Analysis: Rail heading in the right direction with pandemic recovery

Revenue flowing into passenger rail operators jumped by 8% in the year to October-December 2024.

It reached £2.9 billion for the three months, but remains at 85% of the £3.4bn that arrived in the corresponding quarter five years ago, just before COVID’s pandemic struck.

These latest figures from the Office of Rail and Road show that rail continues to recover from the almost overnight collapse in passenger numbers that took place as the virus spread and people stayed at home.

In bald numbers, passengers made 446 million journeys in October-December 2024, which is 7% higher than the 417 million made a year earlier.

ORR delivers a warning with these figures. That comes from two factors: the Elizabeth line in London, and the continued rise in split ticketing.

Opening the central section of the Elizabeth line between Paddington and Liverpool Street in May 2022 marked the start of those journeys being recorded in rail’s LENNON accounting tool. This lifted overall figures which, without the Elizabeth line, ORR estimates would have been 383 million in the October-December 2024 quarter.

This is 86% of the 447 million recorded for the same three months in 2019. Adding Elizabeth line ridership places the latest three-month figure at 97% of 2019’s.

Split ticketing also serves to increase overall passenger journey numbers. ORR reports that the Rail Delivery Group estimates 5% of journeys between April 2023 and March 2024 were made using split tickets, up from around 4% the year before.

Split tickets serve to cut overall fares for a journey a passenger may make. By way of example, RAIL examined a York-Bristol Temple Meads on a weekday morning train that left a couple of days hence.

CrossCountry’s 0744 from York arrives at 1131 as a direct train. An anytime single costs £174.60, which was the only fare CrossCountry’s website offered in Standard Class when RAIL looked.

Using the Railboard app, RAIL cut this to £84.09. But the discount came in the form of seven separate tickets which would be recorded as seven passenger journeys, rather than the one RAIL’s theoretical passenger was actually making.

The split came thus: York-Leeds (advance single), Leeds-Wakefield Westgate (anytime day single), Wakefield Westgate-Sheffield (advance single), Sheffield-Derby (advance single), Derby-Birmingham (off-peak single), Birmingham-Cheltenham Spa (advance single), Cheltenham Spa-Bristol Temple Meads (advance single).

ORR says it intends to incorporate split ticketing adjustments as soon as possible, and revise historic data back to April 2020. This will give a more accurate picture of the way in which passenger journey numbers continue to recover from COVID.

But whatever the actual passenger numbers might be, what really matters is the revenue they bring. It’s cold, hard cash that HM Treasury cares about when rail spends more than it earns - especially when you take Network Rail’s infrastructure into account.

ORR doesn’t split revenue by train operator, as its statistics do for journeys or distance travelled. Instead, it keeps to a broader split of grouping revenue into three buckets: London and South East (LSE), Long Distance, and Regional. Year-on-year, revenue across the three grew by 9% to £1.4bn, 6% to £0.9bn, and 12% to £479m respectively. Open access contributed the remaining £56m, which is £4m less year-on-year.

ORR has adjusted all its figures by inflation to bring them into October-December 2024 prices. This allows comparison with the same quarter in 1997, when train operators were newly privatised.

That quarter showed revenue of £1.4bn. Peak quarterly revenue came in July-September 2019 at £3.41bn, which fell back slightly to £3.40bn in the October-December 2019 quarter that ORR uses as its pre-pandemic comparator.

ORR uses four types of ticket to classify this income: advance, anytime/peak, off-peak, and season.

For franchised services, off-peak tickets were rail’s biggest earner, bringing in £1.1bn in the quarter (a rise of 6% over the year before). Then came anytime/peak tickets on £910m (up 8%), and advance on £590m (up 9%). Season tickets brought in £233m (9% more than the October-December 2023 quarter).

Train operators performed differently when measured in terms of growth and numbers. For growth, TransPennine Express topped the table at 16% year-on-year (7.4 million passenger journeys), followed by LNER on 15% (6.6 million), CrossCountry on 14% (10.3 million), and Transport for Wales also on 14% (8.0 million).

When ranked by numbers, London becomes dominant. Govia Thameslink Railway, which encompasses chiefly Thameslink and Southern, sits top with 75.4 million passenger journeys (up 6%). Then it’s Elizabeth line with 63.3 million passenger journeys (up 8%) and London Overground with 45.0 million passenger journeys (down 4%).

