Leaked VTEC document reports weak Edinburgh <> London rail market share

[whhistle]

Not sure why you're using EMA as the airport ?. Stansted to Edinburgh is a far busier (and significantly cheaper) route if you fly.

Because it's a comparable airport together with a station that is near the East Coast?
Plus, being in the Midlands the choice isn't so easy to make. If you're in the South, I'd certainly fly. From the Midlands (and north) though, it's potentially a harder decision to fly.

Not everyone is London centred :P

 

[Robertj21a]

Because it's a comparable airport together with a station that is near the East Coast?
Plus, being in the Midlands the choice isn't so easy to make. If you're in the South, I'd certainly fly. From the Midlands (and north) though, it's potentially a harder decision to fly.

Not everyone is London centred :P

Sorry, you've lost me (just early mornings.....) - what station near the East Coast ?

 

[swaldman]

<re air vs rail costs>

It's only bonkers when you look purely at the environmental cost.

Hmm. Certainly if carbon emissions were sensibly costed there'd be no comparison, but I'd actually been thinking economic cost. I've always assumed that the dominant cost of any long-distance transport scheme must be energy (fuel, or buying electricity for electric railways). I'd assumed that this would easily outstrip staff and infrastructure, and on this basis railways should be cheaper to run than airlines.

It's the reason that bus companies have been the early adopters of electric and hybrid vehicle technology - a 5-10% saving in fuel is massive for them. It's probably the main reason behind the development of modern airliners like the 787 or Airbus Neo series (yes, they're quieter, but they also burn less fuel).

Am I wrong? Does anybody have an authoritative breakdown of the costs of running a railway?

 

[Tetchytyke]

That may be the case, however I'm going by the furore over Heathrow's third runway.

The furore at Heathrow isn't about the noise, it's about the fact that the third runway will result in the demolition of huge swathes of residential land, including the obliteration of Harmondsworth.

Build the extra runway at Gatwick or Stansted and nobody would mind too much.

That's why long time, high spending ECML users feel let down. BA have made me feel more valued, something I've never said under previous operators.

And that's why the high-spending regular users have moved away from rail, causing the problems. Stagecoach took them for granted. BA noticed: BA never really used to bother competing on domestic travel from Newcastle, filling those flights with international connections, but when Virgin came in suddenly they started aggressively competing on price. BA are many things but they're not daft, they obviously smelled blood.

 

[Joe Paxton]

The furore at Heathrow isn't about the noise, it's about the fact that the third runway will result in the demolition of huge swathes of residential land, including the obliteration of Harmondsworth.

Sorry, that's not right - noise worries are a huge part of the opposition to a third runway.

Also, the third runway plans do not envisage a demolition of "huge swathes of residential land" - indeed some of Harmondsworth would survive (though right up against the perimeter fence).

Take a look at what HACAN has to say.

 

[cuccir]

We've heard on this thread that rail is more energy efficient - and of course it is.

But is it more passenger-efficient? Our system (which I'm not advocating changing btw!) gives rail passengers significant flexibility, at least if they're willing to pay or are travelling short distances. VTEC may be competing with BA between Edinburgh and London, but they're also obliged to convey me on my commute between Durham and Newcastle, or to take someone who is travelling York-Nottingham down to Newark, even though they'd only take a portion of that fare. All this means that they need to leave spaces for these passengers, some of whom might book seats that 'block' those spaces for a Edinburgh-London commuter, reducing the number of cheaper Advances that they can offer. This results in a lot of unused places.

By contrast, an airline has a plane that costs £x to get from one place to another. They simply have to sell their tickets from end to end such that the total amount will cover that cost and hopefully add a bit of profit. There's no 'open' tickets that they're obliged to take so if a flight is filling up they can charge more, or if it's a bit empty they can cut the cost to try and get to a target income. From a passenger-moving perspective, this is much more efficient and if done properly means that there won't be empty seats.

Basically: airlines have full demand-management pricing, rail companies can't. There are very very good reasons for this, but I think it goes a long way to explaining why planes can beat trains for price.

