Shock news

Metroland · 17 Feb 2009

Yep, ticket prices will be going down next year.

Under the Department for Transport’s formula for calculating increases in regulated rail passenger fares, applied each January, one per cent is added to the RPI recorded in the previous July.

So if deflation results, as the CBI is forecasting, in a figure of minus 3.6 per cent by the start of the third quarter of 2009 — followed by minus 4.4 per cent in the third quarter — train operators would be forced to cut all regulated fares by at least 2.6 per cent next January.

http://www.railnews.co.uk/news/business/2009/02/17-cbi-deflation.html

RailUK Forums

Techniquest · 17 Feb 2009

Won't happen...

Metroland · 17 Feb 2009

Will..DfT already confirmed.

Techniquest · 17 Feb 2009

Watch as it magically doesn't then come January 1st...The DfT seem to have a magical way of messing everything up and changing their minds...

That or deflation won't happen/won't happen to the extent they want it to.

Or, if I'm wrong on all of the above, we'll see a wave of TOCs changing policy and revoking long-standing restriction waives to force the fares up.

I'd like to be wrong, but I'm too cynical to believe it!

anthony263 · 17 Feb 2009

if train fares do go down then i will switch bus from traveling by bus since normally i get a overowded dart apart from a very rare occasion like today when first were kind enough to supply a dounble decker.

if rail fares do come down then it will be good and i think that some companies may try to worm their way out of it but if 1 does go ahead then i wouldnt be surpised to see others following.

glynn80 · 17 Feb 2009

Metroland said:
Will..DfT already confirmed.

Reading that article I don't see any comment from the DfT confirming their actions?

Of course the IF the formula is stuck to rigidly then rail fares will fall if the RPI falls below -1% but as David Mapp said in his answer to the Transport Select Committee, it is their prerogative whether they do stick to it or not. Also Mr Mapp's evasiveness when being questioned on this topic left me feeling he was planning to lobby the DfT to remove the RPI + 1% formula during the recession.

Guinness · 17 Feb 2009

Wow, Mars Bars could be slightly cheaper too. Good news all round I say!

Mojo · 17 Feb 2009

Reported on Radio 4, the PM Programme that DafT have said "they expect" TOCs to reduce fares if the formula says they should. To be honest though, other than negative publicity, which doesn't seem to have phased the TOCs in the past, and the limit of the regulated and less restrictive fares, nothing seems to be stopping them from increasing unregulated fares to compensate.

Lee_Again · 17 Feb 2009

The inflation calculation is correct. When the TOC's want to raise ticket prices the rules duly kick in. However, 'raise' is the incorrect term as the 'raise' only happens if the price goes up. The term 'amend' is more accurate. So, if the 'raise' becomes a 'ruduce', TOC's will simply elect not to amend fares. This means the fares can't be raised but also means they won't be reduced. So I'm with the cynical camp too. There is no way on earth prices will go down.

glynn80 · 17 Feb 2009

Mojo said:
Reported on Radio 4, the PM Programme that DafT have said "they expect" TOCs to reduce fares if the formula says they should. To be honest though, other than negative publicity, which doesn't seem to have phased the TOCs in the past, and the limit of the regulated and less restrictive fares, nothing seems to be stopping them from increasing unregulated fares to compensate.

I am waiting in anticipation to Lord Adonis's questioning at the Transport Select Committee next Wednesday as a follow up to the TOCs recent questioning. I am sure this issue will be raised and hopefully we can clarify this further.

jopsuk · 17 Feb 2009

I think the comment about enregulated fares is probably close to the mark- if regulated (ie peak) fares do go down, expect the difference between peak and off-peak faes to shrink somewhat...

Metroland · 17 Feb 2009

As Mojo says, the Radio 4 PM programme reported that the DfT have been contacted and they confirmed the TOCs regulated fares would be amended downwards.

There are various ways of doing this: For a start, the cost of goods and energy is falling, next the obvious way is staff pay cuts.

