Rail operators call for leisure fares (especially day returns) to increase

Discussion in 'Fares Advice & Policy' started by yorkie, 18 Feb 2019.

  1. yorkie

    yorkie Administrator Staff Member Administrator

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    https://www.bbc.co.uk/news/business-47258909
    They are seeking permission from DfT to ditch fares regulation on the former Saver fares; the aim will be to reduce the price of Anytime fares, and increase the price of Off Peak fares.

    For example, an Anytime Return from Manchester to London is £350, while an Off Peak Return is £89.60. Trains departing at 1800, 1820, 1840 have plenty of spare seats, while the 1900 is full.

    It doesn't have to be that way; LNER have a much more sensible pricing structure that avoids this situation.

    Anyway, the plan to remedy this is for business people to pay much lower fares in future for travel at peak time and the cost of this will be paid for by leisure passengers who will, if the proposals come to fruition, have to pay a higher price.

    The cost of travelling on peak time trains will reduce, but it will no longer be possible to purchase a flexible return fare for a journey such as Mancester to London for £89.60; the lowest flexible fares will cost significantly more under these proposals. The aim is to make business people pay less, while leisure passengers pay more.

    Not only do they plan to increase the price of the fares that are currently regulated, they also plan to remove permitted routes to reduce flexibility, but we've had threads on that before.

    Furthermore, though some of the more expensive fares paid for by business users will decrease, the lowest priced fares - which are used by leisure passengers - will increase, so that it is - in theory - no longer cheaper to "split". In reality this won't be fully achievable as you can never eliminate split ticketing (they tried in Scotland in 2013 and failed).

    It looks like one way they want to achieve this will be to increase the price of day return fares. They will do this by abolishing these good value fares and force passengers to buy Singles. Single fares will be cheaper than at present but not to the extent that would be necessary to avoid huge rises for day trippers. Examples of fares that will go up massively include Sheffield to Derby; currently £12.30 for an off peak day return, and London St Pancras to Gatwick Airport; currently £9.80 for a return on a Saturday or Sunday. The single fares for such journeys are expected to be much higher than half these fares, so day trippers will face fare rises far greater than ever seen before.

    The Rail Delivery Group are misusing the results of the recent fares consultation in order to justify their proposals.

    I will stand firm and oppose their plans every step of the way. I will fight to retain good value fares.
     
    Last edited: 18 Feb 2019
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  3. Starmill

    Starmill Events Co-ordinator

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    It's entirely clear there can be no case made for higher off peak fares on any of the intercity routes in question, given they are already so unaffordable to the majority of the population and they already compete poorly. If this were to happen it would be a very clear and simple grab to subvert government regulation and charge more than they are currently allowed to for the some of the most popular and most useful tickets, without actually improving the service.

    The problem is this is rather dressed up in headlines about ease of use, and the above is not particularly clear.
     
  4. yorkie

    yorkie Administrator Staff Member Administrator

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    The rail operators are keen to push people towards train-specific Advance fares for longer distance journeys. They will argue that, for Manchester to London, people should be buying Advance tickets rather than flexible tickets. I suspect they might change the name "Advance" because they are increasingly available right up to departure.

    Of course we do not know exactly what the fares will be, but the Anytime Single fare might reduce to, say, £110 (£220 rtn), Off Peak might be around £60 (£120 return) and if you want to pay less you need a train specific ticket.

    Of course the idea that you can avoid the need to "split" if these changes are made is absolutely ludicrous and will be proven untrue over time. The only way they can eliminate "splitting" is if they embrace the concept of adding up a series of fares but the ticket issuing systems issue the combination on one physical or electronic ticket, which is printed/displayed as an amalgamation of all the tickets. This would be technically very difficult to achieve though (consider if you had to add together a combination of Anytime, Off Peak and Advance for various different companies; what would the terms of the combined product be?)

    I predict this won't go well for RDG and it will be a political disaster if any Government allows the existing fares regulation to be circumvented to allow these fare rises for leisure passengers to occur.
     
  5. extendedpaul

    extendedpaul Member

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    I don't understand how the proposed changes would reduce overcrowding at peak times. If off peak fares are increased to offset decreases in peak time fares surely the reverse is more likely to happen.

    The analysis by Tom Burridge suggests in the seventh paragraph that the possible changes "may drive more people to travel by train, especially on the more empty off-peak services". How will increasing off peak fares and reducing the gap between singles and day returns achieve that ?