 

[Tetchytyke]

Sorry, that's not right - noise worries are a huge part of the opposition to a third runway.

Interesting link from HACAN, thanks for that. Enlightens my understanding.

That said, I've long thought Heathrow was in the wrong place for a major international airport. Living in Muswell Hill, I was disturbed by the aircraft noise because of the flightpaths. Having the landing paths descend right across the middle of central London never seemed entirely the best option for one of the world's busiest airports.

 

[BigCj34]

I think this is an interesting approach - as this will be the meaningful alternative once HS2 is phased in.

The irony of course is that the HS sets will not tilt and so on the classic WCML, will be limited to the non-EPS speeds. What difference that means in journey times, I'm not sure.

Either way, with Blackpool wired and other services coming - Scottish services up the WCML shouldn't be calling before Preston, and only once between there and Carlisle, tops. If both Glasgow and Edinburgh fasts ran up the WCML (plus extras for the Cumbria stops) then stops could be even more spread, given the Birmingham and Manchester Scotland services can support more local journeys twice an hour.

The Carstairs works could save a few minutes definitely, but after that it's clear right into Haymarket. Lancaster to Carlisle is the section which needs help, and is the hardest to do.

Why are the classic compatible trains not tilting? Are they too expensive to build for minimal time gains?

 

[BigCj34]

While journey times of 4h20 are significantly more than the 3 hour pivotal point that converts people to trains over flying, it is still quick enough to bring people to the train whose destinations are reasonably central. There are even TGV services that go from Paris to Barcelona and of course Eurostar services to the south of France or the Alps, suggesting that people may opt for the pleasantries of a train ride if the price is right, though those examples would target the leisure market more than business.

I simply don't think the prices on the East Coast are competitive enough with flying for those who do not have a railcard. While flying is indeed quicker and may well attract business travelers for that reason the journey time is probably not the deterring factor for many, whereas the £30 headline fares on the West Coast does compete a bit better which explains their relative success in gaining market share. Complicated pricing structures for those not aware of split ticketing certainly does not help either.

 

[SaveECRewards]

I don’t think anyone has mentioned the BA plus fares but they also can make flying preferable over an advance purchase rail ticket.

Most people think of the difference between the basic and the plus ticket is basic = hand baggage only and plus is with baggage, but Plus has another advantage - on the day flexibility. The ticket is about £10-£15 more than the basic fare but on the day you can change to a different flight absolutely free of charge (no change fee or fare difference). A good use case for this is if I have a meeting I book the latest flight in case of overruns, then once it’s clear when the meeting will finish I can then move to an earlier flight if there is one.

VTEC experimented with allowing a bit more flexibility at Doncaster. Perhaps offer a ticket that’s slightly more than an Advance but gives you a window of flexibility. Once the seat reservations with sensors are rolled out they could offer you a product that allowed you to move if there’s unoccupied seats on a different service.

 

[mrmartin]

To give you an example how overpriced rail is - until I got my 26-30 railcard, it was often cheaper to:

Get return Ryanair STN->EDI (often £10 each way - so £20 rtn).
Get taxi from East London (zone2) to Stansted - £30 each way, £60 total
Taxi/uber to Edinburgh from the airport (£10-15 each way), say £25 total.

£105 total. I have done this door to door in less than 4 hours before, which compares to the train at probably more like 5-6 by the time I get to Kings Cross, etc. Don't need to carry my bags and get dropped off exactly where I want (and picked up from my door).

This compares to £143 super off peak return - or £230 off peak return. Even with advances I've not seen it generally much cheaper than £100 return when I've looked, which isn't really worth it for the lack of flexibility.

 

[cle]

Yep, this is all pricing based. We know the benefits and the experience (most people do!) - but the price trumps those factors. Until journey times are significantly lower, price will be the only way to regain market share.

 

[DenmarkRail]

Anyone thought of through ticketing on Virgin Atlantic flights, where the American passenger can book a ticket on the VS website, for Atlanta to Doncaster, which would include a flight between ATL and LHR, as well as the ticket between KGX and Doncaster? It wouldn't be perfect, but might help VTEC and VS get a better share of a domestic market without having to spend money on LHR slots?

