New Competitive Scheme

[Jorge Da Silva]

https://www.thesun.co.uk/news/8003961/rail-companies-trains-same-routes-fares/

RAIL RIVALS
Rail companies will run trains on same routes from April in a bid to increase competition and drive down fares


The new changes, due to be introduced in April, will allow passengers to choose which operator they ride on and will allow different operators to compete with each other, potentially driving down fares

TRAIN passengers will be able to choose which rail company they use for their journeys under a new competitive system - that could see rival firms running the same routes.

Some experts say the move might end up dramatically shaking-up the industry -resembling how the explosion of budget airlines revolutionised air travel.

The changes are being introduced to the rail network from April, and will allow different operators to compete against each other for passengers on the same sections of line.

Bosses at the Office of Rail and Road (ORR) regulator hope the new system may cut fares, increase train numbers, and encourage innovation and better quality services.


Franchise operators with government contracts could end up competing directly against “open-access” operators, which would have to pay a bigger share of the costs for the railway’s upkeep in return.

And the Competition and Markets Authority backed the move – suggesting that allowing open-access operators on the railways would have a similar impact to the one seen in the airline industry.

Any thoughts on the idea?

 

[krus_aragon]

This sounds suspiciously like our existing system of operator-only tickets. What exactly are the "new changes" ?

 

[michael74]

I have images of the post deregulation 'bus wars' trains cutting each other up and hogging the station platforms to prevent rival TOCs from getting to the passengers

 

[xydancer]

Needless to say, it's not quite as simple as the Sun likes to make out. It's also two-week-old news, the changes having been announced by the Office of Road and Rail on December 3rd.

I'm not quite sure how it will increase open access given the changes include open access operators being "required to make a bigger contribution to the cost of running the railway through the infrastructure cost charge" and a greater consideration of the "impact on the finances of the existing franchise operator alongside the passenger benefits." Maybe others closer to the industry who are closer to things can shed a little more light on things.

For what the ORR say, go to http://orr.gov.uk/news-and-media/orr-blog/2018/the-future-for-open-access

The future for open access
3 December 2018

By Beth Tasker, Senior Manager, Competition Economics.


Open access operators, like Hull Trains and Grand Central, compete with franchised train operators on the GB mainline. The competition they introduce has been shown to deliver significant benefits. These include: lower fares, improvements to service levels and growth in the market for rail travel. They were also the first to introduce innovative services, such as free WiFi for all passengers.

However, there is a risk that open access operators might cherry pick the most profitable services. In the GB rail market, where there is a lot of public subsidy of franchised services, this would result in the cost of the railway to government going up. Our policy must take this into account alongside the potential benefits of more open access.

What we are changing
Despite the benefits they generate, non-franchised operators account for less than 1% of passenger miles in GB.

We are introducing a number of changes to ensure that open access operators are able to prosper and grow their businesses, so long as they generate sustainable benefits for passengers.

From April 2019, new open access operators (and existing operators that substantially modify their services) that propose to run certain services will be required to make a bigger contribution to the cost of running the railway through the infrastructure cost charge. While this represents an extra cost to potential operators, we are also making changes to our access policy which will increase the likelihood that services incurring the new charge will be granted access rights. This should encourage more competition in the passenger rail market.

We are also introducing the 'Economic Equilibrium' test, which we will use in our assessment of track access applications. It will consider the impact on the finances of the existing franchise operator alongside the passenger benefits. This test is required under EU legislation which seeks to promote competition in passenger rail markets across Europe. This complements our existing access policy, which already requires us to weigh up a number of factors including whether there is fair and efficient use of capacity on the network and whether the new services would enable greater competition.

Lastly, but no less importantly, we are going to be engaging with industry to develop a framework for monitoring the impact of, and response to, open access. This should ensure that open access operators continue to face fair market conditions. It will also act as an early warning system, enabling us to be a more proactive competition regulator.

 

[LNW-GW Joint]

Looks like it is part of this change to Open Access regulation, announced a couple of weeks ago.
http://orr.gov.uk/news-and-media/orr-blog/2018/the-future-for-open-access
Basically, OA operators will now pay towards the fixed access charges that franchised operators pay, rather than just the incremental costs of adding their services.
But the competition access rules will also be less stringent, leading to more OA services on more routes.
I can't see anything more specific on the ORR web site or elsewhere.

From April 2019, new open access operators (and existing operators that substantially modify their services) that propose to run certain services will be required to make a bigger contribution to the cost of running the railway through the infrastructure cost charge. While this represents an extra cost to potential operators, we are also making changes to our access policy which will increase the likelihood that services incurring the new charge will be granted access rights. This should encourage more competition in the passenger rail market.

