I have created this thread to promote discussion on the following hypothesis:
To given an illustrative example we can look at the new fares round tickets between Leeds and York, large cities in Northern England between which trains run frequently and to an unusually competitive schedule with the journey time by road. There are 4 hourly fast TransPennine Express trains, 2 Northern trains one fast and one stopping (services via Harrogate can be ignored for the purposes of this analysis), and one fast CrossCountry train.
Current fares are high on a pence per mile basis and set by TransPennine Express. Tickets for use on any train:
Single after 0930 weekdays £15.60
Single at any time £15.80
Same day return after 0930 weekdays £15.70
Same day return at any time £18.70
Return within one month after 0845 weekdays £19.20
Return within one month at any time £25
In competition with this, Northern set up their own 'dedicated' fares. These currently stand at the following levels:
In addition to this, in the past 3 years, first Northern, then TransPennine Express and then CrossCountry introduced Advance tickets for this short journey. These come with some of the same disadvantages, but not all. Importantly, however, they already provided a mechanism to sell customers cheaper tickets dedicated to one train company close to departure time. But despite this the companies have continued to pursue new products which take significant rights away from customers without them really knowing it, and in some cases without them really explaining it, in exchange for barely any financial return. Setting tickets to 10p less than the current cheapest is a cynical policy designed to capture the parts of the market that just opt for the cheapest ticket or the first one to appear, without trying to offer customers the best value for money that they can.
To summarise my arguments:
Starmill said:The Railway Industry and its customers are all long term losers from so-called 'Price Wars' where train companies compete for passenger fares revenue by setting dedicated (train company specific) walk-up tickets with very low differentials in pricing, either in percentage or absolute terms, and frequently as little as £0.10
To given an illustrative example we can look at the new fares round tickets between Leeds and York, large cities in Northern England between which trains run frequently and to an unusually competitive schedule with the journey time by road. There are 4 hourly fast TransPennine Express trains, 2 Northern trains one fast and one stopping (services via Harrogate can be ignored for the purposes of this analysis), and one fast CrossCountry train.
Current fares are high on a pence per mile basis and set by TransPennine Express. Tickets for use on any train:
Single after 0930 weekdays £15.60
Single at any time £15.80
Same day return after 0930 weekdays £15.70
Same day return at any time £18.70
Return within one month after 0845 weekdays £19.20
Return within one month at any time £25
In competition with this, Northern set up their own 'dedicated' fares. These currently stand at the following levels:
Single after 0930 weekdays £12.10
Single at any time £13.70
Same day return after 0930 weekdays £12.20
Same day return at any time £15.50
But now, TransPennine Express have introduced their own 'dedicated' fares. For regulatory reasons it is likely that these are temporary, but there will still be a huge number of people travelling at the times when they are available:
Single after 0930 weekdays £12.00
Single at any time £13.60
Same day return after 0930 weekdays £12.10
Same day return at any time £15.40
Return within one month after 0845 weekdays £18.20
Return within one month at any time £22.00
These have obviously been added in a tit-for-tat fashion so that they are 10p cheaper than the Northern Only tickets. This has also created the counter-intuitive situation where the cheaper tickets are for the faster and more frequent trains.
One the customer has bought the ticket, under rail industry rules, they cannot change their mind without penalty. If they accidentally board the wrong train the penalty is even higher - the price of a new full price ticket which is likely to be both more expensive than the one the customer needs and result in them having paid twice for the same journey. In some cases the customer may be liable for a Penalty Fare (minimum £20) increasing the amount they have paid even further.
In some cases, there are huge benefits to these types of ticket being offered. Between Manchester and London, some passengers are now able to benefit from tickets costing 60% less than the cheapest flexible ticket that was previously available. This gives customers genuine choice, competes with driving and long-distance bus services, and promotes the railway industry across the board. But this is the opposite of what is happening between Leeds and York.
Leeds to York isn't an isolated example of this kind of fare setting. For example Telford to Wellington (a 5 minute hop) and Warrington to Manchester are both 30p cheaper if you restrict yourself to the one Transport for Wales service per hour.
Single at any time £13.70
Same day return after 0930 weekdays £12.20
Same day return at any time £15.50
But now, TransPennine Express have introduced their own 'dedicated' fares. For regulatory reasons it is likely that these are temporary, but there will still be a huge number of people travelling at the times when they are available:
Single after 0930 weekdays £12.00
Single at any time £13.60
Same day return after 0930 weekdays £12.10
Same day return at any time £15.40
Return within one month after 0845 weekdays £18.20
Return within one month at any time £22.00
These have obviously been added in a tit-for-tat fashion so that they are 10p cheaper than the Northern Only tickets. This has also created the counter-intuitive situation where the cheaper tickets are for the faster and more frequent trains.
One the customer has bought the ticket, under rail industry rules, they cannot change their mind without penalty. If they accidentally board the wrong train the penalty is even higher - the price of a new full price ticket which is likely to be both more expensive than the one the customer needs and result in them having paid twice for the same journey. In some cases the customer may be liable for a Penalty Fare (minimum £20) increasing the amount they have paid even further.
In some cases, there are huge benefits to these types of ticket being offered. Between Manchester and London, some passengers are now able to benefit from tickets costing 60% less than the cheapest flexible ticket that was previously available. This gives customers genuine choice, competes with driving and long-distance bus services, and promotes the railway industry across the board. But this is the opposite of what is happening between Leeds and York.
Leeds to York isn't an isolated example of this kind of fare setting. For example Telford to Wellington (a 5 minute hop) and Warrington to Manchester are both 30p cheaper if you restrict yourself to the one Transport for Wales service per hour.
In addition to this, in the past 3 years, first Northern, then TransPennine Express and then CrossCountry introduced Advance tickets for this short journey. These come with some of the same disadvantages, but not all. Importantly, however, they already provided a mechanism to sell customers cheaper tickets dedicated to one train company close to departure time. But despite this the companies have continued to pursue new products which take significant rights away from customers without them really knowing it, and in some cases without them really explaining it, in exchange for barely any financial return. Setting tickets to 10p less than the current cheapest is a cynical policy designed to capture the parts of the market that just opt for the cheapest ticket or the first one to appear, without trying to offer customers the best value for money that they can.
To summarise my arguments:
- While there are clear benefits to the consumer from allowing this kind of market segmentation where significant savings are available over the existing ticket prices, this is increasingly not happening, and the price differences are increasingly just £0.10
- It seems increasingly likely that some (though certainly not all) setting of dedicated tickets is intended not to grow the market for rail travel but rather to move passengers from one TOC to another, causing inefficiency and undermining the model of competition for the franchise, and even long-term fares revenue maximisation
- The industry is not doing enough to give consumers clear information about their ticket restrictions before they pay
- Although against the Code of Practice, customers rights are often not respected when there is disruption to train services and they do suffer discrimination on the basis of operator
- The more dedicated tickets are set, the more likely it is that the customer will not hold the correct ticket for their journey. The more instances where this happens, the more the train companies can get away with charging people twice for one journey