Peer review: Managing Director of a TOC
Encouragingly, there is broad consensus among different industry parties about the ‘complicated muddle’ that is the current fares system - and (more importantly) about the potential way forward. Disappointingly, however, the quietest voice in the debate belongs to the Department for Transport, the organisation actually with the responsibility and authority to tackle the issues holding back much-needed simplification!
Within the debate it’s important to recognise the varied nature of the markets that rail serves, from high-volume urban services to long-distance inter-urban services. The needs of these markets and their competitive environment are very different, and rail fares need to reflect this to ensure the long-term future of the railway.
One size does not fit all. In reality, there will always be anomalies where these markets interact, and we need to work hard as an industry to ensure that these anomalies are minimised.
The move to market-based pricing from pence per mile pricing led in reality to a reduction in fares on many flows. It recognised the more competitive nature of certain markets – particularly long-distance, where air and road competition exists. Reverting to a pence per mile basis would likely see fares increase.
The point about Advance Purchase (AP) fares being used to manipulate ORCATS is fundamentally misleading. The majority of tickets are sold on flows where one TOC receives the overwhelming majority of revenue from inter-available tickets. The development of AP fares has been used to spread loads more effectively across trains, minimising crowding and offering cheaper fares to passengers travelling at less attractive times.
The article is vague on the difference between operator-specific fares and AP fares. The former are not the same as the latter. AP fares are train-specific, and it is sensible that revenue from those tickets goes to the operator that carries the passengers. Operator-specific fares are often walk-up fares that limit travel to any of the trains of a specific operator.
Barry Doe’s view that operator-specific fares are cheaper but do not offer anything meaningful to the passenger is open to challenge - a cheaper fare is something meaningful, given that the price paid for tickets is one of the biggest issues for passengers in the National Rail Passenger Survey. However, the reduction in price does come with an overall loss in flexibility to the passenger.
The value of flexibility really needs to be considered in more detail. Providing for flexibility comes at significant cost and with a considerable waste of resource. How we balance these two conflicting aims needs careful consideration.
The industry and technology has changed significantly over the past 20 years. But what hasn’t changed in that time is fares regulation, which was set in stone at privatisation and has evolved little since.
So the fundamental question needs to be asked: “What is regulation for?” Until that question is answered, the right path for reform cannot be determined. Frequent government intervention (code for an interminable series of fares and ticketing reviews) has delivered little owing to two primary drivers: political fall-out and financial implications.
Where pressure really needs to be applied is at ministerial level - that is the key obstacle to improvement and change.
