Interview. Train prices: "The cheapest way is to book four months in advance."

Can you remind us what we know to date about the SNCF algorithm for setting ticket prices?

"SNCF implemented yield management (or dynamic pricing), which originated in the airline industry over 30 years ago [just like long-distance coaches, editor's note]. The idea is to offer several prices for the same thing: the low prices are marketed at the beginning, four months before for SNCF, and the highest prices at the last minute to compensate for the first ones.

Imagine that each train is divided into about fifteen tiers (fare classes) for second class and the same number for first. As soon as a price tier is filled, a new one opens. Prices are not set by the customer, but by time. Then, these fare classes start higher or lower depending on the season, the destination, and the departure time.

Do Ouigos work the same, but start lower?

"Yes, Ouigo starts lower and climbs a little more steadily. Reservations also open further in advance. In any case, a Ouigo will always be cheaper than a classic TGV [without a subscription, editor's note]."

What is the point for a railway company like SNCF to offer low and high fares for the same train?

"If the SNCF only offered low prices, it would not be profitable and would therefore be economically dead [ the SNCF made 1.6 billion euros in profits in 2024 , Editor's note]. It is also a political question to maintain low-cost tickets because it is still a public company."

What is the human role in this system?

"Around a hundred people work at SNCF to manage the algorithm and validate the change of levels. They could automate it; technically, these actions are fairly predictable given the volumes, but without human beings at the helm, this could pose other problems. We need people to monitor the case where the algorithm makes a mistake, even if these same people sometimes make mistakes themselves..."

Can prices increase exponentially a few days before a popular trip?

"No, that can't happen at SNCF because the highest fare is set from the beginning, several months before the train goes on sale. SNCF's pricing algorithm never gets out of hand; it can't go completely haywire. On the other hand, there's no official price limit to define fare classes from the outset, other than the pressure of what's acceptable to society."

Conversely, when a train doesn't fill up as expected, does SNCF lower prices rather than have empty seats?

"Generally, this doesn't happen because everything is calibrated to demand. But unforeseen events like the weather can occur, and SNCF avoids slashing prices because it's not recommended. This creates the idea in the customer's mind that they can wait until the last minute for prices to drop further. If the occupancy rate is lower than expected, SNCF prefers to move more slowly to higher fare classes rather than lower the price. Calculations are made every day by the algorithm."

In another scenario, it happens that when exchanging a journey, you save a little money by changing trains, while the gain was less at the time of purchase. How can this be explained?

"It seems very rare to me, but on less than 10% of trains that don't fill up, it can happen that fares drop slightly. It's also possible that, faced with high demand, SNCF adds a train, which restarts the levels."

Do you have a technique you could give our readers to play with the algorithm and save money?

"The cheapest way is to book four months in advance. So even if you're not sure of the exact travel date, a good strategy might be to book two tickets at two different times and cancel one of them later when you're sure. Two times 40 euros will always be cheaper than 120 euros. The algorithm also predicts a certain cancellation rate and puts these tickets back on sale at the current price. It depends on risk aversion because you have to remember to cancel a ticket. The limit I see is ethical, because a wealthy person could take the cheapest seats even though they're not in need."

Are SNCF advantage cards and other discounts really good for saving?

"Yes, they quickly pay for themselves, but they don't work on all trains and, overall, they don't benefit people who have conventional travel. Students who have TGV Max, for example, can't always use it."

Do you understand that this system with 30 different levels creates distrust among consumers who do not necessarily know why they are paying such a price?

"Yes, 30 classes is a lot. They could make three for the second and three for the first with an early booking price, a median price, and a last-minute price. It would be simpler. We could prohibit public companies from having such sophisticated pricing systems. That would save labor, too. The current system is perhaps too opaque. On the other hand, when they say there are "10 places left at such a price," it's true."