Another year, another fare rise

[tbtc]

We don't try and run a health service where users pay 75% of the cost of using it so we shouldn't be doing the same with public transport either.

So you want the railways to be free at the point of use too?

I don't think anyone here has a problem with some Government subsidy - whether 50% or 75% or whatever - but that doesn't mean it'll always be cheaper to take the train than to drive (if you count the cost of driving as only the fuel cost)

 

[radamfi]

The government can currently 'get away' with fare rises because capacity is heavily constrained and patronage is still increasing. If patronage and revenue start to fall, with a lot of trains running empty, then the policy of above inflation fare rises would need to be reviewed.

 

[Dave1987]

We are not really starting to compare the NHS to the railways are we?

The whole point at the moment is making the passenger pay a larger portion towards the cost of the railway.

Do people want tickets to be more subsidised by the taxpayer?
--- old post above --- --- new post below ---

The government can currently 'get away' with fare rises because capacity is heavily constrained and patronage is still increasing. If patronage and revenue start to fall, with a lot of trains running empty, then the policy of above inflation fare rises would need to be reviewed.

They don't "get away" with anything. Train tickets are being pushed towards the passenger paying 3/4 towards the railway compared to the taxpayers 1/4.

Passenger numbers are increasing all the time that is why there is mass overcrowding at times.

I severely doubt lots of trains will be running around empty.

 

[jon0844]

This is the million dollar question. Those advocating a return to BR appear to think it would save millions, even billions, so I assume they don't want the tax payer paying any more.

That leaves me wondering how fares can drop (and not a tiny bit by cutting out TOC profits) but the comparisons to the cost of travel in say Holland or Germany (with the discount cards).

 

[Dave1987]

This is the million dollar question. Those advocating a return to BR appear to think it would save millions, even billions, so I assume they don't want the tax payer paying any more.

That leaves me wondering how fares can drop (and not a tiny bit by cutting out TOC profits) but the comparisons to the cost of travel in say Holland or Germany (with the discount cards).

By the taxpayer paying massive amounts to subsidise the fares......

 

[pemma]

Sounds a bit like what we are getting over the rest of the decade - brand new EMUs being built to cascade other EMUs to newly electrified lines to cascade modern DMUs (like 185s) to secondary routes to allow other services to either be increased in capacity or the "weakest" stock to be withdrawn.

We don't yet know where EMUs for North TPE will come from though. If North TPE gets cascaded stock then there's not many options for it to get cascaded stock and newer stock than the 185s.

319s will likely replace trains that are older than them (142s and 150s), the same age as them (156s) and newer than them (165s, 166s and possibly Northern's 32xs and the 185s on Manchester Airport-Blackpool.) So on average we could probably say they could be considered a like-for-like replacement in age terms but an improvement in capacity terms for most (if not all) services. Unless the 319s get new fronts (which is one option Porterbrook have proposed) then they externally do look like old fashioned trains, probably more so than the 313s, 507s and 508s so it would be a harder job to fool average Joe that they are in fact new trains.

 

[jon0844]

If the 319s get the changes proposed, they'll be virtually brand new in terms of how much of the train will be changed!

You'll even get people who use them now moaning about why said changes weren't done when they were on Thameslink!

 

[island]

Why do you think that a train fare (where you need to pay for a driver, you need to pay for a Conductor, you need to be for signalling staff, you need to pay for a ticket office, you need to pay for the infrastructure, you need to pay for the leasing of the train etc) should always be cheaper than a car (where you discount all of these costs as "fixed" and therefore ignore them)?

It's simple - you and I are comparing the total cost of the journey, whereas Goatboy is comparing the marginal cost, i.e. the cost to make one additional journey.

 

[Dave1987]

Would still like to know from pro renationalisation people what exactly BR would do differently to solve the problems the railway network has. Because at the moment BR is being sold as the magic cure. If that is the case you would know exactly what BR would do to instantly improve the service?

 

[WelshBluebird]

Would still like to know from pro renationalisation people what exactly BR would do differently to solve the problems the railway network has. Because at the moment BR is being sold as the magic cure. If that is the case you would know exactly what BR would do to instantly improve the service?

Well some or the large issues we have are simply because of the fragmentation of different companies running the services, only caring about their own interests. I've lost count at the number of times I have been told by a member of rail staff something to the effect of "sorry, I can't do anything, you'll have to deal with a member of staff from that company".