 

[marks87]

Anyone thought of through ticketing on Virgin Atlantic flights, where the American passenger can book a ticket on the VS website, for Atlanta to Doncaster, which would include a flight between ATL and LHR, as well as the ticket between KGX and Doncaster? It wouldn't be perfect, but might help VTEC and VS get a better share of a domestic market without having to spend money on LHR slots?

And how do the passengers get from Heathrow to Kings Cross? Trundle along on the Piccadilly Line? Or Heathrow Express then find a way from Paddington? All the time potentially hauling luggage.

It's a complete non-starter. Much easier (and possibly even quicker) to fly to Amsterdam, catch a through connection to Humberside (or Leeds-Bradford, at a push) and get an onward transfer to Doncaster.

 

[Clip]

Anyone thought of through ticketing on Virgin Atlantic flights, where the American passenger can book a ticket on the VS website, for Atlanta to Doncaster, which would include a flight between ATL and LHR, as well as the ticket between KGX and Doncaster? It wouldn't be perfect, but might help VTEC and VS get a better share of a domestic market without having to spend money on LHR slots?

But that will have no effect on market share between London and Doncaster. The only thing that will will be price.

 

[DenmarkRail]

And how do the passengers get from Heathrow to Kings Cross? Trundle along on the Piccadilly Line? Or Heathrow Express then find a way from Paddington? All the time potentially hauling luggage.

It's a complete non-starter. Much easier (and possibly even quicker) to fly to Amsterdam, catch a through connection to Humberside (or Leeds-Bradford, at a push) and get an onward transfer to Doncaster.

Yes, I completely agree that it is much easier to go to AMS or CDG on KLM, and I guess VS will push for that once they partly join AF/KLM, but I can't see a reason why a tube ticket could not also be included.

 

[Class 170101]

A leaked report from Virgin Trains East Coast suggests that the market share held by the railways on long-distance flows between London and Scotland is less than 25%.

The report from mid-2016 notes that "In recent years, the airlines have significantly increased their capacity and reach across the UK", with 50 flights a day between London and Edinburgh, which represents control of 70% of the the market. VTEC list under 'weaknesses' in their analysis of their London - Scotland routes that they estimate just a 24% share of the market is on their services.

Presumably the remaining 6% of travel between Edinburgh and London is by road. However, VTEC also note that they have more than 90% of the rail market share, which is perhaps not surprising as they operate the fastest direct trains. Presumably most of the rest here is on Virgin Trains, who occasionally offer a competitive price and only slightly extended journey times but with a change of trains at Crewe.

The report will not take account of developments since the May 2016 timetable change, when VTEC introduce 4 additional services each way through to Edinburgh Monday - Friday, and 2 each way on Sundays. What's more, VTEC have since introduced Advance Purchase on the Day which allows cheaper Advance tickets to be bought the same day of the journey, which is of course something what has always been offered by the airlines - where there is availability. However in my experience it's uncommon to find a huge discount over the Off Peak or Anytime price and the Super Off Peak is often a similar price to any VTEC Advance on the day. They are using it less to whip up demand and more to 'smooth out' the jump in price that would otherwise occur at midnight the night before.

The full table is copied below:



It looks like what they mean by those final two points is that the Super Off Peak Return price (today this stands at £142.90 - presumably VTEC would like it to be more) cannot go up at a higher rate than permitted by the DfT, and because it is valid on all trains at the weekend it limits how much they can charge for Advance tickets, and how much they can extract consumer surplus. This to me suggests a minor victory for fares regulation - these are few and far between!



VTEC also highlight here that they simply cannot match Ryanair on price, which is something many of us have long suspected about costs in the industry. This goes way beyond the ICEC franchise of course, and is something for the ORR and the Government to consider carefully. Why, exactly, is one of the most efficient (on paper) modes struggling so much on price against by far and away the most polluting in terms of noise and air quality, and the biggest emitter of atmospheric carbon?

