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Select Committee on Transport Written Evidence


Memorandum by Great North Eastern Railway (GNER) (FOR 115)

THE FUTURE OF THE RAILWAY

1.  INTRODUCTION: SUCCESS IN THE RAILWAYS

  1.1  Britain's railways suffer from a poor public image—some of it justified, much of it not. A legacy of deep-rooted negative perceptions, coupled with recent difficult times, has been a deterrent to travel and has masked much of the positive progress made by the industry and train operators like GNER.

  1.2  Railtrack was a disastrous and expensive experiment, rightly brought to an end by the present Government with the creation of Network Rail. A minority of the operators selected in the first round of franchising proved not to have the necessary skills to run a railway properly, and have been stripped of their franchises.

  1.3  GNER believes that there is much to be proud of in Britain's railways. Thousands of railway people work tirelessly to operate, maintain and improve the railways, often encumbered by a legacy of under-investment and outmoded technology.

  1.4  Whilst recognising many areas for further improvement and the need to deliver ever-higher service standards to meet increasing passenger expectations, GNER is proud of its successes to date. Since it won the East Coast franchise in 1996, GNER now carries more passengers (c 30% extra) on more services (24% extra) to more destinations using more reliable trains. The company, which has a "best value, passenger first" approach to business development, employs 550 extra on-train crew to provide a more personal and attentive service for passengers. In addition, GNER has delivered improvements to station facilities, opened new, bigger and more secure car parks and has been at the forefront of cultural change within the industry, reversing the mindset that running trains was more important than looking after the needs of passengers.

  1.5  Under a two-year franchise extension to April 2005, GNER is currently spending £100 million on rebuilt, more reliable and longer trains; modernised stations; new car parks (for example, two will have been built at Grantham this year alone to cater for the growth in commuters); improved passenger information and easier ticket purchase.

  1.6  GNER's passenger satisfaction levels, as measured by the SRA's National Passenger Surveys, have consistently been the best of any long-distance train operator, with 87% of passengers either satisfied or very satisfied with their overall journey (4% dissatisfied). Praise letters have risen by 600% since 1997 and the company has won many awards for its customer service, fleet overhaul and catering standards.

  1.7  GNER carries 14.6 million passengers a year across its 920-mile route and employs 3,200 dedicated staff. Earlier this year the company's organisational structure was revised, resulting in a 25% reduction in "back office" managers and a renewed focus on continuous improvement. Customer-facing staff were not affected.

  1.8  GNER, which is privileged to run fast, frequent services on a vital national transport corridor between London and Scotland, is acutely aware of the crucial role InterCity-style services have to play in contributing to national and regional prosperity. Such services are an efficient, competitive means of moving large numbers of people over long-distances—safely, reliably and in comfort—direct to the heart of some of Britain's most important commercial and tourist centres. The reliance on such services to regional economies was cruelly underlined in the aftermath of the Hatfield tragedy.

  1.9  A study by Yorkshire Forward—the Regional Development Agency for Yorkshire and Humberside—stated that the East Coast Main Line provided a net contribution of at least £100 million annually to the regional economy, providing an essential foundation for business and tourism.

  1.10  In addition, the GNER franchise now costs the taxpayer nothing. The company is, in fact, a net contributor to Government finances. This is a success story for Britain, and for the people who provide our service every day.

  1.11  GNER is a long-haul inter-urban railway. All of our trains cruise at 125mph, carry Standard and First Class accommodation, and are crewed by well-trained customer service staff and by highly competent operational personnel.

  1.12  GNER competes mainly with road and domestic air travel. There is also competition with other train operators on parts of the route, although the main emphasis here is on co-operation and connections.

  1.13  In this submission, we have concentrated entirely on our knowledge of the long-haul rail business, in which we believe that our approach has demonstrably succeeded. Our evidence describes briefly what we have done, the outputs that our approach has delivered, and the policy steps that could be taken to allow us to do an even better job in the future.

2.  RAIL IS A MODERN, COMPETITIVE TRANSPORT MODE

  2.1  Despite the continuing challenges of delivering better punctuality and reliability, controlling costs and securing adequate funding, GNER is optimistic about the future of the railways. Rail travel remains an attractive and competitive means of getting from A to B, and its competitive edge will get stronger through the efforts of the industry and increasing congestion and pollution on Britain's road network.

  2.2  A year ago, GNER published its first monthly "Travel Calculator" report, an intermodal survey that compares GNER's performance, prices and journey times versus domestic airlines and private car on three main markets—Leeds-London, Newcastle-London and Edinburgh-London. Although commissioned by GNER, the report is independently compiled from published sources. It aims to help people to make more informed travel choices.

