Examination of Witnesses (Questions 80-99)|
WEDNESDAY 19 JUNE
80. Some of the operating cost is paid for by
the passenger but some of that is then creamed off to be re-invested.
That must be a fairly big percentage of a charge. It is £172
there and back to Manchester. It does not cost that, does it,
to get somebody by rail there and back to Manchester? Not even
(Mr Green) No-one is going to be a millionaire from
running railways. In a good year we make about £20 or £30
million, in a bad year we lost £8 million.
81. Let us look at that. You are saying people
are paying the high price ticket in order to pay for the new trains.
If we look at the ticket, how much would you cut off the top of
the ticket to pay for the trains? Is it one per cent or is it
ten per cent?
(Mr Green) That really is an impossible question to
answer. Do we mean the open tickets or the Savers or which?
82. You have just justified the high cost on
the basis that the travelling public are paying for the new trains.
So they would like to know how much out of their ticket they are
paying for the new trains.
(Mr Green) You are paying for £600 million worth
of new trains.
83. How much on each ticket?
(Mr Green) I would not know. You cannot just divide
a train up into one ticket. It does not work that way.
84. If you are saying you have the highest prices
in Europe for train travel per mile gone, would you dispute that?
(Mr Green) It is probably true except for Heathrow
Express. The reason is that we get almost no subsidy.
85. I do not accept what you have just said
to Mr Bennett. You must know, otherwise why would you load the
price onto the ticket in the first place. You must know.
(Mr Green) We do not work it out per ticket that way.
We get as much income as we can from volume. If that does not
then pay for the investment, we do the rest by pricing.
86. Is it on a percentage basis? If a ticket
costs £100 and the amount you are looking for is a five per
cent increase it is five per cent of £100 is it not? If you
are saying that five per cent is going on to ticket charges to
help pay for the new trains, then it is easy to work out.
(Mr Green) If everyone were buying the same ticket
that would be true, but as everyone is buying totally different
tickets, it is difficult.
87. It is five per cent whether it is a £10
ticket or £100 ticket. If you say it is done on a percentage
basis and you are looking for a five or a ten per cent increase
in tickets to pay for the new trains, it is five or ten per cent
on each ticket surely.
(Mr Green) Inflation would have been about two per
88. If it is inflation then it is 12 per cent
or whatever. If you are using percentages, I would assume it is
the same on every ticket, or is it? Is there a differential? Do
some tickets pay more towards the new trains than others?
(Mr Green) About one third of our travel on the West
Coast is on business tickets and they are the ones which are taking
the hit. The other two thirds are getting very, very cheap rates.
89. In what way are they taking the hit?
(Mr Green) They have the increase of five per cent.
90. The Rail Passengers Council said, "Virgin's
West Coast fares regime is highly unsatisfactory. Virgin has increased
unregulated Open fares at an alarming rate, in order to suppress
demand for journeys during peak times". They quote 67 per
cent between 4/1/98 and 20/5/01. That is a particular standard
class open Manchester-London return ticket.
(Mr Green) Not in doubt. What people have not come
up with is the alternative which is where we get no subsidy from
Parliament, we get no fare increases from passengers and
91. But you knew when you took the franchise
over. You cannot really have it both ways. If you take on a franchise,
you do an estimate of what you are going to get out of it before
you take it over. Or are you telling me that like Arriva you had
no idea until you got there. Presumably you have some assessment
of what you are going to have to charge for your tickets in order
to get your money back. I would have thought that was called capitalism
(Mr Green) What everyone wants is a free Christmas
where there is no subsidy, there is no fares increase and somebody
buys a lot of new trains. That somebody would be bankrupted.
92. Over what period is this going to be loaded
onto the ticket? Are you going to take that five per cent off
ten years down the line?
(Mr Green) It does not go on for ever. At the present
we are talking two or three years out of the remaining ones.
93. What have you said to the Strategic Rail
Authority about the fares scheme? Have you said that you want
the regulated and unregulated fares agreement changed in some
way? What have you asked for?
(Mr Green) The way the situation works is not very
clever. The Saver ticket is over-regulated, so Saver passengers
have not had a significant increase for three or four years, therefore
the increases are all getting loaded on the business tickets.
94. Could we go back to the 18 weekends between
August and December when there will be a lot of frustrated passengers?
Towards the end of that we are coming into the Christmas period.
Would you simply run the 18 weeks or is it possible to delay at
least the December period until January?
(Mr Green) It finishes on 10 December.
95. But in the last two or three weeks the pre-Christmas
rush will begin.
(Mr Green) And if we ask for the contractor to delay
that it will simply delay the work and it will take even longer
to get the acceleration later on. I think they are right to stick
96. There is no way round then.
(Mr Green) Only by delaying the work. Then we have
to use the time before the next August to find a better way of
97. I want to come back to GNER, if I may. High
quality interconnecting services from other operators are important
for you. Are you concerned that the new Northern franchise is
not going to have the funding to achieve improvements?
(Mr Garnett) Yes, we are. There are routes like York-Harrogate
which I bore for GNER on, where you get off our trains and you
get onto the old railway buses which go rumbling along the tracks
to Harrogate. We keep saying to the SRA that the contrast in the
experience is appalling. Harrogate is trying to develop itself
as a conference centre and various political parties have various
meetings there. You go up on our trains and then you get that
experience and it is quite appalling. We have raised with the
SRA that some funding needs to be made available to make some
improvement in rolling stock.
98. Are you suggesting that argument is falling
on deaf ears?
(Mr Garnett) Yes; it is not getting very much response.
99. I come back to your own performance. You
are saying that 27 per cent of the delays you incur are as a result
of internal problems. What can you reduce that to?
(Mr Garnett) Twenty-seven per cent is one of the lowest
for TOCs, but we are not satisfied. We have to get lower. We are
rebuilding our class 91 locomotives and a year ago those locomotives
ran for about 10,000 miles between breaking down. At the last
set of figures, they are averaging 17,000 to 18,000 miles between
breakdowns. We have to improve our own reliability and leave Network
Rail to get on with theirs and perhaps we have spent too much
time worrying about Railtrack and not shining enough light on
our own performance.