Evidence of Revenue Generation and Abstraction from Historical Open-Access Entry and Expansion
Total Page:16
File Type:pdf, Size:1020Kb
PHASE 2 REPORT EVIDENCE OF REVENUE GENERATION AND ABSTRACTION FROM HISTORICAL OPEN-ACCESS ENTRY AND EXPANSION Prepared for Office of Rail and Road Date 7 January 2016 REDACTED TABLE OF CONTENTS 1 EXECUTIVE SUMMARY ............................................................................................................. 3 1.1 Purpose .................................................................................................................................... 3 1.2 Review of previous work ......................................................................................................... 3 1.3 Approach ................................................................................................................................. 3 1.4 Investigation of explanatory factors ........................................................................................ 4 1.5 Direct demand modelling ........................................................................................................ 4 1.6 Generation and abstraction identified .................................................................................... 4 2 PURPOSE OF STUDY ................................................................................................................. 6 2.1 Study Aims ............................................................................................................................... 6 2.2 Background to Open Access Operators ................................................................................... 6 2.3 The Five Stage Test .................................................................................................................. 7 3 REVIEW OF PREVIOUS WORK .................................................................................................. 9 3.1 AECOM study ........................................................................................................................... 9 3.2 MVA ......................................................................................................................................... 9 4 METHODOLOGY ..................................................................................................................... 10 4.1 Summary ................................................................................................................................ 10 4.2 Identifying the quantum of generation and abstraction ....................................................... 10 4.3 Explaining the quantum of generation and abstraction ....................................................... 13 4.4 Direct Demand Modelling ..................................................................................................... 15 5 LIMITATIONS .......................................................................................................................... 17 5.1 Summary ................................................................................................................................ 17 5.2 Treatment of fares modelling ................................................................................................ 17 5.3 LENNON Data Issues .............................................................................................................. 19 6 RESULTS ................................................................................................................................. 22 6.1 Summary ................................................................................................................................ 22 6.2 Use of MOIRA ........................................................................................................................ 22 6.3 A revenue forecasting model ................................................................................................ 24 6.4 Including the impact of TOC-specific tickets ......................................................................... 26 6.5 Performance against actuals ................................................................................................. 27 6.6 Direct demand model – performance against actuals .......................................................... 33 6.7 Sources of error ..................................................................................................................... 36 7 CONCLUSIONS & RECOMENDATIONS FOR FURTHER ANALYSIS ........................................... 39 7.1 Conclusions ............................................................................................................................ 39 7.2 Recommendations for further analysis ................................................................................. 40 Evidence of revenue generation and abstraction from historical open-access entry and expansion 1 Office of Rail and Road 8 APPENDIX 1 – REVENUE MODEL DEVELOPMENT .................................................................. 41 8.1 Revenue model development ............................................................................................... 41 8.2 Differential Fares ................................................................................................................... 46 9 APPENDIX 2 – INVESTIGATION OF POTENTIAL EXPLANATORY FACTORS .............................. 51 9.1 On board offer ....................................................................................................................... 51 9.2 Rolling stock quality ............................................................................................................... 52 9.3 Lagged effects ........................................................................................................................ 53 9.4 Station quality........................................................................................................................ 61 9.5 NRPS as an indicator of service quality ................................................................................. 62 9.6 Marketing/branding effectiveness ........................................................................................ 67 10 APPENDIX 3 – DIRECT DEMAND MODELLING ....................................................................... 69 10.1 Approach ............................................................................................................................... 69 10.2 Processed Inputs.................................................................................................................... 70 10.3 Model Parameters and Processes ......................................................................................... 73 10.4 Results ................................................................................................................................... 76 11 APPENDIX 4 – FARES METHODOLOGY SENSITIVITY TESTS .................................................... 79 11.1 Introduction ........................................................................................................................... 79 11.2 Results ................................................................................................................................... 80 11.3 Conclusions ............................................................................................................................ 85 LeighFisher Limited This document has been prepared by a division, subsidiary or affiliate of LeighFisher Limited (together “LeighFisher”) in its professional capacity as consultants in accordance with the terms and conditions of LeighFisher’s contract with the commissioning party (the “Client”). Regard should be had to those terms and conditions when considering and/or placing any reliance on this document. No part of this document may be copied or reproduced by any means without prior written permission from LeighFisher. If you have received this document in error, please destroy all copies in your possession or control and notify LeighFisher. Any advice, opinions, or recommendations within this document (a) should be read and relied upon only in the context of the document as a whole; (b) do not, in any way, purport to include any manner of legal advice or opinion; (c) are based upon the information made available to LeighFisher at the date of this document and on current UK standards, codes, technology and construction practices as at the date of this document. It should be noted and it is expressly stated that no independent verification of any of the documents or information supplied to LeighFisher has been made. No liability is accepted by LeighFisher for any use of this document, other than for the purposes for which it was originally prepared and provided. Following final delivery of this document to the Client, LeighFisher will have no further obligations or duty to advise the Client on any matters, including development affecting the information or advice provided in this document. This document has been prepared for the exclusive use of the Client and unless otherwise agreed in writing by LeighFisher, no other party may use, make use of or rely on the contents of this document. Should the Client wish to release this document to a third party, LeighFisher may, at its discretion, agree to such release provided that (a) LeighFisher’ written agreement is obtained prior to such release; and (b) by release of the document to the third party, that third party does not acquire any rights, contractual or otherwise, whatsoever against LeighFisher and