Heathrow Express

MBA Consultancy Project

Rachael O’Bryan

Ashridge Business School

http://uk.linkedin.com/rachaelmobryan

Agenda

Background/Context

Approach (i.e. methodology)

Findings

Recommendations

Next steps

Background/Context

Rachael O’Bryan, 26

M.B.A., Ashridge

Business School

B.A. in Communications

& Marketing from

California State

University Northridge

Originally from Kentucky,

U.S.A.

Background/Context

MBA Consultancy project

Chosen from 4 concepts, this one selected for relevance and potential business benefit.

Commenced April, with most of work happening in June-August

Future strategic options for Heathrow Express, mainly in relation to their service proposition.

Background/Context

The primary analysis (interviews, surveys) focused around 3 main questions:

–From the perspective of Heathrow Express passengers and staff, what is attractive about Heathrow Express? What could be considered as a weakness?

–From the perspective of Heathrow Express staff, is a partnership with an onward travel company beneficial? (or of strategic importance)

–From the perspective of Heathrow Express passengers and staff, what should be pursued in the long term for Heathrow Express? What should be made of mention?

Approach (Overview)

Ashridge guidance

Literature Review/Case Study search

Surveys

Interviews (HEx employees)

Meeting with Uber

Qualitative and Quantatative analysis

Approach (Surveys)

Questionnaire development– Selection of 8 main questions– Paper format– Given out on HEx trains– 2 different surveys (PADLHR and LHRPAD)

Collection– 5 days – 266 respondents – Personally given out on trains by myself

Final Step– Qualtrics software used to collate data and analysis

Approach (Interviews)

Interview development– Researched self practice– Derived 9 key questions– Interviewees identified by role relevance and recommendation

Interview implementation – Potential interviewees approached by e-mail– 11 of 12 respondents, and all 11 interviews were conducted– Face-to-face recorded– Length of 12-28 minutes of each interview

Final Step– Interviews transcribed and analysed thematically, and produced

in summary for the report

Findings-Survey

Potential obvious findings (full detail in report)

–Why take HEx?

–Why other transport options weren’t chosen and HExwas

–Demographics (business/leisure travelers, nationalities, age range, and group size)

Findings-Survey

Findings-Survey

Locations

Passengers were also asked geographically where they were coming from to get to Paddington or where they will end their destination after arriving into Paddington.

Central London was the most popular area. 84-85% of those passengers who came from or going to, happen to be inside of the London M25 motorway.

The other 15-16% were in distributed locations which included Newcastle, Durham, Leeds, Liverpool, Nottingham, Cardiff, Cambridge, Oxford, Chelmsford, Exeter, Plymouth, Dover, and Brighton.

Findings-Survey

Findings-Survey

Final thoughts from passengers

- 50% responded

- 33% of those gave entirely positive feedback

- 32% had an issue, and it was around the cost of the ticket.

- 15% represented new ideas (see next slide)

- 11% recommending more frequency and space on the trains (peak periods & weekends).

- 9% was other (wi-fi, toilets, long walk)

Findings-Survey

Recommendations from HEx passengers

15% represented new ideas for the company, some including ideas in relation to price.

Add travel card (underground) on

HEx ticket machines.

Have the oyster gold card

discounts on board as well

Make oyster cards work

Do cheaper advanced fares Family discounts would

encourage more users.

Offer discounts

I want to purchase corporate

tickets on my smartphone app.

More destinations than just

Paddington

To have another train line from

Victoria

Offer drinks on board Free drinks No penalty on train tickets, don’t

have them expire.

Sell tickets on the train without

any penalty.

Airport staff tickets available on

self-help ticket machines

Round trip ticket purchased but

expired return after so must pay.

Please stop having them expire.

Suggest putting screens with train

times at arrivals exit (only

available at main ticket desk). I

seem to be missing the train a lot

lately, and always have to wait 13-

14 min

Suggest a no log in for the Wi-Fi,

and no TV screens to make the

tickets a bit cheaper.

Where are the rubbish bins?

Have more luggage space, and

faster Wi-Fi service.

To have reserved seats in coach as

well as in first class

Better air conditioning

Findings-Interviews

Onward travel

We could do a deal with Europcar, just like Virgin trains do currently

A deal with the underground joining up with an oyster card or having your own smart card.

Look at deals with Regis for using their office space in London.

Look at the VIP area at Heathrow and start integrating stuff there.

Possibly some sort of personalized, chauffer service.

Look into having contactless cards

Continue to focus on working with more airlines, who our parent company Heathrow know very

well, in order to get them to be advocating more strongly the use of our service.

Findings-Interviews

Uber

Hex Interviewee Responses

Benefits & Risks + worth pursuing further

“I am still nervous, considering the controversies & policies Uber sometimes

apply, so this has to be considered.”

“Uber is a brilliant company but secretive in the way they do business. The

only negative to a partnership with Uber is the potential of the press.”

“HEx prides themselves on the service, reliability, consistency; things that

Uber hasn't always shown because there’s less standardization, so that's the

biggest alarm bell for me.”

“My personal experience is mixed. Uber drivers have cancelled on me,

driven frantically, made me find them, etc.”

“Cheaper than a taxi, easy to book. I just don't know enough about Uber to

say if they'd be a good fit for HEx.”

Findings-Interviews

Uber meeting outcomes

‘One size fits all’ for Uber

Logistics at Paddington

seen as tricky- Uber willing

to work on that

Uber would prefer to drop

at Paddington, rather than

Heathrow

Uber integration into HEx

application via API is

possible

Joint promotion

opportunities

Findings-Interviews

Long term pursuits + other themes

We need to be more responsive in terms of price, and need loyalty programmes beside 12 journeys

for the price of 10 that we offer now at HEx.

