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

[Starmill]

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:

Strenghts
Destinations appeal
Festival – trains are busy and a real revenue driver
Strong rail market share (90%)
Frequency of our service
Rail is most preferred mode of transport (H&P)
Centre to centre

Weaknesses
Capacity constraints (Fri/Sun) – when most people want to travel
Edinburgh station is a big open space
24% market share
Consistency of our product vs. Airline
Regulated fares reduce yield management to a degree
Weekend off-peak return yield constraint

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!

Opportunities
8 extra services (4 each way) per day from May ’16
T-24 on weekends
Consultant analysis
Reintroduce price messaging (headline fare) during certain times of the year
Revenue management strategies
More active partnership activity

Threats
Most competitive market
Ryanair pricing - we cannot match
Potential Increase of flight frequency
Petrol pricing – reducing air costs further, and softening the ABD market
EDB station works causing passenger disruption. July ‘16 for 18 months

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!

 

[cf111]

Why is Waverley being a "big open space" a bad thing? I don't even really think it is when compared to King's Cross or Newcastle!

 

[Starmill]

I don't get that at all!

 

[tony_mac]

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%.

They were much more positive about it last year
http://www.mynewsdesk.com/uk/virgin...-airlines-between-scotland-and-london-2114238

"On the east coast route between Edinburgh and London, Virgin Trains’ market share against airlines was as high as 37%, up two percentage points on its previous peak in 2014. "

 

[Starmill]

For comparison purposes, it is worth considering Madrid to Barcelona. The two Spanish cities are a reasonably similar size about the same distance from each other. Since the final section of the High Speed route was opened in 2008 the journey time was cut to around 2h 30, down from almost 6 hours before the High Speed route opened. Rail now has a 63% market share on this route, which was previously one of the busiest routes for air travel in Europe.

 

[Ianigsy]

Why is Waverley being a "big open space" a bad thing? I don't even really think it is when compared to King's Cross or Newcastle!

I can only imagine it means that it's seen as sprawling and exposed to the elements, particularly if your carriage doesn't stop under cover.

The fare point is interesting- I suspect the psychological price point for travel from Edinburgh to London is rather lower than in the opposite direction, and you tend to find that Scots are more used to having to travel at inconvenient times to get anywhere so prepared to travel early/late/overnight to get a better price.

 

[Robertj21a]

I doubt that the problems that Ryanair experienced in 2017 will have had any impact whatsoever. In any event, surely, the Ryanair flights from Edinburgh to England only go to Stansted ?

 

[700007]

London <> Edinburgh is a very competitive market. Surely this would only get worse when First East Coast Trains is introduced?

But when the main rivals are airplanes, relating to the plane vs train argument, it is surprising to see how low the VTEC market share is.

 

[yorkie]

I doubt that the problems that Ryanair experienced in 2017 will have had any impact whatsoever. In any event, surely, the Ryanair flights from Edinburgh to England only go to Stansted ?

Yes but Greater Anglia's Stansted Express takes people directly from the airport terminal into the City in around an hour (with a not too inconvenient change at Tottenham Hale for anyone going elsewhere), so even when you add up all the connection and check-in times, it will be quicker by air.

 

[Robertj21a]

Yes but Greater Anglia's Stansted Express takes people directly from the airport terminal into the City in around an hour (with a not too inconvenient change at Tottenham Hale for anyone going elsewhere), so even when you add up all the connection and check-in times, it will be quicker by air.

Fair enough, but there's usually only 4-5 flights a day. Their prices are so much cheaper that I can well see them taking an even greater share of the market.

 

[swt_passenger]

London <> Edinburgh is a very competitive market. Surely this would only get worse when First East Coast Trains is introduced?

Weren’t the DfT intentions for ECML Open Access to Edinburgh shown in the ITT, with bidders also being made aware of intended changes to TPE services?

AIUI Virgin/Stagecoach should have allowed for the First services, they cannot really now claim surprise.