    I travel mainly in Kent and South Wales. In Kent peak travel can cost more than double off peak, with limited railcard concessions, and many day returns are only pennies more than singles. Off peak trains to and from London are generally well loaded. In South Wales the difference between peak and off peak fares is much smaller, and the price difference between singles and returns much greater also there are fewer railcard restrictions. The trains to/from Cardiff are grossly overcrowded at peak times but many run almost empty from 10-4.

    I only travel longer distances on advance tickets and I certainly wouldn't pay much more than I do now. I don't consider £90 for a restricted off peak return between London and Manchester to be particularly cheap but the £350 anytime return is just extortionate. At least the competition between operators keeps fares reasonable between London and Birmingham
     
  6. yorkie

    yorkie Administrator Staff Member Administrator

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    They want more people to buy train-specific fares; again taking London to Manchester as an example, the current "peak" fares cost £150 at present and that would reduce, and the income would be made up by increasing the price of off peak fares.

    London to Manchester is an example of the sort of flow that is broken and does need fixing, but the trains could have more appropriate passenger loadings if Virgin got their yield management tactics up to LNER's standard, as their trains do have sensible loadings departing King's Cross in the evening peak.
    Enjoy those cheap off peak fares while you can!
    Enjoy day returns while you can!
    At present each operator can do its own thing (within fares regulation). But the proposals are for a nationwide structure that would be uniformly set everywhere. They will abandon these plans when they realise it is unworkable, but if they were to implement it, all sorts of problems would be created due to regional variations.
    Yes it is extortionate and they are going to reduce it. But the exercise has to be "revenue neutral" so the cheaper fares will rise, to make up for the lost revenue.

    Just think of how many thousands of business users pay those £350 fares; let's say the price reduces to around £125 single (ie. £250 return). That's £100 less revenue for each Anytime Return sold on that flow alone. That means huge rises for those of us who pay the cheaper fares, in order for the exercise to be "revenue neutral".

    Be under no doubt: these proposals are designed to disbenefit leisure passengers, especially those making day return trips.
    But it also makes for more splitting opportunities, so this would end, under RDG's (unworkable and unpopular) proposals.
     
  7. squizzler

    squizzler Member

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    I reckon that there is no need for anybody to set fares at all. Budget airlines have come up with various formulae that fill up their aircraft all through the day. It must be a pretty established art by now. Fares should be handed over to an algorithm which dispassionately extract the maximum utility from the train services.

    Of course the stakeholders get a say as to how the algorithm works, but the mindset gets away from setting fares structure to a more abstract idea of setting broader rules of the game.
     
  8. ForTheLoveOf

    ForTheLoveOf Established Member

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    Unfortunately, whilst (budget) airlines have it down to a T, within the bounds of what the market can support, that would effectively require all tickets to become Advances, including the abolition of season tickets. It would also require that, like the Eurostar and Caledonian Sleeper now, that everyone has a reservation to travel on the service. That would no doubt be incredibly unpopular with a whole host of passengers - especially commuters.

    Reading through the news reports it's clear that a lot of the media have lapped up the RDG's press release fully. I found it almost funny, although of course it's deeply unfunny, when they said that "the underlying message from train companies today is that they are on the side of passengers" (from the linked BBC article).

    If you read into it, the mere fact that the train companies insist it must be revenue neutral simply makes it impossible to have effective reform. There's no way of skirting around it - a lot of people will be deeply unhappy about the actual results of the proposals if that is to be a central tenet of the reforms.

    In many ways, it feels like we've had this all already several times. Back in 2007-9, when "simplification" meant renaming ticket types, and increasing restrictions as a result. Back a few years ago, when "simplification" meant hunting "Any Permitted" to extinction, and either making it unclear that there are such things as permitted routes at all, or (attempting to) restrict passengers' journeys in ridiculous ways (e.g. the recent Buxton to Marple thread).

    It might be argued that those 'reforms' were necessary and brought benefits, but it remains the case that the ticketing system is considered "too complex" by the general public, and in the end all the reforms have done is to increase prices and reduce rights for passengers.

    With that in mind, I'm not sure how the RDG can expect those of us who actually understand what their proposals mean, to not take their current ideas on cynically. It certainly feels no different to the last two times we've been here - however this time, I suspect that, if this all goes ahead, it will simply reduce the custom of the railways because people will see real-terms increases in the cost of their ticket. Overcrowding will nevertheless increase because more people think the Anytime fares are affordable, and thus it will have achieved the very opposite of what it set out to do.

