Rail Delivery Group submission to the Williams Review

Discussion in 'UK Railway Discussion' started by CyrusWuff, 30 Apr 2019.

  1. HowardGWR

    HowardGWR Established Member

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    I think the organisation that ensures cooperation would also determine who runs the operational signalling at junctions and jointly used lines. The 'pre-grouping' vertical organisations and PTEs would do their own logistics and apply for slots with that organisation. The latter would not only regulate who provides and maintains jointly-used infrastructure but also what charges are made for doing so. One could call this organisation the 'Railway Clearing House'. :)
    As example, I think a future LNWR would include what is at present Virgin Trains and LNR and the NR organisations on those routes, and there would not be 'open access'*. However, the new LNWR would compete with HS2 and Chiltern. All three would be vertical organisations running track and trains along the lines I think were suggested by HH in his post. They would run their own train control and signalling except at junctions and joint lines, where the arrangements I suggest above would apply.

    *The new Railways Act would specify where low-cost inter-city services would be provided along the lines of Ouigo. They could be called 'Parliamentary trains' here. :)
     
  2. Jorge Da Silva

    Jorge Da Silva Established Member

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    https://www.shropshirestar.com/news...-a-single-organisation-to-run-train-services/

    Seems like the public agree with the Rail Delivery Group’s Proposals.
     
  3. Randomer

    Randomer Member

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    Or alternatively people were asked very leading questions to get a result that they wanted on a survey....

    If people were asked "would lowering prices at peak times but making them far more expensive at off peak times when you travel be the right move for the railway" they might get a different answer. Although to be fair that was the gist of the fares consultation rather than this.

    RDG represents it members and it could be doubted that they would suggest or survey for a system that would lesson the power of the TOC concerned to set fares or make profits. Even moving to purely management based contracts (as London Overground, TFL rail or GTR are currently) would change the railways considerably if a new national body set the terms for the contracts and allowed operators to bid on them.

    Frankly it doesn't entirely matter if the terms of reference for the Williams review aren't going to be published along with any "advice" given to him by the DFT. I can't see a government commissioned review turning round and suggesting abolishing franchising and going back to and approximation of the grouping companies matched to the new Network Rail regions.
     
  4. thedbdiboy

    thedbdiboy Member

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    Would that be leading in the same way that your post says 'making [fares] far more expensive off-peak' instead of what the report actually says, which is that long distance fares might cost slightly more at the margins of the off-peak but could be lower in the middle of the off-peak?

    RDG is not ATOC, it includes member input but does not just reflect what the owners want. In fact, given the exodus of owning groups from rail, their voice is somewhat muted.

    What is emerging from the Williams review is the need for an industry structure with a proper controlling body. This will inevitably mean that fares will be reformed so that whoever is in charge will actually be able to implement a coherent fares structure. That should be better for everyone except the 1% who know how to play the current system with all its manifold contradictions between validities, conditions of travel and routing guide.

    Far too many people are deluding themselves that this is about stopping nasty private operators from exploiting passengers, but the current system came from DfT squeezing bids to maximise bid premia without any concern about exacerbating fare anomalies and the risk of split ticketing. Now that this is unravelling, it is the government that ultimately bears the risk from loss of revenue. I'll leave you to speculate about how that one may play out....
     
  5. Randomer

    Randomer Member

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    Do you see RDG positioning itself as potentially the organisation to evolve into that controlling body outside of political interference? Or potentially something like a reborn SRA?

    I don't disagree that the current fares structure has too many oddities and contradictions I just personally believe that the current system cannot be meaningfully reformed in a manner that is revenue neutral without adversely affecting people who can least afford but most need rail travel. I.e. those on low incomes for who the current peak fares or indeed off-peak are prohibitively expensive and don't have access to other means of long distance transport.

    Do you mean in that companies will not wish to bid for operating contracts on the basis that the profit margin or risk profile is too small? Or something more direct?

    Outside of the management contracts (e.g. GTR or TFL rail) surely most current franchises bare the revenue risk or loss of guarantee bond as happened with VTEC? I will confess that I haven't been hugely attentive towards it but I haven't heard of the legal cases around season tickets and London jobs growth being successful for the TOC concerned.
     
  6. Justapunter

    Justapunter Member

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    Amy (in the example) doesn’t buy walk up fares on the ECML. She can’t afford to . Working in a tech start up she can’t pay a days wages or more for a train ticket.and she works for a tech startup. Not a pun antiquarian bookshop. She books in advance. On her phone. Unless it’s an emergency. Or she shares a lift in a car for a lot less money. Peterborough is on way to London. And there’ll be others in London going for weekends.
     
