Route network optimisation

Optimise investment in rolling stock

Investment dropped by 12.5% on 2013.

In drafting its 2014 investment programme, the Company decided to invest most of its money into new rolling stock; a total of RUB 21.1 billion was spent to buy 274 passenger carriages. Priority was given to new carriages for premium-service trains. To that end, RUB 5.5 billion was allocated in 2014 to purchase 146 carriages.

78 of the carriages purchased in 2014 were RIC carriages, which were going to be used to maintain international service.

50 double-decker carriages were bought to improve the quality of passenger service on busy routes with big passenger numbers, reduce operational costs and use the carriages replaced by those double-deckers to compensate for standard carriages that had to be decommissioned on other routes because of the end of their service life.

The Company continued its efforts aimed at ensuring a more even use of the rolling stock over a year. The number of runs during summer peak periods in 2014 was reduced by 6%, with the number of runs during the November holiday seeing even a greater reduction of 28%.

50 double-decker carriages were bought to improve the quality of passenger service on busy routes with big passenger numbers.

Quick-to-implement product and service improvement measures

Reviewing the list of services in luxury carriages

The following results were achieved with respect to the provision of services in luxury carriages:

  • The number of passengers who used prepaid services grew by 37%;
  • The amount of revenue from services increased by 32%.

The above figures were achieved after JSC FPC’s premium-service trains with luxury carriages were added to the list of trains covered by the profitability management system and became part of a meal delivery initiative implemented within the dynamic pricing use expansion project.

Forming additional premium-service trains

JSC FPC’s 2014/2015 schedule includes 93 premium-service trains, which is 4 trains less than at the beginning of 2014; as a result, premium-service trains will account for 18% of the total number of trains.

The amount of revenue from running premium-service trains grew by 1.7% year-on-year.

Replacing single-decker compartment carriages with double-decker ones

In 2014, the Company got good financial results from running a double-decker train (No. 103/104) on the Moscow to Adler service.

At the beginning of 2015, a double-decker train No. 5/6 was launched on the Moscow to St. Petersburg service.

The Company is going to expand the reach of double-decker trains, including trains with carriages with seating, and currently is considering the feasibility of running such trains on the Moscow to Kazan, Moscow to Samara and St. Petersburg to Adler long-distance services as well as Adler to Krasnodar and Adler to Rostov regional services.

Replacing open carriages with carriages with seating on short-distance routes

An increase in the volume of carriage by “daytime trains” confirms the steadiness of passengers’ demand for this kind of service. In 2014, the total passenger traffic of daytime trains exceeded 6 million people, a 57% increase on 2013. The share of trains travelling during daytime was 6.5% of the total number in 2014 (compared with 3.5% in 2013).

Proving transportation services in the country’s regions with daytime trains and attracting more passenger traffic requires that introducing such new routes results in profit. In the end of 2014, the Company launched a new programme called Daytime Express that gave the green light to the expansion of the list of daytime passenger services with train speeds of up to 100 km per hour to 30.

Improving sales channels, branding and ad quality

In 2014, a quarter of all tickets sold were e-tickets. The Company plans to increase this figure to a third by the end of 2015. Year-on-year, the share of e-tickets grew by 6%, while the number of the Company’s ticket offices was reduced by 9%.

Compared with 2013, JSC FPC’s awareness-raising and information activities grew by 23% in 2014; a total of 16,087 favourable and neutral publications about the Company appeared in mass media.

JSC FPC maintains partnerships with major Russian information agencies (Interfax, TASS, RIA News), federal printed and electronic media (Rossiiskaya Gazeta, Kommersant, AiF, MK), popular radio stations (RSN, Dorozhnoe Radio, Avtoradio) and federal TV channels (Rossiya 24, TV Tsentr, Moskva 24, etc).

The Company has been building a present on social media. For example, the number of members in JSC FPC’s official social media groups “Better by Train” on Facebook, VKontakte and Odnoklassniki grew by 12% (according to IAS Medialogia).

Improve the route network and expand multimodal transport services

Ensure the submission of a government order for loss-making routes

Given the continuing decline in state subsidies that we have seen over the recent years, the volume of passenger train services provided by JSC FPC was optimised, with 46 pairs of trains taken out of service, which did not have any significant impact on the Company’s ability to meet the passengers’ demand for traveling. The impact of this optimisation effort reached RUB 4.2 billion.

The following work is going to be done as part of the route network optimisation project:

  • Draw up a Procedure for JSC FPC Route Network and Train Schedule Optimisation in order to improve economic efficiency and reduce costs while retain passenger traffic through train cancellations and launches;
  • Create a strategic computing facility implementing the Procedure for JSC FPC Route Network and Train Schedule Optimisation for use in train scheduling and schedule adjustment;
  • Draw up a list of adjustments for the 2015 train schedule submitted to JSC RZD and a list of passenger train scheduling initiatives for 2016.

