This person should have got advice here...

[DaveNewcastle]

This is complicated to resolve -
First, "market forces" (which allow prices to be set such that they manage the supply & demand balance) would not be applicable if rail was seen as a public service.
Second, (as others said), rail is an imprecice mix of a free-market and a regulated market and a public service.
Third, the "market" is confused by the inability to quantify the alternatives. (This thread and another on this forum in recent days has argued the cost of car travel vs cost of car ownership).
Fourth, the TOCs are, in my opinion, just playing with us! I have had to pay walk up Newcastle-London fares 3 times this year (I'll skip the explanations here) and have also just received a clutch of £5 tix for travel booked from NXEC's "Birthday" offer. Market pricing can manipulate demand across supply, but the diff between £125 and £5 is NOT manipulating the s and d balance.
Fifth, the fragmented and historic network of routes would provide different analyses of cost/benefit depending on which cities/towns we were considering. (Rail and air are subject to this more than road unless we're considering an element of sea travel?)

My point?
UK Rail is not operating in a real free-market, and nor is it operating in a true regulated market. It does operate in a market where the alternatives can be hard (if not impossible) to compare, for various reasons; such as the probs with evaluating the cost of car use, the cost of liberty from being in control of a vehicle, the cost of using different modes for each "leg" of a journey, cost advantages of several pax on some modes, ability to plan and to commit to a journey in advance, etc. etc.

Can any of us actually come up with a simple means of "evaluating the value" (or cost) of rail travel?

 

[glynn80]

Although I have been thinking about what you said earlier that it's just an example of capitalism and a case of charging what they can get away with. I'm not so sure. Capitalism appears to be about giving discounts for items bought in bulk, or if you buy several products from the same shop. It's almost unheard of for someone to be charged more for buying in bulk - surely this goes against all the rules of logic and business?

I'm sorry to have to say this but this logic is ridiculous. How can you say that buying a combination of tickets is regarded as buying in "bulk". Buying is bulk is based on the value of the goods bought NOT the quantity (although the two are often linked) for example under your logic if I was to buy 100 penny sweets (£1 total), I should get a greater discount than if I am buying 50 Aston Martin sports cars (approx. £10 million). TOCs do give discounts for buying in bulk (group travel) ie. they will give discounts if more passengers are travelling not for the number of individual tickets purchased (I could purchase a combination of 10 tickets and thus be buying a higher quantity of tickets than a group of 9 all buying through tickets, the group will get a discount, the combination of tickets won't.)

Another issue was that if these silly money fares were reduced to the level of the combination of fares it would result in a higher level of subsidy being required. I'm not so sure, as I reckon not many journeys are made on such tickets and I think the high price will mostly result in one of two things: 1) the customer trying to get round it by consulting friends/family/money saving websites, etc - which may result in them splitting fares or 2) simply giving up on rail altogether (which is what this guy has done from now on). A few people may opt to pay the fare as a one-off as they need immediate travel then either opt for option 1) or 2) for future journeys. People are unlikely to repeatedly pay silly money for journeys. They will either find a way round it for future reference or find another travel mode, surely?!

On the matter on the number of people purchasing Full priced Open return tickets, the number of people purchasing is not the issue, it is the amount of revenue these fares brings to the TOC, that will factor on the level of subsidy needed to replace this lost revenue if these prices are lowered.

On the London to Manchester flow 5% of passengers purchased the Open fare - £187, whilst 50% of passengers purchased a ticket between £50 and £60 (2006 prices gained from Tony Collins reply to TSC).

So where 5% in passenger numbers purchase the Open fare it accounts for alot more than 5% of total revenue. 5x £187= £935, 50x£55=£2750. So here 10 times more people purchase a ticket between £50 and £60 but it doesn't account for 10 times more revenue than the Open fare, infact it only account for around 3 times more revenue.

 

[yorkie]

Well, there sure are some interesting posts here and plenty of things to think about.

The whole issue of why certain fares are so expensive is a very complex one. But I am only really taking issue at this point with the fact that splitting the ticket makes the journey a lot cheaper. In other words, paying for segments of the exact same journey is cheaper because the individual segments cost less than the equivalent cost of the segment as part of a through ticket. This is quite bizarre and, where it occurs outside the rail industry (e.g. the fish & chip example) it is usually due to a mistake and the customer is refunded. The rail industry is the only one I know of that deliberately prices the sum of several small products at a considerably higher price than the individual products sold seperately, and by factors of up to 2.5 times the price.

