Progress on strategic projects and plans for 2016

As at the end of 2015, the corporate Revenue Management System (RMS) covered 254 trains operated by FPC and 47% of train operations in the deregulated segment of the domestic passenger transport market.

In December 2015, the Revenue Management System was further implemented with flexible pricing applied to another 134 trains departing on or after 14 January 2016. Thus, 390 trains on 116 routes were covered by the system in early 2016. As at January 2016, the Revenue Management System covered 75% of regular train services on domestic routes.

In 2015, pursuant to Russian Federal Tariff Service Decree No. 280-т/1 dated 5 December 2014, FPC was for the first time authorised to use flexible ticketing for third-class and common carriages, with the price determined by the location of seats.

The price differentiation of tickets for various seat categories in third-class carriages made train fares more affordable for people with lower incomes. The Company does not plan to increase fares in this segment as the upper limit of the tariff range is set in the Tariff Guidelines and the flexible tariff regulation schedule, and is adjusted for a service category coefficient.

Discounts off the price of third-class carriage tickets have been offered since February 2015, when the price differentiation was available for 14 train services only. The Company gradually expanded the new pricing approach to include 50 train services in April 2015 and another 130 train services in September, with all long-distance domestic trains covered in October.

In the reporting year, over 2.3 million people benefited from attractive price offers made available for third-class carriages.

The flexible ticketing scheme will be continued in the regulated segment into 2016. For instance, passengers will be offered a 25% discount on a side upper bunk in third-class carriages departing between 24 February and 3 March and between 9 March and 28 April 2016.

Dynamic pricing helps identify a balance between demand and service pricing and improve the overall efficiency of the initiative.

In general, train services covered by the Revenue Management System demonstrated a 107% increase in passenger traffic in 2015, with the average revenue rate up 5%.

In addition to rising passenger numbers, the use of Revenue Management System has also driven passenger revenue growth. Specifically, gross revenue grew 107% year-on-year (or by RUB 2,159 million), with passenger revenue up 106%. This progress was recorded against a backdrop of lower ticket supply — the seat turnover rate decreased 4% year-on-year.

Given the positive effects of the RMS implementation, its application will be expanded in 2016.

The target is to extend dynamic pricing to about 95% of domestic routes in the deregulated segment by the end of 2016. The system is expected to cover about 485 train services.

Domestic services covered by flexible pricing

Domestic services covered by flexible pricing

RMS implementation phases

RZD Bonus loyalty programme and bonus cards

RZD Bonus loyalty programme for FPC long-distance train passengers was launched on 1 July 2012.

Over 630,000 new members were registered in the Programme in 2015. The year-on-year growth in the number of registered cardholders was 36.1%, with their total number reaching 1.6 million people.

RZD Bonus loyalty card holders, ’000 people

RZD Bonus loyalty card holders

Cardholders bought over 88% of tickets via the corporate website of Russian Railways (up 4 p.p. year-on-year).

In 2015, premium tickets were received by 72,500 cardholders (a 3.4-time increase year-on-year), with the total number of premium tickets issued reaching 138,000.

In 2015, 46,000 VTB24 — RZD Visa card holders registered in the Programme (about 7.3% of all new cardholders in 2015).

In 2015, partners of the Programme offered the following benefits to RZD Bonus card holders:

  • A new partner, the Russian Trade Union of Railwaymen and Transport Construction Workers, joined RZD Bonus programme; union members were offered special point earning terms as part of the Programme.
  • RZD Bonus card holders receive a 7% discount in Rosinter Group restaurants (Il Patio, TGI Fridays and Costa Coffee).
  • Special offers are available to loyalty card holders at participating theatres and hotels in Moscow and Saint Petersburg as part of a pilot project, Capitals of Culture.
  • A partnership agreement was signed with Carlson Rezidor, the first international hotel group to partner with FPC. As part of the Programme, RZD Bonus card holders can benefit from special rates and offers across the Carlson Rezidor hotel chain.

The Loyalty Programme featured new promotions and special offers:

  • A corporate programme was developed for the companies willing to join RZD Bonus Loyalty Programme. Corporate membership means that points are awarded for every trip made by the company employees. The earned points can be spent on premium tickets for company employees.
  • Russian university students are offered Student Cards as part of a new project under RZD Bonus Loyalty Programme; Student Card holders receive a 25% seasonal discount on tickets in compartment carriages on domestic routes and can earn loyalty points, which can be exchanged for premium tickets.
  • Starting from 1 March 2015, RZD Bonus card holders receive 3 points per every 10 roubles spent on car transportation, with points earned in exactly the same procedure as for train journeys.

RZD Bonus Loyalty Programme won the Loyalty Award Russia 2015 for the Best Transportation Company Loyalty Programme.