    If there's any change at all that might actually achieve the "simplification" the RDG always maintains it's looking for, it would be a nationwide Oyster-like ticketing system, with only one fare for each given journey - a single, based on the average revenue, per one-way "leg", for each flow. That would be a much simpler system indeed. You'd also be able to eliminate the idea of permitted routes, just as Oyster has in London, with time limits placing an effective cap on unreasonable routes instead. But that is not something I can ever foresee happening - if nothing else because I would suspect revenues would end up decreasing, because business users would be being charged less than they are willing to pay, so revenue is lost there, and because other users are being charged more than they want to pay, so they would use the railways less.

    Anyway, a lot of this feels like it is just "change for the sake of change". Yes, the ticketing system is too complex. Yes, ticket prices have ridiculous cliff-edges in many cases, that can lead to overcrowding on the first Off-Peak services. But their proposals are not the correct way of solving that. In fact, I don't even know what the correct way of solving it is, without an increase in subsidy. If anything, I would simply prefer the status quo to continue. Sadly, I doubt that's going to happen.

    As for their intentions to stop splitting, I think the example of Scotland is appropriate. The only way of doing that is to reduce through fares, through an increase in subsidy, or to increase local fares. Neither is acceptable to all of the stakeholders involved, and that, really, is an exemplification of the root cause of the problem here.
     
  9. squizzler

    squizzler Member

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    I see no reason why season tickets, or even open tickets, could could not be retained. These are just additional tweaks. The system would presumably "learn" what services get full with holders of open tickets and price the walk up fares higher for these services. Add in holidays and so-forth, and the system has even more data to play with.

    Modern systems allow the cost for the next journey leaving any given station to be shown in real time, so whilst it might be an "advance fare" it is still turn-up and go. Open tickets would presumably only be used by businesses who want to buy travel for their employees, so these would be priced accordingly. Most smaller businesses would probably reimburse fees paid out of pocket from their employees as this would be cheaper.

    I conceded "touch in / touch out" systems make more sense in metropolitan areas, but the physical oyster card is yesterdays news. The option to use this for longer journeys might be available, but as a duress option as it would be more expensive than booking your seat!

    Want something more radical: I think it worth considering that all seats on all journeys get allocated between two or more ticketing agencies who can then set their own fee structure in competition with each other to keep prices low.
     
  10. Jurg

    Jurg Member

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    Yorkie's choice of example of Manchester to London is interesting. Surely the (eventual) answer to the capacity issue for that route is HS2. There have to be quite a number of other routes where the best solution would be infrastructure or rolling stock rather than pricing people off trains.
     
  11. squizzler

    squizzler Member

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    Ah, but how to pay for the infrastructure other than to get best returns from the capacity we already have. Going back to the budget airline metaphor, they work on the principle that any empty seat represents lost income. The more seats that are filled throughout the day the greater social utility being generated as well.

    I definitely fall into the "year zero" camp, and think the whole fare structure should be thrown up in the air and recast (to mix metaphors). Modern realtime data driven systems allow the opportunity to leapfrog any other industry, but any new system should assume that fares and the means to pay them will continue evolving.
     
    Last edited: 18 Feb 2019
  12. anme

    anme Established Member

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    Haha, this line is very funny. :)

    On a more serious note, who will stand up for commuters and business travellers? You know, the people who travel because they have to, not for fun. The people who pay their share, or actually more than their share, for travelling. Let's think about which side we should be on.
     
  13. yorkie

    yorkie Administrator Staff Member Administrator

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    Business travellers who use Anytime fares, especially on premium routes, have nothing to worry about under these proposals, as they would benefit.

    It's the off peak fares, especially day returns, that will see huge rises, so leisure passengers have most to lose under these proposed reforms.

    However the message should be "I will fight to retain good value fares".
     
  14. AM9

    AM9 Established Member

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    Actually, most annual season tickets are priced lower than the equivalent restricted use off-peak ticket. Season ticket holders have a better deal than walk-up travellers so they are in effect being subsidised. It is irrelevant why people travel. If you think that leisure travel is trivial then try convincing somebody whose livelihood depends on it. The industry provides 3.8M jobs and 10% of GDP.
     
  15. Hadders

    Hadders Established Member

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    The RDG want to get rid of fares regulation. If this happens we need to be very, very concerned.

    Regulation isn't perfect but at least it keeps the price of some fares in check and provides a benchmark. Without regulation a London - Manchester Off Peak fare would not cost £89.
     