  2.3  Contrary to public perception and media headlines, it consistently shows that long-distance, city-centre to city-centre passenger rail travel is more punctual than travelling by plane or car, and usually cheaper and faster.

  2.4  Table 1 below shows average journey times in hours and minutes with delays factored in for June 2003. (Journeys are calculated from city centre business locations to the Bank of England in London.)



  2.5  Table 2 below shows 0-15 minutes punctuality (the airlines' measure of "on time"—CAA figures) as a percentage of journeys, across all three markets in June 2003. No figures available for right time arrival by road.



  2.6  Punctuality figures for May 2003 were: 88.2% of trains within 0-15 minutes versus 74.7% for planes. Figures for April 2003 were: 86.1% for GNER trains versus 75.6% for domestic planes.

  2.7  In short, GNER believes it offers a total journey experience superior to that offered by rival modes.

  2.8  Nonetheless the no-frills airlines have been successful in promoting their headline fares, but these do not reflect the fact that the aviation industry does not meet its full external costs. Such airlines have stripped-out the customer service which they describe as "frills" but we regard as "basics".

  2.9  The car—particularly the company car—can offer comfort, entertainment and door-to-door convenience, although typically on long journeys motorist face delays of two hours or more above normal journey times.

  2.10  Rail offers the ability to work whilst travelling, the convenience of arrival in a city centre, relative safety, comfort and—if managed correctly—the most enjoyable travelling environment.

  2.11  The development of GNER's industry-leading customer service package since the start of its franchise in 1996 can be seen, therefore, as an essential tool in the acquisition of customer loyalty. Creating an inclination amongst existing passengers to use GNER time after time is essential for business success, as is attracting more people from other modes. Good customer service is not an optional extra.

  2.12  Customer service has been delivered across the board in GNER, involving train drivers, guards, on-board and station staff, depot personnel and managers. Soon after taking over the business, GNER invested in a purpose-built training facility at York—"The Studio".

  2.13  GNER was the first train operator to be awarded "Investor in People" status. It has the highest safety rating of any UK train operator, and is regarded amongst the best in the transport sector worldwide, under the International Safety Rating Scheme (ISRS). It achieved a Gold Award from the Royal Society for the Prevention of Accidents at its first attempt.

  2.14  All of these achievements are underpinned by innovative partnership agreements with all four rail trades unions—ASLE&F, RMT, TSSA and Amicus—which have delivered productivity benefits for passengers, along with industry-leading terms and conditions and working relationships based on trust, transparency and consensus.

  2.15  As part of a programme of further enhancement to GNER's customer service package, GNER will shortly become the first UK rail operator to be introducing continuous broadband internet access whilst travelling at high speeds, for passengers using "WiFi" enabled laptop computers. GNER believes that this facility has the potential to transform the nature of some of its markets, as business and leisure travellers can spend their time event even more productively and enjoyably than at present. Such a facility cannot be used—for obvious reasons—whilst in the air or driving a car.

  2.16  GNER's approach to fares has also been important to our marketing. GNER has learned from the airline industry by introducing "yield management" to the railways. Passengers booking journeys well in advance are able to benefit from a range of attractive, discounted fares. They also have the advantage of guaranteed seats—especially important to the occasional and leisure traveller.

  2.17  GNER remains committed, nevertheless, to "turn-up-and-go" passengers, who continue to provide about a third of total ridership. The ability of passengers to use rail almost on impulse is a distinct competitive advantage versus the airlines. GNER has no plans to introduce all-reservation services.

  2.18  The company's customer focus has caused us to deal decisively with issues relating to our inherited "machinery", partnering extensively with the UK train manufacturing and overhaul industry.

  2.19  Our Class 91 electric locomotives and our diesel fleet of High Speed Trains have all been rebuilt in British factories to improve reliability. All 302 of our Mark 4 "Mallard" coaches—the backbone of our fleet—have been redesigned and are being totally rebuilt in West Yorkshire. They will deliver a more comfortable and reliable journey for passengers and a better working environment for GNER's busy on-train crews, and should make travelling with GNER an even more attractive prospect. GNER was honoured recently when the Queen and Duke of Edinburgh inaugurated the first new-look train at King's Cross.

  2.20  GNER's further innovation in rolling stock has been to lease and introduce into our regular passenger services between London and Leeds three Class 373/2 trains leased from Eurostar (UK) Ltd. In summer 2002, following the completion of the Leeds 1st project, GNER introduced 11 extra services a weekday between London and Leeds, and this market has grown significantly since.

