profitability IMHO.
Mike - Sorry but wrong! Toll had run a railway before their NZ acquisition - Toll Rail in Australia in competition with Pacific National interstate. Later they bought that business as well through the Patrick acquistion.
The freight railway is a business - if you think otherwise it is terminal. The government already owned the Network through Ontrack so Toll couldn’t close it only stop services that were uneconomic to it - any one not doing that is reckless as a company unless someone else pays for it. Nobody owes the railway a living it must prove it’s worth to survive.
How can one company bully the full Sovereign government of a country who can bring all it powers and threats that the Sovereign has especially when they owned the Network. Toll was a minnow in that respect. Toll built up the NZ business well with Fontera, Solid Energy, Genesis to name a few yet you say it showed they couldn’t run a railway. What makes you think a Government owned business is better? Evidence please?
@Giel, I am of the understanding that Toll had agreed to the increased access charges after X number of years. When the time arrived to introduce those increased charges, at the level they had previously agreed to, they refused to do so, claiming the business was more costly than they had anticipated.
@Jon, Do you also claim that when KR cancel freight trains (happens daily) due to low freight levels, that SJ is somehow responsible? Trains being cancelled is a normal part of running a railway, just as adding specials during high periods of demand is. The only difference here is that we are seeing it happen with a passenger train for the first time, instead of usual practice of operating the train at a loss. I assume your stance is that you think the TC should be subsidized to keep it going?
Geoff in part right but the amount of increase was not agreed. Ontrack costs ballooned big time - way above what even they anticipated. They were unsustainable for anyone and customers of rail were not willing to pay and for that matter still arn’t. However it was supposed to be partnership. Reality was Ontrack went off and did it’s own thing like spending millions on projects that Toll had a low desire for. In hindsight you could say it was their agenda early on to force Toll out of rail in NZ - except that Toll just didn’t roll over liked they hoped they would and managed a good ‘exit’ payment.
Tim - You are incredibly naive thinking Toll turned around Tranz Scenic. Having been actively involved in marketing during it’s ownership then the transfer to Kiwirail I can tell you some facts for free.
They had NO marketing of TS services. Overlander was run down. Even the passenger cars on the Tranz Alpine were becoming grotty through lack of investment (but they were sucking all the profits out).
If Toll was so wonderfull, as you claim, how did the Overlander nearly close down? Why didn’t they create some new passenger services?
Geoff -Not going into one of you dogfights, but as suggested elsewhere, the Silver Fern could have been used as an interim measure until pax numbers increased. Thus keeping the service running and would help build numbers up faster than a direct cut of service does.
Just to let you know, Swiss Railways do not cut services. The provide services for the public good, which includes tourists as well. However, SBB does receive a level of funding for certain services whereas the Minister of Transport, while throwing billions into useless roading projects, refuses to help long distance rail services, even if they are for the public good. He won’t even help fund the Waikato - Auckland commuter train which makes more sense than 5 of his 7 Roads of Incompetence projects.
Jon that’s a bit selective. My post above has the facts on what Toll did for the Overlander post the near close down in 2006. When they bought Tranz Scenic of West Coast Rail in 2004 the carriages and the business were a mess. It wasn’t necessarily that businesses fault as they too got caught up in the Tranz Rail melt down and things like Heat 40 speed restrictions over summer did them in with very slow running trains. As a example the outside paneling on the carriages had rust holes in them and looked plainly ugly! Post the near closedown a significant amount of money was spent by Toll to spruce it up and turn it round and marketing money was spent including a TV and print add campaign! Steam Engine Saturdays/ Sundays were also introduced under Toll. Toll initially set about to make the business they acquired financially viable including trying to focus the market - for example the website was improved, rather than relying more on third party websites like Rail New Zealand. Financially they had to fix the business first as it was bleeding badly.