  7. thedbdiboy

    thedbdiboy Member

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    Whatever organising body is carved out, it won't be RDG in its current form. There are bits of the DfT Rail department, bits of RDG and bits of bodies such as ORR and RSSB that would need to be migrated to create a logical controlling body. The crucial thig is that this body will be answerable to government for overall policy. It is government that needs to prioritise factors such as funding, the return on assets that needs to be generated and which things should be protected (such as fare levels for vulnerable groups or in captive markets).
    Ther existing franchise system is completely broken. There are a number of models that may work in a future structure, ranging from concessions through to areas where open access might work. The legal cases pending are a sideshow, the main problem is that without the model being completely reset there is no prospect of any sustainable bids for franchises in their current form. The profit margins are wafer thin and the risks far too great, from changing markets, the pensions risk, the industrial relations issues and misaligned incentives including the current fares system and regulation and the trcak access arrangements.

    ing a
     
  8. Mike@Raileasy

    Mike@Raileasy Member

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    The 1% you quote do save money but are obviously still paying so the "risk" is a (small) percentage of 1%. And what about the new users cheaper fares can attract, or make rail affordable, which increase the overall revenue? Your Fares Consultation suggested fares could be reduced on quieter services and train operators run promotions so it appears this is a tried and tested model for attracting new users. Presumably this has all been tracked and measured or why run them? Price is the main reason non users give.
     
  9. thedbdiboy

    thedbdiboy Member

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    Yes, it's 'elasticity' and its why particularly on longer distance routes in particular, a better balance of fares with the majority being lower actually generates more revenue. There are far too many cases at the moment when someone thinking of making a non-commuting journey looks up a train fare and immediately decides not to use rail because the price generated puts them off despite available capacity.
     
  10. yorksrob

    yorksrob Veteran Member

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    This is particularly the case with medium distance non-London journeys.
     
  11. yorkie

    yorkie Administrator Staff Member Administrator

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    Surely train companies have the ability and tools, right now, to put the price down for such journeys? Many TOCs have already done this.
     
  12. Bletchleyite

    Bletchleyite Veteran Member

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    A TOC can reduce any fare they feel like provided they price it, even regulated fares (they only can't increase those). They do like blabbing that this isn't the case, but it is. What they want is more subsidy so they don't lose profits from doing so, of course.
     
  13. HH

    HH Established Member

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    This is a rather simplistic view. All the TOCs use some form of yield management (for better or worse, Intercity TOCs generally have the best systems), so prices are designed to earn the most revenue - if lowering the price looks like it will achieve that (and they can carry the extra passengers!), then they will (theoretically) lower the price.
     
  14. thedbdiboy

    thedbdiboy Member

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    We're not talking about core flows but the thousands of network journeys priced by flows set by one train company but valid via myriad routes and services that they don't operate. The number of potential journey options on the network is approximately 6.25 million and it is not humanly possible to optomise the pricing on all of them through the current fares setting process. The way these are managed through the archaic system of flow ownership and ORCATS allocation gives no-one any proper control or oversight of who is using them and what prices should be charged. I don't really want to reopen this debate as I know you are happy with the system and convinced that it just somehow needs a person with a big stick to make it work; however, with over 30 years experience having worked with the people who built and maintained the BR structure, I can say that it was very good for its time but has been hopelessly compromised by DfT's conflicting commercial arrangements, competition law and technological advances. In any normal envrionment it would have been replaced years ago, but the quasi-privatised structure has completely paralysed the process needed to evolve it.
    The train companies can't reform it as they are hog-tied through their contracts to various bits of the system. The only reform that can happen is from government. They can either do it sooner, or wait until commercialised split ticketing destroys the current system completely. This is nothing to do with nasty horrible train operators (quite a few of whom will soon be or are already exiting the industry), and everything to do with government who will look at the hole opening up in revenues and take fright. The point is, if you insist on preserving the current structure, the only response government will eventually make is to put up regulated rail fares, which won't help much because it will just put more people off rail travel and still not address the need for fares for part time workers or times of the day when off-peak intercity fares aren't valid. Proper reform will do a much better job of actually generating more money with, in many cases, lower fares because proper use of dynamic technology (the stuff that BR didn't have) will enable much better real time targeting of fares that people are willing to pay when they want to travel.
     
