Supplementary memorandum from Transport
Investigations Ltd (TPT 12a)
REVENUE PROTECTION
ON THE
RAILWAY NETWORK
1. A starting point for any discussion on
this topic should be an estimate of the extent and nature of fare
evasion on the railway business, to define the problem before
deciding on the measures relevant to solving it.
2. The reality is that there is very little
accurate evidence on this subject and the estimates brought before
the Committee were more speculative than real. It is my belief
that most of the quoted figures in the public domain are based
on surveys that are statistically flawed, both in the sampling
techniques used and in any weighting (or none) applied to the
figures. Some are little more than anecdotal or informed guesswork.
Extrapolation of numbers from station based activities can be
misleading, while others do not adequately take into account differences
in fare values and revenue weights for different types of journey.
It is generally recognised for example that short journeys tend
to be more prone to non-payment, but such figures are then applied
across the whole business, particularly to longer distance journeys
with higher revenue values.
3. The figures being quoted by ATOC and
Passenger Focus, of 5-8% of revenue or £400 million, are
estimates without qualification as to how much of this is active
fare evasion and how much is unpaid travel caused by ticket retailing
failures. There is also likely to be some overstatement due to
the lack of revenue value weighting by journey type. My personal
estimate, based on such information as is available to me, is
that although there are places where fare evasion reaches these
levels, that figure is not typical of the network as a whole,
while the areas of conspicuous retailing failures are on local
services where traffic has outgrown the ability of the ticketing
systems to cope. These do not actually account for the bulk of
railway revenue.
4. The degree of confusion about the extent
of fare evasion is evident from statements by First Group, with
the Chairman claiming losses on its FCC rail franchise of £40
million, which represents 1 passenger in 6 not paying a fare,
while the TOC's MD told the Committee the loss was around 5% or
£15 million. Claims that have been made for the extra revenue
earned from measures such as ticket barriers are not based on
any objective assessment of the before and after effects over
a longer time period. Short term revenue changes certainly occur
but can lead to overstatement of the long term impact.
5. In my business we have developed a statistically
sound methodology to support surveys on fare evasion. While this
has been applied in a few cases, in general we have found a lack
of interest in the proper measurement of this important topic.
Managers have tended to rely in simplistic solutions to undefined
problems, and have actually spent large amounts of money, usually
on ticket barriers, in the belief that they are a proven generator
of additional revenue, while not evaluating alternative options,
such as the more intelligent deployment of staff. The station
gating agenda has advanced to the point where it appears to be
accepted policy by the DfT, most TOC owning groups and consumer
bodies. Franchise tenders call for them and bid commitments claim
such schemes to be a benefit for passengers.
6. It is my contention that this should
be challenged on a number of grounds: that it is not necessarily
cost effective, is often customer unfriendly and that many of
the benefits claimed for such equipment are overstated or misapplied.
7. That is not state that gates are inappropriate
in all circumstances. The barrier types used in Britain were developed
for use on urban networks with high volumes of passengers, mostly
unencumbered and familiar with the system, such as London Underground
where alternative and adequate methods of control are difficult
to envisage. Those used by Eurostar are entirely different, both
in their purpose and method of operation, and would not be suitable
for revenue control of high volumes of traffic. They are only
used for entry checks and are linked to the seat reservation system.
8. It is reasonable to accept that there
are parts of the National Rail network where circumstances akin
to LUL exist, with such heavy flows of regular users, that gates
are an appropriate form of revenue protection. However there are
important contrasts between LUL and the NR system in general.
LUL achieves a very high degree of gate compatible tickets (over
99%) such that manual intervention is limited, and the high penetration
of Oyster cards in London has made the gates easier and faster
to use. In Central London the minimum fare is that most commonly
due which improves effectiveness.