I agree about what you say re hard time for long distance rail passenger funding in this country. The Waikato connection as a simple example should be up and running but Environment Waikato and Auckland Transport have other priorities right now but I think that is one that will happen as most think it makes sense. CBT and others are doing their best and all I can say is keep it up guys.
@Patrick R Your comments make me realise how behind we are from the rest of the world including long distance European rail travel.
Of course there should be free Wi Fi (and locally on trains) and a glass of wine should be absolutely available The marketing seems set in the 60s.
I might gather up the ideas and sent it to KE marketing and see their reaction (“yes but we haven’t the money..)
@Patrick R It would be better if they appointed a funky small marketing agency with young people who have returned from their OE, have experienced overseas long distance and get what needs to be done, and propose a relaunch they would never think of inside the Govt dept
It is unfortunate, but TS marketing is firmly in bed with a multi national agency which is “light” in ideas. It was I who got KR to start using radio in advertisements after showing them plenty of ideas.
Very kind AKT, I am available… ? The current website isn’t quite Gdansk 1947, possibly more Belarus ’55, but really how obvious is it? They really can’t be accused of over selling themselves… Of course the service would have to actually be good. As no business works by offering a rubbish product until they are busy then improving it [because it will never happen]. You have to get the product right first and market it right…. rail in this country suffers from the Stockholm Syndrome… it believes the belittling insults bullying master calls it. Grow some confidence KR. Potentially those are three of the best passenger trips in the world. Deliver it. I’d love to be marketing it.
@Patrick you would be brilliant.
Kris i don’t really follow any of that but it sounds very strange indeed…. want to try to be a bit clearer?
are they claiming the New Zealand Rail website breach their copyright or something similar?
JReeves, yes other options could have been pursued if they really wanted. But their decision to do nothing was just that - their decision. Your claim that it was SJ’s decision is false. If you are going to credit SJ with every KR decision you don’t like, then you must also credit SJ with any decisions KR makes that you do like.
BTW, I thought the ferns were a good idea too, until I realized the added expense of having to take half a dozen LE’s and fitters with them, as SI staff don’t have certification to drive them, and it would take months and a lot of money to get that certification. It couldn’t be done within the timeframe, not to mention only one railcar is currently available for service.
For Patrick R -
Currently, it is still in the hands of the lawyers, so I can not say to much about things publicly at the moment.
For Luke -
No, it wasn’t the case.
The Tranz Scenic marketing team in late 2004, got into their heads it was taking business away from their own reservation marketing website - tranzscenic.co.nz.
When Toll took over the old Tranz Rail, it became obsession, despite the fact that Tranz Scenic own sales figures from the Agent code that was linked to Rail New Zealand web site was showing good income, placing Rail New Zealand in their top 5 performing wholesalers at the time.
Rail New Zealand website was saving Tranz Scenic money on their international distribution costs.
Tranz Scenic own web site and the reservation/ticketing system behind their web site, is not own by Tranz Scenic/KR but are own by a Wellington based wed design/software company.
Anybody in the IT industry would know, its not cheap to lease a reservation system from a software company. KR has tried to buy the reservation system but the company who built it for the West Coast Rail is asking to much for it.
To build a proprietary reservation/ticketing system in house is expensive, so currently, it is cheaper to lease it. Unfortunately, its now old technology.
Over the least 5 years, has seen rapid development in internet based reservation distribution technology, allowing 3rd party websites like Rail New Zealand to save money in marketing and distribution costs.
By using the latest internet distribution technology, it has been calculated that Rail New Zealand can save Tranz Scenic up to 63% in local and international distribution and marketing costs.
Unfortunately, Tranz Scenic/KR are totally out of touch in the merits of internet marketing, which is now makes up to nearly 60% of a tourism operator’s income.
Since there is only one global search engine, any tourism operator who believes that they can get 100% business via their own web site is wrong. As this global search engine gets bigger, a tourism operator will need to forge internet business partnerships for future business.
Even Air NZ knows this is the case and had to re-established other sales channels to keep bookings flowing through their reservation system.