  15. Starmill

    Starmill Events Co-ordinator

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    This happens pretty much every time someone I know thinks about traveling by train (apart from enthusiasts, nearly everyone I know travels by train never, or almost never), or so they tell me. I will offer fares and journey advice to anyone who asks me for it, but I have pretty much given up trying to advocate for rail over people driving themselves or flying - to the average person, it's simply not attractive enough. Even my mother, who knows how I spend much of my time, has made only one long-distance round trip rail journey in the past year. I organised it for her, she felt she had paid fairly but quite a bit, and then hated it because the train before hers from London to Manchester was cancelled, so she was claustrophobically crushed in. If she wants to go somewhere again, her partner will probably just drive her.
     
    Last edited: 11 Jul 2019
  16. Bletchleyite

    Bletchleyite Veteran Member

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    Complexity of fares is also a big issue. This also comes up for group travel - we really need to just standardise on GroupSave across all TOCs rather than them having their own incompatible systems.
     
  17. kevin_roche

    kevin_roche Member

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    Sorry to be really off topic but this reminded me of "only 3 can play"
     
    Last edited: 11 Jul 2019
  18. tony_mac

    tony_mac Established Member

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    That's also somewhat simplistic; there is no practical way of finding the best price to charge (where demand is non-linear). E.g., it may be that reducing by £1 will reduce revenue as it doesn't increase demand, but reducing by £5 will increase demand and revenue. If you reduce by £1, and lose money, few people then keep reducing prices...

    And, a big bugbear of mine, maximising ticket revenue is not maximising utility - taking people off the roads should be a consideration, now more than ever, but that isn't (currently) in the TOC's interest.

    I don't believe that any dynamic pricing will be successful, in the long term, without considering the utility of the taxpayer who is involved in funding the services.
    This is certainly true - but the current TOCs' 'yield management' doesn't appear to be helping. In recent years, I have seen a lot of low-priced advance fares on quietly-used trains disappear.

    And therein lies the problem, how will 'proper' reform be achieved?
    I could write pages about the subject, but doing it properly would require an amount of expertise that we don't yet have.
    You could do it with long-distance fares, like airlines do, but what about commuters? Will people continue to commit to travelling by rail when they have no idea how much next month's ticket might cost? You can't change routes if demand changes, like an airline can.
    Limited dynamic pricing might actually make the split-ticketing 'problem' worse, and make revenue even harder to predict.

    I suspect that dynamic road pricing will be a much better-researched topic; it will take into account optimising the flow and not just revenue, and can be implemented by a single central authority. It is well-known that you can optimise a network flow through 'central' pricing; you can't do it where the price functions are set by competing agents.
     
  19. RLBH

    RLBH Member

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    That depends on whose hat you're wearing. If you're wearing a TOC's hat, then profit is your measure of utility, so maximising revenue is the goal. As long as fares are set by TOCs and are their main source of income, that will be the basis of their decision making. A network-wide approach to fares is incompatible with the way we run the railway.
     
  20. thedbdiboy

    thedbdiboy Member

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    The fundamental requirement is to create a fully programmable system capability. This is entirely feasible and indeed the ground work has been undertaken to prove it could work. The system operator or subsidiaries can then decide the parameters for the progamming of their parts of the network. I agree that commuter fares, which function entirely differently to long distance fares and serve captive markets with limited elasticities, would not suit dynamic market pricing, certainly in the peak. Therefore dynamic pricing functionality could be inhibited for those journeys, but it could be enabled for those journeys where the commuting 'leg' is part of a longer intercity journey with different market characteristics.
    It's a big job but like most big jobs can be made managable by breaking it down into stages. You highlight an issue when you refer to lack of expertise. The expertise do this exists in the wider world but has been pretty much expunged from the rail industry because privatisation in 1995, instead of enabling fares innovation basically stifled it by tying everyone to a regime that regulated them to the BR fares structure in perpetuity (i'm not talking about prices or even products - i'm talking about the very nature of how the flow structure is compiled). An early step is therefore to start rebuilding this capability with a new generation of people with the rigth capability and vision.
     
  21. Indigo2

    Indigo2 Established Member

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    I don't see why being tied to the BR fares flow structure is an excuse for losing the expertise to be able to manage it? Even relatively straight forward things like updating time restrictions in advance of changes to timetables, or keeping abreast of easements on bank holiday dates, often seems to be a challenge these days.
    I strongly agree with this point though; I feel if all the discussion about fares reform leads to nothing more than this point being widely recognised, it would still be a really good achievement.