Customer: "Can I have a knife and fork please?"
Shopkeeper: "£10 sir"
C: "Hmm, I'm sure a knife only cost £2 last time I was here. How much is a knife on it's own?"
S: "£2 sir"
C: "How much is a fork?"
S: "£3 sir"
C: "Then can I buy a knife and also a fork as seperate items?"
S: "Certainly sir, £5 please"
C: "Why did you not say £5 in the first place?"
S: "I'm not allowed to sir. The ticket for a kife and fork is £10, but if you ask for a knife and a fork seperately then I am obliged to sell them as individual items, sir"
--- old post above --- --- new post below ---

I'm sorry to have to say this but this logic is ridiculous. How can you say that buying a combination of tickets is regarded as buying in "bulk". Buying is bulk is based on the value of the goods bought NOT the quantity (although the two are often linked) for example under your logic if I was to buy 100 penny sweets (£1 total), I should get a greater discount than if I am buying 50 Aston Martin sports cars (approx. £10 million).

No, I'm not saying that at all. Where does my logic imply that? It clearly doesn't.

The equivalent would be if you go to a shop you don't expect a box set of cutlery to cost more than the invidiual items. A box set of DVDs would not cost more than the individual DVDs. That's utterly bonkers.

 

[Nick W]

As many people have probably realised, transport can never operate under a free-market (unlike hotels accommodation and restaurants) as there is no potential for real competition due to the limited number of routes (be it railways, motorways and airports). However they do obviously seek to maximise profits.

For the railways route used by the punter in question, the peak trains are already full up from season-ticket holders, therefore it makes little sense in letting additional customers on as the season-ticket holders, who pay for the bulk of the railway, will be disadvantaged by an even fuller train.

The railway will therefore charge what they believe is the price of the inconvenience to season-ticket holders, leading to a ridiculously high fare. They have obviously deemed it uneconomical to run longer trains, perhaps because of the short-length of the franchise and because they don't own the infrastructure.

In this case, the "green" thing to do would be not to travel at all, or travel later. Railway companies, forced to pay their promised premia have no incentive to be "green" and are therefore in general not very environmentally-aware companies.

Can we criticise the railway companies for having no concern for the environment in this respect and charging extortionate peak fares? I think not. It is my opinion the Government is to blame for failing to put the environment higher up on its agenda, and tax or subsidise the modes of transport more appropriately. Then finally we will see investment in rail capacity.

 

[yorkie]

For the railways route used by the punter in question, the peak trains are already full up from season-ticket holders, therefore it makes little sense in letting additional customers on as the season-ticket holders, who pay for the bulk of the railway, will be disadvantaged by an even fuller train..

Do you honestly believe the 0543 from Bath and 0804 from Kings Cross will really be "full up from season-ticket holders"? I think not!

The 0543 may well be fairly busy from Reading, but does that mean passengers from Reading to Paddington should pay £100 or so for their journey? That's the only part of his journey where the trains might be full. A SDS is about £17.

A Bath Spa - Paddington annual season ticket holder spends approx £32 per return journey (£16 each way), assuming they get about 25 days holiday and do not use the train ever on weekends.

 

[glynn80]

No, I'm not saying that at all. Where does my logic imply that? It clearly doesn't.

The equivalent would be if you go to a shop you don't expect a box set of cutlery to cost more than the invidiual items. A box set of DVDs would not cost more than the individual DVDs. That's utterly bonkers.

I was unsure what you were meaning in the context of your argument, you didn't state what you were talking about when talking about buying in bulk, it seemed to be that you were talking about buying a greater "number" of tickets which didn't necessarily add up to a higher value than the through ticket BUT because you were buying a great number of tickets you should of been given a discount.

Also I don't think you can analogise train tickets with DVD box sets, as the DVD boxset analogy doesn't take into account that the combination of fares on the railway has drawbacks in restricting the route you can take and also which trains you can catch (so a through fare commands a premium as it allows for a greater degree of flexibility).

 

[Nick W]

Do you honestly believe the 0543 from Bath and 0804 from Kings Cross will really be "full up from season-ticket holders"? I think not!

No, and similarly I once had to drive to London around 5 am because the perfectly good and probably near-empty 0542 was considered a peak train.

I'd support a flexible system where peak trains are marked in the timetable and online as oppose to the current fixed time system (similar and less complex to the AP quota system) but I don't know how to campaign for it myself.

A Bath Spa - Paddington annual season ticket holder spends approx £32 per return journey (£16 each way), assuming they get about 25 days holiday and do not use the train ever on weekends.

The season ticket holder has paid a regular up-front cost towards the cost of running the trains he can get. This works out as a guaranteed payment of about £30 a day for which once paid, the company pays no marketing costs, probably a small customer service cost per journey, as the regular passenger will probably require assistance or complain rarely per journey (ie similar to the reasons why buying products in bulk works out cheaper). This is the ideal customer and the company quickly finds that all the seats of peak trains become used up. The company, if not for regulation, would no doubt find the price at which it can attract the maximum number of season ticket holders without the trains becoming too crowded. At this point there is little room for the occasional passenger for whom other variable costs are greater, and accommodating to many of such less ideal customers could be at a detriment to those who have paid and will probably continue to pay a large up-front cost.

