Is the RDG finally ‘manning up’?

I want to explore the widening gulf between 21st century lifestyles and 19th century ticketing. There’s currently no railcard for general use for people aged between 25 and 60, and the increase in home working means that salaried staff don’t visit an office every day. They don’t travel quite enough to justify a traditional five-day-a-week season ticket, and maybe three journeys a week is ruinously expensive. 

Why not pre-paid carnets of tickets (say, ten or 20 at a time), available nationwide on any route, at maybe slightly more than season ticket journey rates, offering significant savings in walk-up fares? I’m disappointed, but not surprised, that Plummer’s answer is murky and evasive.

“These are all things we are debating - how do we provide better service to customers in a way that generates revenue and generates investment? Some of these things can be done by the industry alone, while others require permission. Some of that is relatively easy, while others are really quite hard conversations.”

I give him a very personal example. I’ve been buying a lot of East Coast fares recently between Peterborough and Newcastle. Sometimes the advance fares are maybe £45, sometimes they’re around £90 according to time and train - and often it just isn’t possible to use the really cheap ones. 

OK, so sell me a book of 20 tickets for around £55 a journey to use when I like. You’ll have my money up front and I’ll get a good deal. And you know what - I just bet I’d end up travelling more. Plus, of course, everyone knows that the odd one goes down the back of the sofa and is never used, so it’s good for the railway, too. This would reflect modern lifestyles and would be easy to do. So why not just do it?

“Those are exactly the things we are debating,” he replies. “So what is it we can do to improve those things quickly, and what are the things we need permission to do because the regulations otherwise stop us?

“The problem is the requirement to offer a fare for every station combination for all operators. And that’s just the start of layer upon layer of complexity, which is why we need to tackle the root issue of those regulations and requirements which either prevent progress or make it look hugely complicated.”

So we’ll finally see progress, will we?

“I can certainly commit to promoting and provoking that debate, and highlighting where we can deliver those things within the industry and where we need agreement elsewhere before we can act.”

The RDG’s Jacqueline Starr has said we’ll see the end of mag stripe ticketing in around two years?

“We published a booklet a few weeks ago saying that we weren’t necessarily going to get rid of the mag stripe because some people actually want that, but certainly you would have barcode-based ticketing across the country from 2018. You’d have the ability to use mobile phone devices for tickets from that time, and progressively you’ll see smart target solutions in the major cities for commuting - exactly the things that the Secretary of State said in his recent statement. So you’ll see that being delivered progressively from 2018.”

Plummer agrees that passenger flow at gatelines is too slow at peak times. So why don’t we adopt Japanese-style gates which remain open all the time, and only close when an invalid ticket is detected?

“That’s absolutely the sort of thing we need to be doing.”

What about franchises? Are we still happy with long-distance franchises, or should we now be thinking of concessions? If we now have franchises being pursued by only two bidders, isn’t that a bad thing? Should we take revenue risk away by switching to concessions?

“There are aspects of franchising where RDG and its members are quite clear that the Department needs to make changes in terms of the balance of risk and reward - those areas of economic risk that are outside the control of bidders.

“That balance needs to be consistent and at the moment, yes, we’ve had a number of examples where there have not been as many bidders as you would want. If that was to continue then that’s not a fully competitive situation, but we believe that if those refinements are made to the franchise model then we will see more bidders fighting for those important franchises. And that competitive environment is important for everyone.

“We would also like to see a few more smaller franchises. But we don’t want the pendulum to swing too far and have too many franchises and interfaces. By having a few more franchises, you create more of a dynamic market and are more likely to have competition.”

The DfT once wanted shortlists of at least four bidders, yet now seems content with two because of the sharper sense of competition it is assumed this creates - with the added advantage (I am told) of the elimination of ‘makeweight’ bids.

“My gut feeling is that if you thought there was always going to be two bidders, then that’s a problem. If there’s two occasionally, then that’s maybe not a problem.”

What is his view on a potentially tricky situation emerging in train leasing, whereby relatively new trains could go for scrap many years - decades even - before the end of their expected lives? 

Plummer is enigmatic: “Is that a quirk, or is that just ‘the market’? Isn’t that just innovation and evolution?”

It’s hardly customer-friendly, though, is it? If it follows through, then rolling stock costs will soar and passengers will end up footing the bill - either through fares or taxes.

“But we should also try and be consistent,” he replies. “In the past we’ve had the opposite problem, with no liquidity in the market at all, and then people criticise us for having taken a risk then charging a market price. The flip side is if you want a market to work then you need liquidity - you need some ability to have some choice. Bluntly, if there’s no liquidity there’s no choice, and then somebody has to manage where everything is going in order for it to work. We need to be consistent about that. Do we want this to be a market or not? That said, we just need to be clear how we want this to work as a proper market.”

For years, the railway and Government alike have become cautiously accustomed to annual compound growth of around 6%, which only blipped slightly after the financial crash of 2008. For the first time there is clear evidence that solid growth is at least softening. Is it the end of the run?

“There’s a lot of work being done to understand what happened and why it felt a surprise to many people why we had that slowdown. As ever, it’s a whole combination of factors that resulted in that slowdown, and you can explain something ‘after the event’.

“We need to understand if this a sustained flattening of demand. It certainly does look as if the rate of growth is likely to be slower. We have had a really high growth for many years and many people believe that growth will continue, but perhaps not at such a high rate. Rail growth will depend on the growth in population, the economy, the desire to travel - and we’ve had some short-term issues with terrorism, Brexit and confidence in the economy to deal with, too.  

“But in all of the scenarios we are looking at, we will still need to invest in capacity. What is less clear is how much more challenging it will be given lower volume and yields. Investment will become less affordable, but we can’t stop and do nothing.”

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  • Nick Jones - 25/04/2017 18:18

    Good searching and very relevant questions. Unfortunately answers were punctuated with " we need that debate /conversation.......". In other words no real answers. Disappointing but not surprised.

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