9. At the major stations now gated by TOCs
very different circumstances apply. There is high degree of manual
intervention due to the many ticket types that are incompatible
with barriers, or not correctly interpreted by them. Without further
checks only the minimum fare at that station is protected. Also
they cannot manage train specific checks, or validate discount
entitlement or class of travel. Unlike LUL there is also no proper
re-use or pass-back protection, and there is no visual cancellation
of tickets. It is therefore quite unrealistic to assume that such
equipment will eliminate fare evasion. At best it will help to
enforce pre-travel ticket purchase (assuming such facilities are
adequate), and support the mopping up of arriving revenue, usually
from local services where on train or station based ticket selling
is inadequate. Many more users are unfamiliar with gates and are
encumbered with luggage so the staff providing assistance can
be under continuous pressure. This results in degraded standards
of customer service and reduced revenue control.
10. Such information as I have been able
to gather suggests that ticket gates at suburban stations are
effective to the extent of halving the fare evasion rate. There
are still the problems of inconsistent manning (identified in
the Passenger Focus evidence), manual intervention and short tickets
or multiple passage. There is also some evidence that this effectiveness
declines with length of journey where the other factors in fare
evasion come into play that the gates do not address. It is reasonable
to assert therefore that for longer journeys (say of an hour or
more) they are largely pointless in revenue protection terms as
on-train checks are still needed and will be more effective.
11. Although, in my own evidence, I agreed
that most passengers want to see action on fare evasion and to
feel their own honesty in purchasing tickets recognised, I do
not believe that ticket barriers enjoy widespread acceptance for
this reason. Access to and from trains is restricted, often with
the closure of secondary entrances and exits, which extends times,
congestion is caused and many customers find them intimidating
and difficult to use. Meeters and greeters and those who may wish
to use station facilities are deterred from legitimate use. The
overall message is negative and unwelcoming, and one has only
to observe the operation of barriers at any major station where
there are many irregular and encumbered users to come to this
conclusion.
12. Another stated benefit is security.
Again this may well be true of the suburban station afflicted
with idle youth and vandalism, but that may be as much due to
visible staff as the actual equipment. Plainly it cannot be true
of stations in general since the majority that have acquired secure
station status do not have ticket gates. Also closing off the
platforms at major stations does nothing for security in the other
public areas of the station where much of the crime risk still
exists. Restricting access to facilities within a paid area to
ticket holders makes them less frequented, which may not actually
enhance security, and affects the viability and attraction of
trading outlets.
13. Any notion that ticket barriers contribute
to wider security concerns, such as the threats of terrorism,
can be dispelled when it is recalled that the 7/7 bombers entered
the system at Luton, with tickets at a gated station.
14. Penalty Fares, and the fairness of their
application, have featured in evidence given to the Committee,
and I do not propose to debate the appeals process. What is being
overlooked is the reason that Penalty Fares legislation was introduced
in the first place. It was to address the inevitable fact that
in busy suburban networks it is impossible to mount fully effective
ticket checks on all journeys, either for reasons of cost or practicability.
The original aim was to rely on a managed level of spot checks,
with the intelligent deployment of staff that is not predictable
to the passenger. The concept has parallels in other areas of
life, such as Pay-and-Display parking, and requires reliable ticket
retailing opportunities. This would have benefits in terms of
operating cost and preserve easy access at stations as far as
possible.
15. A consequence of barrier schemes has
been that ticket checks are now concentrated at major stations,
have become predictable to fare evaders and at least in commuter
networks the on-train presence has been scaled back due to the
need to man the gatelines. They have also tended to demotivate
staff as the variety and initiative of the task has been downgraded,
while the remaining mobile staff tend to rely on the assumed effectiveness
of gated stations. Overall therefore it is doubtful whether they
are as successful in targeting fare evasion as is commonly supposed,
while increasing the level of check on those who pay their fares
anyway.
16. The impracticability of mounting full
and effective manual checks at reasonable cost at major stations
was noted in evidence. The Penalty Fares regime, as originally
conceived, was designed to avoid the need for these since checks,
whether at stations or on train, were intended to be on a sample
not a blanket basis. The heavy level of resources now deployed
at some major stations could certainly be deployed to better effect
in other ways.