InterCity Group (InterCity, Newmans & Great Sights brands) is a good business model. They have a young management team who look outside the square. InterCity Group relies on their own multiple reservation/marketing web sites, 500 odd national retail agent network, build positive relationships with their wholesalers (Unlike Tranz Scenic) and has just rolled its new affiliate/e-agent programme for 3rd party web sites to mop up any further business locally and internationally.
The business model InterCity Group is using, will have an impact on Tranz Scenic business, unless Tranz Scenic/KR has a major rethink about coming into the 21 century. With Tranz Scenic current sales team, that is not going happen.
As at 31 March 2011, Rail New Zealand web site has an estimate potential market value of $10,107,061.00 worth of additional business for Tranz Scenic, which KR has made clear it does not want.
Geoff B - I did say”it is Steven Joyce and the National Parties huge squeeze on Kiwirail which is forcing this to happen. The Govt is not squeezing NZTA to cut Roads of Idiots Significance.”
Do you not think if KR had a Minister of Transport who actually was pro-long distance passenger rail this service would be cut? He throwns billions to roading projects of little national significance…but long distance rail doesn’t receive the same luxury. Why?
Kris - Interesting background - well said. Creativity is certainly lacking there.
KR do seem on a mission at the moment. One of the more bizzare things is the apparent impending abandonment of the valuable Tranz Scenic brand in favour of KiwiRail Passenger brand on the new carriages about to be released. Vey much state railway / old world mentality. The current “interns” seem to think the brand “Tranz” has historical baggage being linked to the old Tranz Rail brand. By by all accounts the Tranz brand it is quite sucessful. Even Toll have kept it for Toll Tranz Link. In fact using KiwiRail for retail as a brand I am not so sure of!! Fine for the Freight / Network business but Long Distance Scenic Passenger??
Maybe it is all about the state trying to wrestle control before a major rebranding / potential sale / partnership of Tranz Scenic - So why brand passenger KiwiRail??
For Giel
Thank you for your comments.
I agree with you about the ‘Tranz Scenic’ brand.
It is an effective brand that has been around for 25 years or so. Unfortunately, the brand hasn’t been marketed properly both locally and internationally.
The ‘TranzAlpine’ & ‘TranzCoastal’ brands are in people’s mind because it is a name of the train, like the Ghan’ or Indian Pacific’ in Oz.
Unfortunately, when people search for passenger train services in NZ, they do not use ‘Tranz Scenic’ , they use NZ rail New Zealand railways, New Zealand trains, auckland to wellington train, train christchurch greymouth & so on.
The next popular search phrases are TranzAlpine, Trans Alpine & Overlander, trans coastal or tranzcoastal.
The next search phrase is kiwirail or kiwi rail but is pretty in the search phrase rankings and ‘Tranz Scenic is almost at the bottom of the heap.
That is due to the fact, that ‘Tranz Scenic’ brand is not constantly in the public eye.
With regards to overseas customers, they do not know what or who is ‘Tranz Scenic’.
What is need, is to update the ‘Tranz Scenic’ icon/logo to be more modern & then hit the market, which will cost KR money but not as much as a complete rebranding.
With regards to your comments about the proposed ‘Kiwirail’ passenger brand, that is going to be a costly exercise & will take a long time to filter through to the international market over a 5-10 year period & then the international tourist is going to say ‘Kiwirail’ who?
Then KR will have to get Tranz Scenic tied in and at the moment, Tranz Scenic is not the flavour of the month with its wholesalers due to ‘anti-competitive nature that start about the end of 2007/early 2008 by Toll.
If KR uses ‘Kiwirail Passenger’ (sic) what are they going to call the TranzAlpine & Tranz Coastal - Kiwi Rail Alpine and Kiwirail Coastal???
The Overlander will be okay under the ‘Kiwirail Passenger’ brand.