 

[yorkie]

I was unsure what you were meaning in the context of your argument, you didn't state what you were talking about when talking about buying in bulk, it seemed to be that you were talking about buying a greater "number" of tickets which didn't necessarily add up to a higher value than the through ticket BUT because you were buying a great number of tickets you should of been given a discount.

I said:
"..Capitalism appears to be about giving discounts for items bought in bulk, or if you buy several products from the same shop...." (snipped to the relevant sentence)

I'm not saying that there should always be a discount for buying several items at once, but in capitalism this is often the case, e.g. "Buy this and get that half price" or "Buy this box set" but to deliberately charge more for the combination of items into one bigger item eg. a box set costing more than the individual DVDs is not synonymous with capitalism. And no, I'm not saying it's communism either! Far from it. It's just weird and illogical.

Also I don't think you can analogise train tickets with DVD box sets, as the DVD boxset analogy doesn't take into account that the combination of fares on the railway has drawbacks in restricting the route you can take and also which trains you can catch (so a through fare commands a premium as it allows for a greater degree of flexibility).

But it doesn't always restrict in that way.

For example there is only one sensible basic route you can take that avoids London, and that is via Birmingham and Sheffield, and a combination of tickets at peak time brings the cost down from £170 to £85. The combo still allows you to go via Leeds or Doncaster (I counted that as the same basic route). And in my York-Derby example above that is also the case.

Yes, you can argue that if he splits return tickets at London he is denied the choice to avoid London on the return, but even then a SOS to London (£80ish), GC Single to NTR (£35) and combination of singles back avoiding London (the returns are £85 so the singles will be less) still gives you a price of under £200, and all of these are walk-on, and you can buy them on the trains! If he didn't know what route he was coming back he could buy a load of singles as appropriate and save money whatever route he took back!
--- old post above --- --- new post below ---

No, and similarly I once had to drive to London around 5 am because the perfectly good and probably near-empty 0542 was considered a peak train.

Common sense has prevailed I see

Glad you agree that, just because the train is (probably) full of RDG-PAD commuters for 25-30 minutes that doesn't mean he should pay a disproportionately high price for his journey.

But that's what happens. People do very long distances on a train that spends a few minutes in a peak period where the train gets a bit busy and then their price jumps from maybe £50 to maybe £200 or from £80 to £300. Yet the people who cram onto the train for the busy bit pay something like £30 instead of the £10 their off peak tickets cost. There is no logic to that whatsoever, and splitting tickets avoids the problem. Penalising one-off passengers doing a long journey does NOT solve overcrowding problems and it does NOT raise huge amounts of money for TOCs as customers simply do not put up with it. It generates bad publicity and drives potential customers away, as we've seen.

 

[Nick W]

Looking at it now, it's possible that train fares really are deliberately set to be cheaper by splitting.

Those willing to pay more will generally be happy to pay the high-quoted costs, while those not willing to pay as much will look into ways of reducing the cost. In this way, the train company is maximising revenue by charging more money for those willing to pay it, and less for those who if not for doing research and finding forums like this, would otherwise not travel.

 

[yorkie]

An interesting hypothesis, and it could well be true. People who have more cash than sense will pay regardless, and people who don't have time to research will also pay regardless. If it is a deliberate policy then it may well be successful in raising some revenue but you have to question if it's worth the bad publicity it generates, and also the extra hassle for ticket office staff in having to issue combinations of tickets.

 

[glynn80]

I said:
"..Capitalism appears to be about giving discounts for items bought in bulk, or if you buy several products from the same shop...." (snipped to the relevant sentence)

I'm not saying that there should always be a discount for buying several items at once, but in capitalism this is often the case, e.g. "Buy this and get that half price" or "Buy this box set" but to deliberately charge more for the combination of items into one bigger item eg. a box set costing more than the individual DVDs is not synonymous with capitalism. And no, I'm not saying it's communism either! Far from it. It's just weird and illogical.

But it doesn't always restrict in that way.

For example there is only one sensible basic route you can take that avoids London, and that is via Birmingham and Sheffield, and a combination of tickets at peak time brings the cost down from £170 to £85. The combo still allows you to go via Leeds or Doncaster (I counted that as the same basic route). And in my York-Derby example above that is also the case.

