MARTA: Revenue Management

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

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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

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Exploit each products 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
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Current Pricing Situation - Other
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Exploit each products 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.
  

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Exploit each products 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.
  

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Exploit each products value cycle

• Visitors 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

• Visitors 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

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Exploit each products value cycle

• 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

• 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

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Exploit each products value cycle

• 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

• 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

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Exploit each products value cycle

• 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

• 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

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Scenario 1 Revenue Enhancements
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Scenario 2 Revenue Enhancements
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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)

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Revenue Management Opportunities (cont.)

• Discount low traveled routes
• Charge daily commuters for parking and increase
  overnight/daily fees
  
• Charge combination parking/travel passes

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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
  

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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

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Questions?