 

[pemma]

You'll even get people who use them now moaning about why said changes weren't done when they were on Thameslink!

Which will be the same reason that the 158s didn't get a full refurbishment on TPE but the ex-TPE ones that got cascaded to EMT and SWT have done. Why would the operator agree to it when it'll involve trains being out-of-service (and probably an increase in leasing costs or the operator funding the refurbishment) when they are going to get brand new trains to replace them?

 

[al.currie93]

This will be long, but I'll try to cover everything :P

Because otherwise there is little incentive for the car driver to leave his car behind and use public transport. Rail is a crucial public service and is central to the governments desire to reduce CO2 emissions and create a sustainable economy which isn't reliant on imported foreign oil.

We MUST have public transport as a much bigger part of our nations transport mix.

Except for certain cirucumstances, for example if you need to do some work or perhaps travel to London, if it was cheaper to drive at a time that suited you in a private car to a destination that suits you than it is to use the train, you'll take the car. We must change this if we are serious about meeting the commitments we've made for future emisisons and if we want to remain a competitive economy in the future.

Fossil fuels are not the future. We need people off them BEFORE a huge price shock causes irrepairable economic damage.

Rail is not, generally, a premium service. Private transport is the premium service. Therefore outside of lucrative fast business link services (ie Manchester to London, London to Paris) it must compete on price.

Other countries understand this. Look at Germany. The German government realises the value of a rail network that makes people think 'Why would I drive?!'

Rail services are rarely commercially viable (I mean the entire cost) - they are always going to be a cash sink for a government. Rail is rubbish at profit - its a subsidy sponge. The sooner we get over that, realise that and stop pretending it can stand on its own two feet and charge enough to cover its costs the better.

We don't try and run a health service where users pay 75% of the cost of using it so we shouldn't be doing the same with public transport either.

Completely agree with you there Goatboy :P ! Rail travel NEEDS to become a far greater aspect of the transport system in this country if we hope it to be sustainable in the future. Road travel in its current form is not sustainable, firstly because of the fossil fuel consumption (converting all cars from fossil fuel power to electric power will not work either, I have many reasons for this), secondly because of road capacity. We need to get more people onto the railways, and these fare rises are not helping this... if there isn't an incentive to get people onto the railways and off cars soon, as was said, there will be serious consequences.

We are not really starting to compare the NHS to the railways are we?

Actually, I think it's quite a good comparison. They are both services which are essential to the country being able to function as we wish it to. As Goatboy indicated, the NHS is very heavily subsidised, and NOT profitable, and it never will be unless it becomes privately funded and so expensive that very few people can access it.

Railways are in the same boat; they are not profitable***, but are still an essential service to the country that needs remain in place for us to live as we do today; very much like the NHS. So, yes, I think that they are a very good comparison to the NHS which should be treated in a similar way.

I personally cannot drive, but I work for an electrical engineering company in London, so I'm dependent on the train; for me, it is as much a necessity in my life as the NHS. I'm sure I'm not the only one who this applies to. It will also become an even more important service to the country in the future, as myself and Goatboy previously said, so it really should be more heavily subsidised by the government funds and less expensive for the fare-payer.

Apologies if this should be in another thread, but, as it has been asked, I'll give my opinion on nationalisation and why I think it would help:

I do think that nationalisation is the way forward, and if you want to know why, it's not because it will drastically decrease fares (the cost of running it will decrease by at least what money is going to the private company's profit, which is better than nothing at all), but for the following reasons:

- The railways are a service (like the NHS), which I believe should be run by the government for the people, and not a product (like a car) which should be sold for a profit.

- The current system is so fragmented, it cannot be easy, cheap or efficient to run, whereas a single government company will not be anywhere near as fragmented. As has also been discussed, this will probably mean it will be cheaper to run (current leasing costs may well be a bit of a money-drain), hence may also result to lower fares.

- We are not dependent on (quite a few foreign) companies for the running of a service which is very vital.