Yes, you can argue that if he splits return tickets at London he is denied the choice to avoid London on the return, but even then a SOS to London (£80ish), GC Single to NTR (£35) and combination of singles back avoiding London (the returns are £85 so the singles will be less) still gives you a price of under £200, and all of these are walk-on, and you can buy them on the trains! If he didn't know what route he was coming back he could buy a load of singles as appropriate and save money whatever route he took back!
--- old post above --- --- new post below ---

I agree in this case it turns out you can split without losing most of your flexibility but I'm not sure this is the case in all circumstances.

Looking at it now, it's possible that train fares really are deliberately set to be cheaper by splitting.

Those willing to pay more will generally be happy to pay the high-quoted costs, while those not willing to pay as much will look into ways of reducing the cost. In this way, the train company is maximising revenue by charging more money for those willing to pay it, and less for those who if not for doing research and finding forums like this, would otherwise not travel.

If this was the case it would be a very elaborate and clever price discrimination technique, but would involve an awful lot of collusion involving all the TOCs setting the various fares

 

[Metroland]

Glad people are thinking now, rather than making assumptions.

I don’t know any more than people here, but I would guess some of these prices are generated off some complex algorithms that lead to less the perfect results.

Obviously certain trains/travel times are designated peak, and if you are unlucky enough to be routed through the peak, you pay a disproportionate amount as, your long journey ticket price multiplies by a factor of 2 or three, which can lead to some very large figures. On a short journey, the same thing can happen, but clearly it doesn’t end up being quite so eye watering. Rather like taxes, where the poor pay a greater portion of their income in tax, but pay less tax than the rich.

It gets more complex: If you note certain stations have disproportionally high fares say to London. Slough is a good example. Other stations have much lower fares, yet are the same distance away. Again, I would assume this is due to flow and market. A popular commuter station where there is a high flow to another town (often because there is no other sensible way at that time to travel) will have a higher ticket price, especially in the peak. This can end up in some strange situations, for example, a Peterborough to Birmingham ticket at least at one stage (not sure of the same applies now) was more costly, than a March to Birmingham ticket- even though the distance is some 20 miles greater, and you have to pass through Peterborough! Now the discerning passenger, if he/she is travelling from Peterborough could get a price reduction by buying the ticket for the longer priced journey from March!

I’m sure many other examples exist. But one could hazard a guess; the demand for Peterborough-Birmingham journeys is greater and more inelastic. Therefore more money can be raised on this flow, than from the March flow, which may be more price sensitive because either the flow isn’t so great, or even the demographic – the latter place has a higher percentage of pensioners and low paid workers.

I note fares in the North tend to be a lot cheaper than fares in the South. Northern rail has some of the highest subsidy, but some of the cheapest fares. Clearly people in the north cannot/will not pay higher prices, or there may be other travel alternatives. Rather like beer is cheaper in the north, and carrots are more expensive in Sainsbury's in Kensington, than in Teeside.

I can see another situation arising too, where you *need* to fill a lot of trains with volume, such as the new Virgin WCML services. In some cases, I can see offering a lot of low fare tickets would lead to a greater economy of scale, and in turn get a lot of bums on seats. Similar to low cost markets which work on volume, where profits are very small (say only a few pence) but because of the sheer volume of goods/services, profits can be made. In short, this means there might be a lot of low cost tickets on certain routes.

So in short, I guess splitting the tickets leads to all these strange values, depending on the flows, volumes, times, and so on. The aim of the railway company is to basically extract as much money as possible (not necessarily always filling trains!) and doing combo tickets, or even backward tickets, such as the March example, short circuits the system. Although I totally concur that very high priced tickets, do nothing but generate bad publicity. How much that matters I don’t know, some say all publicity is good publicity. Do businessmen travelling from Manchester to London in the peak really care about price much, if they can earn £100 an hour working on the train, especially a non crowded train, and head off beating the traffic to clinch a lucrative deal? That said, it must put off some people that automatically don’t consider the train because of things they hear or read. If the trains are full, I don't suppose the railway companies care too much.

 

[djw1981]

If this was the case it would be a very elaborate and clever price discrimination technique, but would involve an awful lot of collusion involving all the TOCs setting the various fares

But how many TOCs have actually doen a route and branch review of their fares since privatisation, or have they just increased by x% per annum.
Hence you get the illogicalities, like tickets within a (former) PTE area costing less per mile than the same distance outwith the PTE area, even though the PTE no longer exists. Also, the failure of pricing to keep up with changed loading patterns and new services. Thus the collusion could in fact have been designed in by BR, and just not removed since.

Maybe there should be a zoning of all train services into 3 categories - intercity, inter-regional and suburban, then a price per mile as appropriate.

Sadly, the winners in this would be south coast commuters (inter-regional service with suburban frequencies etc).