A LITTLE HISTORY
Fares (and the data sets governing them) have always been complicated, from the opening of the Liverpool & Manchester Railway in 1830.
Today’s fares structure is largely inherited from British Rail and an analogue age. As Steer Davies Gleave pointed out in a research project as long ago as 2011: “The current set of fares has not been developed based on the passenger requirements of today, or even those of the recent past. They have been developed through a combination of historical, market and regulatory factors.”
Regulation began in 1844 with the requirement to run what became known as ‘Parliamentary Trains’ at a penny a mile. Per mile pricing was introduced nationally in 1928, and ordinary return tickets were generally sold at double the price of a single.
In 1968, market forces rather than mileage became the prime determinant of ticket prices, to try to even out loadings. This was followed by the introduction of Railcards in the 1970s to target savings more effectively to specific market types.
Market pricing to stimulate optional journeys created anomalies. There was no one-way Saver, and many Saver returns were cheaper than an anytime or open single, so people were sold a return when they wanted a single. This could cause a ten-minute conversation to explain why.
To avoid this, in the early 1990s BR introduced a feature whereby if a cheap return was offered, the system would generate an equivalent single that was just slightly less. The object was to discount the return, but not one-way trips.
This is the situation facing Eurostar today, Mark Smith points out, where a cheap return rate is needed to encourage Brits to go for the weekend, but Americans going one-way to the Continent are generally willing to pay more. Selling rail with that complexity through a self-service channel is a challenge (see panel, below right).
Assuming an average of five types of fare between the network’s 2,500+ stations, there are more than 30 million individual fares, presenting a huge task for pricing managers and database administrators to keep track of it all. The database structure largely derives from work carried out by BR in the 1980s to modernise and standardise fares for the introduction of APTIS (the Accountancy and Passenger Ticket Issuing System).
Formal regulation was abolished with the formation of the British Railways Board in 1962, but was revived at privatisation, with a schedule in each franchise agreement capping the prices of key fares on each route.
In addition, operators were required to participate in the Ticketing & Settlement Agreement (TSA) of 1995, which controlled the way fares were set, sold and honoured. It still does - the TSA has grown with each new franchise agreement, with very little discarded.
A landmark in the move towards smart ticketing was the establishment in 1998 of the Integrated Transport Smartcard Organisation (ITSO), with support from the DfT. It was created to “develop an open specification and standards so that smart ticketing could be used across different types of public transport and transport operators”. Smart technology has the potential to reduce transaction and administrative costs.
As originally envisaged within the TSA mechanism, TOCs would co-ordinate with each other on fares to ensure the maintenance of a rational national structure. However, the advent of the Competition Act in 1998 effectively outlawed this and resulted in ever greater anomalies and conflicts in fares.
A Strategic Rail Authority review in 2003 simplified the regulatory structure to some degree. However, it also enacted a change in policy whereby regulated fares moved from being adjusted on average by RPI -1% to RPI +1%.
The original regulation had been put in place as a public sweetener for privatisation, but the Treasury had grown alarmed at the increasing public subsidy that this required. The move to RPI+1% heralded a decade of above-inflation increases that became increasingly toxic and inhibited open debate about fares reform.
