Coronavirus: what impact might it have on the railways?

mike57 · 15 Mar 2020

An article on the BBC News website suggesting that TOCs will require a bailout.

https://www.bbc.co.uk/news/business-51896169

The government is in talks with rail bosses to put emergency measures in place to deal with falling passenger numbers after the coronavirus outbreak.

Some train operators were already losing money but fewer fares will put even more pressure on their finances.

A senior industry source said fairly drastic measures might be required for train companies to survive.

At an industry meeting last week, passenger numbers were said to have fallen by up to 18% on certain lines.

However, another industry source acknowledged that the fall in passengers could be significantly higher.

I traveled back from Chester Thursday evening, leaving Man Vic on 16:30 for Scarborough. Train seemed significantly less busy than usual. So probably a further drop in revenue for companies who are already struggling.

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Tazi Hupefi · 15 Mar 2020

I'd be more worried that even post-virus, many firms have now invested in new technology for video conferencing and remote working, and will have built up trust in their workforce. These business travellers will certainly not all return.

mike57 · 15 Mar 2020

Tazi Hupefi said:
I'd be more worried that even post-virus, many firms have now invested in new technology for video conferencing and remote working, and will have built up trust in their workforce. These business travellers will certainly not all return.

We have been told to avoid travel where possible, We set a video and screen share Friday instead of a face to face meeting in Preston, so yes I agree passenger number may never recover

Tazi Hupefi · 15 Mar 2020

On a related note actually, our HR department has asked anyone who has purchased an annual season ticket from our employee scheme to arrange for it to be returned.

Bessie · 15 Mar 2020

18% fall in passengers will be more like 80% by next week. Most London based office jobs can be done from home. I’ve been WFH since Weds, my wife (who commutes to Canary Wharf) joins me tomorrow.

Tazi Hupefi · 15 Mar 2020

Out of interest, if a sizeable proportion of annual season ticket holders turned up and applied for a refund, it would surely run into tens of, if not hundreds of millions of £.

Would any TOC likely go bankrupt in this regard as a result, leaving passengers without refunds?

221129 · 15 Mar 2020

Tazi Hupefi said:
Out of interest, if a sizeable proportion of annual season ticket holders turned up and applied for a refund, it would surely run into tens of, if not hundreds of millions of £.

Would any TOC likely go bankrupt in this regard as a result, leaving passengers without refunds?

Depends on the value that the season ticket has left on it to be refunded.

Tazi Hupefi · 15 Mar 2020

221129 said:
Depends on the value that the season ticket has left on it to be refunded.

Well given most tickets will run January to December, I'd imagine the vast majority will have a large value.

sharpley · 15 Mar 2020

Airlines, rail operators, holiday firms, plus anyone else linked to those industries are in for a lean time over the next few months. Bancrupcies and consolidation will be the norm for this year. The government will get a lot of begging bowls aimed at it in the next few weeks

Brissle Girl · 15 Mar 2020

Tazi Hupefi said:
Out of interest, if a sizeable proportion of annual season ticket holders turned up and applied for a refund, it would surely run into tens of, if not hundreds of millions of £.

Would any TOC likely go bankrupt in this regard as a result, leaving passengers without refunds?

I have a feeling that the value of longer season tickets needs to be accounted for and held separately, with money released as “earned” precisely to avoid the situation you describe. Else a company going bust in January would result in a huge loss to the government.

Logically you’d expect the same thing for advance tickets too.

swt_passenger · 15 Mar 2020

Brissle Girl said:
I have a feeling that the value of longer season tickets needs to be accounted for and held separately, with money released as “earned” precisely to avoid the situation you describe. Else a company going bust in January would result in a huge loss to the government.

Logically you’d expect the same thing for advance tickets too.

Yes, there’s a separate season ticket bond has to be provided. Also used to deal with transferring season ticket value to a new franchisee.

357 LTSRail · 15 Mar 2020

I wonder if the financially struggling franchises will use this as an opportunity for renegotiation or recovering losses or debt. The government is stretched in its resources across departments, not just the operator of last resort so I can't see nationalisation being an option.

I agree if we really want a true privatised market for transport, we should let them fail for not preparing for these eventualities. However, the reality is someone has to pick up the pieces one way or another, and I don't think we have a choice with rail simply as we absolutely need people to run the trains. I know this would likely be illegal, but I would quite like to use this as an opportunity to cull some of the worst performing TOCs though!

bb21 · 15 Mar 2020

You are reminded this is not an outlet for rants especially unfounded allegations. If you wish to do anything other than sensible discussions, you are advised to go elsewhere.

Anything other than constructive discussion will be deleted with no exception. Thank you.

VauxhallandI · 15 Mar 2020

Tazi Hupefi said:
Well given most tickets will run January to December, I'd imagine the vast majority will have a large value.

I’ve not had a Jan - Dec season ticket in the twenty odd years I’ve had one

StephenHunter · 15 Mar 2020

Tazi Hupefi said:
I'd be more worried that even post-virus, many firms have now invested in new technology for video conferencing and remote working, and will have built up trust in their workforce. These business travellers will certainly not all return.

Marketing will have to move towards leisure travellers in that case.

Peregrine 4903 · 15 Mar 2020

Tazi Hupefi said:
I'd be more worried that even post-virus, many firms have now invested in new technology for video conferencing and remote working, and will have built up trust in their workforce. These business travellers will certainly not all return.