We are also introducing the 'Economic Equilibrium' test, which we will use in our assessment of track access applications. It will consider the impact on the finances of the existing franchise operator alongside the passenger benefits. This test is required under EU legislation which seeks to promote competition in passenger rail markets across Europe. This complements our existing access policy, which already requires us to weigh up a number of factors including whether there is fair and efficient use of capacity on the network and whether the new services would enable greater competition.

Lastly, but no less importantly, we are going to be engaging with industry to develop a framework for monitoring the impact of, and response to, open access. This should ensure that open access operators continue to face fair market conditions. It will also act as an early warning system, enabling us to be a more proactive competition regulator

I don't think this amounts to "leap-frogging" services on the same routes.

 

[krus_aragon]

Thank you both. I'd never have guessed that from the Sun's article.

 

[tommy2215]

Hopefully a new open access operator will operate on the Midland Mainline. EMT fares are driving many people (myself included) away from using their trains to London.

 

[Gerald Fiennes]

ORR hugely overselling what is a actually a fairly mixed reform. Given that DfT at present is far from keen on open access and that most mainline routes are full -- or worse -- doesn't look like this will amount to that much change in reality.

 

[Masboroughlad]

Could be Ian Yeowart has set up another OA company?

 

[Jorge Da Silva]

Could be Ian Yeowart has set up another OA company?

Isn’t that Grand Union Trains?

 

[Bletchleyite]

Anything promoting on-rail competition is a silly idea, just like on-street bus competition is a silly idea. The target is, and should be, the vast majority of passenger journeys which are taking place by car rather than a petty spat between rail or bus operators for fewer than 10% of passenger journeys. Reform is needed to the industry which will push it to actually compete with those car journeys by way of more attractive pricing and significantly increased capacity. For instance, VTWC's highly-priced (to maximise revenue, not bums on seats) Anytime tickets are completely counter to this, and this idea needs to be banned.

The aim has to be, as I recall VTWC once saying, to be able to grass over the M6 and crush the market for domestic air travel to the point they just give up, not to make an extra few quid by ramming a few extra passengers into your 4-car Class 350s leaving half-empty off-peak Pendolinos (yes, you, LNR) or your rail replacement bus services (GC and Hull Trains).

 

[WrongRoad]

So could someone explain where do all the extra pathways suddenly come from into somewhere like Waterloo station? If say an OA operator wants to compete against SWR on the Waterloo- Portsmouth via Guildford route and SWR operate say 50 return journeys per day, will an OA operator have to match that frequency? Will the available pathways be split between the two operators? That then isn’t any competition if only one operator is running a service at certain times.

 

[swt_passenger]

So could someone explain where do all the extra pathways suddenly come from into somewhere like Waterloo station? If say an OA operator wants to compete against SWR on the Waterloo- Portsmouth via Guildford route and SWR operate say 50 return journeys per day, will an OA operator have to match that frequency? Will the available pathways be split between the two operators? That then isn’t any competition if only one operator is running a service at certain times.

They don't suddenly appear as was seen with the Southampton proposal, NR were always very cautious about the timetabling/pathing issues. Then even if reliable paths did appear NR wouldn't have any spare power available anyway.

OA operators welcome. Bring your own substations...

 

[geoffk]

The ORR seems to be obsessed with rail on rail competition. Someone tell them that the main competitor is the car. Or preferably abolish them altogether. Train service will only improve if all the players work together to optimise the available paths for different types of passenger trains and freight. At the moment there are too many conflicting objectives and TOCs are just trying to maximise their own revenue. Why do we need more trains between London and Southampton, or London and Edinburgh? We already have six fast trains an hour between York and Newcastle and three (soon to be four) between Newcastle and Edinburgh. And whatever happened to "not primarily abstractive"?

 

[swt_passenger]

^^^
If the ORR are obsessed with OA, they have an odd way of showing it. I reckon they have turned down far more than they’ve allowed.

 

[LNW-GW Joint]

^^^
If the ORR are obsessed with OA, they have an odd way of showing it. I reckon they have turned down far more than they’ve allowed.

I think it's the CMA which is obsessed with competition, having had runs in with DfT and ORR before, and ORR is trying to keep them at bay.
There's also the pressure of EU legislation (for now at least) to open up the railway in the same way as airlines, and reduce the barriers to entry.
You only have to look at recent rail developments in France, Spain and elsewhere (even Germany) where significant private sector competition is starting.
Most of that, though, is in areas with spare capacity (eg new high speed lines), or where frequency is low by GB standards.
eg today's item on OA in Spain: https://www.railwaygazette.com/news...ona-backs-open-access-high-speed-project.html

SPAIN: Prospects for on-rail competition in the high speed market have increased, with Madrid-based international construction group Acciona expected to take a majority stake in open-access promoter Intermodalidad de Levante SA.

