Which Company Gets My Fare?

Discussion in 'Fares Advice & Policy' started by Envoy, 6 Dec 2018.

  1. Envoy

    Envoy Established Member

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    Why I go on National Rail.co.uk and put in for a journey and select BUY - I get put through a a TOC website. Is that the company that actually gets my fare?
     
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  3. alistairlees

    alistairlees Member

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    It gets your money. The money is then distributed between train operators depending on the ticket you are buying.
     
  4. ForTheLoveOf

    ForTheLoveOf Established Member

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    The company that directly gets your money is the one that you give your card details to.

    This company (called the retailer - NB this can be totally different to the train company who you travel on, and it may not even be a train company at all) then pays the value of your fare to Rail Settlement Plan Ltd. (RSP), a company established in the early days of privatisation to distribute the revenue from fares.

    RSP will then pay the retailer their commission (a fixed percentage of the fare, varying dependent on the type of ticket and the method of the sale). They will distribute the rest of the fare between the various train companies.

    This method of distribution is mostly done automatically by a system developed by British Rail in the 80's, known as ORCATS. This, roughly speaking, works out all the non-overtaken itineraries which are possible to do on the day(s) where the ticket is valid (e.g. on a ticket bought for a Sunday, this could be quite considerably different to a ticket bought for a weekday). It also ignores those itineraries which are not permitted by route, company or time restrictions on the ticket (but it does not take into account whether or not an itinerary follows a permitted route).

    RSP then distributes the money to each train company in proportion to the number of itineraries which use their services (e.g. if Northern had 30% of the non-overtaken itineraries and TPE had 70%, Northern would get 30% of the money and TPE 70%). For itineraries involving several companies, it is distributed approximately based on the proportion of the journey's mileage completed on each company.

    Various adjustments and weightings are done, for example to take into account the number of seats provided by each service, but the above is the basic formula. For certain tickets a train company may dispute the allocation of ticket revenue, for example claiming that more passengers take their service than the automatic ORCATS allocation suggests. In this case, negotiations with other affected train companies would normally take place, leading to an agreement as to a manual allocation. In the most conscientious cases where no agreement can be made, passenger number counts may be undertaken to settle the matter.

    The exact methodology, weightings and individual allocations are obviously all trade secrets, but based off the many leaks we have had over the years (as well as a limited amount gleaned through Freedom of Information requests), it would probably be possible to approximate the calculation through an automated program taking into account the information we know.

    I hope that answers your question!
     
  5. Envoy

    Envoy Established Member

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    Many thanks for your answers - and especially ‘ForThe LoveOf’ for taking the time to give your detailed response.

    I asked the question because when I put in for a journey from Edinburgh to Cardiff on 12 December I saw that a 10.52 departure (Virgin to Crewe and then Transport For Wales to Cardiff) was the quickest at 6 hours 2 minutes. The odd thing then happens when it directs me to the Cross Country website to take my fare. My journey is nothing to do with Cross Country. I take it that Cross Country are not actually getting any of my money - should I book this journey and that it is being split between Virgin & Transport For Wales? Anyway, I am aware that I can get such fares down by splitting the ticket at Crewe. The high fares for this route must surely put people off travelling by train - if they don't know about the split. So, are Cross Country setting this fare even though no sane traveller would be using their trains to get from Edinburgh to Cardiff as they go the long way via Newcastle?
     
  6. jfollows

    jfollows Member

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    See http://www.brfares.com, for example http://www.brfares.com/#expert?orig=EDB&dest=CDF to see who sets the fare, in this case it is indeed Cross Country (route NOT VIA LONDON, open and SVR tickets) and it is well known here that much money can be saved by splitting fares set by XC in particular. However advance fares VT & CONNECTIONS are set by Virgin West Coast.
     
  7. ForTheLoveOf

    ForTheLoveOf Established Member

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    No problem. There is no particular logic to which site National Rail Enquiries directs you to, to buy the ticket(s) suggested. Sometimes it will be the train company used, where there is only one involved in the journey. For other journeys it will be the fare setter.

    The retailer you use, and the fare setter for the fare, both have no relation to the company which will actually, at the end of the day, end up with your money. You could buy a ticket through CrossCountry's website, itself being a CrossCountry set fare, and even travel with CrossCountry - and yet it is entirely possible that CrossCountry might end up with nothing more than the commission for the ticket sale. Such are the vagaries of ORCATS!

    The reasons for particular companies setting fares are many and varied, and in a great deal of cases simply nonsensical (even if, historically, it made sense). As an example, there is no apparent reason why LNER should price Preston to Glasgow fares (for the Any Permitted route). After all, going via Newcastle on that journey would be an extraordinary slow and circuitous route of at least 6.5 hours - compared to the twice-hourly Virgin services to Glasgow (and 1tp2h TPE service), each taking just over 2 hours! And why does Greater Anglia price Penzance to Ipswich, despite it being a journey which involves travel on GWR for 5-odd hours, and Greater Anglia for about an hour?

