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Getting fares policy right is vital for passengers and for the Government's stated aim of 'growing' the railways. But its importance goes further. The railways are a public service, partly funded by the taxpayer. Consequently, they should be run in a manner which supports rather than undermines broader public policy objectives, and which benefits any taxpayer who wishes to use rail services. Fares and ticketing policy has a direct impact on whether, when and how people travel on the railway. This in turn has important implications for wider transport strategy, environmental policy, and regional development. A misconceived ticketing policy has the power to hinder the achievement of policy objectives far beyond the railways themselves.
The way in which rail fares are currently managed does not serve the best interests of passengers and it does not provide value for money for passengers or tax payers. We uncovered a range of problems - for example:
- The structure of fares is deeply fragmented and highly complex. Names, conditions and restrictions often vary subtly between different train operating companies.
- Flexible walk-on rail travel does not suit train operators who have sought to impose hefty premiums or cumbersome restrictions on such fares. Excessive price increases have put Standard Open fares well beyond what is affordable for most people. Furthermore, many operators are imposing new and ever narrower restrictions on Saver fares. As a result, the ability of many people to travel by train has been severely curtailed because walk-on travel is the only option suitable for their needs, and they are priced out of that market.
- Train operators have introduced modern reservation systems based on the model used by 'no-frills' airlines in an attempt to maximise the revenue for every seat on every train. To help them attract passengers on to less popular departures, advance-purchase fares have become widespread. Such fares may provide some passengers with good value for money. But many others are denied the bargains because they are unable to travel off-peak, or do not wish to book their tickets weeks or months in advance.
- The value for money of rail travel has deteriorated by most yardsticks over the past decade. Passengers are consistently dissatisfied with what they perceive to be the value for money of their fares.
Train operators and the Government have done little to alleviate these problems, citing simply the fact that the number of people travelling by train is at record levels. This does not mean, however, that passengers are content. In the short term, many passengers have little choice but to accept the situation. But in the longer term, fares levels and complexity may influence them to make different choices about where to live and work, where to locate their business operations, and whether and how to commute or travel for business.
Train operating companies have exploited the complacency of the Government. The industry has demonstrated beyond doubt that it can neither be relied upon to produce a simple, coherent and passenger-friendly structure of fares, nor is it capable of maintaining reasonable ticket prices. Prices for Open fares are now exorbitant. Although Advance Purchase fares are good value for some passengers, many others are punished for their need to have flexible travel arrangements. Saver fares might have been a saving grace, but train operators have sought to curtail their use. This is not good enough. We fear that the single-minded pursuit of revenue and profit by train operators will have serious long-term consequences for the railways.
The privatised industry has had more than a decade to get fares and ticketing right, and it has proven incapable of doing so. Passengers are being held to ransom by a system that is deeply flawed. Neither passengers nor tax payers are getting value for their money. The situation is simply unacceptable, and the Government must now pick up the pieces and set about creating a coherent policy for the railways which also incorporates better regulation of fares and conditions of travel. The system of fares, conditions, and restrictions must be simplified, unified, and made easy for passengers to understand. Ticket names, conditions and restrictions should not vary from one operator to another but should be consistent across the network.
The Government must also strengthen the regulation of prices, and the regulatory framework more generally so that both Network Rail and train operators can be held to account.
The Government must ensure that the needs of passengers are put firmly before revenue for train operators. The Government is pouring millions of tax payers' money into the railway. This is well and good, but the corollary is that the tax payer should benefit. The Government must recognise that train operators are semi-monopolistic operators driven primarily by the objective to maximise revenue. Therefore, the only way to ensure that all passengers receive a user-friendly service that is value for money is by increasing the regulation of the fares structure as well as pricing. We need strong vision and leadership for the railways, and only the Government can provide it.
The Government needs to look again at whether the regulatory framework could be simplified to create greater clarity for passengers. It must also review the powers of the Office of Rail Regulation in areas such as excessive fares to ensure these are adequate. The Regulator itself needs to reconsider its consensus-seeking approach to the industry. The time has come for the ORR to graduate into a tough and 'grown-up' regulator.
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