If I was a rail operator like Veola, Connex, Serco, etc, I would buy into the ‘Tranz Scenic’ brand because it has some marketing value but buying to a new brand like ‘Kiwirail Passenger’ while involved alot of money to get that brand into the market place, especially the international market.
I agree with you about ‘Kiwrail’ is good for rail freight branding.
As I have always said, the marketing team at Tranz Scenic is in a world of its own and not in touch with reality.
the abandonment of the Tranz Scenic brand is not old-world mentality at all. It is new world corporate/marketing and management influence.
A major part of it is so all elements of kiwirail are seen as one, and staff work together. Same reason for getting rid of ONTRACK brand.
Luke - Do you see them abandoning the Interislander brand which they themselves say is an Icon brand - isn’t called KiwiRail Ferries so why KiwiRail Pasenger over Tranz Scenic? That is a business group name - fine (Tranz Metro plus Tranz Scenic) - not a brand. You don’t have to synchronise them exactly. Does KiwiRail Passenger have more potential brand equity than Tranz Scenic? - good question.
ONTRACK was different - a supporting business unit to KiwiRail so KiwiRail Network is better I agree since it became suboridnate to its bigger parent.
Tranz Scenic is a tourism business and when partly privatised, as it will be in the not too distant future, will probably be branded different anyway. So why not wait until then. The new colour scheme for the cars is quite nice though, even with KiwiRail branding.
for Luke -
I agree with Giel.
Within KR, Rail Passenger Group can be called Kiwirail Passenger or Kiwirail Passenger services. Ontrack can be called Kiwirail Networks or what ever and Interislander can be called Kiwirail Ferries but from the public perception, the Interislander brand is well know locally and internationally.
Any marketing person will say, changing a brand is an expensive exercise and there is no guarantee that the brand will work.
The question is, if or when KR does drops the ‘Tranz Scenic’ brand for ‘Kiwirail Passenger’ or what ever, will have an impact on ‘Seats’ sold either up or down.
Tranz Scenic has admitted privately, growth in the domestic market has almost reach saturation, so the any branding whether current or new, will have to be targeted to the international market to stimulate demand.
It is going to be interesting to see what happens.
the Interislander brand is very well known world-wide, however Tranz Scenic is not. Also the major cost involved is repainting, however with the new carriages being introduced in the new livery I don’t think that will be a problem.
Tranz Scenic have always been saying the domestic market has reached saturation, but the Overlander keeps proving them wrong. Hopefully the turnaround plan will enable an hour or 2 to be taken off the journey time which definitely will help.
Saturation!? You’ve got to be kidding, most people I know say: There’s a train you can take between AK + WGTN? Really? Is it cool?
I wonder, is it? It should be.
It seems to me that Kris is a stakeholder in the whole issue. Pinch of salt people!
I would say there is more than meets the eye to situation between Kiwirail and Newzealandrail.com (run by Kriscorp, as detailed in the website footer).
Working myself for a supplier in the (not dissimilar) hospitality industry, whilst one does want to have as much brand exposure, and ensure maximum product distribution, there are several considerations to be made.
In terms of systems compatibility, it appears there may be be a lack of commonality between suppliers and potential distributors which makes the situation more difficult. Without systems commonality movement on distribution really cannot be made. Also terms such as commissions/fees need to be weighed up.
If Tranz Scenic really is serious about increasing it’s online share of bookings, a corresponding serious investment is required in those booking systems. Without a stable, scalable system that integrates easily with distributors, they will continue to suffer.
I’m not sure whether it’s a question of will, rather whether integrating their system to a larger network of distributors is practicable.
@JonReeves -
“Do you not think if KR had a Minister of Transport who actually was pro-long distance passenger rail this service would be cut?”
You seem to be saying that a pro-rail transport minister would step into the issue and say “keep the train going, we’ll subsidize it for you”. TBH, I can’t see any responsible politician doing that, as it would be contradictory to how an SOE is supposed to operate, which is as a normal business.
