Regulated fares
41. Saver fares and most commuter fares are subject
to regulation by the Department for Transport which assumed responsibility
for fares regulation in July 2005 following the winding up of
the Strategic Rail Authority.[42]
Regulated fares make up between 40% and 50% of fares depending
on the method of calculation.[43]
The nature of regulation
42. The basis for regulation is the market position
of rail in relation to other forms of transport in a particular
area. If rail has a dominant position, regulation can be imposed,
but if there is adequate competition from other transport modes,
train operators are left to set fares freely.[44]
The Secretary of State has "an obligation to ensure that
where it appears necessary, fares or certain classes of fare are
'reasonable' in all circumstances of the case."[45]
This obligation has resulted in two broad types of fares regulation,
'Commuter Fares regulation' and 'Protected Fares regulation'.[46]
Fares are regulated through a 'fares basket', where a limit or
'cap' is applied to a weighted average of the relevant fares on
each train operator. The system of fares regulation as a whole
was reviewed in 2003.[47]
The impact of regulation on complexity
43. Regulated fares have not been characterized by
the same multiplication of different products with different names
and different conditions and restrictions. The fact that prices
are regulated means that there is less reason and scope for train
operating companies to create different products to appeal to
different groups of passengers. That said, train operating companies
have increased restrictions on the use of Savers in recent years,
limiting the times of day when these fares are valid.[48]
We believe that the greater stability and clarity of fares'
names as well as the restrictions and conditions of travel for
regulated fares such as commuter fares and Saver fares is an illustration
of the potential benefit of a tighter regulatory framework for
rail fares in general.
27 