  16. JamesT

    JamesT Member

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    The focus has been on the boundary between peak and off-peak. Currently there are peak trains which are somewhat empty because everyone waits for the first train they can use an off-peak ticket on. Which then makes that off-peak train extremely full. The reasoning is if you reduce the difference in price, more people would opt for the peak train and spread the load.
    Though this does seem like the tail wagging the dog, fixing one small part but potentially breaking the rest.
     
  17. yorksrob

    yorksrob Veteran Member

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    Pricing off leisure passengers from off-peak trains isn't going to benefit commuters in any way.

    This proposal is designed to support the TOC's margins and the Government's insatiable desire to reduce subsidy to unrealistic levels.

    This is not designed to benefit passengers.

    Up here, a reasonably priced day return is a rarity and most middle distance journeys are extortionate.

    Essentially TOC's are frit because business has got wise and will no longer put up with extortionate anytime fares. The sensible thing would be to reduce anytime fares to sensible levels without damaging the rest of the business, but as the Government insists on 'revenue neutral' such ann approach would be impossible.
     
  18. anme

    anme Established Member

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    Yes, exactly. So maybe we should welcome these proposals.

    That's a much more reasonable message. :)

    For any change in fares to be revenue neutral, it is likely to increase some fares and reduce others. This means there will be winners and losers. (A magic formula to cut all fares and attract enough extra passengers to make up the shortfall without leading to more overcrowding is difficult to achieve). So if we want to address obvious problems like the empty peak time trains between London and Manchester, someone is going to be unhappy. So we either have to live with the status quo or choose who will pay the price.
     
  19. Fawkes Cat

    Fawkes Cat Member

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    Do we actually know the number of people who travel on full--price anytime fares and the number who travel on (broadly) anything else - or do we have some idea of the ratio between the two groups?

    There's two reasons for this:

    1) Given that the change is meant to be revenue neutral, then the impact on lower-priced fares from reducing anytimes depends on the ratio. If the ratio is 1:1 (half of all journeys are at anytime fare) then a £100 reduction in someone's anytime fare means a £100 increase in someone else's leisure fare (always assuming no one is chased off /enticed on to the railway by the changed fare). If the ratio is 1:10 (only ~9% of journeys are anytime) then the £100 reduction translates into 10 people each having to find £10 more.
    2) Rail users have one vote each . Something that disadvantages lots of rail users (leisure users who travel occasionally) while advantaging a few (regular peak hour travellers) has the potential to swing a lot of votes at a general election. Is the industry and government brave enough to commit to something that is widely unpopular? (Of course, someone who commutes every day is more likely to vote on the basis of their train fare than someone who uses the train once a year, so it's not quite as simple as numbers.)
     
  20. anme

    anme Established Member

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    Is that true? I haven't done an extensive analysis but it's certainly not true for the routes I have commuted on.

    Anyway, can we really say that a commuter who travels every working day and hands over thousands of pounds per year to the railway industry is being subsidised by someone who makes the occasional leisure journey? Which of those people is more important to the industry?

    As I said, any revenue neutral change in fares is going to create winners and losers. Of course it's not irrelevant why people travel. If it was we wouldn't need peak and off peak, singles and returns, advances and walk up tickets, and so on. We could just have one distance based price for each journey.

    What we are discussing here is if and how the balance between those ticket types is changed.
     
  21. Bletchleyite

    Bletchleyite Veteran Member

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    Is not Super Off Peak the solution to this? So you have Off Peak a bit higher than present but Super Off Peak a bit lower? LNR have just done this, and it does seem to work reasonably well.

    I am in favour of single-fare-based pricing, but as most people buy returns this alone should have little effect on what people pay overall - there would be a small increase to deal with the fact that people cease to be ripped off if they do single or 3-point journeys, but it would be small as such people are a minority, particularly now we have things like Saver Halves on both the biggest IC TOCs.
     
  22. Hadders

    Hadders Established Member

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    RDG's Press Release says this when it comes to the regulation of long distance fares:

    https://www.raildeliverygroup.com/media-centre/press-releases/2019/469762745-2019-02-18.html
    The very specific time bands that they refer to are the fault of the TOCs. They could relax them tomorrow if they wanted to. In fact they were far less restrictive when privatisation started, it's the greedy TOCs that made them more restrictive

    What a load of rubbish. There's absolutely nothing stopping the TOCs from offering good value fares throughout the day now. Advance fares are not subject to regulation and if the TOCs wanted to fill up the fresh air on all these empty 'peak' trains then I don't understand why they don't already offer cheap Advance fares on these services.

