Virgin's staggering SOR's and FOR's increase once again!

Nym · 20 Dec 2011

Is one thing, it might be quicker to get to London from Manchester, but I can get to Hull for £40.10 return off peak

£80something on peak, but I'd split and travel via HFX for less.

Either way, I rarely pay full price, but have had occations where I need to be somewhere NOW, thankfully, YP Railcard = Off Peak valid On Peak with VT, arrive Euston at 09:20

RailUK Forums

districtline · 20 Dec 2011

junglejames said:
The stupid fares structure we have. In order to make themselves look good with loads of stupidly low fares, they have to make walk on fares stupidly expensive to overcompensate.

I think you've missed the point here. The full walk on fares reflect the cost of running the railway. Advance tickets are offered on quiet trains to fill seats that otherwise would have been empty, resulting in extra revenue for the TOC. This actually reduced the cost of walk on fares. If you think it's expensive now then you'd be in for a shock if TOCs were no longer had the additional revenue from advance fares.

headshot119 · 20 Dec 2011

districtline said:
I think you've missed the point here. The full walk on fares reflect the cost of running the railway. Advance tickets are offered on quiet trains to fill seats that otherwise would have been empty, resulting in extra revenue for the TOC. This actually reduced the cost of walk on fares. If you think it's expensive now then you'd be in for a shock if TOCs were no longer had the additional revenue from advance fares.

I disagree with the quiet trains bit. I can get advance fairs on the 07:00 off of Wrexham - Euston, it's packed past Crewe.

Old Timer · 20 Dec 2011

districtline said:
I think you've missed the point here. The full walk on fares reflect the cost of running the railway. Advance tickets are offered on quiet trains to fill seats that otherwise would have been empty, resulting in extra revenue for the TOC. This actually reduced the cost of walk on fares. If you think it's expensive now then you'd be in for a shock if TOCs were no longer had the additional revenue from advance fares.

The point being made is that these fares are far lower than they necessarily need be, rail travel is to a degree an inflexible market in that it is speed people want, which is why we do not see the Motorways packed with coaches.

The full fare ticket sales in no way cover the costs of operation which is why there are still subsidies. It is more cost efficient for TOCs such as Virgin to have extremely high full fare tickets, when they are actually encouraged to sell much lower priced tickets by a system which skews the attribution of revenue.

If for example the Government told Virgin that there would be no more subsidies I am certain that the differential in fares would be significantly reduced, and they would still make money. Right now our whole system is skewed crazily, so crazy that the only TOC which did run without a subsidy and actually paid money into the Treasury was GNER, which through cynical Political preferrment, internal Government hostilities, and a number of personality disordered senior Government Ministers and advisors, had its Franchise unneccessarily removed in order to be replaced by subsequent arrangements which were substantially of disbenefit to the Country and the taxpayer as a whole.

districtline · 20 Dec 2011

Old Timer said:
The full fare ticket sales in no way cover the costs of operation which is why there are still subsidies.

This isn't the case some of the intercity franchises where they have to pay a premium rather than get a subsidy. In this case the full fare clearly does cover the cost of running the train and if they didn't offer cheap advance tickets then they wouldn't have this source of revenue and would have to increase the full fare even more.

Old Timer · 20 Dec 2011

districtline said:
This isn't the case some of the intercity franchises where they have to pay a premium rather than get a subsidy. In this case the full fare clearly does cover the cost of running the train and if they didn't offer cheap advance tickets then they wouldn't have this source of revenue and would have to increase the full fare even more.

Perhaps you can enlighten me as to whom these are. I (and the person who has given me some of this background) am only aware that GNER did not receive any subsidy.

districtline · 20 Dec 2011

Some of the franchises do get a subsidy at the start but by the end of the franchise this turns into a significant premium. If the TOCs were not able to cover the cost of running the trains by this time they certainly wouldn't be able to pay the premium and would still need a subsidy but this is not the case. There should be subsidy profiles online somewhere where you can see that by the end of the franchise there are premium payments.

Old Timer · 20 Dec 2011

districtline said:
Some of the franchises do get a subsidy at the start but by the end of the franchise this turns into a significant premium. If the TOCs were not able to cover the cost of running the trains by this time they certainly wouldn't be able to pay the premium and would still need a subsidy but this is not the case.

You say this but as I understand it none of the TOCs anticipate being in a non-subsidy situation at the end of their Francise period.

So the question agains remains why are such ridulously low priced tickets being sold, when it is clear that the market will easily bear much higher cheap fares ? Your argument falls down if you look at how full the Virgin WCML trains are now - I dont mean Christmas either.