In December 2015, FPC, MasterCard international payment system and Alfa Bank launched a co-branded plastic card, RZD-MasterCard-Alfa-Bank, which can be either credit or debit. Over 7,000 new members were registered in the Programme between 10 December and 31 December 2015 under the co-branding project with Alfa Bank.

Plans for 2016 are to expand RZD Bonus Loyalty Programme through the following enhancements:

  • Cardholders will be allowed to use RZD points for partial payment of ticket price;
  • Cooperation with the Moscow Pass / Piter Pass tourist card programme covering Moscow and Saint Petersburg and offering discounts on the card price to RZD Bonus card holders;
  • Special daytime rates in partner hotels for RZD Bonus card holders and special prices for FPC day train tickets;
  • Roll-out of a customer relationship management (CRM) system enabling:
  • a single data environment to ensure a single source of information about existing and potential customers, partners, competitors, etc;
  • customer segmentation;
  • planning, monitoring and analysis of customer contacts;
  • customer service and support management, which will ultimately lead to more journeys and higher average price of a single rail journey, reduced passenger losses, acquisition of new customers and increased passenger traffic;
  • Launch of a co-branded student bank card programme jointly with the ISIC.

VTB24 — RZD card

VTB24 — RZD cards accumulate points for every purchase made; points can be redeemed against a premium journey under RZD Bonus programme. Cardholders automatically become RZD Bonus members and earn points for tickets and on any purchase they make using their card.

Moscow Pass / Piter Pass card

Moscow Pass / Piter Pass is tourist card programme offering visitors to Moscow and Saint Petersburg a “pass key” to major tourist sites, free entrance to museums, city tours at a reduced price, a double-decker bus tour and a river trip.

ISIC card

ISIC (International Student Identity Card) is a card that can verify a student status all over the world, providing discounts and privileges to its holder.

Improvement of Baggage, Unaccompanied Baggage, and Mail Transportation Efficiency

In 2015, FPC transported 3.3 thousand cars
In 2015, FPC transported 3.3 thousand cars.

On 1 October 2014, FPC fully switched to new arrangements for the transportation of baggage, which now may be stored in a dedicated compartment on the the carriage as the passenger is taking, rather than placed on the overhead baggage rack or under the seat, on any train made up by FPC and running on the same route.

In 2015, 81,200 passengers benefited from the service of baggage transportation in a dedicated carriage compartment (a twofold increase over 2014).

By optimising baggage transportation, the Company phased out 270 baggage desks between 1 January 2014 and 31 December 2015.

Car transportation is another rapidly growing service, currently available on eight routes:

  • Moscow — Helsinki;
  • Moscow — Saint Petersburg;
  • Moscow — Petrozavodsk;
  • Moscow — Pskov;
  • Moscow — Astrakhan;
  • Saint Petersburg — Astrakhan;
  • Saint Petersburg — Adler;
  • Moscow — Adler.

Since 28 February 2015, passengers can submit online applications for car transportation service by calling RZD’s Unified Information and Service Centre. Transportation documents are issued in 17 offices of the Moscow, Northwest, North Caucasus and Volga Branches. At the customer’s request, tickets and transportation documents can be delivered free of charge in Moscow, Saint Petersburg and Sochi.

In 2015, the Company transported 3,259 cars, up 64% year-on-year.

To further enhance the car transportation service FPC plans to include car carriers into the trains running between Moscow and Kazan and between Saint Petersburg and Vorkuta in the first half of 2016.

Optimization of Rolling Stock Investments

80 Talgo carriages acquired to provide high-speed services between Moscow and Nizhny Novgorod.
80 Talgo carriages acquired to provide high-speed services between Moscow and Nizhny Novgorod.

Rolling stock investments dropped 37.4% year-on-year.

In 2015, the Company purchased 185 carriages for RUB 12.6 billion as part of its Investment Programme. In 2015, the Company’s rolling stock replacement efforts were focused on the following priority projects:

  • Acquisition of 25 carriages for branded trains on the routes generating sufficient revenue to secure a positive return on investments;
  • Acquisition of 70 double-decker carriages;
  • Acquisition of 80 Talgo carriages;
  • Acquisition of 10 RIC carriages to replace retiring carriages on international routes.

Rolling stock investment projects with a direct economic effect totalled RUB 5.6 billion (44% of the total rolling sock costs) in 2015.

In 2015, the Company continued its effort to reduce fluctuations in the rolling stock utilisation rates throughout the year.

Starting from 2015, extra trains are put on only if the projected performance is expected to be positive and the associated costs and efficiency of using the required rolling stock are in line with budgetary requirements.