  2.21  It is our strong contention that GNER's unique business strategy has produced a better deal for the taxpayer through reducing our requirement for public subsidy. Unlike elsewhere on the network, we have not needed to renegotiate the terms of the premium/subsidy profile for our franchise.

  2.22  According to the SRA's latest Rail Trends report, in 2002-03 GNER paid a £26.9 million premium back to Government and is one of only seven train operators not to receive a subsidy.

3.  POLICIES FOR SUCCESS IN THE FUTURE

  3.1  GNER is a growing and successful railway. We are proud and privileged to be an effective custodian of a great national asset, securing public policy goals by increasing the market share of rail and promoting the economies of the regions we serve.

  3.2  Rail is a highly regulated industry. It always must be in the fields of safety, pricing and competition policy.

  3.3  Quite properly, the SRA is seeking through its franchise replacement programme to introduce new standards of service quality to the railways, backed up by key performance indicators on such issues as station and train cleanliness. This is appropriate where the SRA is seeking to secure value for money for the taxpayer from public subsidies.

  3.4  GNER does these things anyway, in the main, because it is good business practice. As it receives no subsidy, it must continue to raise standards, retain its existing passengers and win new ones.

  3.5  GNER believes that such a commercially self-standing franchise model deserves some freedom to exploit competitive opportunities in what is a relatively dynamic marketplace. GNER's people also need the opportunity to achieve their true potential over time.

  3.6  The SRA's recent Network Utilisation Statement (NUS) and its individual Route Utilisation Strategies (RUS) are to be welcomed. The SRA, following consultation, will determine how the scarce asset of track capacity can best be deployed given available funding. This will, understandably, create a greater degree of central control on such matters as timetabling. A possible downside is that having a more fixed timetable may reduce train operators' capability quickly to respond to new market opportunities, especially where competition with the airlines is a decisive issue.

  3.7  GNER hopes that in specifying the requirements for a new East Coast Main Line franchise, from May 2005, the essential part that customer service—underpinned by strong people management skills—should play in the future success of rail on the route, will not be overlooked. Whilst perhaps not the intention, GNER's very uniqueness and its cultural and industrial relations advances, may be ignored or not given sufficient priority. Although the specification is yet to be issued, the danger is that such an oversight could lead to a decline in service standards, turning the business into a rather dull conveyor belt, rather than an industry-leading brand able to compete more effectively with car and air travel.

  3.8  Like everyone in the rail industry, GNER places great importance on the Interim Review of Network Rail's access charges currently being undertaken by the Rail Regulator.

  3.9  GNER supports the efforts of the Regulator to drive down the costs of Network Rail's enhancement programme, which has seen enormous sums diverted in to the West Coast Main Line Route Modernisation for relatively little gain, denying funding to other important routes

  3.10  GNER also supports Network Rail in its decision to bring a significant portion of its maintenance and renewal activity in-house, so as to improve management and gain a better understanding of underlying costs.

  3.11  GNER has no desire to see the run-down or closure of any part of the railway network. Indeed, branch lines provide important feeder traffic for our own services. Nevertheless, the scale of maintenance and renewals expenditure required by Network Rail to make up for decades of under-investment in railway infrastructure by successive governments may simply be too great for passengers, freight customers, train operators or the taxpayer to bear.

  3.12  If difficult decisions on priorities have to be made, GNER favours the use of central government expenditure on the maintenance and renewal of urban commuter networks around London and our other principal cities, and on the inter-urban high-speed network.

  3.13  In the much longer term, GNER supports the principle of a new, very high-speed north-south rail route between England and Scotland. We would seek to operate such a route if it were ever to be built. However, this project should not be used as an excuse for inaction now and investment inertia on existing routes such as the East Coast Main Line. That is why GNER welcomes the SRA's commitment to Allington Chord near Newark, which will create a full half hourly London-Leeds service, and a new platform at King's Cross. The modernisation of the existing main lines has to continue and will secure public policy goals in the medium term. In preparation for the awarding of a new East Coast Main Line franchise from 2005, we are currently developing our own vision for the route.

  3.14  GNER welcomes the opening of Phase 1 of the Channel Tunnel Rail Link (CTRL). When complete to St Pancras in 2007, this will provide easy transition to Eurostar services from GNER trains arriving at the adjacent King's Cross station. The other priority for new railway infrastructure from our perspective should be Thameslink 2000, which will significantly increase capacity in the King's Cross area.

GNER

October 2003


 
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