    A lot of it makes very little sense indeed - and I think you can see the background to how anomalies such as splitting at Crewe start to develop (though that particular split has less to do with who sets the fare, and more to do with commercial interests and the non-cooperation of Transport for Wales' predecessor Arriva Trains Wales with most other companies for Advances!).
     
  8. robbeech

    robbeech Established Member

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    The easiest way to look at it is to treat the website of the train company as a completely different company when it comes to booing tickets.

    Of course there are sometimes benefits to booking a journey on a particular companies train on their own website, some will allow you to select a seat rather than just assigning one, some give you free Wi-fi etc but the important thing to remember is a retailer is a retailer and a train operating company is a train operating company.
     
  9. sprunt

    sprunt Member

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    What was the purpose of ORCATS pre-privatisation, when there was only a single company running the trains? Was it allocating revenue to sectors for accounting purposes, or something like that?
     
  10. ForTheLoveOf

    ForTheLoveOf Established Member

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    Exactly that - to see which business sectors were the most 'profitable'.
     
  11. LNW-GW Joint

    LNW-GW Joint Veteran Member

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    There were many anomalies thrown up when Cross Country transferred from Virgin to Arriva, even though Scotland-Preston-Birmingham was left with VT.
    For some reason XC retained most of the "Not London" fares (ie presumed Via Birmingham), and therefore imposed their draconian fare rules.
    You can however usually find some fare combination not involving XC, if you use splits.
    Nor do you have to buy the XC fare from XC if NRE sends you there - you can use any TOC's site, eg TfW or VT.
    However, ORCATS will determine who gets the money, whichever site you book on.
    Most of the time, Edinburgh-Cardiff will be quicker via Preston (but maybe not on Sundays!).
     
    Last edited: 6 Dec 2018
  12. pdeaves

    pdeaves Established Member

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    As suggested by others, the choice of retailer simply determines who gets the commission. If you happen to like company X better than company Y, use X's website. Otherwise, it doesn't matter.
     
  13. Envoy

    Envoy Established Member

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    So, a company that I would not be travelling on set most of the fares for through tickets between Edinburgh & Cardiff at a ridiculously high rate. What a ridiculous system. Surely this means fewer people make such a journey by train and this must impact on the two companies that a person would be using for such a trip = Virgin & Transport for Wales.

    Perhaps Arriva Trains Wales would not co-operate with Virgin on setting through fares because Arriva figured that they could keep all of the money as they owned Cross Country?

    This is no way to run a railway. It is cheaper to fly!
     
  14. Starmill

    Starmill Veteran Member

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    This isn't neccesarily value for money though. For example, there is a Virgin Trains Only fare from Edinburgh to Birmingham. I'm not sure there'd be any point in buying it though because it is only a wee bit cheaper and it restricts you to a two-hourly service. If you wanted to travel before 0930 on a weekday it would be a fair bit cheaper though.
     
  15. ForTheLoveOf

    ForTheLoveOf Established Member

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    I don't think attracting money to the railway by reducing through fares is the operators' primary concern. In a way, the fares are set so high so as to put off price-conscious passengers from travelling on all but the least busy trains (on which somewhat more palatable Advances will be available). In many cases, it is more profitable to have the same seat occupied by several passengers each travelling shorter stretches along a route, rather than to have one passenger travelling the whole distance - as the equivalent pence-per-mile yield will be higher for multiple shorter journeys (even on regulated fares).

    At the end of the day - the railways are, overall, still heavily subsidised by the Government; the only train companies which are nominally contributors to the taxpayer are SWR and VTEC - and both have had financial problems to different levels. Until such time as Government policy - and, frankly, popular opinion - changes so that subsidising the railways more becomes acceptable, high through fares for long distance will not change.
     
  16. PeterY

    PeterY Member

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    Thank you ForTheLoveOF. An interesting read.

    Recently I did an off peak return to Prestatyn from Hemel Hempstead buying my ticket at the booking office Hemel Hempstead. (I didn't want an advance because I wanted to be flexible.)
    Out using LNWR, Virgin and TFW
    Back using Just Virgin and Southern (Changing at Milton Keynes).

    I'm guessing Virgin got the lions share of my ticket.
     
  17. Envoy

    Envoy Established Member

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    I get what you are saying but when I look at Advance fares from Edinburgh to King’s Cross, I see through ticket fares as low as £26.50. This is just a fraction of the Edinburgh to Cardiff fares for a similar distance. So, clearly, because Cross Country are setting the latter fare - even though they don't operate trains on the direct route, people on this route are getting screwed.
     