Agains, apologies if this should be in another thread, but it's also been asked why our railways are so expensive, whereas the continental railways are less so. I personally feel that this is due to less subsidy in the UK, but I do have another theory:

Compared to SNCF, for instance, we do seem to be trying to run an all-singing-all-dancing system; one that is super-modern, delay-free, profitable(!?!?) and cheap, but, obviously, we cannot have all of them. If we want IEP, we have to admit that it is going to cost more, which, to give one theory, will put less money to the actual running of the services, and delays may be experienced, or it will increase fares. If we want cheap and delay free services, we may have to go for cheaper stock. After all, SNCF (who are envisaged to run a cheaper, more delay-free service) still run locomotives like these (http://upload.wikimedia.org/wikipedia/commons/3/32/BB22394-Antibes.jpg) hauling coaches like these (http://upload.wikimedia.org/wikipedia/commons/d/df/SNCF_Corail_Plus_Austerlitz.jpg), as well as DMUs like this (http://en.wikipedia.org/wiki/File:X_2104_Brive.jpg) on a majority of regional services, which, in the UK, would be seen as old, tired, and should have been replaced many years ago. Furthemore (in 2010 at least) the RER trains seemed very much on par with our class 319s, which are running on a similar service, and what is happening with these two examples?? We're replacing while (I believe) the French are making do, and enjoying cheaper fares and more reliable service... Just a theory I came up with :P



***They were once; in 19th century and early 20th century where, unless you had a horse, walked, or were very rich and could afford an early car (which was probably still slower than the train), it was the only means of getting from A to B. Now, with all these other means of transport available to us, and the railways decreased in the 1960s to the stage that they are at now and cannot meet the transport requirement of many people, they will not be profitable.

 

[Goatboy]

It's simple - you and I are comparing the total cost of the journey, whereas Goatboy is comparing the marginal cost, i.e. the cost to make one additional journey.

Quite.

Marginal cost is the cost that should be used when somebody who owns a car is deciding whether to drive or use rail.

Total cost is the cost that should be used when somebody who owns no form of transport is deciding whether to buy a car or use public transport exclusively.

Given the majority of households own at least one car, it is marginal cost which is most relevant when looking at ways to wein the country off its addiction to the private car and imported fossil fuels.

For an example of what happens to a country when it's government doesn't put the effort into public transport and instead encourages car use, see the United States. $10 a gallon gasoline will cripple their economy. And it's coming, at some point.

For an example of what happens to a country when it's government DOES put the effort in, see Germany. Here is a country in love with cars - producing them is the lifeblood of the economy - yet high fuel prices are nothing like the risk to the German economy (Manufacturing industry aside which is irrelevent to this discussion) as the network is well founded, good value and there are numerous resaons why many Germans leave the car at home and take the train.

 

[jon0844]

What people should be arguing about isn't private or public ownership, but whether the tax payer picks up more of the tab and we begin to consider PT to be a public service.

If we do, clearly many already overcrowded services will get worse which means more state funding...

 

[Goatboy]

Personally I think the answer to private v public is to bin franchising and simply pay private companies a management fee to run a public system. The franchising system gets more and more ridiculous as time goes anyway - TOC's seem to have less control about what they actually run and what they run it with now than at any point since privatisation anyway.

Lets just admit franchising doesn't work and come up with a new model - by all means involving the private sector.

 

[jon0844]

I agree about the management contract idea. Let private operators run what, to the general public, looks like a national railway system.

Sent from my Nexus 7 using Tapatalk 4

 

[johnnycache]

There was a nice piece in March 2013 Modern Railways listing TOC profitability and premium/subsidy

What was interesting was the losses made by Chiltern £57m and Cross Country £30 which shows how much the German tax payer is helping to subsidise our railway!

I understand that the data came from the Transport Select Committee and i'll supply a link if i can find one

 

[pemma]

There was a nice piece in March 2013 Modern Railways listing TOC profitability and premium/subsidy

What was interesting was the losses made by Chiltern £57m and Cross Country £30 which shows how much the German tax payer is helping to subsidise our railway!

I understand that the data came from the Transport Select Committee and i'll supply a link if i can find one

According to a DB senior manager interviewed at DB HQ in Berlin, I think by Laura Kuenssberg for ITV, the British elements of DB are treated entirely separately to the German elements and profits from country would never be used to fill gaps in funding in other countries.

 

[Tibbs]

I don't see 3% profit for TOC's as huge consider the investment and risks in their franchise for trying to reduce costs and increase revenue.

Let's also remind ourselves that TOC's don't set the level which regulated fares on average are set at. With nationalisation, I don't see why fare setting policy would have been any different.

Let's also remind ourselves that journeys have been increasing over the last decade, of which some should be attributed to franchising.

Where's the risk? They have increasing passenger numbers and the DfT tops up their money if they don't make enough.

And if they really don't like it, they just hand the keys back.

 

[Simon11]

Where's the risk? They have increasing passenger numbers and the DfT tops up their money if they don't make enough.