Speed up trains and optimise long-distance train schedules

In order to improve the quality of passenger service and make trains more competitive compared with other means of transport, the Company is speeding up its passenger trains.

With the introduction of the 2014/2015 schedule, 364 trains were sped up, including:

  • 256 trains by up to 30 minutes,
  • 51 trains by up to 1 hour,
  • 57 trains by 1 hour or more.

The average speed grew by 1% to 54.1 km per hour.

The following train got the maximum acceleration:

  • № 360 Adler to Kaliningrad by 4 h 50 min;
  • № 9/10 St. Petersburg to Arkhangelsk by 2 h 24 min/33 min;
  • № 360 Ufa to Nizhnevartovsk by 4 h 12 min;
  • № 84 Moscow to Priobie by 3 h 47 min;
  • № 147/148 Astrakhan to Nizhnevartovsk by 2 h 07 min/50 min.

In 2015-2016, the Company plans to introduce high-speed trains on the Moscow to Berlin and Moscow to Nizhny Novgorod service using Talgo carriages purchased under a contract signed in 2011. The travel time will be reduced by:

  • 6 h (from 24 to 18 h) on Moscow — Berlin route;
  • 30 minutes (from 4 h to 3 h 35 minutes) on Moscow — Nizhny Novgorod route.

Draw up and implement multimodal transport schemes

In the reporting year, the Company got its first experience with multimodal transportation, including rail, bus and ferry services.

Multimodal transport systems with JSC FPC as participant and development of schemes for complex transport services in regions on the basis of new interregional transport links create a foundation for efficient transport systems.

On December 01, 2014, a multimodal service, combining rail and motor transport, was launched on the route Valuiki to Stary Oskol to Moscow, with Stary Oskol being the transfer hub.

Train/bus services are aligned in terms of their departure and arrival times. The time of travelling from Stary Oskol to Valuiki is 3 h 45 min. Tickets for train 57/58 Moscow to Stary Oskol and the Stary Oskol to Valuiki service can be bought from JSC FPC ticket offices.

A month-by-month breakdown of the number of tickets sold shows that the service is growing in popularity: about 4 thousand tickets were sold over three months (from December 2014 through February 2015), while the volume of sales rose by 25% against a 20% growth of the seating capacity use rate.

The Company plans to introduce multimodal routes on a large scale in the second quarter this year and to have at least 10 of them by the year’s end.

The following criteria are considered when deciding on whether to introduce a multimodal service:

  • Competitive advantages relative to air/motor transport (travel time and price);
  • Service’s passenger capacity, i.e. if there is a stable passenger traffic between the locations to be linked to a long-distance train service via other kinds of transport;
  • Alignment of long-distance train and other transport schedules so that passengers can get to the train stations by other means of transport;
  • The distance to a transfer station where passengers can get on a long-distance train from their departure locations cannot exceed 150 km;
  • A single travel ticket for various means of transport in same ticket office;
  • The coach station must be located conveniently so as to enable passengers to get to the train station without having to spend too much time, i.e. it must be convenient for passengers to transfer from motor transport to rail.

Optimise product offers

JSC FPC carries on working on improving its portfolio of product offerings.

In the reporting year, the Company decided to review its approaches to product portfolio planning and management in an attempt to make it economically efficient.

One of the first steps the Company took to implement that was the reorganisation of JSC FPC’s marketing and transport management functions; a single centre — Marketing and Tariff Policy Department — was created to deal with product offer development tasks in each market segment.

The Company hopes that these organisational changes will provide synergy and make it possible to implement the product offer optimisation project in 2015.

Succeeding in implementing the project will improve customer experience and satisfaction, enabling the Company to target certain market segments with strategic initiatives and position itself appropriately, which is expected to lead to business profitability growth.

Expanding the portfolio of products and services

Car-carrier service

High-speed Patentes Talgo S.L. trains

Double-decker trains

Daytime trains

Multimodal service

Develop key skills and competencies in major functional areas

As part of a project aimed at developing key skills and competencies in major functional areas, the Company is implementing a subproject called Development and Deployment of a Corporate Project Management System and Development of a Target System of Key Performance Indicators. The work is being done in collabouration with McKinsey&Company CIS.

The following outcomes are expected:

  • Develop a Methodology for the Corporate Project Management System (CPMS);
  • Test the CPMS in a pilot project, create a project management team;
  • Develop a target system of KPIs.