Nov 18, 2017 - 8:39 PM
in reply to rockoyster
G'Day Rockoyster -
<<"I will take Lucas’ “because they can” theory as the most likely explanation.">>
Of course. If they are out of capacity for a service, why would they lower costs?
(by the way, I'm sure it is not cheap to maintain those roadbeds and the rolling stock. What do you think?)
It's their job to make money for their shareholders. So, "can" is not without limits other in addition to the willingness of riders to pay.
However, to make it easier for you to understand my point buried in the lengthy comments -
the "can" is constrained by all of the factors I mentioned. If there were no constraints, they would do yield management as described by Lucas.
One tiny example -
The fare from Lauterbrunnen to Wengen could be a lot higher, and it would not impact travel volume.
If half the people going up to the Jungfrau cgo via Wengen, there are 500,ooo every year. They would pay more than the few CHF that that short leg costs. The price is held down by the Swiss government social policy of good, inexpensive public transport, and the political power of the residents of the canton and Gemeinde, in my opinion.
If capital is expensive, it is always good business to get the most return from invested capital as a first step, rather than simply pouring more capital into the business to expand capacity.