Complexity Versus Choice: UK Rail Fares Linda Hatano

Feature Railway Fare System

Complexity versus Choice: UK Rail Fares Linda Hatano

recognition that some form of lower fare to privatization was that public services Introduction was necessary came with the Regulation should be more economically viable. of Railways Act 1844 requiring all Consequently, the BRB faced the To anyone unfamiliar with the system of operators to run at least one train (so- increasingly difficult task of running an rail fares in the UK, the first impression called Parliamentary Train) each day efficient railway with growing passenger is often of a very complicated structure. allowing travel in covered third-class traffic while facing decreasing subsidies. The UK railways have a reputation, both coaches for no more than one penny (1d) Historically, fares had been based simply at home and abroad, for a complex fare per mile. The following 100 years saw on miles travelled, but in 1968, it was structure with little transparency for the introduction of a range of differential decided to adopt a market-based passengers. fares, including workmen’s fares (1883), approach that would give more pricing This article looks at the history of rail- a cheap monthly return ticket (1929) and flexibility. In general, the BRB increased fare policy in the UK and the manner in special fare scales for picnic parties, fares in line with inflation with higher which this has changed with commercial travellers (salesmen), rises on sectors where services had been privatization. It then moves on to anglers, ramblers, police officers, and improved, such as by adding new rolling examine how fare levels are set currently people on military service. stock. On some sectors, the BRB could and some of the issues for those also raise fares to whatever level the responsible for setting fares. Lastly, it market could bear, creating extra revenue examines the situation from the Pre-privatization Fare Policy to help reduce public subsidy. In reality, passengers’ viewpoint and discusses this meant that while some fares were current passenger perceptions of the fare All private railway companies in the UK raised in line with market forces, others system. were nationalized in 1947 and the new were increased in line with inflation even nationalized company became British when the service had actually got worse. Rail (BR). Until privatization completed When faced with rising passenger History of UK Rail-fare Policy in 1997, the British Railways Board (BRB) demand coupled with finite financial was responsible for BR’s overall pricing resources, the BRB was able to use This section looks at the history of rail strategy. One of the core ideologies of differential price increases to force fares and the government’s changing role the Conservative governments (Thatcher passengers off the railways and choke off in setting fares. It examines the issues and Major cabinets) during the lead up demand on overcrowded lines. before privatization and the regulatory system introduced with rail privatization. It then moves on to discuss the problems associated with the regulatory system and how these are being managed. Finally, it examines how train operators set current fares. The history of differential fares in the UK began in the 1820s with the Stockton & Darlington Railway (SDR). On opening in 1825, the fare for a single journey along the full 19-km length of the line was 1 shilling, the 2003 equivalent of £2.21 (£1= US$1.68). The following year, a lower fare of 9 pennies (12 pennies = 1 shilling, or £1.76 in 2003 prices) was introduced for passengers travelling outside the covered coach. By 1835, the SDR was offering cheaper fares on market days (or what would now be termed incentive fares). The first official Passengers getting off the train at Paddington Station in London (T. Suga)