I wonder if rail has started to win back market share in the two years since? What can rail do to attract people who currently fly? VTEC have refurbished trains and stations to an extent, but how attractive is their new overall over? How have the 2017 disruptions at Ryanair affected the market?

All comments welcome!

If VTEC wanted to increase revenue they surely could do what LM did on Saturday Trent Valley services and ban the super off peak fare on Sunday trains and instead charge for the unregulated off peak fare?

 

[SaveECRewards]

Yes, I completely agree that it is much easier to go to AMS or CDG on KLM, and I guess VS will push for that once they partly join AF/KLM, but I can't see a reason why a tube ticket could not also be included.

There’s no reason they couldn’t do it. GWR does it with a number of airlines from Heathrow although you need to book via a travel agent. It gives you protection in both directions - if your booked train to the airport is delayed your put on the next flight free of charged if you miss it. If booked separately you’d have to rely on insurance.

You can have National Rail tickets that incorporate the tube from Heathrow or combined HEX+Tube.

 

[benbristow]

As for Waverley, let's face it, the place is a dump. A big, cold, run down, chaotic dump.

I beg to differ. It's quite a beautiful station in my opinion. Lots of good places to get lunch/coffee too.

It can be confusing trying to find the right station though, I've had a few panics before, I'll give you that.

 

[BigCj34]

I beg to differ. It's quite a beautiful station in my opinion. Lots of good places to get lunch/coffee too.

It can be confusing trying to find the right station though, I've had a few panics before, I'll give you that.

Considering its location in what is a UNESCO World Heritage site, parts really could be better. Once it's due for refurbishment a feature could really be made of the roof, currently repeated glazed ridges which blight the view between the Old and New towns somewhat.

 

[Joe Paxton]

If VTEC wanted to increase revenue they surely could do what LM did on Saturday Trent Valley services and ban the super off peak fare on Sunday trains and instead charge for the unregulated off peak fare?

No can do, at least not under the current fares regulatory regime - the Super Off-Peak fare (on East Coast priced flows) is the regulated fare and it cannot be withdrawn at the weekend.

 

[Wallsendmag]

Ask @Wallsendmag on that one

We're looking at various options and hoping to be able to retail them as we used to in the future (don't ask me how long that is though)

 

[Shaw S Hunter]

<re air vs rail costs>


Hmm. Certainly if carbon emissions were sensibly costed there'd be no comparison, but I'd actually been thinking economic cost. I've always assumed that the dominant cost of any long-distance transport scheme must be energy (fuel, or buying electricity for electric railways). I'd assumed that this would easily outstrip staff and infrastructure, and on this basis railways should be cheaper to run than airlines.

It's the reason that bus companies have been the early adopters of electric and hybrid vehicle technology - a 5-10% saving in fuel is massive for them. It's probably the main reason behind the development of modern airliners like the 787 or Airbus Neo series (yes, they're quieter, but they also burn less fuel).

Am I wrong? Does anybody have an authoritative breakdown of the costs of running a railway?

It is difficult to get detailed numbers as much of the information is considered commercially sensitive with even parts of franchise agreements redacted from publicly available copies. However some more generalised reports do exist. I found this one http://orr.gov.uk/__data/assets/pdf_file/0019/4933/toc-benchmarking-report-2012.pdf issued by the ORR in 2012; not completely up to date but a useful guide. Note the graphic on p12 which says that 52% of whole industry costs are attributable to Network Rail, also the top graphic on p46 which although without numbers suggests TOC energy costs are in the region of 10-12% of the total. Perhaps rather more significantly staff costs are at least 1/3 of the total.

An attempt was made a few years ago to benchmark British railway costs against those of European railways. Direct comparisons are not too helpful given the very different characteristics of the various networks but it was very clear that staff productivity here is comparatively poor and that this is largely due to our trains being typically short when compared to the best performers, in particular Switzerland though French operation of doubled-up double-deck TGVs does wonders for their figures.

