Renfre has decided to lower the price of its AVE train service and to offer discounts in an effort to attract more users. Both efforts have been a strong success. In just four months Renfre has met the passenger quotas that it set for two years.
The company now has to make sure that it does not succeed too much, becuase a larger passenger load will require the company to improve the efficiency of its service and adapt to the increase demand from customers. Some solutions are easy, like increasing the length of time that doors are open before trains depart.
The significant investment that taxpayers have made in the high-speed train service mean that the company should be showing a profit. And Renfre has put into practice an elemental economic truth: lowering prices increases demand. The results have been immediate, and what Renfre has done should be copied by other firms.