HEx needs to dial up in terms of communication. What are the reasons to make HEx worth your

while?

We have to make sure people really understand and use the product. Once they try it, it’s quite easy,

and also easier for them to repeat the experience.

We need to focus our strategies on individual areas.

HEx should look at price for offline and online ticket sales.

Be more transparent with our strategies and goals. If there are any issues, put it out to the entire team

to come up with solutions. We also need to be more aggressive in how we market our brand.

Showing that extra value for the price of the ticket, which can be perceived as expensive.

Findings-Interviews

Pricing

“Our service is geared more towards business travelers that aren't as price sensitive. Big

potential for growth in leisure market but we go up against fierce competition such as

black cabs and the underground which are iconic to London, and people want to ride on

them during their holiday here. Also, a crazy year with the engineering works where our

service may not be seen as reliable. “

“The price. I've been here just 1 year and prices have gone up since I've been here. It

hasn't gone up significantly, but the trend is that it’s going up. This has a negative impact

on passengers.”

However, one interviewee contradicted the view point of price as an issue.

“I don't think price is a weakness. It's around value for money and price isn't the same

thing. So it’s about showing that extra value for the price that can be perceived as

expensive.”

Conclusions

Despite recent pricing initiatives (kids go free, group save, etc.) a large proportion of customers & employees expressed concerns about HEx pricing

Importance of onward travel confirmed by this research (many different ideas)

Prominence of Uber in market & high level of awareness confirmed by this research

Recommendations

Onward travel partners (Taxi)–Work with Uber to explore further options (NDA to still be agreed)–Confide in other potential partners (Addison Lee/Halio) and open dialogue

Public Transport sector partners–TFL (oyster card)–ATOC (National Rail)

Pricing & Promotions

Culture and Employee Engagement

Next Steps-Further Research

Focus Groups (non-users)

More survey respondents

Compare to quarterly report questionnaire coming out

Further access to Uber

Leave you with this quote...

– “We’ve been a bit nervous about trying things because for fear we’ll fail. We’ve been very

slow when we’ve wanted to have a fully perfect solution and I think we just need to get stuff

done. Trial it. Learn. Find what works, find what didn’t. Tweak and move on. So I think for

onward travel I’d like to see something with the topper end of the market in terms of similar

to a chauffeur business. That’s a product that we could then talk about with our airline

colleagues and it’s also something as I say, that clearly some airlines have already got on

their mind anyway.”

Thank you!

Approach

11 Heathrow Express staff members were interviewed. The questions asked were:

– What is your role at HEx?

– Why do you think passengers choose HEx?

– Why do you believe passenger growth has slowed at HEx?

– What do you believe the company’s strengths & weaknesses are?

– What degree is onward travel an issue at HEx? What steps if any have been taken,

and what still needs to be done?

– According to Nat’l Rail, value for money is a weakness at HEx. What can they do to

address this perception?

– Do you see an opportunity to work with other org. in terms of onward travel?

– What is your personal experience and perspective on a company like Uber?

Findings

Findings

Findings

Demographics

- 59% represented business, 41% represented leisure.

- 80% of Heathrow Express passengers are in the age range of 25-54, with 35-44 making up the biggest sector.

- A majority of the Heathrow Express passengers are male, representing 64%.

- The UK, rest of Europe, and Americas make up the top nationalities, representing 89%.

- In terms of how many people Heathrow Express passengers travel with, 49% travel alone with 33% travelling with 1 other person.

- 93% of passengers aren’t travelling with children under the age of 16.

Phase 1: Research

First, a literature review, looking into demand, strategy, service quality, and marketing of transportation companies occurred.

Key findings were:

– Demand for public transport is high, with it continuing to grow in Europe and North America.

– Cost (including fares and time) is one of the main determinants of public transport demand. Riders are more sensitive to changes in travel time than to changes in fares; unlike price and other factors, time is an absolute constraint.

– Service is at least as important as fare, if not more so. Fare increases can be compensated for by equivalent service improvements without affecting patronage. For those travelers using high frequency urban public transport, the negative impact is expected to be less, even though journeys on some urban networks can involve a high number of interchanges.

Phase 1: Research

Key Findings (service convenience & disruptive innovators)

– Convenience is vital in helping to ensure long term viability of public transport, through increases in demand, revenue, public support, and acceptability. The aim of the public transport provider should be to ‘minimize the gap’ between service quality sought, targeted, delivered, and perceived.

– There is a clear, strong synergy between marketing and public transport improvements. Some of the key value components that marketing in public transport must address include convenience, comfort, affordability, extensive mobility for transit-dependent riders, and a sense of making the “smart” choice.

– Good marketing starts with the customer, differentiates itself, takes into account the competition, promises, communicates, and delivers. Good promotion and marketing of a package of service improvements is at least as important as the improvements themselves.

Phase 1: Research

Key Findings (marketing in public transport)

– There is a clear, strong synergy between marketing and

public transport improvements. Some of the key value

components that marketing in public transport must

address include convenience, comfort, affordability,

extensive mobility for transit-dependent riders, and a

sense of making the “smart” choice.

– Good marketing starts with the customer, differentiates

itself, takes into account the competition, promises,

communicates, and delivers. Good promotion and

marketing of a package of service improvements is at

least as important as the improvements themselves.