As for other modes comparisons are difficult. Airlines have very different business models varying from the true LCCs to somewhat bloated legacy carriers with everything in between. The most important difference is that nearly all flights are point-to-point services making it relatively easy to subject most passengers to the full gamut of yield management techniques. Railways providing a walk up service are somewhat restricted in this area and although overcrowding is a real issue there are also plenty of trains with empty seats. This phenomenon is increasingly less common on commercial aircraft. Airline fuel costs as proportion of the whole also varies depending on location and network. Arabia based airlines pay (mostly) very little for locally sourced fuel. Airlines with a high proportion of long-haul operations will likely find fuel a significant proportion of costs due to the tankering effect ie the cost of carrying the fuel needed to fly long distances. That is what makes the development of the 787 (and now also the 350) so significant and is already starting to shorten the expected lifespan of the 777.

The bus industry on the other hand has squeezed staff pay so hard that improved fuel efficiency is almost the only way to make worthwhile cost savings. There is also the political imperative to reduce/eliminate harmful emissions especially in urban areas.

 

[whhistle]

Sorry, you've lost me (just early mornings.....) - what station near the East Coast ?

Peterborough :P

 

[deltic]

ORR publish rail financial costs - for TOCs as a whole breakdown of costs are as follows - fuel costs are negligible

Staff costs 23%
Fuel costs 3%
Rolling stock charges 14%
Payments to Government 26%
Other operating expenditure (including Network Rail charges) 33%
Interest and exceptional expenditure / (income) 0%
Corporation tax 1%

 

[Robertj21a]

ORR publish rail financial costs - for TOCs as a whole breakdown of costs are as follows - fuel costs are negligible

Staff costs 23%
Fuel costs 3%
Rolling stock charges 14%
Payments to Government 26%
Other operating expenditure (including Network Rail charges) 33%
Interest and exceptional expenditure / (income) 0%
Corporation tax 1%

Is there anything then broken down by TOC ?

 

[deltic]

Yes - see http://orr.gov.uk/rail/publications/reports/uk-rail-industry-financial-information

 

[swaldman]

Thanks for the responses re cost breakdowns. I stand corrected!

 

[HowardGWR]

As can be seen, by far the biggest rail cost is the infrastructure which the airlines have comparatively little (the air is free). They have terminal and ATC contributions to make. IATA says 14% for those and fuel being the greatest cost factor, but this will be different for internal and short international flights, although take off and taxiing is fuel-expensive compared to at 35000 ft.
If government wanted to get more of its expense on rail infrastructure back, it would make internal flight taxes big, it would institute road charging and congestion charging, and thus ensure that rail capacity was used to the maximum possible. Also, because road usage would be lessened, road infrastructure costs would be reduced. Win win. You could probably get more leisure travellers from Edinburgh to London onto rail, that way, but I doubt if genuine business travel would reduce so much, where time is expensive.

The other factor is that no government would last five minutes with that approach!
Edit: here's a link I found:

http://www.iata.org/publications/economics/market-issues/Pages/costs.aspx

Airlines and passengers are estimated to have paid at least US$92.3 billion for the use of airport and air navigation infrastructure globally in 2011, equivalent to 14.4% of the cost of transport.

 

[swaldman]

You could probably get more leisure travellers from Edinburgh to London onto rail, that way, but I doubt if genuine business travel would reduce so much, where time is expensive.

I don't buy the "time is on air travel's side" argument, at least for city centre to city centre travel. It's a little faster, but really not very much.

Figures off the top of my head here, but I doubt they'll be massively off.
For London <> Edinburgh, it's about an hour on the plane.
Then add 1.5-2 hrs for checkin, security, boarding etc.
Then add half an hour at each end to get to/from the city (more if Stansted)
Add 15-30 minutes waiting for luggage if you have any.

That's 3.5-4.5 hours, plus another 15-30 minutes waiting for luggage if you have any. In the best case you've saved an hour over rail, and in the worst case nothing at all, and the intervening time has been spent in taxis and in queues at airports rather than being productive on the train.

Air travel does carry a *perception* of speed, and I suspect that has as much influence on business travel as anything real does.