How do you reduce cost per passenger miles?

Answer 1

Reducing costs per passenger mile (cppm) is a continual and constant objective of managers in the transport side of the of the travel industry. There are three key variables in the calculation of cppm: number of passengers, miles travelled, and total costs. If a company can reduce their costs and still maintain their service and passenger numbers, the company's costs per passenger mile will be reduced. Or, if it can increase passenger numbers and/or miles travelled without significantly increasing company costs, the cppm will also be reduced. Example (1).

A company has fleet of private cars they use to transport staff on a regular basis, to collect their staff from railway stations and take them to their place of work. There are various ways that economies can be obtained in situations like this, such as by increasing the number of staff collected at each pickup. e.g. Compare these two scenarios.

(A) Four staff always arrive at a station with a few minutes of each other. The taxi only picks up the first two, takes them to work, and then returns for the other two. (B) At the station the taxi waits for a few minutes until all four arrive and then takes them to work in one trip. Which is the more efficient? Which has the lower passenger cost per mile? Obviously scenario B. So good logistics will reduce cppm.

There are many additional ways that cppm can be reduced:

* Maintaining a steady driving speed is one way. Rapid starts and stops, frequent bouts of harsh acceleration and sharp braking, frequent changes in speed, all these contribute to higher fuel consumption and wear and tear of the vehicle, whereas a steadier approach at the most efficient mpg speed, can significantly reduce fuel consumption. Less fuel used = lower fuel costs. Lower fuel costs = lower ccpm. * More efficient engines, bulk buying of fuel, cheaper fuel, regular maintenance, reduction in non-passenger weight of the vehicle (e.g. avoid carrying goods unnecessarily), more efficient routing (compare motorway mpg with non-motorway mpg), ensuring tyres are fully inflated to the right pressure, trip-scheduling to avoid rush-hour congestion, removing roof racks, closing the windows, etc etc. All of these things will make car transport more cost-efficient and thus achieve lower cppm. Example (2)

A passenger airline, regularly carrying 100 passengers a distance of 100 miles in any given period, has therefore provided 10,000 passenger miles (pms) of service (100 x 100). If the airline's total costs for providing that service (e.g. fuel, maintenance, plane depreciation costs, airport duties, staff and administration costs, etc) totals 100,000 zibdons, then the cppm = 100,000 zibdons divided by 10, 000 = 10 zibdons. i.e. 10 zibdons per passenger mile. But if the airline can increase carrying capacity, perhaps be re-designing the seating plan, and can now carry 120 passengers over the same route (we now have 120p x 100m =12,000 pms), and the airline's total costs are now 114,000 zibdons, has their cppm increased or decreased? To calculate, divide the new cost (114,000) by the new passenger miles (12,000) and what do you get? 9.5 zibdons per passenger mile! Their cost per passenger mile has been reduced. The company has become more efficient. In this scenario, if they maintain their ticket prices, their net profit will increase. If they reduce fares, their passengers benefit. Either way, they will have become more efficient, with evident economic benefits. Summary

* cppm is the product of total costs (tc) divided by passenger miles. i.e. tc / (p x m) = cppm * Reduction in cppm means more efficient use of finite resources.