 

[Starmill]

They were much more positive about it last year
http://www.mynewsdesk.com/uk/virgin...-airlines-between-scotland-and-london-2114238

"On the east coast route between Edinburgh and London, Virgin Trains’ market share against airlines was as high as 37%, up two percentage points on its previous peak in 2014. "

I could be wrong but I believe that this figure takes into account the whole London to Scotland market, wheras the 24% is the London to Edinburgh Market. What's more, it would appear that when they say 'Virgin Trains' in the linked article they actually mean Virgin Trains East Coast and Virgin Trains, whereas the relative success of the latter are not the subject of this thread.

 

[Shaw S Hunter]

Not sure why anyone is surprised. Until Kings Cross-Waverley can be done in under 3 hours air is likely to retain a significant competitive advantage. Even HS2b will not reduce the journey time sufficiently to make much difference. The only way to make a big difference quickly would be to introduce a much heavier regime of "polluter pays" by way of more aviation taxes. Unfortunately aviation does not exist within a purely GB bubble so hiking taxes here would inevitably damage the finances of local airlines in all their markets while making little difference to foreign based airlines. Such are the realities of living in a global village.

 

[oldman]

The figures may understate rail's share, depending on what you mean by London. If I visit relatives in East Anglia, I can fly to London Stansted, or use the train via Peterborough. Perhaps one is counted as a London journey, the other not. The same may apply to other destinations in SE England, such as Oxford.

 

[marks87]

The figures may understate rail's share, depending on what you mean by London. If I visit relatives in East Anglia, I can fly to London Stansted, or use the train via Peterborough. Perhaps one is counted as a London journey, the other not. The same may apply to other destinations in SE England, such as Oxford.

Well, no, in that situation it's not understating rail's share, but overstating air's - you're not actually going to London, which is reflected in the destination of a train ticket, but not a flight.

 

[delt1c]

I work at Malta Airport and can confirm the Ryanair 2017 publicity has had no impact as it is continued growth for Ryanair . Maybe if rail companies could use the same template as ryanair they could see the same .

 

[exile]

Well, no, in that situation it's not understating rail's share, but overstating air's - you're not actually going to London, which is reflected in the destination of a train ticket, but not a flight.

The fair comparison is when one end of a door to door journey is in Edinburgh (or a few miles round) and the other is in Greater London. I would imagine air still wins but not by nearly 3 to 1 as in the story. Of course journey time is the big factor but I wonder whether airlines are better at pricing their product. The fact rail has to pay to maintain 400 miles of track between the two cities, rather than just two airports and an air traffic control system, makes it impossible for trains to compete on price even with a better pricing model.

 

[yorksrob]

I wonder if the key factor is price or speed.

Certainly, given the stories I hear about Ryanair, I can only assume price is driving its continued growth. Perhaps if we want fewer people to use polluting planes on Anglo-Scottish journey's there's an argument for directly subsidising Anglo-Scottish train fares to make them more price competitive.

That said, I get the impression that VTEC doesn't try as hard to be price competitive as previous incarnations on the ECML, so perhaps when the current franchise agreement is finally laid to rest with its unrealistic premium structure and First are operating their direct airline competitor service, rail might achieve a boost in its price competitiveness.

The Madrid to Barcelona example is an interesting one, particularly since it went from being much slower than London - Edinburgh to much faster. Whilst 60+% might be optimistic, I would hope that it wouldn't require a two and a hald hour journey time to achieve a significant increase in market share from what rail has now.

 

[ForTheLoveOf]

Not sure why anyone is surprised. Until Kings Cross-Waverley can be done in under 3 hours air is likely to retain a significant competitive advantage. Even HS2b will not reduce the journey time sufficiently to make much difference. The only way to make a big difference quickly would be to introduce a much heavier regime of "polluter pays" by way of more aviation taxes. Unfortunately aviation does not exist within a purely GB bubble so hiking taxes here would inevitably damage the finances of local airlines in all their markets while making little difference to foreign based airlines. Such are the realities of living in a global village.

As you state, it would indeed be difficult to restrain the aviation market through pollution taxes (duly noting that the pollution caused and fuel used by any Ryanair flight is likely to be significantly lower than the equivalent car journey, especially given the likely 1-person car occupancy on such journeys).