The canning of the TC isn’t a government issue. The issue is a freight orientated business isn’t going to divert money into keeping a mostly empty train running. Neither should any pro-rail person be expecting them to do that. Why take money from revenue earning services to keep a loss maker going? That just means the business is less competitive, and road transport gains from it.
For Alex -
Firstly, the issue is, that Tranz Scenic made a commercial decision in early 2008 to compete against is wholesale distribution channel by giving its wholesalers, a set of booking rules and fares and itself a different set of rules and fares to entice customers to book with them directly.
Under the Commerce Act, Tranz Scenic would be breaching the Act as - “Being a supplier in a dominant market position and is using differential price structure to control competitive conduct by the re-supplier. Such conduct may amount to misuse of market power”
Because of the unlevel playing field, this has upset Tranz Scenic wholesalers who believe that Tranz Scenic was manipulating prices and booking conditions to suit Tranz Scenic.
Any tourism operator knows, they have to work will all of their sales channels (whether they a travel agents, wholesalers, 3rd party website owners, etc) to get business and in Tranz Scenic case, a large percentage of Tranz Scenic international business still comes from it local and international wholesalers.
The commercial reality for Tranz Scenic/KR is getting ‘Bum of Seats’. It would be nice to see all 3 long distance passenger trains with 98% loadings 7 days a week but we are country of 4.4 million compared to other countries who have more efficient passenger rail systems.
Tranz Scenic/KR has alot of competition from Air NZ and Jetstar between AKL/WLG/CHC, also from InterCity Group and Naked Bus, especially on the AKL/CHC route where InterCity and Naked Bus is in direct competition with the Overlander and also on the CHC/PCN/CHC route.
The TranzAlpine has hardly any competition hence the service is profitable. The 2 bus operators that operates CHC/GRE/CHC use 21-30 seater buses, yet these bus services are very popular for the independent traveler who wants a cheap fare.
If InterCity and Naked Bus started to operate on the CHC/GRE/CHC route, would the TranzAlpine be profitable, especially if Naked Bus offer fares from $1.00?
There are a group of people who will use long distance passenger rail for various reasons but there is not enough of them to sustain profitable regular long distance passenger rail services.
If NZ population was 8 or 10 million, yes, there will be a population base to sustain long distance passenger rail services.
Like with Air NZ long haul, Tranz Scenic/KR needs to think outside the square and look at bringing the ‘Romance into Rail’ travel.
In 2003/2004 a plan was submitted to Tranz Rail, to look at that whole concept, of using the Northerner train as a ‘No Frills’ Stop at “All Stations’ travel and use the Railcars to operate a premium service with major stops WLG/PPQ/PMR/NAT Pk/HLZ/AKL. This service would have provide free morning/afternoon tea and lunch similar to the old Silver Fern service. This premium service was an attempt to bring the ‘Romance into Rail’ travel and would have been targeted at the baby boomers, tourists & corporate market for businesses whohad clients as means to see some of NZ travelling AKL/WLG or WLG/AKL.
The AKl/WLG line does travel through 5 unique geographical regions of NZ, which suited a premium service.
I believe the Tranz Scenic did make a mock up of a Premium service carriage at the time the British carriages where being refurbished for the Overlander but ended up on the Capital Connection. This carriage had a seats similar to seats used in Business Class that airlines used prior to the introduction of lay flat beds.
Whilist brand image is important so is building distribution partnerships to catch as many reservations as possible from the competitors.
By now, all of you have the phrase Web 2.0, will there is sub catergory call Web Travel 2.0 which relates to the use of internet distribution systems and internet phone technology (VOIP - Voice Over Internet Phone).
As mentioned in previous blogs, internet reservation distribution technology has seen rapid development over the last 5 years to the point reservations systems can talk to other reservation systems using simple system to system interface technology.
Unfortunately, alot of reservation systems that are used by tourism operators in NZ are older proprietary systems that are currently can not talk to other systems. In Tranz Scenic case for $5000.00 Tranz Scenic current reservation/ticketing system would be able to talk to other reservations reducing its distribution costs by 63%, plus it will have the ability to develop business partnerships across the a wide range of distribution channels, like its own web site, travel agents, wholesalers and 3rd party web sites like Rail NZ.