How much of this is related to the ability of the TOC to keep all, if a not much higher percentage of the revenue than is the case with full fare tickets ??

districtline · 20 Dec 2011

Old Timer said:
You say this but as I understand it none of the TOCs anticipate being in a non-subsidy situation at the end of their Francise period.

This is not the case, http://www.firstgroup.com/assets/pdfs/investors/presentations/FINAL_half_year_slides_2010.pdf clearly shows FGW and FCC going into a premium payment situation with the other First TOCs getting a subsidy. FGW most certainly did not expect to be in a subsidy situation at the end of their franchise. When the franchise was awarded the deal was there would be £1.3 billion in premium payments although the first years would get a subsidy.

So the question agains remains why are such ridulously low priced tickets being sold, when it is clear that the market will easily bear much higher cheap fares ?

For the reasons I said above, if you increase the cheap advance fares then less people will use the trains and so the walk on fares will have to be higher to cover the cost of running the franchise.

paul1609 · 20 Dec 2011

districtline said:
This isn't the case some of the intercity franchises where they have to pay a premium rather than get a subsidy. In this case the full fare clearly does cover the cost of running the train and if they didn't offer cheap advance tickets then they wouldn't have this source of revenue and would have to increase the full fare even more.

Yes it is! All the current intercity operators are subsidised and all have since privatisation. The only franchise currently covering its costs is FCC:
http://www.dft.gov.uk/publications/dft-business-plan-indicators-input-01

Old Timer · 20 Dec 2011

districtline said:
...As I have said, the cheap advance fares help keep the cost of walk on fares lower. If these cheap advance fares were more expensive then less people would use them and so full fare would need to be even more expensive to cover the costs of running the franchise.

It is the level of the" cheapness" that is in question here. There is no doubt that there is no need for these to be so cheap. If there was then we would be seeing trains running empty on the basis of your logic. I suggest you take a look at the EBW services which are regularly well loaded, indeed Virgin was and is quite happy to run a 20 minute servcie to Birmingham, and I would vouch that most of the tickets are reduced price tickets. These journey would still be undertaken as a lot of business travellers now purchase reduced fare advanced tickets on the basis that it is cheaper for them to buy a couple spanning their anticipated travel days, and simply throw away the tickets that they dont use than it is to buy a full fare ticket.

districtline · 20 Dec 2011

paul1609 said:
Yes it is! All the current intercity operators are subsidised

This is not the case. Some have to pay a premium to the government and this is shown in the table as a negative subsidy. The Network Grant is paid to Network Rail and does cover part of the total cost of running the railway but it is not a TOC subsidy.
--- old post above --- --- new post below ---

Old Timer said:
It is the level of the" cheapness" that is in question here. There is no doubt that there is no need for these to be so cheap. If there was then we would be seeing trains running empty on the basis of your logic.

No, that's not my point at all. The trains are well loaded as the tickets are so cheap. If you start increasing these then less people will use the trains and walk on fares will also have to be increased due to less revenue.

Old Timer · 20 Dec 2011

districtline said:
No, that's not my point at all. The trains are well loaded as the tickets are so cheap. If you start increasing these then less people will use the trains and walk on fares will also have to be increased due to less revenue.

I dont think you are even bothering to read my posts accurately, if at all.

Can you let me have some evidence of this reasoning, because if that is the case then the coaches at lower fares would be spread out along the M6 which is clearly not the case.

As I have already pointed out many of the journeys made would continue to be made. There appears to be this urban myth that if you reduce fares to really low levels you will suddenly find the whole country will decant to all sorts of places simply from some suddenly desire to go to Tipton, or Grimsby or Milford Haven or some other woebegone place simply because there is a cheap ticket available to go there ? People simply do not suddenly wake up on a morning a decide to go to Southminster on a whim because the fare is cheap, most plan there journey in advance, and fares are not as big a factor as some would have you believe. There is a difference between someone getting a really cheap fare and what the same person is prepared to pay.

There is sufficient demand in the West Midlands to easily cover an decent increase in cheap fares and allow a reduction in the full fares without any negative impact on revenue, this was one of the reasons why the EBWs were half-hourly to Birmingham in BR days, and why Virgin increased the service to a 20 minute interval. Please say on what basis you feel that the WCML passenger demand is so elastic as to be driven away by a slightly higher fare ?

If things go on as they are then there is no way that there will be sufficient sales of full price tickets to cover anywhere near the true costs of operating the train services.

districtline · 20 Dec 2011

Old Timer said:
There is sufficient demand in the West Midlands to easily cover an decent increase in cheap fares and allow a reduction in the full fares without any negative impact on revenue, this was one of the reasons why the EBWs were half-hourly to Birmingham in BR days, and why Virgin increased the service to a 20 minute interval. PLease say on what basis you feel that the WCML passenger demand is so elastic as to be driven away by a slightly higher fare ?