    I would think something like a regular technical meeting, where the people who still have the expertise (but are dispersed amongst many different companies) could get together with the people who have responsibility for managing fares, to discuss the technical challenges in fares innovation, would be a good start.
     
  22. thedbdiboy

    thedbdiboy Member

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    The problem is that it was designed to be managed by a single entity; for the first decade or so after privatisation the majority of pricing managers and associated technical people scattered across TOCs and the suppliers were ex-BR so had the contacts and herd memory to make it work, but with their departure it is very difficult to keep all the bits in alignment, expecially as competition act restrictions severely limit any ability to coordinate the structure. It's not really fit for purpose for a devolved network with Wales, Scotland and potentially regions being seperately managed anyway, regardless of whether its publicly or privately run.

    The concept of a 'flow' as defined in the TSA is really just a copy and paste for the technical process needed in the late 1980s and early 1990s to enable fares to be attached to journeys using the mainframe systems then in place. The final part was the mk1 human brain in the form of the booking clerk. It was a proxy reflecting the limits of data capability that could now be run in real time against available trains services and associate fares data, and would allow journey planners to work much more efficiently, as they would not have to try and locate a fare that matched a journey they had identified. The journey itself would produce the valid fares data. No more itineraries without associated fares!
     
    Last edited: 14 Jul 2019
  23. HH

    HH Established Member

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    I never said the best price. I don't even know what best means with regard to prices.

    What I do know is that a decent Yield Management system knows the difference between reducing by £1 and reducing by £5. But I can't imagine many fares where a £1 reduction would be even considered.
     
  24. maniacmartin

    maniacmartin Established Member Senior Fares Advisor

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    One of the problems with dynamic pricing that I see is buying tickets will have to involve using a journey planner to select a service. Aside from the loss of flexibility, this simply takes a lot longer on a TVM compared to buying a walk up ticket today, if you are an experienced rail traveller who knows what ticket you want to buy. (for evidence of this see the Terrible northern ticket machine update thread). This could lead to big queues at TVMs as not everyone wants to use an app, and indeed getting a phone signal in a London Terminal at peak is nigh on impossible anyway so apps can't be used.
     
  25. Bletchleyite

    Bletchleyite Veteran Member

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    I think you need to change either network or phone. I have never had a problem getting a phone signal at any London terminal in the peak, and I do use my phone each time for RTT. So while there are issues with this approach, I don't think this is one of them, really.
     
  26. tony_mac

    tony_mac Established Member

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    I will expand on my point a little - I am more concerned with the expertise regarding strategy, rather than implementation. Although the current seemingly ad-hoc approach to dealing with fares and routeings (such as given by Indigo2 above) has not inspired much confidence in me, it certainly sounds like positive steps are being taken.

    Assuming the goal is to:-
    "enable much better real time targeting of fares that people are willing to pay when they want to travel"

    Take two complaints we have seen on this forum regarding advance fares:-
    1) TOC A selling cheap advance tickets on already busy trains
    2) TOC B not selling advance tickets on quieter trains

    In 1) They are doing this to gain revenue by taking passengers from another TOC
    in 2) They are doing this so that they don't lose revenue from the busier trains

    In both cases, the strategy is correct to maximise revenue, but not very beneficial to passengers.
    If you want to change their strategies, you have to change the rules - you can't blindly rely on 'market forces' to do the right thing.

    Understanding how to design the system so that it will do roughly what you want is far from trivial, and there have been plenty of attempts that badly failed (e.g., https://mindyourdecisions.com/blog/2014/07/22/4-crazy-moments-in-auction-theory-history/ or even https://en.wikipedia.org/wiki/Darlington_Bus_War)

    I suspect, in future, that there will be increasing pressure on the rail industry to reduce carbon footprint. The best way that I can see to achieve this is to put bums on seats - so how will a new system be able to achieve this without running into the problems such as described above?

    Unlike, e.g., airlines - we are also dealing with fixed infrastructure, capacities, and franchises with limited competition. All of this, I think, makes the system uniquely complex to understand what the actual effects might be.
    I hope that there is some serious work undertaken to understand how such a system might operate in practice, before being tied down to a specific implementation for potentially decades to come.

    (COI declaration - previous work as a not very successful game theorist)
     

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