Founded by Valencia-based regional airline Air Nostrum, ILSA has applied to launch a twice-daily Madrid – Montpellier service, calling at Zaragoza, Barcelona, Perpignan and Narbonne. It argues that this would tap into an under-served cross-border market, but it could also compete head-to-head with state operator RENFE for domestic business. The proposed service was approved in September by competition authority CNMC, which concluded that the main objective was the international traffic
…
The group is understood to be in negotiations with DB and Italo-NTV, as well as SNCF, which is seen as a potential front runner following the reported collapse of talks with RENFE over possible participation in the Spanish operator’s planned EVA low-cost high speed service

 

[Master29]

For some reason these stories get cooked up in the press randomly it seems, but this isn`t anything new.

 

[Wilts Wanderer]

If operators who significantly modify their timetable are to pay higher infrastructure costs, how do they intend to define what is and isn’t a ‘significant’ modification? Does the GWML intercity enhancement count? It is now planned for Dec 2019 but the finances of the plan will be based on the existing TAC arrangements - and ultimately justify the GWEP (or not!) I can’t believe DfT will simply dump a load of extra cost onto the franchise at this stage, after everything that has already happened.

 

[xotGD]

Get rid of the cherry-picking chancers, renationalise the franchises and give passengers the integrated network they want.

 

[hooverboy]

https://www.thesun.co.uk/news/8003961/rail-companies-trains-same-routes-fares/



Any thoughts on the idea?

they need to get rid of about half the franchises to make this work.

i ,for one, would actually be quite happy if I had the choice between an express service,to which I pay a premium, or a semi-fast regional express, which takes half an hour longer each way from StP to sheffield, but can be done return on a £25 day pass- on the day!
DB manage perfectly well with their day passes.....and it works much the same way.

I don't care much for what motive power gets me there, as long as it's fairly comfortable,and keeps to time at about 30 minutes behind express timings each way.

recycled HST or 90/91+mk3/4 is totally fine with me, as long as I get a seat and they ain't ironing boards.
FWIW maybe even a top+tail 88 set /88+dvt could do this...7 mk4's is still way better than a 5 car(actually 4 car worth of seating) meridian.
I think the LNER mk4's are VERY comfortable!...would certainly suffice....not sure about GA mk3's But they could be got quite cheap on lease now I think!

 

[krus_aragon]

If operators who significantly modify their timetable are to pay higher infrastructure costs, how do they intend to define what is and isn’t a ‘significant’ modification? Does the GWML intercity enhancement count? It is now planned for Dec 2019 but the finances of the plan will be based on the existing TAC arrangements - and ultimately justify the GWEP (or not!) I can’t believe DfT will simply dump a load of extra cost onto the franchise at this stage, after everything that has already happened.

I think that matter of "significant modification" applies only to the open access operators. Existing operators can continue as they are after the introduction of the new scheme, but wholesale timetable changes will mean they'll have to pay the revised access rates, which reflect the base and incremental costs of running the trains on the infrastructure. At present, all of the base cost is on the franchises.

As the OAOs will be contributing more to infrastructure costs, franchise operators' costs could reduce slightly as a result.

 

[Megafuss]

Not so long ago didn't Branson suggest operators should bid for departure slots - like airlines instead of having a franchise

 

[tbtc]

I'm reading this as "convenient passenger-friendly headline about competing trains meaning lower fares" as the frothy distraction for the more substantial "we are making Open Access pay a more reasonable share of the costs rather than getting a relatively free ride compared to TOCs". Well managed Press Release, making something costly sound appealing by dressing it up as a consumer friendly move.

I don't think there are paths (or electricity/ stock etc) for any more OA at busy stations, so I don't think we should be seeing more. But, at least, if we do then we'll see them paying a fairer share of the costs, so less for people like me to grumble about!

 

[LNW-GW Joint]

Not so long ago didn't Branson suggest operators should bid for departure slots - like airlines instead of having a franchise

That's a serious option which will be considered in franchising reform.
It's how it works in Italy on high speed lines, and is proposed for France and Spain.

 

[xotGD]

That's a serious option which will be considered in franchising reform.
It's how it works in Italy on high speed lines, and is proposed for France and Spain.

Totally bonkers.