Virgin got on and ran a train to Birmingham every 20 minutes as that's what the DfT told them to do. Virgin didn't write the VHF timetable. If you increase the fares then people will look at other modes. For a journey to London I doubt many would switch as the train is the only realistic option but this isn't the case for other routes where it's easy to go by car. Also if you did increase the cost of the cheapest fares then this wouldn't automatically result in cheaper walk on fares. People clearly do pay the full fare and as there is no realistic alternative to the train on the London route they will continue to pay it as so it wouldn't be a good commercial decision to reduce these fares as it would result in less revenue.

Old Timer · 20 Dec 2011

I think it is best left here to be honest, as I totally disagree with your point of view on this particular matter, and no end of continued debate is going to change either of our opinions.

I wish you a very happy Christmas and a prosperous New Year.

LCC106 · 21 Dec 2011

Thanks for your responses to my questions guys.

Roylang · 21 Dec 2011

calc7 said:
Anyway, as a business and leisure traveller, I think their fares represent pretty good value for the former (who are price insensitive) whilst the advance fares are very good value for the latter.
Very little problem with the price rises, but the 16-25 railcard could warp that opinion

Oh dear, how disconnected from the reality of business you are :roll:

Business today is so competitive that travel expenses can play a huge part in whether a tender is successful or not. Not only do we have to complete with other UK business, but often with cheap labour from oversees.

Roy

calc7 · 21 Dec 2011

Roylang said:
Oh dear, how disconnected from the reality of business you are :roll:

Business today is so competitive that travel expenses can play a huge part in whether a tender is successful or not. Not only do we have to complete with other UK business, but often with cheap labour from oversees.

Roy

It depends on the employee. If a director is getting paid £300,000/annum, then a £279 (soon to be £296!) SOR between London and Manchester could work out better value for the company than advances - this well-paid member of staff doesn't have his/her time fragmented waiting or worrying about departure times.
Surely the VHF timetable was intended to attract such a market, and that's the reason it runs through most of the day?

snail · 21 Dec 2011

One other factor that hasn't been mentioned in respect to the Manchester - London prices are the cost of hotel rooms at either end. Even at the new prices it is still cheaper to travel there and back the same day than use Off Peak tickets and stay in a decent business class hotel.

Nym · 21 Dec 2011

calc7 said:
It depends on the employee. If a director is getting paid £300,000/annum, then a £279 (soon to be £296!) SOR between London and Manchester could work out better value for the company than advances - this well-paid member of staff doesn't have his/her time fragmented waiting or worrying about departure times.
Surely the VHF timetable was intended to attract such a market, and that's the reason it runs through most of the day?

Indeed, although someone on 300kpa would either be driven, or be using a FOR...

Wouldn't want the high excecs seeing the real world...

junglejames · 21 Dec 2011

districtline said:
Virgin got on and ran a train to Birmingham every 20 minutes as that's what the DfT told them to do. Virgin didn't write the VHF timetable. If you increase the fares then people will look at other modes. For a journey to London I doubt many would switch as the train is the only realistic option but this isn't the case for other routes where it's easy to go by car. Also if you did increase the cost of the cheapest fares then this wouldn't automatically result in cheaper walk on fares. People clearly do pay the full fare and as there is no realistic alternative to the train on the London route they will continue to pay it as so it wouldn't be a good commercial decision to reduce these fares as it would result in less revenue.

As OT has mentioned already, less people are buying the full fare tickets now, because of the large supply, and cheapness, of the advance fares. Advance fares are now available on the busiest of services.
If you stopped selling advance fares at peak times, and increased the price of them as well, then more of the full fare tickets would be sold. These people will always travel, as they have no choice. In fact, if you did this, you may also reduce overcrowding on the services immediately after peak time.

Also as OT mentioned, if price was such a large factor, then why dont we see more people travelling by coach?
Car travel also, is not always any cheaper than the train now. If travelling on your own, the train is nearly always cheaper, unless you are left with the full fare. Even the old Saver tickets (Off peaks) are usually cheaper than the car.

I can see why you are coming out with your point. Its the exact reason TOCs give for doing what they do. But in reality, it actually isnt the case.

Its just one of the ways of the system unfortunately. Virgin would prefer to sell advance tickets, because thats about the only way of ensuring they keep all of the money. If someone bought an off peak return from London to Birmingham, and intended to use Virgin. How much of that revenue do you think Virgin would see? Nowhere near 100%.
--- old post above --- --- new post below ---

calc7 said:
It depends on the employee. If a director is getting paid £300,000/annum, then a £279 (soon to be £296!) SOR between London and Manchester could work out better value for the company than advances - this well-paid member of staff doesn't have his/her time fragmented waiting or worrying about departure times.
Surely the VHF timetable was intended to attract such a market, and that's the reason it runs through most of the day?