17. Some of the London termini, such as
Euston, King's Cross and St Pancras, as at present configured
for InterCity trains, are fairly optimally laid out. They allow
train specific manual entry checks when required, while preserving
a walk-off facility for arriving passengers when a full on board
check has taken place. These sensible arrangements are threatened
by proposals for "automated" gatelines that have no
logic in revenue protection terms and will cause substantial inconvenience.
To impose exit checks with barriers at such stations, where passengers
can at present walk off unimpeded, is a serious loss of an important
customer amenity.
18. A number of other principal stations
have been extensively renovated to an open layout that is easy
for passengers to use and attractive in environmental terms. These
too are threatened by barrier proposals that can and should be
challenged on revenue protection grounds, and will significantly
detract from the value of these stations in terms of facilities
and access. If there are fare collection problems on the local
services at these stations, they need to be quantified and other
solutions are possible. Penalty Fares can sometimes assist.
19. The proliferation of ticketing technology
like barriers, which requires significant hardware and software
integration to be effective, will inhibit introduction of new
ticket formats or media such as smartcards, print-at-home and
mobile phones (see Appendix note).
20. Much of the current drift towards "closing"
stations (as opposed to maintaining open access) leads to a situation
where they cease to be part of the public realm and are a place
where people are processed. The message to customers is authoritarian,
in that they can only enter on the operators terms and are not
trusted. This is potentially damaging to the railway business,
losing a marketing advantage against air travel, while bus and
coach users can retain easy access in the public street. It should
be noted that nowhere in Europe (Eurostar excepted) are Inter
City type passengers processed through ticket gates.
APPENDIX NOTE
ON TICKET
FORMATS
Visual ticket inspection requires no more than
the proper training of staff and the provision of simple equipment
to cancel daily tickets. The latter should include a proper coded
marking of tickets, such that the date and place of check can
be identified, thus reminding the customer how it has been used,
and allowing checks to be made of refund claims etc. Many operators
fail to do this, with staff using a hole punch or pens.
Gates require tickets in a predefined format
and carrying machine readable codes that must carry sufficient
information for validity to be accepted or rejected. As most barrier
systems control access to a complete station, validity can only
be assessed in relation to any possible journey at that station
at the time/ date.
A number of ticket and pass types exist on the
rail network that are not gate readable or compatible, due to
their size or the lack of magnetic or other coding. At barriers
these have to be inspected manually.
The large format tickets are known as ATB style,
similar in some respects to airline tickets and those issued by
Eurostar and European railways. They were designed as an inclusive
travel and reservation ticket, and carry more printed information
than is possible, or legible, on the credit card size ticket.
A number of rail sales outlets still have the ticket systems designed
to issue this format, although there are now machines that can
do something similar on credit card size tickets, usually with
a separate reservation ticket. Some outlets have switched over
from ATB to credit card size because of the incidence of ticket
barriers.
The gates used on the national rail network,
being based on those designed for the London Underground, only
work on the credit card size ticket, and can only check fairly
basic information from the magnetic stripe. The only gate design
for ATB format is that used by Eurostar, which have a quite different
function and are much slower, being linked to the train reservation
system so they are actually checking each train in. TOC gates
cannot do that, so there is no prospect of doing a check at stations
related to the train used.
We now have Oyster cards in London (and the
ITSO problem), mobile phones (barcode scanner needed) and print-at-home
(like ticketless airline travel bought via the internet) where
2D barcodes are used. Eurostar and European railways for Inter
City travel are moving to the latter in place of the current ATB
with magnetic stripe (coding is not just for reading by gates
but is to protect against fraudulent ticket production).
All this means that while ATB may wither away,
other ticket types and media will come along that are not gate
compatible, or even if they could be, there is a large system
development task to get that to happen. With the multiplicity
of uncoordinated gate installations on the TOCs over the past
ten years, the evidence suggests that the integration of new ticket
media, even if they are technically machine readable, will not
easily be achieved.
January 2008
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