Most of the blogs have been around the Government and Steven Joyce but the reality is, the buck stops with KR board. They have the power to make the 3 long distance passenger trains to make money by embracing Web Travel 2.0 technology.
Air NZ, Naked Bus and now InterCity have embraced Web Travel 2.0 technology to get ‘Bums on Seats’ and reduce distribution costs, so why can’t Tranz Scenic.
Shouldn’t we be discussing why the KR board is not making good commercial discussions instead of pointing the finger the government?
By the way Alex, I have had 24 years in the tourism industry in wholesale, retail, product development, niche marketing and reservation systems, of which 17 years has been in internet marketing, so I have seen the rise and fall of alot of internet marketing concepts.
that must have been the biggest response to an issue to date
KiwiFail should not be looking at “partnering” whatever that means. The Minister should be giving a clear instruction to start preparing a case to a sell off a combined TranzMetro and TranzScenic business to a New Zealand company. Tourism Holdings, Tainui or Graeme Hart come to mind, but there are dozens of potential bidders. I put forward the following reasons to be bold and do the right thing for customers, taxpayers and the business, as a professional private sector business with a contracted operator if needed can:
1. provide decent customer service, treating passengers as people, not bits of uncooperative cargo, which is the crux of the problem.
2.operate on time - KiwiFail’s attempts to contract with itself have failed miserably, but a third party can enforce penalties etc so needed work is done and things operate as they should. KiwiFail won’t sue KiwiFail for its failures.
3. operate more cost effectively - costs have increased with the shift to public sector ownership, largely due to increased compliance costs, management bulge, political costs and bureaucracy.
4. freight can focus on freight, its core business. The business does not have the luxury to shilly shally or get distracted when it needs to transform the way it operates. Same applies for TranzMetro and TranzScenic
5. Selling Tranz Metro and Tranz Scenic will release cash to repay the taxpayer or invest in track etc.
6. New purchaser in a better position to raise needed capital for new rolling stock, systems etc.
7. Commercial, performance based, not SOE (Stale Old Enterprise) Culture.
8. Foster innovative and creative solutions and opportunities that a bureaucratic, inefficient organisation would hide from or overlook
Time to step back and fix the real issues, if services were efficient and cost effective, and customers were treated like people and the service delivered (increasing value of product), there would be more services.
Of course, management would not be in favour of this, as they get paid a flat fee on the “size” of the inefficiently oversized business, not on service delivery, customer satisfaction, efficiency or any other measure of performance.
Interesting read!!!!
considering the stories we read here daily about the fantastic performance of international experts Veolia I wouldn’t place too much faith in ‘private sector expertise’.
Tim is full of right wing vagueness again.
Explain your facts behind points please otherwise you are reciting pure BS.
“3. operate more cost effectively – costs have increased with the shift to public sector ownership, largely due to increased compliance costs, management bulge, political costs and bureaucracy.”
Explain?
“5. Selling Tranz Metro and Tranz Scenic will release cash to repay the taxpayer or invest in track etc.”
And when has this EVER been done with any other State Asset sales?
“7. Commercial, performance based, not SOE (Stale Old Enterprise) Culture.”
Tim - lets make the NZTA roads be the same then. You become a major leftie not supporting roads being sold off or run as a commercial enterprise.
“8. Foster innovative and creative solutions and opportunities that a bureaucratic, inefficient organisation would hide from or overlook”
Tim WTF? Perhaps you are asking them to take risks which in most cases large companies do not take either?
Get real “Making Sense”, and stick to the facts. You sound like a person with a vested interest. Glad you agree with my seven other reasons why TranzMetro and TranzScenic need to be free of KiwiFail and run by a commercial business.