Another reasopn for the VHF timetable, is probably too ensure Virgin gets more of the revenue from ORCATS.
Plus to compete with the ever more popular Chiltern.

Also, as mentioned, with full fare tickets of that price, why not buy a number of advance tickets to cover all eventualities? Its cheaper than buying 1 full fare ticket.

tony_mac · 21 Dec 2011

junglejames said:
As OT has mentioned already, less people are buying the full fare tickets now, because of the large supply, and cheapness, of the advance fares. Advance fares are now available on the busiest of services.

Have you been on a Pendolino recently at the beginning of the peak?

I have, and it was about 90% empty - there were no cheap advance tickets available the day before, and no more than a dozen people on-board who had bought advance tickets (you can tell by the seat reservations).

But Virgin would rather run an empty train than risk somebody buying a cheap advance ticket instead of an anytime.
Fine for them, but not so good for everybody else.

The idea that 'market forces' will automatically reach the best solution is horribly naive.

jon0844 · 21 Dec 2011

junglejames said:
Also as OT mentioned, if price was such a large factor, then why dont we see more people travelling by coach?

Getting details of available coaches is still not that easy for many (different operators - and is there a National Rail style website with routes/timetables/fares and live running info?). My concern with any bus or coach would be what happens if it doesn't turn up - or leaves early (a big problem with the local operators, so a perfectly valid concern).

However, I would have ordinarily agreed with you and OT 100%, but the wife was recommended by someone at her work to take a coach to Heathrow the last time she flew, and it took just 45 minutes from Hatfield to Heathrow - which was quicker than we can go via train (not much longer than driving ourselves) even though I've always considered the train to be very quick and easy (fast train to KGX, over to Paddington and then Heathrow on the Express).

The coach is not as frequent, and had the risks mentioned above, but she said how comfortable it was - and obviously it didn't require any changes. I would strongly consider using the coach next time.

Perhaps in the years ahead, people will begin to look at coaches? I've been on some very new and fancy coaches used for rail replacement service and thought that they were very pleasant indeed.

Butts · 21 Dec 2011

Funny thing five years ago the cheapest return airfare from Edinburgh to Birmingham was about fifty quid.

Even funnier its the same price today !!!

Zoe · 21 Dec 2011

junglejames said:
Even the old Saver tickets (Off peaks) are usually cheaper than the car.

I'm not sure about that, Off Peak fares have significantly increased in recent years and this encourages car travel for people that want flexibility.

jon0844 · 21 Dec 2011

For work, I think you can claim around 40p a mile - which usually makes the train cheaper for a single person getting around.

Once you have multiple people, the car can usually win quite easily when you take into account the flexibility.

Zoe · 21 Dec 2011

jonmorris0844 said:
Once you have multiple people, the car can usually win quite easily when you take into account the flexibility.

On the routes to London though that have some of the highest walk-up fares, driving isn't really an option though due to the traffic in Central London and the cost of parking there.

radamfi · 21 Dec 2011

jonmorris0844 said:
Perhaps in the years ahead, people will begin to look at coaches? I've been on some very new and fancy coaches used for rail replacement service and thought that they were very pleasant indeed.

Coaches have had a mini-renaissance in the last few years since Megabus and other smaller players started and the introduction of dirt cheap advance type coach fares. Until about 10 years ago, coach fares were not that much cheaper than walk up train fares but the difference has grown. At least long distance passengers on a very low budget do have the coach option in the UK which is denied to residents in much of Europe as coaches are not permitted to compete with trains in many other European countries.

Old Timer · 21 Dec 2011

tony_mac said:
Have you been on a Pendolino recently at the beginning of the peak?

I have, and it was about 90% empty -.

Having used and using Virgin regularly when I am in the UK, I find that to be almost incredible.

I understand that a Pendolino carries 439 people so that would equate to 43.9, say 44 people in total over 9 vehicles. Every train I have seen in the peak out of Euston has been very busy, and on the EBW services you will find difficulty in getting a seat on most peak services.

tony_mac · 21 Dec 2011

Virgin seem to have been severely cutting their peak advance tickets lately.
This was the first afternoon peak service to Liverpool, other routes may vary (although I bet the first peak to Manchester is similar).

There were definitely 2 people in Coach A, and 3 in coach B. Approximately 12 in C, where all the advance tickets where. I didn't see more than 2/3 people per coach in any others, but it is possible more arrived after I boarded. Maybe it was 85% empty.

Virgin's staggering SOR's and FOR's increase once again!

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