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Season Tickets. Heavily discounted?

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tom73

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The industry tells passengers that Season Tickets are heavily discounted in the sense that the passenger is getting 12 months for the supposed price of 10½ months.
However if someone is paying £5K for an Annual, not only is the passenger paying way in advance for his/her travel, which should be the basis of the alleged discount. They are releasing £5K to the railway upfront on which they will surely earn significant interest.
I am thinking that the interest earned by the railway and the alleged discount the passenger is being given are surely not far off being a similar amount.
So why are Railcard holders given no discount whatsoever on Season Ticket purchases? Even a 10% discount is way better than nothing.
 
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ForTheLoveOf

ForTheLoveOf

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tom73 said:
The industry tells passengers that Season Tickets are heavily discounted in the sense that the passenger is getting 12 months for the supposed price of 10½ months.
However if someone is paying £5K for an Annual, not only is the passenger paying way in advance for his/her travel, which should be the basis of the alleged discount. They are releasing £5K to the railway upfront on which they will surely earn significant interest.
I am thinking that the interest earned by the railway and the alleged discount the passenger is being given are surely not far off being a similar amount.
So why are Railcard holders given no discount whatsoever on Season Ticket purchases? Even a 10% discount is way better than nothing.
Click to expand...
First of all a factual correction. The interest 'earned'/lost on an annual season ticket is nowhere near the discount offered on a weekly or monthly season ticket. For example, the holder of an annual season ticket pays just 87% of the rate that a monthly season ticket holder pays. Given that the ticket is used over the year, you are, on average, only lending them half of the amount for the year as a whole. I would encourage you to try and find any kind of account that, on a large scale, will offer anything near to the required interest rate of several tens of percent. The best buy for consumers is 'only' 5%, and that's only on a measly sum of £1500. On the millions that TOCs keep floating around, you'd be hard-pressed to get 1 or 2%.

Quite apart from this, the reason why there isn't a Railcard discount on season tickets is because Railcards were originally designed, and continue to be intended, to boost off-peak travel. This is because the majority of costs are incurred in order to meet peak-time demand. There is a fairly marginal cost to running a similar sort of timetable throughout the off-peak period, so if the railways can encourage custom then, they can (broadly speaking) receive additional income "for free". If Railcard discounts were offered on peak-time travel (as is, admittedly, the case in the evening peak) then then overcrowding would be even worse than it already is.
 
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JP

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And the annual cost saving assumes the legal minimum holiday allowance and no other days off for whatever reason - illness, work from home, compassionate leave, travel with work.

So if you get more than 20 days annual leave plus public holidays, the cost per journey they advertise is immediately wrong. And of course add two more days to that when the railway shuts down but some people still need to commute.
 
higthomas

higthomas

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tom73 said:
The industry tells passengers that Season Tickets are heavily discounted in the sense that the passenger is getting 12 months for the supposed price of 10½ months.
However if someone is paying £5K for an Annual, not only is the passenger paying way in advance for his/her travel, which should be the basis of the alleged discount. They are releasing £5K to the railway upfront on which they will surely earn significant interest.
I am thinking that the interest earned by the railway and the alleged discount the passenger is being given are surely not far off being a similar amount.
So why are Railcard holders given no discount whatsoever on Season Ticket purchases? Even a 10% discount is way better than nothing.
Click to expand...


Also remember that even those monthly season tickets offer a discount.

Take Reading - London:

Annual: £4,604
Anytime day return: £49.20

Average daily cost of an annual ticket (assuming 230 days per year, so no free weekend travel): £20 (4604 / 230)

% daily saving: 60

Now, personally I think a 60% saving is pretty good, don't you?
 
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radamfi

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higthomas said:
Also remember that even those monthly season tickets offer a discount.

Take Reading - London:

Annual: £4,604
Anytime day return: £49.20

Average daily cost of an annual ticket (assuming 230 days per year, so no free weekend travel): £20 (4604 / 230)

% daily saving: 60

Now, personally I think a 60% saving is pretty good, don't you?
Click to expand...

It only sounds like a good deal because of the very high base price. It would sound like an even better deal if you make the return fare £100. Then you could claim an 80% discount.
 
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CyrusWuff

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In addition, the Train Companies don't get the whole amount in one go. Instead, it's drip fed throughout the period of validity of the ticket.
 
ForTheLoveOf

ForTheLoveOf

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CyrusWuff said:
In addition, the Train Companies don't get the whole amount in one go. Instead, it's drip fed throughout the period of validity of the ticket.
Click to expand...
Indeed, although is it the retailer or is it RSP who keep the revenue in the mean time?
 
