Revenue split between operator, retailer and ticket issuer

[hkstudent]

We all know that retailer does take up to 9% of the ticket value per each sale. I am thinking if someone collects an online ticket from machines/ticket office not operated by the retailer, how much in shares the ticket issuer may get?

 

[yorkie]

For low value fares, the retailer makes a loss.

...an online ticket...

The commission for that is 5% for non-season tickets, see: https://www.atoctravelagents.org/clientfiles/File/RAIL INDUSTRY COMMISSION RATES FROM 1 APR 2016.pdf

But the costs can far exceed 5%. In addition to the fixed CTR fees detailed in that document, 5 years ago it was reported in another document that TOD collection fees were 90p if the customer goes to a ticket counter, or 40p from a machine:
https://orr.gov.uk/__data/assets/pdf_file/0012/15312/retail-market-review-sep14-atoc.pdf

Ticket on Departure fulfilment fees (per transaction)
TVM Issue £0.40
Booking Office Issue £0.90

I am not sure if those fees are current or not though.

So any ticket (or combination of tickets under one TOD code) under about £10 is going to make a loss for the retailer, even if you use a machine.

 

[hkstudent]

For low value fares, the retailer makes a loss.

For example like Leeds Burley Park - Leeds?

 

[yorkie]

For example like Leeds Burley Park - Leeds?

Huge loss for the retailer! Buy it from a company you dislike

 

[hkstudent]

Huge loss for the retailer! Buy it from a company you dislike

Does the company (not the retailer) who prints the ticket share the great loss and not receiving a single pence?

 

[yorkie]

The TVM operator gets the money for TVM collections.

 

[hkstudent]

The TVM operator gets the money for TVM collections.

Oh, I see, no wonder LO gets its own Roundel orange ticket.
Most tickets printed from LO TVM are in roundel form, except the Plusbus ticket. (It would be madness if a non-London bus ticket is printed on a Roundel ticket, which causes big confusion)

 

[paul1609]

Huge loss for the retailer! Buy it from a company you dislike

Surely that only applies to the small independent retailers, the TOCs will be getting the fee for the use of TVM and it will be swings and roundabouts between the various TOCs?

 

[yorkie]

Surely that only applies to the small independent retailers, the TOCs will be getting the fee for the use of TVM and it will be swings and roundabouts between the various TOCs?

You are absolutely right that TOCs with TVMs (not all TOCs, e.g. CrossCountry is the most notable exception) are able to offset any costs against the income they get from other retailers. Some TOCs with more collections of tober retailers sales at their own TVMs than sales made on their website collected at other TOCs TVMs will possibly be raking it in.

So yes this does definitely impact against the third party retailers and open access operators etc. No doubt some of the bigger TOCs will find this to be very much to their approval.

Whether the charges are proportionate and lawful or not I am unsure. The TOCs might get away without a legal challenge though as the charges for the new barcode system will be much fairer and will avoid low value fares incurring losses for retailers.

 

[Egg Centric]

For low value fares, the retailer makes a loss.


The commission for that is 5% for non-season tickets, see: https://www.atoctravelagents.org/clientfiles/File/RAIL INDUSTRY COMMISSION RATES FROM 1 APR 2016.pdf

But the costs can far exceed 5%. In addition to the fixed CTR fees detailed in that document, 5 years ago it was reported in another document that TOD collection fees were 90p if the customer goes to a ticket counter, or 40p from a machine:
https://orr.gov.uk/__data/assets/pdf_file/0012/15312/retail-market-review-sep14-atoc.pdf


I am not sure if those fees are current or not though.

So any ticket (or combination of tickets under one TOD code) under about £10 is going to make a loss for the retailer, even if you use a machine.

I read the first document as contradicting the second document. As the first document is newer, presumably the rates within it are correct (despite the proposals on page 75 of the second document) and so the fee is 0.5%, with a minimum of 7.5p and maximum charge of 50p. So I think the break even point for most tickets would be £1.50 if collected from a machine.

 

[alistairlees]

The first document is correct.

 

[Andrew1395]

Retail commission is financed by the TOCs who receive the revenue. So simplistically a ticket with face value Of £1.00, where the allocation of the sale is split 50% TOC A and 50% TOC B. Both TOCs pay half the standard sales commission (9%) and half the Ticket on Departure commission fulfilment fee at 40p. So in this example their net earnings are 50p minus 4.5p standard commission and 20p ToD fulfilment commission = 25.5p earnings. It is a subjective judgement if £0.255 is a loss or marginal income gain.

 

[alistairlees]

Retail commission is financed by the TOCs who receive the revenue. So simplistically a ticket with face value Of £1.00, where the allocation of the sale is split 50% TOC A and 50% TOC B. Both TOCs pay half the standard sales commission (9%) and half the Ticket on Departure commission fulfilment fee at 40p. So in this example their net earnings are 50p minus 4.5p standard commission and 20p ToD fulfilment commission = 25.5p earnings. It is a subjective judgement if £0.255 is a loss or marginal income gain.

For a ToD ticket the fulfilment channel is likely to be internet, so the % commission payable will be 5% (or 3% for B2B), rather than 9%. It’s the retailer that pays the ToD fee (out of the 5% or 3%) and, for collection from a TVM, this is now 0.5%, subject to the minimum and maximum of 7.5p and 50p respectively. This fee goes to the TOC from which the ticket is collected.

 

[paul1609]

I read the first document as contradicting the second document. As the first document is newer, presumably the rates within it are correct (despite the proposals on page 75 of the second document) and so the fee is 0.5%, with a minimum of 7.5p and maximum charge of 50p. So I think the break even point for most tickets would be £1.50 if collected from a machine.

The advice I got from Sickynicky who is a well known rep of Trainsplit is that he doesn't want my £10 day return business if Im using TOD suggests that something is wrong with this calculation somewhere. Im no expert just curious.

 

[Egg Centric]

The advice I got from Sickynicky who is a well known rep of Trainsplit is that he doesn't want my £10 day return business if Im using TOD suggests that something is wrong with this calculation somewhere. Im no expert just curious.

I haven't accounted for credit card processing fees etc. If Trainsplit take American Express, he probably doesn't want your business ever if you qualify as a business account (according to the above document, business accounts with more than 50 000 in business a year earn 2% commission for the retailer, which is less than Amex processing fees for almost everyone)!

 

[alistairlees]

I haven't accounted for credit card processing fees etc. If Trainsplit take American Express, he probably doesn't want your business ever if you qualify as a business account (according to the above document, business accounts with more than 50 000 in business a year earn 2% commission for the retailer, which is less than Amex processing fees for almost everyone)!

3%, not 2%.