  18. Starmill

    Starmill Veteran Member

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    It took me all of 30 seconds to find that through tickets are available from Edinburgh to Cardiff Central for £33.
     

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  19. ForTheLoveOf

    ForTheLoveOf Established Member

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    It's very difficult to compare an Advance with a (long-distance) walk-up ticket. They are each designed for totally different markets. £150 odd for Edinburgh to Cardiff return is not cheap, but it compares quite favourably with the cost of fuel (let alone all the other costs associated with a long car journey) if you were to drive there and back.

    And in any case, as @Starmill has pointed out, a little searching will show through Advances from Edinburgh to Cardiff at prices very similar to that for Edinburgh to London.

    I think it's worth also bearing in mind the difference in the markets between Edinburgh to London and Edinburgh to Cardiff. The former has stiff competition from the airlines in terms of price and time. The latter, not so much. Like it or not, the railways are a commercial operation in almost all cases nowadays, so they are no longer there to get people from one place to another cheaply as a public service.
     
  20. Envoy

    Envoy Established Member

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    Yes, but that fare is for a train leaving Edinburgh at around 4pm and arriving in Cardiff over 8 hours later at 00.23.
     
  21. ForTheLoveOf

    ForTheLoveOf Established Member

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    You can't always travel at a convenient time for such a good price!
     
  22. Envoy

    Envoy Established Member

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    Flybe fly direct between Edinburgh and Cardiff. In fact I just found a flight that leaves Edinburgh at 12.05 and arrives Cardiff at 13.20 with the price on 12 January of £25. So, in terms of price and time, I can’t say that the railways face stiff competition on the Edinburgh to Cardiff route because they simply don’t provide any competition. It is a no - brainer > Fly.
     
  23. kieron

    kieron Established Member

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    Crosscountry could hardly cut their Edinburgh-Cardiff off peak returns by much, or else they'd undercut Virgin's Glasgow-Cardiff tickets (Edinburgh-Cardiff is valid via Glasgow and Shrewsbury, but not vice versa).

    As mentioned, there are cheaper advance fares available on selected trains. VT & Connections starts at £47 for both journeys, with £32 ones available on a slower route via Manchester.

    Crosscountry have given Edinburgh-Cardiff their normal off peak restrictions, so the fare setter does have some effect on things. There are usually lots of constraints on what they can do with a fare, though, so "it's Crosscountry, so is expensive" is a little simplistic.
     
  24. Deerfold

    Deerfold Established Member

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    That depends where you're actually travelling between. If it is the city centres you'd have costs to and from the airports.

    I think you'd also need a larger sample of air fares than one and how far in advance you're booking to conclude that rail does not provide competition on this route (I think that's what you were trying to say).
     
    Last edited: 8 Dec 2018 at 21:45
  25. alistairlees

    alistairlees Member

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    Of course there is.
     
  26. alistairlees

    alistairlees Member

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    You are correct that the retailer bears no relationship to the TOC that receives the customer's money. However, in most cases, the fare setter will also be the largest recipient of the money (and, in some cases, the sole recipient); that is why they are the fare setter. So it is not true to say there is "no relationship". There are of course, many exceptions and anomalies; but they should not detract from the fact that there is (broadly, on an industry-wide basis) a strong relationship between fare setting and receipt of customers' money.
     
  27. Starmill

    Starmill Veteran Member

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    So what? That fare is available on all but one TransPennine Express itinerary that day.
    Screenshot_20181206-220607_Chrome.jpg
    One train costs slightly more.

    I do not see the problem?
     
  28. JB_B

    JB_B Member

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    @alistairlees - no doubt there is a logic to it but it's opaque to the end-user and it looks pretty random.

    I've just run Brighton to Lewes x 10 on NRE with cookies cleared - the referrals were as follows


    C2C
    Chiltern
    Chiltern
    Hull Trains
    GWR
    Hull Trains
    GWR
    SWR
    TPE
    TfWales


    Can you explain what is actually happening here - some sort of load-balancing or is it referral management?
     
    Last edited: 8 Dec 2018 at 22:24
  29. ForTheLoveOf

    ForTheLoveOf Established Member

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    Well, perhaps I should have said this - there is no automatic link. Sometimes the fare setter, retailer and recipient of the ORCATS money will all be the same. Sometimes they will all three be different - perhaps most commonly where there are "intercity" TOC controlled flows for journeys which are fastest on non-"intercity" services, e.g. Stafford to Rugby during the non-peak service pattern.
     
  30. ForTheLoveOf

    ForTheLoveOf Established Member

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    Well, not in my experience! Sometimes it's the TOC that provides the majority of the journey. Sometimes it just seems to pull a random site out of a hat.
     

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