Personally though I think this will be partially offset by increased leisure travel as a result of this, as people will likely make more trips into central London and other places in the evenings and at weekends as they are not travelling to and from work during the week. Plus I'm sure there will still be significant commuter traffic after all of this is finished. But ultimately we will have to wait and see. This is all after the virus dies down of course.

StephenHunter · 15 Mar 2020

A lot of people will merely defer leisure trips until later in the year. I am.

Class 170101 · 15 Mar 2020

Peregrine 4903 said:
Personally though I think this will be partially offset by increased leisure travel as a result of this, as people will likely make more trips into central London and other places in the evenings and at weekends as they are not travelling to and from work during the week. Plus I'm sure there will still be significant commuter traffic after all of this is finished. But ultimately we will have to wait and see.

Certainly not for the next few months they won't. My local station looked similar to what it did on Christmas Eve last year.

Brissle Girl · 15 Mar 2020

sharpley said:
Airlines, rail operators, holiday firms, plus anyone else linked to those industries are in for a lean time over the next few months. Bancrupcies and consolidation will be the norm for this year. The government will get a lot of begging bowls aimed at it in the next few weeks

Indeed, and if we are to avoid an apocalyptic economic crash it needs to respond to that in a positive way. Companies going out of business mean job losses which will then fuel the recession. (The rail industry is unusual in that most jobs would be protected, albeit under a quasi nationalised business. )

The budget already recognised the need to support smaller businesses, and I am sure there is more to come in some form or other. Yes it will cost a lot, but this cost shouldn’t be confused with normal spending. It’s a bit like the cost of the Falklands War in 1982 - regarded as a reserve for an event of national crisis.

brad465 · 15 Mar 2020

Tazi Hupefi said:
I'd be more worried that even post-virus, many firms have now invested in new technology for video conferencing and remote working, and will have built up trust in their workforce. These business travellers will certainly not all return.

mike57 said:
We have been told to avoid travel where possible, We set a video and screen share Friday instead of a face to face meeting in Preston, so yes I agree passenger number may never recover

StephenHunter said:
Marketing will have to move towards leisure travellers in that case.

Roads are very congested in many places and rail commuting by rail makes up a small proportion (seen 5-10% quoted before) of all commuting. IF there is a permanent reduction in commuting numbers as a result of this, it presents an opportunity to get others off the road and onto rail, where feasible, to take up space freed by newly remote workers.

But of course TOCs have more important things to worry about before then.

Peregrine 4903 · 15 Mar 2020

Class 170101 said:
Certainly not for the next few months they won't. My local station looked similar to what it did on Christmas Eve last year.

I meant after this whole ordeal is over and things are back to some level of normality. I definetely agree though at the minute that passenger numbers are going to continue to fall.

nidave · 15 Mar 2020

One thing to note about working form home - Home broadband is not guaranteed and has no SLA up time compared to business broadband. A lot of companies will start to throttle speeds once the network gets congested and speeds will start to slow down a lot - again business specific broadband has QOS (Quality of Service) SLAs

StephenHunter · 15 Mar 2020

Indeed. It's not ideal if you have people coming into your office from off the street.

marko2 · 15 Mar 2020

Tazi Hupefi said:
Well given most tickets will run January to December, I'd imagine the vast majority will have a large value.

I'm sure somebody will correct me if I'm wrong - but don't franchises usually have a bond specifically for the liability they are carrying with season tickets - to prevent the revenue from them propping them up, but leaving whoever takes over with a huge black-hole?

Jimini · 15 Mar 2020

MightyTRexUK said:
One thing to note about working form home - Home broadband is not guaranteed and has no SLA up time compared to business broadband. A lot of companies will start to throttle speeds once the network gets congested and speeds will start to slow down a lot - again business specific broadband has QOS (Quality of Service) SLAs

That's a really good point, cheers.

Brissle Girl · 15 Mar 2020

marko2 said:
I'm sure somebody will correct me if I'm wrong - but don't franchises usually have a bond specifically for the liability they are carrying with season tickets - to prevent the revenue from them propping them up, but leaving whoever takes over with a huge black-hole?

Posts 10 and 11 above raised this point and confirmed that is indeed the case.

LNW-GW Joint · 15 Mar 2020

France has just mandated a reduction of long distance rail services (ie the TGVs) by up to 50%.
The DfT is probably frantically trying to work out how to implement a similar policy here, and how it impacts on the franchise contracts.
The current contracts allow very little room for flexing services downwards.
You could see the 3tph on some routes coming down to 2tph very quickly (eg Manchester, Birmingham, Leeds), as happens when there is significant disruption.

Peter Sarf · 15 Mar 2020

Its been said that about 20% of a companies workforce will be absent while the virus works its way through the population. Eventually commuting levels should return to near normal (but see below) as most of those dying seem to be well above working age.

Questions are :-
1) How long will the 20% drop drag on for ?.
2) How many people will never return from home working ?.
3) Possibly more significantly - how many companies will go under.
4) How many new employers will mandate a change in working patterns ?.

bb21 · 15 Mar 2020

Further discussion on home broadband vs business broadband has been moved to this thread below.

https://www.railforums.co.uk/threads/quality-of-home-broadband-vs-business-broadband.202204/

Tazi Hupefi · 15 Mar 2020

How does the bond work though? If a TOC goes under, who's guaranteeing the bond? Is it a commercial entity like a bank, or is it Government?

Has this ever happened before? Normally a third party like CAA would step in for flights, but would ORR manage this for rail?

Coronavirus: what impact might it have on the railways?

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