26 Japan Railway & Transport Review 37 • January 2004 Copyright © 2004 EJRCF. All rights reserved. Network SouthEast’s were increased by 1 regulation or ‘protected’ fares), along Pre-privatization Fares an average of 10.8%. However, fare with all commuter and weekly season increases over the long term were similar tickets (known as Tier 2 regulation or During the 1970s and 1980s, BR in all three sectors—between 1984 and ‘commuter’ fares). Fares were set largely introduced a range of fares to stave off 1991, Network SouthEast fares increased at existing BR levels and changes in these competition from road and long-distance by 83%, InterCity’s by 76% and fares were capped at the Retail Price buses; early systems such as reduced Regional’s by 75%. Index (RPI) until 1999. Thereafter, price fares for students and senior citizens were capping would be at RPI minus 1%, further advanced in the mid-1980s when Government and Fare Policy making rail travel cheaper year-after-year. the InterCity, Network SouthEast and before Privatization In fact, since privatization, regulated rail Regional business sectors were fares have decreased in real terms by established. InterCity dealt with the long- There was some government intervention around 6.6%. distance market, Network SouthEast with in BR’s pricing strategy, for example, to The protected fares regulation protected the London and south-east commuter hold commuter fares at some level but passengers by ensuring that walk-on market, and Regional with the regions. the level of intervention was not like that long-distance leisure fares were always The three sectors catered for different seen today. Since the government’s available at a reasonable price. Each fare markets with different priorities and this prevailing opinion was that railways was capped individually, unlike was reflected in their respective fare should be economically efficient, there commuter and season tickets that were systems. As a case study of a sector that was little intervention even when BR regulated in a ‘fares basket.’ This system catered for a more-or-less elastic business announced above-inflation price considers a set of fares together as part and leisure travel market, InterCity increases. However, the Treasury did of a ‘basket’ with each fare in the basket introduced a variety of long-distance keep a close eye on fare increases and weighted by the revenue generated in the fares, some of which still exist in one form occasionally asked BR either to scale previous year. It means that while the or another today. In 1985, Saver and down fare increases or to raise fares change in the overall value of the fares SuperSaver tickets were introduced on differentially for better services. This was basket could not rise by more than RPI InterCity services; these were discounted especially evident during recessions minus 1%, individual fares within the walk-on tickets with restrictions on peak- when the government intervened directly basket could rise more than others, time usage. The cheaper SuperSaver was to restrain prices. As a result, a conflicting providing operators with more fare- the most restrictive and replaced earlier situation occurred whereby government setting flexibility. Regulation of BR restricted-use tickets, such as the policy both encouraged fare increases to commuter and season tickets also Weekend Return that had proved the improve financial performance while attempted to protect passengers by market for this type of ticket. These simultaneously limiting price rises. creating a mechanism to compensate for special tickets were followed from 1987 poor performance. The Fares Incentive by a large range of advance-purchase Post-privatization Government Adjustment Payment scheme (FIAP) tickets, such as the Apex, Advance Return and Fares Policy applied to 17 London commuter and Leisure First, designed in large part operators meant that if an operator’s to encourage travellers to travel at off- Introduction of regulation performance was very bad, the amount peak times and introducing the general Railway privatization was accompanied by which it could increase fares would concept of using price structure to tailor by a government regulatory process to be restricted in a future fare-setting round, demand to capacity. protect passengers in captive markets like thus compensating passengers forced to In BR’s later days, although still centrally London where commuters have almost suffer poor performance and spurring the controlled by BRB, the fare policy no transport choice other than railways. operator to do better. differed between sectors due to the It was also a government move to ensure different market conditions and priorities. acceptance of a very controversial Regulation problems Sometimes, this created tensions between privatization plan even within the Despite good intentions, this regulatory the sectors through differential price rises. governing Conservative party. The system has not always worked as For example, in January 1989, InterCity’s government decided to regulate Saver intended. Capping the Saver fare long-distance commuter fares were tickets and Standard return tickets where effectively capped all prices below it. increased by up to 21%, whereas there was no Saver ticket (known as Tier Therefore, regardless of service

