Abstract
M.Comm.
The South African economy requires effective low cost passenger transport in order to provide sufficient time and place utility for its population. The role that long distance passenger transport plays within this economic framework is important and ranges from inter city transport of passengers traveling for work and private purposes to that of metro transport. It is also important to note that long distance passenger transport plays an important role in the development of rural areas. Huge potential also exists for long distance passenger transport to assist in the development of the tourism industry.
Long distance rail passenger transport forms an integrated part of the long distance passenger market. Due to the characteristics of long distance rail passenger transport this form of transport is specially conducive to providing low cost transport to low income groups. This situation enhances development and social interaction of the community in different geographical areas.
Although long distance rail passenger transport plays an important role in the national economy the service has traditionally not generated a profit. The reasons for this situation are diverse and complex. This study addresses some of the traditional managerial approaches towards the business. A model is developed to enable management to focus on detailed service-level management that will enhance a higher service level with lower associated costs.
This study focuses on service profitability management with the associated costing and pricing methods, and concomitant management information systems. During the discussion of these specific issues some of the cost and revenue deficiencies are identified, and possible solutions are proposed for these problems. Concerns with the traditional costing method are discussed in this study, where after a new model is developed to incorporate all costs that are necessary for product costing. The main reasons for adapting a different approach to costing of services are as follows'.
Accurate costing of services enables management to decide on the improvement, continuation or discontinuation of a certain service. Service costing is used as a decision tool for the determination of fares for each service that is provided. The costing model incorporates the reclassification of expenses and costing of services according to their life cycle.
For the purpose of arriving at a revenue level that should satisfy sustainable
economical development and specific company requirements namely
profitability, this study develops a method for calculating fares for long
distance passenger rail transport. This method includes internal as well as
external environmental issues.
The primary requirement for a service profitability model is for management to
obtain the relevant information that would enable such a model to function
effectively. Due to the purpose of the study, namely to develop a decision
model for management a project management approach for the development
of a management information system is discussed. This model is related to a
long distance rail passenger organization and highlights specific
management information that is required for product profitability modeling.
Finally this study recognizes that further research needs to be conducted to
develop new strategies to decrease cost and increase revenue, with a
satisfactory level of service.