Most UK workers can expect to get a pay 'cut' next year in line with the RPI - its not really a cut, because your salary will buy as much. Pay raises normally rise in line the RPI to offset inflation. Any additional rise is normally offset by increased productivity. In the cases of some TOCs, as they have already shed staff, thus savings have been made in any case, which may negate some of this.

theblackwatch · 17 Feb 2009

jopsuk said:
I think the comment about enregulated fares is probably close to the mark- if regulated (ie peak) fares do go down, expect the difference between peak and off-peak faes to shrink somewhat...

Or the 'peak' time will be extended, forcing people who previously bought off peak tickets to buy more expensive peak ones...

glynn80 · 18 Feb 2009

Metroland said:
As Mojo says, the Radio 4 PM programme reported that the DfT have been contacted and they confirmed the TOCs regulated fares would be amended downwards.

There are various ways of doing this: For a start, the cost of goods and energy is falling, next the obvious way is staff pay cuts.

Most UK workers can expect to get a pay 'cut' next year in line with the RPI - its not really a cut, because your salary will buy as much. Pay raises normally rise in line the RPI to offset inflation. Any additional rise is normally offset by increased productivity. In the cases of some TOCs, as they have already shed staff, thus savings have been made in any case, which may negate some of this.

Having listened to the show myself now I don't think they have given a blanket guarantee on this eventuality.

The quote was they "expected" rail fares to fall if we were to move into negative RPI figures. In my eyes that gives them a lot of room for manoeuvre and I would not state that they have "confirmed" this decision at all. A confirmation is not the same as an expectation and until I have heard Adonis's answers I would be skeptical about making statements such as the ones being banded about in this topic.

Mojo · 18 Feb 2009

http://www.publications.parliament....rd/cm090212/text/90212w0003.htm#0902139000544

Stephen Hammond: To ask the Secretary of State for Transport whether the RP plus one per cent. formula for regulated fares may result in a negative number. [256015]

Paul Clark: Yes, the RPI plus 1 formula for regulated fares may result in a negative number.

I'm still not convinced though - Mr Clark is well known for being a pedant, check out his answer to the question he answered on parliamentary services.

OwlMan · 18 Feb 2009

The details regarding fares are in the London Midland National Rail
Franchise Terms file on the dft website

schedule5.5
Regulation of individual fares

.2 Regulated price says

2.1The regulated price or the regulated child price (as the case may
be) for any fare in any fare year shall be an amount equal to the
greater of

(a) preceeding year price + 10p and

(b) preceeding year ticket price x PII

PII = ...... (a calculation based on the RPI)

However if the PII is negative this means that (a) is the greater and
fares can be increased by 10p

Peter

glynn80 · 18 Feb 2009

collybs said:
The details regarding fares are in the London Midland National Rail
Franchise Terms file on the dft website

schedule5.5
Regulation of individual fares

.2 Regulated price says

2.1The regulated price or the regulated child price (as the case may
be) for any fare in any fare year shall be an amount equal to the
greater of

(a) preceeding year price + 10p and

(b) preceeding year ticket price x PII

PII = ...... (a calculation based on the RPI)

However if the PII is negative this means that (a) is the greater and
fares can be increased by 10p

Peter

This is very interesting. Does anyone know whether these terms are the same in every franchise or whether they differ?

First class · 19 Feb 2009

Merseyrail cannot rise by any amount. They always stay real-term, i.e. RPI+0. Therefore reduced fares should ultimately be implemented.

Metroland · 21 Feb 2009

MINISTERS are preparing plans for a backdoor bailout of train firms by subsidising fares for job seekers and freezing ticket prices that might otherwise have fallen this year.

Details are being drawn up by transport officials and have not been finalised. Briefings circulating among train companies suggest they will administer a card scheme for job seekers that will entitle them to discount fares. The discounts will be paid for by the taxpayer.

At the same time, ordinary train fares will be frozen. While this is expected to be presented as a consumer-friendly measure last week a study commissioned by the watchdog group Passenger Focus found that UK fares were among the highest in Europe it may in some cases stop fares from falling this year and next. Many regulated fares are tied to the rate of inflation. With deflation expected this year, these fares could fall, rail-industry insiders said.

http://business.timesonline.co.uk/tol/business/industry_sectors/transport/article5780328.ece

dan_atki · 21 Feb 2009

Metroland said:
Details are being drawn up by transport officials and have not been finalised. Briefings circulating among train companies suggest they will administer a card scheme for job seekers that will entitle them to discount fares. The discounts will be paid for by the taxpayer.