And if they really don't like it, they just hand the keys back.

What's the risk...... Have you read this thread? Arriva has invested into the chiltern and XC franchises, with large losses for last year.

DFT provides revenue support, however this doesn't provide full support for the franchise. If we had nationalisation, you would find the government paying 100% to keep the TOC afloat.

They can hand back their keys, however that doesn't give the best image for the brand.

 

[starrymarkb]

Where's the risk? They have increasing passenger numbers and the DfT tops up their money if they don't make enough.

And if they really don't like it, they just hand the keys back.

DfT doesn't top up profits, they will share losses if over a certain amount, similarly if your TOC is very profitable expect the DfT to claim half...

Personally I'd rather have Gross Tendering (like Germany or LO) where the Private company is merely a contractor...

 

[Simon11]

How do you provide incentives for TOC's to increase revenue, carry out good marketing and roll out new products?

 

[Goatboy]

How do you provide incentives for TOC's to increase revenue, carry out good marketing and roll out new products?

You don't - infact you ban them from rolling out new products incase they 'compete' with other franchisees.

 

[Simon11]

So you don't wish for TOC's to be competitive against other TOC's and transport, thus the passenger pays a higher fares as well as passengers choosing not to travel by train?

What about TOC's developing their product range to increase revenue (thus lower subsidies) as well as increase the number of customers using quieter services?

While TOC's take 3% in profits, I personally can't see a management TOC contract being that eager to increase revenue, thus the cost of not having an incentive could well exceed what a normal TOC would have received in profit.

 

[Goatboy]

So you don't wish for TOC's to be competitive against other TOC's

I do, but the DFT does not. Which is why many applications for new services are blocked.

 

[Dave1987]

I do, but the DFT does not. Which is why many applications for new services are blocked.

So why are LM, Chiltern and Virgin all competing??

Which new services have been blocked recently then??

 

[Crundles]

I don't see 3% profit for TOC's as huge consider the investment and risks in their franchise for trying to reduce costs and increase revenue.

I get that the World's not a perfect place and there will be fare increases, especially during times of relatively high inflation, but there's been above RPI increases for 20 years (under the DfT's auspices I know but the point still stands) on top of continuing high levels of subsidy. The whole idea of profit orientated operators like the TOCs and ROSCOs was that they would improve efficiency across the network but this hasn't really been the case. The 3% average often touted by ATOC conceals the true costs that this reward system inevitably maintains.

From my point of view, the franchising system encourages corporate behaviour that is more often than not detrimental to the future health of the railway. For those TOCs that are profitable the returns may not set the world on fire but they are from a business point of view relatively easy since so little capital is required. Those that do invest in the routes record inevitable losses due to disruption but that is a risky strategy since investors have to be convinced that there will be a future pay off worthy of their continued finance .

The question of railway profitability versus wider external benefits is a perennial one and won't be solved any time soon. That said it isn't getting there any faster with the quasi-private franchising system we seem to be so in hoc to (even with various tweaks à la the Brown Report and the rest of it). Personally I would like to see far more vertical integration regarding TOCs, infrastructure and stock but that seems unlikely considering current European policy. Long story short: I think this conversation is one we'll be having for many years yet.

 

[Sammy h]

It's the same every year. The fares go up, we moan. But at the end of the day, we keep on coming back for more and more. And the railway? It just keeps on growing.

 

[radamfi]

While TOC's take 3% in profits, I personally can't see a management TOC contract being that eager to increase revenue, thus the cost of not having an incentive could well exceed what a normal TOC would have received in profit.

It is possible to offer bonuses for good punctuality and various other performance indicators. London buses are effectively management contracts where TfL keeps all the revenue and tells the companies what routes and timetables to run. The operators are judged on various quality measures and get rewarded for good performance. The London model is generally considered superior to the deregulated model outside London.

 

[pemma]

So why are LM, Chiltern and Virgin all competing??

Really they are providing different products but giving incentives for people to take their product over competitor's products. If LM applied to run a Birmingham-Euston direct express service then I doubt ORR would approve the application even if there was a path available to do so.

Northern Rail run a Manchester-Stoke stopper but you can't really say they compete with XC and Virgin for passengers travelling between Manchester and Stoke as they offer an inferior product (slower service with commuter style interior) and no incentive to use the inferior product like cheaper tickets. LM and Chiltern offer the cheap fares to get passengers to use their 'economy' service over a competitor's 'premium' service.