It's far more feasible to introduce motorway tolls or - to the chagrin of drivers, who are actually damaging the environment the most by far - increasing fuel duty to the level it ought to be, had it not been frozen several years ago. Either of these could serve to:

a) Pay for increased railway subsidy - such that for example operators could claim a 50% subsidy on the face ticket value when selling Advances on a route served by flights and thereby indeed compete with the Ryanairs and Easyjets, and
b) Introduce pricing pressure to reduce road usage, alleviating congestion and reducing environmental impact.

However, with there being far more marginal voters who like going by car than those who like going by train, it would be politically unacceptable to increase fuel duty.

 

[Starmill]

Not sure why anyone is surprised. Until Kings Cross-Waverley can be done in under 3 hours air is likely to retain a significant competitive advantage. Even HS2b will not reduce the journey time sufficiently to make much difference. The only way to make a big difference quickly would be to introduce a much heavier regime of "polluter pays" by way of more aviation taxes. Unfortunately aviation does not exist within a purely GB bubble so hiking taxes here would inevitably damage the finances of local airlines in all their markets while making little difference to foreign based airlines. Such are the realities of living in a global village.

It isn't especially shocking, and I wasn't really suggesting that a new levy should be placed on air travel. However it is still clearly a case of market failure. As you mention it, I wonder if it would be permitted under the current framework to introduce a higher duty that applied only to intra-GB flights?

 

[Starmill]

As you state, it would indeed be difficult to restrain the aviation market through pollution taxes (duly noting that the pollution caused and fuel used by any Ryanair flight is likely to be significantly lower than the equivalent car journey, especially given the likely 1-person car occupancy on such journeys).

It's far more feasible to introduce motorway tolls or - to the chagrin of drivers, who are actually damaging the environment the most by far - increasing fuel duty to the level it ought to be, had it not been frozen several years ago. Either of these could serve to:

a) Pay for increased railway subsidy - such that for example operators could claim a 50% subsidy on the face ticket value when selling Advances on a route served by flights and thereby indeed compete with the Ryanairs and Easyjets, and
b) Introduce pricing pressure to reduce road usage, alleviating congestion and reducing environmental impact.

However, with there being far more marginal voters who like going by car than those who like going by train, it would be politically unacceptable to increase fuel duty.

These are all splendid points, but I don't think that travel by road is ever likely to gain significant market share on Edinburgh to London. At 7 - 8 hours journey time it's perhaps not too surprising.

 

[91101]

The sweet spot for rail is journeys between 2.5 and 3.5 hours where rail can achieve a massive market share. Most BA traffic now from Manchester is for connections rather than what is termed O&D traffic. A few years before the West Coast Route upgrade with 1 train an hour to Manc, rail lagged behind massively. Same is true for Paris and Brussels!

I've just booked a flight back from Amsterdam to London, and just between BA and KLM there was at least 30 flights a day. I didn't look at Ryanair or EasyJet, but add them in for LTN, STN and LGW and you would quickly probably add up to at least 50 daily flights.

Will be interesting to see what impact in a few years, if any Eurostar will do to that market.

If VTEC can reliably path a 4 hour service using its shortened MkIV's then it might claim some share back.

With regards to Waverley, I think they were referring to the confusing nature of the station and platforms, with Platform 2 and 19 sharing the same platform face for example and it all seeming very confusing. As a railway person you sit back and work out the pattern, but when you're in the maze, its confusing for pax!

 

[Tetchytyke]

VTEC is too slow and too expensive. From Newcastle it's neck and neck between VTEC and BA on both price and speed. From anywhere North, the plane wins hands down.

Interesting that VTEC reckon that fares regulation is the problem. Sums up the attitude of the Beardy Price Gouger. His desire to fleece the rail passenger at every turn is a massive part of why the plane dominates the market.

As for Waverley, let's face it, the place is a dump. A big, cold, run down, chaotic dump. The fact every VTEC train j catch seems to go in on 8 or 9, with the resultant ten minute walk across the station to use any facilities, probably doesn't help improve my opinion.

