Tuesday, September 26, 2006

Fun with Statistics - Is the KTX really successful?

Last week yielded a head scratcher about the KTX (Korea's bullet train):

In December, rail passengers can look forward to viewing the latest movies while riding the country's bullet trains, the KTX. The "cinema train" project entails turning the first car of the train into a theater....The railroad believes movies-on-the-go will be attractive to long-distance passengers traveling more than two hours on the bullet train, at speeds of up to 300 km/h. Rail officials predict the new service will attract 2.5 million passengers a year.

OK lets work the numbers. KORAIL says the plan will attract 2.5 million a year (lets set aside if that will actually happen for the moment), this works out to 6850 people per day. To do this they will need to donate a car in the train, or about 60 seats. Now lets count KTX trains, to do this lets count number of trains between two segments both ways, Seoul to Daejeon and Yongsan to Seodaejeon (this assumes that all KTX's at least stop at Seoul area to Daejeon area, and perhaps continue elsewhere). This equals 138 KTX trips a day. This also equals a loss of 8280 seats a day as per the movie theater plan.

So we have the first problem, this will give up more possible revenue seats than it will possibly gain. Or to put the problem into starker relief, this plan calls for the use of 15230 seats a day (the 8280 for the theater plus the 6850 additional seats sold) that are not currently being sold! 

Or if you want to take a look at capacity, thats 60 seats a car, 18 cars a train, 138 trips, making 149040 seats. Which means this plan will hopefully call for the use of 10% of capacity unsold on a basis so regularly that they can be assured of both the space needed for the theater and the additional riders.

Now lets look past what this probably means for KORAIL's real rider-ship, and talk about this conceptually. One of the main benefits of the KTX is the shorter travel time, or about half that of the other classes. This leads to travel times currently of about three hours to Pusan and four to Kwangju/Mokpo. The problem is your average movie is about two hours or longer, so only a few people will see the entire movie. Secondly since these are first-run, or very recent, movies I am willing to wager that few people will be willing to walk in and sit on a movie already half way through. 

What does all that mean? The number of people an innovation like this would attract would be very narrow. They would have to be people who:

A. Need to travel at least two hours on KTX line
B. Start from at least Seoul, Pusan, or Mokpo/Gwangju
C. Willing to pay 50-100% more over slower classes of service (or even more in the case of the bus)

or

A. A free movie is enough to lure people from Air travel which they take out of time efficency or prefernce over rail transit.

Now given that airlines have reduced Seoul-Pusan service since the KTX's introduction, you could say that those remaining loyal to the airlines need some pretty strong inducements. I wonder if a movie is enough. 

Regardless, it is from these two groups that KORAIL hopes to attract 6850 per day (on average) from.

In defense, if we are generous and say that KORAIL is running at 75% KTX capacity currently on average, this leads to sales increase of about 6%. Ambitious but attainable. (Then again if real capacity is less...)

posted by Dram Man @ 3:02 PM

1 Comments:

At September 26, 2006 7:17 PM, Anonymous Anonymous said...

I've noticed that the staff has declined from approximately two hotties per car down to about one for every three cars. :(

 

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