Thought such a railcard already existed myself... unless the New Deal Photocard is something completely different :?

Techniquest · 22 Feb 2009

I was reading about it once when in Cardiff a few years ago (way before I was on New Deal) and whilst it offered 50% off fares I seem to recall you had to prove you were not using it for leisure travel. Whether you did that at the ticket office or what I don't know, as I binned the leaflet years ago.

I applaud the idea of a jobseekers' railcard, I'd find that very useful as things stand!

Metroland · 25 Feb 2009

Train companies are to be forced to cut the price of season tickets and off-peak fares for the first time since privatisation.

The Government has rejected pleas from the operators to ignore pricing rules as deflation looms.

Although the decision will be welcomed by commuters, it is likely to result in operators cutting services and jobs and raising prices on other fares. Those operators that are already struggling financially could be forced to surrender their franchises and large chunks of the railway could be nationalised temporarily.

The companies had argued that the formula which says that fares will rise by 1 per cent above the retail prices index each January was not designed to cope with deflation. Each stands to lose millions of pounds from January 2010 when commuters renew their season tickets.

Lord Adonis, the rail minister, will today tell the Commons Transport Select Committee that fares will fall in actual terms next January if, as is widely predicted, the RPI is negative this July. The July RPI figure is used to determine the following Januarys fare changes.

Last month the big drop in mortgage costs pushed RPI down to 0.1 per cent, the lowest since 1960. Leading economists predict that by July RPI will be between minus 2 and minus 3 per cent, which would mean fares falling by 1 or 2 per cent. The cost of the average annual season ticket for journeys of 11 to 25 miles, currently £1,972, would fall by either £20 or £40.

Lord Adonis will tell the committee that train companies have made strong profits under the formula during boom years and cannot expect the rules to be changed in a recession. He will also argue that deflation will lower the companies costs: the fees they pay for their franchises and track access are index linked.

http://business.timesonline.co.uk/tol/business/industry_sectors/transport/article5799500.ece

jon0844 · 25 Feb 2009

Why do they base things in January on a rate in July? This is what screwed us over this year! One month in, we're learning that we would have had a near zero percent increase and now even a drop!

Some consolation for those people paying around 10% more.

glynn80 · 26 Feb 2009

jonmorris0844 said:
Why do they base things in January on a rate in July? This is what screwed us over this year! One month in, we're learning that we would have had a near zero percent increase and now even a drop!

Some consolation for those people paying around 10% more.

I have gone over this in previously threads but the main reason for using July's RPI figure is time. The July RPI figure is released in September. Once this is released it gives the TOCs a basis to work with when deciding how to implement their fares policy for the next fares change. These changes are then made to the millions of fares that are in the system by mid December when the new fares manual is released. Any other figure would not give enough time to do the previous.

In previous there has been fares increases that have been lower than the 12 month average before it and some that are higher. It all smooths out over time but I do realise that doesn't help people at the time, this however seems the best option we have at the moment.

First class · 26 Feb 2009

Lets be right here- fares are NOT falling, nor being reduced.

Fares will simply be the same in real terms. Probably find more rises then anything- particularly in Advance fares. The TOCs will still profit from these 'adjustments' to the rail fares.

As an employee and passenger, it does annoy me that when TOCs are making a lot of money through a policy they are happy, but when the beloved policy backfires, they suddely want a load of protection- you can't pick and choose!

No doubt these fare decreases will end up being some sort of advertising gimmick - who knows, maybe more people will travel by rail as a result?

It is extremely dissapointing that TOCs attempted to block fare decreases in a time of growing uncertainty with the economy. Glad Merseyrail isn't part of that consortium anyway

Suppose it's good news for people with Rail Travel Vouchers- they will buy you more travel then previously when the fares are adjusted! A few pence saved is better than nothing!

Inflation just doesn't affect train tickets- everything else will decrease, track access costs, power, tax etc... So TOCs will be paying less out anyway. They are, quite simply, attempting to maximise upon profits, at the expense of the taxpaying passenger.

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