Costs have increased under state ownership - number of reasons why but discussed by others above. KiwiFail’s so-called “successes” to date (I can’t actually think of any!) have only been achieved at ludicrous cost to the taxpayer. The only winners here have been big customers such as Fonterra and Toll, who’s freight costs are being indirectly subsidised by everyone else.
With proceeds of any asset sales, they would go to the government coffers. What are you suggesting “Making Sense”?
What’s NZTA got to do with the price of fish? But glad you agree that things are not being operated in a commercial manner as things stand. Just because roads are operated in a less than optimal way is absolutely no excuse for rail doing an even worse job.
Other have already established that KiwiFail are not taking sensible or prudent business risks and are way behind the best operators overseas - with the case of marketing as discussed above, isn’t this just the tip of the iceberg?
Agree with Luke about Veolia, but they just operate under instructions by the real “owner”, Auckland transport, so basically their hands are tied in most respects by government bureaucracy at regional leve. A sale of TranzMetro and TranzScenic would envisage a higher level of commercial autonomy to run an efficient, cost effective and customer focussed business.
Mainfreight seem happy with Kiwirail. They are spending $40 million to built huge new warehouses on rail land and Wellington and Palmerston North, and aim to be rails biggest customer in a couple of years.
This is directly as a result of govt ownership, they didnt trust Toll so wouldn’t invest with them as owner.
Luke - Mainfreight are happy because KiwiRail dealt to Toll Tranz Link in their freight rates so Toll now less competitive on line haul. Nothing to do with KR being better at a higher service level - more about dealing with the so called “foreign” competition. Mainfreight won’t admit that of course. Mainfreight - the new Toll - Biggest potential customer because Toll doesn’t move so much on rail - QED - but they are NZ owned so that makes it OK I guess….
Also with highly subsidised capital (read free) to KR on the Network and rolling stock by the Government who wouldn’t be happy with KR pricing? I’d being singing their praises as well. The KR team and advocates like Mainfreight, Fontera have in that regard, done an exceptionally good job and now benefit from low non commercial freight rates (ie not covering most capital cost) to get more freight on rail. Not saying that is bad (helps level the playing field with road for Network at least and get freight of the road) but let’s be honest about it - it is the fact of the matter. Until capital is appropriately charged to KR what incentive do they have to improve utilisation, efficiency of capital deployment and real service? That is where the Government is trying to push Rail - they just needed a helping hand up.
Giel and road users really cover the capital cost of the whole road network?
No Road Users don’t cover the cost of all the road network as such but it is not so relevant because roads are funded through a PAYGO system. This is more like cash based system rather than invested capital whereby in any one year there is hypothecation that revenue collected from Road Users Charges (RUC’s), fuel excise duty, local body rates and to some limited degree general Government funding out of taxes go into roading. The general Government funding pool other than when huge projects like RON’s are done, is not that large – most from road users. Huge arguments over whether private motorists subsidise heavy trucks – no clear answer but most academics think they do (as do the AA). Of course above road users pay the full cost of capital of their vehicles which rail currently is not.
The argument for rail is more for higher externality benefits that justify a form of subsidy through capital Grants. For example: Less road accidents (life valued about $4 M a head by MoT), generally safer through towns and villages as rail corridor only used by rail operator not general users, less CO2 emissions (through less fuel use), cheaper on fossil fuels generally 3 to 4X’s in NZ and up to 7X in some overseas countries with bigger trains), potentially more labour efficient if well used, less polluting runoff formation since rail drains better than roads as rail infrastructure breathes (ballast as opposed to tar seal), less congestion with own right of way and higher capacity per M2 of transport corridor, higher quality of life through less noise/vibration, reusable infrastructure (rails can be lifted and reused else where - try that with tar), more accessibility to transport disadvantaged in heavily populated centres, the physics of a train being able to take high volumes at a time for major shippers like coal mines and so on .
The question is putting a value on all these and what resulting support should be given to rail to balance the economic equilibrium ie Level the Playing Field