19 January 2010

A big pay-out

Imagine you're a butcher and it's just under a week before Christmas Day. You've taken a whopping number of orders for hams, joints and other assorted carcasses and are looking set to enjoy a bumper Festive Period despite the recession. Then, with just two days to go your delivery van breaks down; your shop's electrical system fails, causing your fridges and freezers to defrost and all this amidst people clambering to your shop for their pre-ordered goods.

What do you do? Apologise and give them their money back and then try and recoup costs from your local mechanic or electricity supplier? Would be people be happy to receive a full refund with your heartfelt apologies? A few weeks ago they'd have been able to go elsewhere, that is another butcher, and order their Christmas meat from him, but at the eleventh hour, a refund will provide diddly-squat.

Now apply this scenario to Eurostar. They were looking set to enjoy a bumper Christmas period with thousands using their London-Paris/Brussels trains to return home or visit friends and family over the Festive Period. The summer 2008 lorry fire beneath the Channel and the initial impact of the recession had taken their respective tolls on the company, but Christmas was 'in the bag' until the events of 18 December took place.

Their 'delivery van' broke down - initially five of their fleet, though with an endemic problem having been identified, their 'local dealer' suggested they all be withdrawn pending strategic modifications. Their 'pre-ordered goods' were therefore unable to transport their customers despite the company receiving payment beforehand. They offered refunds, but in the case of the butcher, at such short notice, alternatives - certainly of the same price - were incredibly limited.

In both cases, the problems were unforeseen, though Eurostar seems to have received a pasting like no other in the national press. Proportionately, the company deals with more customers than one butcher and while not being able to return to your native country for Christmas is far more of an issue than going without turkey, perhaps it is only fitting that the total paid out in refunds and compensation should reflect this.

Eurostar has revealed that the total compensation payment made to its inconvenienced passengers will be in the region of £10 million. We estimate this to represent 1/67th of the company's annual ticket sales. It's a sizable proportion for a such a large company. If a butcher's annual turnover is £70k, the refunds and compensation paid to his disgruntled Christmas customers would total £1,044. We'd need to ask a butcher whether this is a sum likely to be taken in the week before Christmas - though we suspect it would be higher.

Therefore, is £10 million really such an eye-watering sum of money for a company of Eurostar's standing? The way in which Eurostar handled themselves during the period of non-operation is what could be their undoing; you're more likely to forgive your friendly local butcher and return to him next year - that is unless Stellios Haji-Ioannou's been spotted in your area with a new venture in mind: easyMeat!!

1 comment:

Unknown said...

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