 

[Meerkat]

I can only see it (possibly) working by breaking up franchises and selling/franchising sets of paths.
A bit like Premier League TV rights!
Very simplistically operator A gets xx:00, operator B gets xx:30.
How much flexibility they have over stopping patterns would be a big argument......

You would then have real competition on price and quality (ironing boards.....) and all sorts of fun when there was disruption!!

 

[jagardner1984]

This feels like a last ditch attempt to salvage privatisation in the context of an ever more dissatisfied public. “Ah but you see, we didn’t have enough competition, that’s why it’s not been working.”

I think there are 3 main points:

1. As a piece of national infrastructure, the railway is too big to fail and therefore any performance drop (see Hull Trains) is unacceptable when there is no guaranteed (by Contract) alternative.
2. Therefore the public want more simplicity, not less when buying a ticket. Most people accept the restriction of a particular train in return for a discount. They know in a day of significant disruption those restrictions are loosened and getting from A to B is the priority. There would have to be really clear contractual rules on guaranteed ticket acceptance for this to even be considered (see Hull Trains issues)
3. Most of the mainline terminals are close to capacity, and so more significant OA is not particularly practical without reducing existing services. I would observe little enthusiasm for that, particularly in return for more complexity and confusion.

At some point, some government with some competence needs to assess the network more widely, and someone needs to realise that the myriad of operators, regulators, maintenance companies, contractors, contracts, lawyers; have become part of the problem, not the solution. Streamlining and simplicity the key. See every successful public service or private enterprise, ever.

How about some honesty. Not one penny of subsidy. Not one penny of money back to the treasury. Charge a rail operators tax on a percentage of all income. Lock a fare ceiling of CPI until fares per mile achieve parity with our European neighbours. For routes deemed unprofitable, have them run directly by a company called “National Rail”. Introduce a national smartcard to encompass all discount cards. Make all ticketing electronic. Make all delay repay automatic. Setup an investment fund of X billion per 10 year period (funded by a mix of general taxation, operators tax and local development funds). Allow bids from councils, operators, government as to where money should be spent. Setup a rail users council to determine funding priorities in each region. In other words, allow cherry picking of profitable routes. But set an operators tax to pay for the rest of the network, strip away so much complexity and political meddling. Other countries show us clearly. Railways do not have to be this complicated.

 

[whhistle]

That's a serious option which will be considered in franchising reform.
It's how it works in Italy on high speed lines, and is proposed for France and Spain.

Totally bonkers.

What is bonkers?
The idea of being able to bid for departure slots or that it's how it will work in Europe?
If the former, why is it "bonkers"?

 

[Jorge Da Silva]

https://www.theweek.co.uk/98584/riv...ins-on-same-routes-in-bid-to-improve-services

Rival rail operators to run trains on same routes in bid to improve services

Passengers on the UK’s railway network will soon be able to choose which train operators they use for their journeys, under a new system that experts believe could revolutionise rail travel.

The reforms, which come into effect in April, will allow “open-access” operators to run services on routes currently served by government-contracted franchise operators, “provided that they pay a bigger share of costs for the upkeep of the railway”, The Times reports.

The Office of Rail and Road (ORR) says the changes “should encourage more competition in the passenger rail market” and drive down the cost of fares, as well as resulting in more train services and encourage innovation.

Rail Technology Magazine reports that open-access operators such as Hull Trains and Grand Central have “already shown that the competition they introduce leads to service improvements and growth in rail travel, and they were also the first services to introduce innovative services such as free Wi-Fi”.

The Competition and Markets Authority is also backing the changes, which the watchdog says could have a similar impact to the reforms seen in the airline industry, The Sun adds.

Paul Plummer, chief executive of the Rail Delivery Group, said: “Competition, provided through open-access operators or through competitions to run franchises, has delivered real benefits both for customers and taxpayers.”

However, the ORR’s senior manager for competition economics, Beth Tasker, warned that operators might cherry-pick the most profitable routes. “In the GB rail market, where there is a lot of public subsidy of franchised services, this would result in the cost of the railway to government going up,” she said. “Our policy must take this into account.”

The RMT union has warned that the reforms may lead to “even more fragmentation and profiteering on Britain’s broken rail system”.

More news on the changes and the RMT are not impressed.

 

[paddy1]

Hopefully a new open access operator will operate on the Midland Mainline. EMT fares are driving many people (myself included) away from using their trains to London.

Could defintely do with another TOC giving EMT some competition on the MML and stop them from abusing their what is effectively a monoply position on this route. It's not only the high fares that drive people away but also the overcrowding and uncomfortable journey experience that's results from being 'shoe horned' into four and five car Meridians, which, especially on a Sunday, is doubly reinforced by the spartan service and lack of frequency.