    So they want to abolish regulation on long distance fares and replace it with an overall turnover based target. So in a franchise bidding competition a company wins by offering the best return to the Government. After a while they're not reaching their turnover target because their bid was 'too ambitious', guess what happens to fares? In case anyone's wondering we're already seen this on VTEC/LNER. They got into financial difficulty and Advance fares have risen significantly - thankfully regulation on Off Peak fares at least provides a cap. If we didn't have this regulation I dread to think how high the fares would become.
     
  23. higthomas

    higthomas Member

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    Also, we really do need an actual rail users consumer group, rather than dreadful transport focus. Someone to actually present the sensible side of the debate.
     
  24. LNW-GW Joint

    LNW-GW Joint Veteran Member

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    Here's the RDG document: https://www.raildeliverygroup.com/media-centre/press-releases/2019/469762745-2019-02-18.html

    I haven't read it fully yet, but it doesn't seem as apocalyptic as some of the above posts suggest.
    They are not "abolishing fares regulation", but changing the basis for it to a capping process rather than on specific fare types.
    They talk about "small increases" in off-peak fares, and a better matching of peak/off-peak demand, probably some kind of sliding scale.
    I think the core regulated fare would be the 7-day season (currently regulated by DfT), with adjustments to meet demand.
    Anyway, the RDG has never had much success persuading the DfT to change the regulatory system, as it's always deemed "too hard".
    We shall see what happens with this one.
     
  25. Bletchleyite

    Bletchleyite Veteran Member

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    I can see an argument for a fares basket based system of capping which would include all fares for a given flow - but yes, the effect would be as you state.
     
  26. Bletchleyite

    Bletchleyite Veteran Member

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    Which sounds a bit like the LNR Super Off Peak vs Off Peak split that has just been introduced and I think, with a few tweaks[1], would work reasonably well on all TOCs, certainly all the ones that go to London.

    [1] It relies on return fare pricing, though, as one "buy up" to the Off Peak Return is that it has no evening restrictions, which doesn't work quite the same with single fare pricing (which as I've said before I completely support).
     
  27. anme

    anme Established Member

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    The current system ends up privatising profits and nationalising losses. It means that the bidder making the most optimistic assumptions - and that is therefore the most likely to fail - wins. But the risk to the company bidding is not very high because if it doesn't work out they can simply hand the franchise back to the government. The government is not prepared to force the train operators to take the losses if they overbid because if they did so no companies would bid at all.

    That's getting off topic, but it does raise a more fundamental question. Who should be responsible for setting fares? The train operator? The government? Or some split between the two as we have now?
     
  28. yorksrob

    yorksrob Veteran Member

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    Even setting aside the failed policy of reducing subsidy beyond what the passenger market can bear, if the TOC's are running around empty seats at peak time, selling them at a lower price will increase revenue, even before you start destroying the leisure market.
     
  29. ABB125

    ABB125 Member

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    One thing that I think needs changing is the availability of Anytime and Off-Peak tickets on routes with either no peak flows, or a very sparse service. For these trains there should just be one fare.
    Another thing is that if, say, there is a two-hourly service, and one train runs just before the peak cut-off for a few stations, before suddenly becoming off-peak, it should be valid for off-peak fares throughout.
     
  30. anme

    anme Established Member

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    That's not necessarily true. Let's take a simple example - say that alongside the £175 peak time single fare from London to Manchester, we introduce a £100 advance fare. That should attract some new passengers to the peak services, who might have previously bought cheaper off peak tickets or might even not have travelled at all. It will raise some extra revenue. And it might reduce overcrowding on the first and last off peak trains.

    So why not do this? Well, it is not as simple as getting some money for otherwise empty seats. Probably some of the passengers who bought the £175 fare will switch to the £100 fare. So we will not only gain some revenue from passengers switching up from cheaper tickets. We will also lose some revenue from people switching down from more expensive tickets. Will we make more money overall? Maybe, maybe not. TOCs employ people whose job it is to predict these things.

    Introducing cheaper tickets does not necessarily increase revenue. This is not very surprising when you think about it. And remember, selling 200 tickets at £175 each makes more money than selling 300 tickets at £100 each.
     
  31. Hadders

    Hadders Established Member

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    Why not make the £89 Off Peak ticket less restrictive and allow it to be used on some of the emptier peak trains?

    Much more simple and transparent. No need to faff around with Advance tickets which the TOC can increase in price, sell fewer at the cheaper price points or withdraw altogether if they're not meeting their revenue target and need passengers to pay a bit more.
     

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