From https://www.virgin.com/richard-branson/virgin-trains-and-rail-franchising
I'm sure the vast majority of readers will know that train companies tend to charge medium to long distance journeys at a premium compared to shorter distance journeys, for example the cost of journeys like Reading to Birmingham is considerably higher than the cost of its component parts: it can be as little as a third of the price (ie. two thirds off!) in cases such as that.
Train companies such as Virgin Trains are very worried because it used to be the case that passengers had to do their own research, but now websites will calculate the cheapest ticket so literally anyone can avoid being overcharged without any prior knowledge, just by using the right website.
Virgin Trains, Cross Country and others are very keen to get Government approval to increase the price of the shorter distance prices, so that those who currently save money are no longer able to do so.
They are worried that their revenues will reduce, due to increasing numbers of people avoiding the current overcharge.
Of course, the train companies could reduce the price of the longer distance tickets. However if they did this, they would collectively earn £750m less income from customers, as the overcharge would no longer be made. Clearly that is not a viable option for train companies, hence why they are keen to ensure the Government steps in and increases the cost of the cheaper fares.
It does not have to be this way; the Government could choose to increase subsidies by this amount and ask train companies to reduce the price of longer distance tickets. This would result in Reading to Birmingham reducing in price, without increasing the price of the shorter intermediate journeys.
In fact this did happen in Scotland in 2013: https://www.heraldscotland.com/news/13098598.1500-rail-fare-anomalies-ended-by-23m-grant/
Did anyone realise the overcharge was as high as £750m?
Does anyone have access to the calculations used to reach the figure quoted by Virgin Trains? Presumably it is an annual figure?
The other stuff is already being discussed elsewhere, so this thread is to focus on the fact that Virgin Trains has identified £750m as the value of additional revenue obtained by train companies by charging people more than the cheapest combination of valid fares.
I'm sure the vast majority of readers will know that train companies tend to charge medium to long distance journeys at a premium compared to shorter distance journeys, for example the cost of journeys like Reading to Birmingham is considerably higher than the cost of its component parts: it can be as little as a third of the price (ie. two thirds off!) in cases such as that.
Train companies such as Virgin Trains are very worried because it used to be the case that passengers had to do their own research, but now websites will calculate the cheapest ticket so literally anyone can avoid being overcharged without any prior knowledge, just by using the right website.
Virgin Trains, Cross Country and others are very keen to get Government approval to increase the price of the shorter distance prices, so that those who currently save money are no longer able to do so.
They are worried that their revenues will reduce, due to increasing numbers of people avoiding the current overcharge.
Of course, the train companies could reduce the price of the longer distance tickets. However if they did this, they would collectively earn £750m less income from customers, as the overcharge would no longer be made. Clearly that is not a viable option for train companies, hence why they are keen to ensure the Government steps in and increases the cost of the cheaper fares.
It does not have to be this way; the Government could choose to increase subsidies by this amount and ask train companies to reduce the price of longer distance tickets. This would result in Reading to Birmingham reducing in price, without increasing the price of the shorter intermediate journeys.
In fact this did happen in Scotland in 2013: https://www.heraldscotland.com/news/13098598.1500-rail-fare-anomalies-ended-by-23m-grant/
However £2.28m was not sufficient to end all the "anomalies" in Scotland, and when the funding ended, Scotrail was keen to retain the overcharge for the remaining fares that cost more than a combination of tickets.
Did anyone realise the overcharge was as high as £750m?
Does anyone have access to the calculations used to reach the figure quoted by Virgin Trains? Presumably it is an annual figure?