The next two places also go to classic London commuter operators - South Western Railway (43.2 million, up 10%) and Southeastern (35.4 million, up 8%).

ORR uses other measures to assess train operator activity. It reports passenger train kilometres, which reflects whether or not operators are running more trains or more distance. The measure includes empty stock workings.

Given the size of its operations, GTR comes at the top with 14.5 million passenger kilometres (up 6% year-on-year). But c2c recorded the greatest increase (up 13% to 1.7 million). This measure favours operators with large geographies, so following GTR come Northern (12.5 million), Great Western Railway (11.3 million) and ScotRail (11.0 million).

An alternative measure is passenger vehicle kilometres, which makes allowance for the length of a train. Once again, GTR comes top with 117 million passenger vehicle kilometres. This reflects in part Thameslink’s 12-car fixed-formation Class 700/1s.

One of the biggest increases (18%) comes from Merseyrail, but here background is important. In October-December 2023, Merseyrail was still running its final few three-car Class 508s. A year later, its fleet comprises only four-car Class 777s. This instantly boosts its figures, although the newer trains come with four fewer seats.

For performance, train operators planned to run 1.842 million trains in October-December 2024. They cancelled 94,184 (a rate of 5.1%), but the remainder achieved punctuality (arriving within 59 seconds of booked time) of 62.1%.

This punctuality figure represents a very small decline on the previous year’s quarterly figure of 62.2%, produced by 1.778 million planned trains with 86,605 cancelled (4.9%).

Looking back five years to October-December 2019 sees punctuality at 59.4%, with 1.934 million planned trains and 79,346 cancelled (4.1%). This leaves rail now delivering slightly higher punctuality, but across 105,848 fewer services.

October-December is the quarter of the year with traditionally poorer performance, mainly because of autumn leaf-fall.

For 2024’s quarter, ORR reports 34 severely disrupted days (which it defines as days with cancellations running above 5%). Storm Bert disrupted three days (November 23-25), while Storm Carroll affected November 27, and Storm Darragh did for December 7-8 - giving six days for named weather storms. Cancellations from lack of train crew hit 18 days under ORR’s severely disrupted definition.

Most train operators shared between 40% and 60% of the responsibility for cancellations across the quarter.

There were two outliers. Caledonian Sleeper held responsibility for 87% of its cancellations, which represents a 48 percentage-point increase on the same quarter in 2023.

At the other end, Greater Anglia’s cancellation proportion sat at just 19% - and even this figure was 2.4 percentage points higher than the previous year.

The Railway Industry Association uses Greater Anglia as an example of success. RIA notes that GA’s revenue is 10% above pre-pandemic levels and that the company has recorded significant increases in passenger satisfaction.

Latest Transport Focus figures put GA passenger satisfaction at 91%, ranking it fourth of 22 operators (TF doesn’t include Caledonian Sleeper, and splits GTR into Great Northern, Southern and Thameslink).

This compares with 77% satisfied in TF’s spring 2020 National Rail Passenger Survey (NRPS), which was slightly truncated after the pandemic broke out mid-way through its fieldwork.

Greater Anglia’s complete fleet renewal that started in the late 2010s has dramatically cut that share of delay minutes. GA’s self-inflicted delays caused by operations has also sharply dropped, with RIA putting this improvement down to more devolved accountability in which teams must justify service performance.

RIA holds Greater Anglia as an example of how to grow revenue by focusing on customers. It argues that further significant growth can come by restoring public confidence in rail.

That will need train operators to drive down cancellation figures from the 5% seen recently.

It will also need rail to position itself as a product that competes with cheap flying and coach travel with a focus in value for money.

RIA implies a strong need to reposition travel for some rail operators. Operators on the East Coast Main Line (chiefly LNER but also the smaller open access operators) have seen rapid growth that’s been delivered by a strong demand for leisure travel.

Over on the West Coast Main Line, demand has historically been for business travel between major cities. If RIA is right, then more emphasis on West Coast leisure travel may reap rewards.

Taken overall, rail is growing and generating more revenue. It’s recovering from the pandemic shock, but now faces the challenge of keeping its eyes firmly on passengers while also restructuring itself into Great British Railways.