In 2015, a total of 404 extra trains made a total of 1,187 trips as compared with 592 trains and 1,771 trips in 2014 (down 32% year-on-year).

Quick-to-Improvement Product and Service Improvement Measures

In 2015, double-decker trains were launched on four routes
In 2015, double-decker trains were launched on four routes

Revision of services in luxury carriages

Services in luxury carriages include:

  • Cold meals;
  • Bed sheets;
  • Sanitary kit;
  • Print media.

In 2015, capacity utilisation rates for luxury carriages grew 2% year-on-year to 63.3%.

The average number of luxury carriages in the Company’s trains amounted to 1,355 (vs. 393 carriages in 2014).

In 2015, the Company expanded its service that enables passengers to choose meal options from the pre-set menu.

The new service was introduced on branded trains of the Moscow and North Caucasus Branches of FPC in July 2015, followed by the Gorky, Kuybyshev, Volga, Northern and South-Eastern Branches in November 2015. In Q4 2016, the menu-based meal selection option will be available on all branded trains of FPC.

Additional branded trains

As at January 2016, FPC’s train schedule for 2015/2016 included 93 branded trains (one train less than in 2014).

In 2015, FPC branded trains carried about 24.5 million people. Capacity utilisation rates in branded trains having an average of 11 carriages reached 66% in 2015.

To replace old carriages in branded trains the Company bought 25 new third-class carriages.

branded train

Branded train is a train offering its passengers a wide range of premium services. Its schedule offers the most convenient times for departure and arrival at its final destination and the shortest transit time.

Key advantages of branded trains:

  • Convenient schedule and the shortest time in transit (as compared to the same-route long-distance trains);
  • State-of-the-art carriages with air conditioning (on trains running in suitable climatic conditions);
  • The best attendants, trained and certified to work on branded trains;
  • Bed sheets, blankets, pillows and sanitary kits of better quality;
  • Upper bunk beds made before boarding;
  • Comfortable dining cars with an extended menu.

Branded trains offer a guaranteed set of services, including tea, confectionery, print media, souvenirs and other goods on sale, medicines, tabletop games and clothes brushes.

Replacement of single-decker compartment carriages with double-deckers

Double-decker carriages are very popular with passengers.

In 2015, double-decker trains were launched on the following routes:

  • Train No. 5/6 Moscow — Saint Petersburg since 1 February 2015;
  • Train No. 23/24 Moscow — Kazan since 1 June 2015;
  • Train No. 45/46 Moscow — Voronezh replaced with a double-decker train made up of carriages with open-plan seating since 31 July 2015;
  • Train No. 49/50 Samara — Moscow since 3 December 2015.

Altogether, double-deckers carried over 1.4 million passengers (6% of the total passenger traffic in the deregulated segment) in 2015, while the number of destinations serviced by double-decker runs makes up only 1.3% of the total train destinations in FPC’s deregulated segment. In 2015, the Company purchased 54 first-class double-deckers.

Given the high demand for double-deckers from passengers, the second double-decker train started running between Moscow and Saint Petersburg in February 2016.

Plans are to put another double-decker train pair on the line between Moscow and Voronezh in June 2016, and a new train on the route between Saint Petersburg and Adler in August 2016.

Replacement of third-class carriages with open-plan seating carriages on short-distance routes

As at the year end 2015, there were 36 pairs of day trains running on 20 routes (vs. 23 pairs as at the end of 2014).

In the reporting year, day trains carried about 8.2 million passengers, up 40% year-on-year. While in 2014 day trains accounted for 6.5% of the total passenger traffic, in 2015, their share increased by 3.2 p.p. year-on-year to 9.7%. In 2015, day trains generated RUB 40.2 million of profit.

To expand daytime services in the reporting year, the Company purchased 16 double-decker carriages to serve interregional routes and 80 Talgo carriages to be used on the route between Moscow and Nizhny Novgorod.

Plans for 2016 are to increase the number of day train pairs on the existing routes:

  • Moscow — Yaroslavl;
  • Moscow — Smolensk;
  • Krasnodar — Adler;
  • Moscow — Kursk;

and launch new day trains services on the following routes:

  • Yekaterinburg — Chelyabinsk;
  • Chelyabinsk — Kurgan;
  • Moscow — Saransk.

Given the increased demand for passenger services on Fridays and Sundays, weekend trains can be added since February 2016 on the following routes: Moscow — Yaroslavl — Ivanovo, Moscow — Bryansk, Moscow — Kazan, and Moscow — Cheboksary.

Lastochka train interior
Lastochka train interior

Lastochka trains are operated on six routes:

  • Petrozavodsk — Saint Petersburg;
  • Moscow — Kursk;
  • Moscow — Nizhny Novgorod;
  • Moscow — Smolensk;
  • Adler — Krasnodar;
  • Moscow — Orel.

