Monday, May 9, 2016
How much money is it?
Let's assume an easy figure of 1,000 monthly pass holders in September 2014 at $355 (and no need for 'special' discounted fares) a pop. That's $355,000 a month. If Explore had not turned up, that would be around $6,400,000 revenue over the 18 months of competition.
As Explore pinched around 25% market share, the revenue from monthly passes was 750 times $325 a month (the eternal "special" fare trumpeted in their media ads) totalling about $4,400,000.
Roughly, Fullers lost $2,000,000 from Waiheke commuters alone when Explore was running. And that's not counting the doubling of its operating costs when Fullers doubled its number of sailings.
Ballpark figures, of course, everything is commercially confidential as they never tire of telling us. You can adapt the amounts but it's certain a considerable sum. And mind you, this does not include the losses in market share in other tickets such as tourist single fares and multi-rides.
On the plus side, Fullers enjoyed 100% of the super gold card cash, despite Explore carrying pensioners too, and was never obliged to share that loot until very late in the day. Fullers owes Winston Peters a big donation for that political help!
For Fullers passengers who remained loyal there was only upside: extra sailings, discounted monthly passes making a saving for them of $400,000 ($30 x 750 x 18) that was able to be spent on Waiheke on other things.
So how to recuperate the lost $2 million?
The time frame for this should be about 6 months, because then the tourist season starts and commuters are just a nuisance taking up space on the boats that could be sold more profitably to tourists.
Spread out over 1,000 monthly pass holders that means about $330 extra per month on top of the current monthly pass price. So expect $685 monthly pass fares ($355 - the discount no longer applies - plus $330). This can be mitigated by upping all other fares, of course, so the cost doesn't get borne by commuters only.
How to sell this?
You may have noticed crude oil prices have gone up recently. Fullers could spin this increase from $30 to $45 a barrel as a 50% increase that needs to be reflected in fares. They have done this effectively in the past anyway when the barrel price went to $250. That's half of the increase covered.
The other half can be accounted for by spinning the costs of taking on 35 former Explore staff. Surely we will not begrudge those lovely boys employment and pay for them?