Memorandum by Great North Eastern Railway
(GNER) (FOR 115)
THE FUTURE OF THE RAILWAY
1.1 Britain's railways suffer from a poor
public imagesome 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
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
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-distancessafely,
reliably and in comfortdirect 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 Forwardthe
Regional Development Agency for Yorkshire and Humbersidestated
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
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
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 marketsLeeds-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
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
2.9 The carparticularly the company
carcan 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 andif managed correctlythe 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 unionsASLE&F, RMT, TSSA and Amicuswhich
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 usedfor obvious reasonswhilst
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 seatsespecially
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
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
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" coachesthe backbone of our fleethave
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
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
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
3.2 Rail is a highly regulated industry.
It always must be in the fields of safety, pricing and
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
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 serviceunderpinned by strong
people management skillsshould 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
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
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.