In 2015, Lastochka trains carried 3.2 million passengers, up 45% year-on-year.

Strizh train interior
Strizh train interior

Strizh trains have run between Moscow and Nizhny Novgorod since June 2015, having transported 686,700 passengers since then.

A Strizh high-speed train made its first voyage from Moscow to Nizhny Novgorod on 1 June 2015. Today, these trains run daily and make up to seven journeys per day. The time in transit is 3 hours 35 minutes. Some trains call at Vladimir, Kovrov and Dzerzhinsk; non-stop trains are also available.

On 11 August 2015, this Strizh train service reached the 200,000th passenger milestone.

On 8 September 2015, the 300,000th passenger milestone was reached.

On 11 November 2015, the 500,000th passenger was carried.

Tickets are priced from RUB 499. The average price of an economy class ticket is RUB 1,500.

In 2015, Strizh trains carried 686,700 passengers (from June to 31 December).

Day trains routes

Day trains routes

Optimisation of sales channels, branding and advertising

In 2015, every third ticket sold was an e-ticket.

In 2015, a range of initiatives were implemented to grow the share of online ticket sales, including both technological innovations and an advertising campaign.

In 2015, the Company made the following technological improvements:

  • In March 2015, a new online booking service was launched in the Passengers section of Russian Railways (RZD) website. When buying a railway ticket, a passenger can book a hotel room right after the ticket payment is confirmed.
  • On 2 June 2015, a “single ticket” valid for a trip that covers rail, motor and marine transport services to the Crimean Federal District was made available for sale on RZD website.
  • On 16 June 2015, online registration for international trains operated by FPC and Kazakhstan Temir Zholy was made available.

A further e-ticket sales volume increase is expected after all trains are equipped with e-ticket validity control devices to dramatically reduce e-ticket verification times when boarding the train.

In 2015, 271 self-service transaction terminals and 67 registration terminals were installed at railway stations. The number of the Company’s ticket offices decreased by 20 year-on-year down to 2,030.

The Innovative Mobility, a major project launched by FPC in late 2015, will offer a step-change in the passenger experience of buying tickets.

The project will introduce the following solutions:

  • A mobile app to buy tickets online;
  • A digital route planner;
  • Personalised passenger support.

Evolution of sales channel structure, %

Evolution of sales channel structure

Online booking service

Sale of “single ticket” valid for a trip that covers rail, motor and marine transport services to the Crimean Federal District

Marketing activities

A major marketing campaign, Plan in Advance, was launched in early 2015 on all domestic routes (except for those covered by the dynamic pricing system). The campaign offered price reductions depending on the booking date and location of seats. Passengers were offered an opportunity to book tickets at a discount of up to 30%.

In a bid to increase demand for compartment carriage tickets, in 2015, the Company ran a series of weekly bargain sales under the Higher is Cheaper slogan, offering discounts on upper bunks in compartment carriages.

On 21 July, the Company launched the Lucky Tuesday campaign enabling passengers to purchase tickets for long-distance trains at highly attractive prices. The price of a fare depends on the distance of travel and starts at RUB 300 for the cheapest ticket.

This special offer is only valid for the routes covered by the dynamic pricing programme which provides for price differentiation in the deregulated segment of long-distance train services depending on the ticket purchase period. Every week, the Company selects new routes to be covered by the promotion, with the list of trains and sales start time announced on RZD website on Mondays, a day before the sales start. Our passengers have already appreciated the benefits offered by this promotion. Every “Lucky Tuesday” the Company sells three times more tickets for the selected routes than on other, non-promotion days.

Tickets sold at special offer rates account for 45% of combined sales in the regulated and deregulated segments.

Plan in Advance campaign

Promotion periodExcept for the period of The Higher, the Cheaper marketing campaign (weekly bargain sales). Days before departure
45 days 11 days 10 days and less
Seat location (discount/surcharge)
from 12 January till 29 April 30% discount 10% discount 10% surcharge
from 30 April till 11 May (excluding 8 and 9 May) 15% discount 5% discount 5% surcharge
from 12 May till 28 May 30% discount 10% discount 5% surcharge
from 29 May till 30 June 20% discount 20% discount 5% surcharge
from 1 July till 13 September (except for southbound routes) 20% discount 10% discount 5% surcharge
from 19 September till 30 September 25% discount 25% discount 15% discount
from 1 October till 23 October 25% discount 5% discount
from 24 October till 10 November 10% discount 5% discount
from 11 November till 31 December 20% surcharge for departures on and after 25 December
20% discount 10% discount 5% surcharge

For more information on our current promotions and discounts visit FPC website.