 

[Robertj21a]

It isn't especially shocking, and I wasn't really suggesting that a new levy should be placed on air travel. However it is still clearly a case of market failure. As you mention it, I wonder if it would be permitted under the current framework to introduce a higher duty that applied only to intra-GB flights?

Given that Ryanair is being referred to throughout this debate, can anyone confirm what pollution levels are appropriate to their fleet ?(don't they have the fleet with the highest % of new, highly efficient, aircraft ?).

 

[Chrism20]

Why is Waverley being a "big open space" a bad thing? I don't even really think it is when compared to King's Cross or Newcastle!

From a VTEC point of view Waverley is a mess and must be brutal to manage. Currently their services can depart from platforms 2, 7, 8, 9, 11 & 19 (I think). Those platforms are all over the place.

You can have a VTEC train arriving on 8 and one departing on 2 almost simultaneously which are at opposite ends of the station from each other. This will all add to the stresses of running the operation so it may not be the fact that the station is spacious but the layout and logistics.

If you look at other terminating stations such as Glasgow, Leeds, Newcastle etc the services all usually depart from the same two or three platforms which are usually adjacent to each other. Even at Kings Cross all the VTEC platforms are together. Cleaning, portering and assistance costs are probably higher at Edinburgh compared to the others due to this which will make it a weakness.

Once the new terminating platforms are in place this should make it easier operationally for the staff and the customers as in theory only the Aberdeen/Inverness/Stirling services should be using other platforms.

 

[theironroad]

Given that Ryanair is being referred to throughout this debate, can anyone confirm what pollution levels are appropriate to their fleet ?(don't they have the fleet with the highest % of new, highly efficient, aircraft ?).

Their website claims average age is 6.5 years and will fall with introduction of 737-MAX and new planes are more fuel efficient.

 

[yorksrob]

Interesting that VTEC reckon that fares regulation is the problem. Sums up the attitude of the Beardy Price Gouger. His desire to fleece the rail passenger at every turn is a massive part of why the plane dominates the market.

Indeed. It seems that the more freedom Virgin/Stagecoach have to operate yield management, the further away they get from offering a consistently competitive product in terms of price. The report mentions the consistency of the product as a weakness, yet they don't seem to think that potential passengers are looking for this in terms of fares. For "price messaging" expect gimmicky nonsense.

 

[Starmill]

I believe 'price messaging' means advertising on the basis of price, rather than on the basis of speed or of comfort and quality. All of VTEC's advertising is gimmicky, regardless of which of these they are pushing (and they have pushed all three at times in the past).

 

[HSTEd]

The only way to get a competitive journey time via the West Coast route would be by continuous HSL all the way to Scotland, which is never going to happen.

Perhaps we should curtail the conventional HSL programme after HS2/3 and, baring any disasters when it opens, adopt Chūō Shinkansen technology.

London to Edinburgh in 90 minutes.

 

[gingerheid]

I'd suggest that, along with every other valid point already made, there seem to be fare problems with the route.

In this forum we're not your normal travelers in terms of the things we'll do to get good/reasonable fares that we take for granted. Normal people won't do that, and if the first fare they are offered is silly they'll move on.

I travel from East Anglia to beyond Glasgow Central and nowadays find the plane / train balance very fine in terms of convenience and price (generally I do prefer the train and will pay a bit more accordingly but often it comes down to what luggage I'll have). However I often find it a real mission to find sensible fares (almost always requires a split ticket otherwise advance fares don't appear, and in the days when you had to take delay repay vouchers to ticket offices often you had to spend ages there while they tried to make the routings NRE showed appear at all). I really noticed this become a problem after the direct trains to Glasgow stopped (and when those existed I almost always took the train, but now that Edinburgh Glasgow is either a third or forth connection in the journey that becomes off-putting)

The only time I've not taken the train for another reason has been where the last train from Edinburgh had been too early for me (and really I think it is a bit early given the nature of the route).

I imagine they have also lost people to VTWC? If you are going somewhere between the two routes they are now often a better option than they were historically. While I personally would never voluntarily do Cambridge - Birmingham if I could avoid it, it now often shows up in the journey planner as part of a trip to Glasgow where it wouldn't have before!