Tetchytyke

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ForTheLoveOf said:
On the millions that TOCs keep floating around, you'd be hard-pressed to get 1 or 2%.
Click to expand...

The advantage for lump sum payments is cashflow. Large lump sum payments may reduce the need for TOC borrowing, and even the cheapest bonds are 5%+. So there is a massive advantage to the lump sum payments, which is why they are offered. The more you commit, the more you save.
 
Wallsendmag

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If you look at Peterborough to Kings Cross the Any Permitted 7DS is £200 the SHR is £115 so a years travel is £8k roughly equal to 70 days travel at peak time.
 
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alistairlees

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CyrusWuff said:
In addition, the Train Companies don't get the whole amount in one go. Instead, it's drip fed throughout the period of validity of the ticket.
Click to expand...
I don't think that's correct. In any case, most seasons are sold by the TOC on which most (or all) of the travel occurs.
 
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alastair

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ForTheLoveOf said:
First of all a factual correction. The interest 'earned'/lost on an annual season ticket is nowhere near the discount offered on a weekly or monthly season ticket. For example, the holder of an annual season ticket pays just 87% of the rate that a monthly season ticket holder pays. Given that the ticket is used over the year, you are, on average, only lending them half of the amount for the year as a whole. I would encourage you to try and find any kind of account that, on a large scale, will offer anything near to the required interest rate of several tens of percent. The best buy for consumers is 'only' 5%, and that's only on a measly sum of £1500. On the millions that TOCs keep floating around, you'd be hard-pressed to get 1 or 2%.

Quite apart from this, the reason why there isn't a Railcard discount on season tickets is because Railcards were originally designed, and continue to be intended, to boost off-peak travel. This is because the majority of costs are incurred in order to meet peak-time demand. There is a fairly marginal cost to running a similar sort of timetable throughout the off-peak period, so if the railways can encourage custom then, they can (broadly speaking) receive additional income "for free". If Railcard discounts were offered on peak-time travel (as is, admittedly, the case in the evening peak) then then overcrowding would be even worse than it already is.
Click to expand...

Well there is no restriction on peak travel with the new 26-30 railcard (other than a £12 minimum fare before 10am). This must be costing TOC's big amounts.
 
ForTheLoveOf

ForTheLoveOf

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Wallsendmag said:
If you look at Peterborough to Kings Cross the Any Permitted 7DS is £200 the SHR is £115 so a years travel is £8k roughly equal to 70 days travel at peak time.
Click to expand...
Yes, but the SHR is shockingly expensive, so it's not exactly a level comparison. It's the 7DS that has remained the relatively speaking reasonable one and the SHR that has shot up. Back at privatisation the SOR (as was) was £40.00, as compared to £100.80 for the 7DS. A far cry from today.
 
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CyrusWuff

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alistairlees said:
I don't think that's correct. In any case, most seasons are sold by the TOC on which most (or all) of the travel occurs.
Click to expand...
The relevant parts of the Ticketing and Settlement Agreement are 11-14 on page 268 of Volume 1 (version 10.1), entitled "Season Ticket Fares" and Schedule 28 (Estimated Number of Journeys made with a Season Ticket Fare) on page 422 of Volume 2.

I'd quote it here, but it takes up four pages! The short version is that holders of tickets valid for six months or less are assumed to make 45 journeys per four week period, with those valid for over six months being covered by a table giving values between 26 journeys per period (Period 06 - mid-August to mid-September) and 42 per period (Periods 8 and 9 - mid-October to early December; and 11 to 13 - early January to the end of March). Where the validity straddles a period, it's calculated pro rata.
 
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JonathanH

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LivingBelowYM said:
It only sounds like a good deal because of the very high base price. It would sound like an even better deal if you make the return fare £100. Then you could claim an 80% discount.
Click to expand...

It is possible that the base price is the way in which fares are going to be set in future.

If the peak fare for a journey is, say, £45 return at the moment, it would appear likely that the peak single fare will become £22.50.

Then calculate a daily cap and then work out how to deal with the clamour for 'part-time' season tickets and the outcome will be that travelling five days a week could be much more expensive than it is today.

All of the feedback to fares consultations seems to be the desire to remove anomalies and make things much more formulaic / structured. With single ticket pricing that can only be done from the bottom up.

Oyster / Contactless to Reading later this year will be a very interesting worked example of how things might work in the future in the area around London.
 
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