investments made by operators, there is will be clearer, eliminating earlier making slight improvements would be a ceiling to farebox revenues generated anomalies. permitted to increase fares, while a at the lower end of the market. The Saver In general, a relatively small number of relatively good operator experiencing has also led to overcrowding on certain journeys make up the bulk of an temporary problems would be forced to trains, where large numbers of passengers operator’s business, but until now, every reduce fares. Due to the complexity and choose to wait for the off-peak, cheaper possible journey was included in the lack of clarity for passengers, this system Saver service, rather than pay the full fare. basket. From January 2004, only has been abandoned and passengers will Furthermore, the system created journeys that generate 95% of an be compensated directly by the operator anomalies depending on whether fares operator’s income will be regulated, under the terms of its Passengers’ Charter. were calculated as commuter or substantially reducing the basket size. protected fares; due to the way they were Eliminating seldom-used fares from the regulated, some long journeys were basket reduces the TOC’s workload but TOCs and Fares Policy cheaper than short journeys! still ensures effective caps on all fares The large fare baskets contained prices geographically by capping the most Under the franchise agreements, train for thousands of possible but rarely made important journeys. Thus, if the regulated operators have three opportunities to set journeys, generating unnecessary fare from A to C via B is £10, the fare their fares—January, May, and September. difficulties for the pricing departments of from A to B cannot exceed this, regardless Given their competitive market, it is the Train Operating Companies (TOCs). of whether it is regulated or not. The cap critical to get the right balance between Consequently, while the post- for changes to regulated fares will be set yield maximization and the regulatory privatization pricing and regulation at RPI plus 1% for 3 years with a system described above. system was more transparent than under possibility of raising any individual fare One feature of the UK rail market is that BR, it led to a number of significant in a particular basket by a further 5% as each operator caters to a distinct and problems as well as lower revenues for long as the overall basket does not exceed unique market (even when operational some TOCs. However, despite these the cap. The SRA has also set 2006 as areas overlap) but also forms part of a difficulties, rail passenger demand the date for bringing in a new system to greater rail network in the sector it covers. increased greatly. regulate Saver fares, although the details Within one operator’s area, the market are still unconfirmed. conditions dictating what happens on Fares review These changes do not permit the TOCs one section of line can be completely The original government body to make a profit from any price increase different to further up or down the same responsible for overseeing the regulatory under the new system. The fares review line. This interplay of differing travel system was the Office of Passenger Rail clause stipulated that any changes would scenarios means that there is no magic Franchising (OPRAF). OPRAF has since result in no net loss or gain for the formula for setting fares—it would make been disbanded and the Strategic Rail operator. Consequently, any funds little business sense to simply increase Authority (SRA) created in 2001 now generated by the new system will go to or decrease fares by a uniform defines the strategic agenda for railways. the SRA in the form of reduced subsidies percentage. It is important for each A clause in the privatization franchise or increased franchise payments, leaving operator to identify passenger profiles, agreements allowed a fares review in more resources for other investments in priorities, and travel requirements 2002. The review conclusions were the rail network. accurately. After this information is published by the SRA in July 2003 and a Even before the SRA review, the FIAP collected, fares for each different section new system will come into effect in system of compensating passengers for are set according to what that market can January 2004. The basic premises are to poor performance was generally bear and to what other operators on the make regulation easier for the TOCs recognized as ineffective. The delay network are charging. As a franchise while ensuring that rail users contribute between monitoring an operator’s condition, operators are obliged to supply more to the system, thus redressing the performance and making adjustments to through fares that are not restricted to balance between user and taxpayer rail fares was so long that there was little their own services, but they are also free contributions. Regulation still applies but correlation between the fare and current to set their own fares. All these decisions everything will be controlled by fare performance. Furthermore, the changes must comply with the fare regulations baskets. The distinction between what were based on relative rather than overall described above. Furthermore, many constitutes commuter and protected fares performance, so a very poor operator people in the railway industry would

28 Japan Railway & Transport Review 37 • January 2004 Copyright © 2004 EJRCF. All rights reserved. argue that although operators now have some freedom to price fares as they wish and are able, remnants of the old BR fare structure are still in evidence and coupled with the regulatory system, prevent the TOCs from devising truly innovative fare policies. Others go further to say that, having successfully negotiated the interplay between the regulatory system, through fares, etc., there is actually very little room for operators to manoeuvre when setting their fares. While passengers may feel that the current UK fare system is too complicated, they may be partly consoled by knowing the difficulties faced by the TOCs. Platform at Paddington Station (T. Suga)

from London to Birmingham between available wherever a journey entails the TOCs and Setting Fares different termini and via different routes. use of two or more TOCs’ trains. These Virgin’s service is generally faster than arrangements are set out in the Ticketing An operator’s pricing department must Chiltern’s and the company enjoys a and Settlement Agreement (TSA) where consider both finances and the viewpoint certain prestige as an InterCity operator the rules for apportioning through and of the marketing department when setting rather than a commuter operator. In the through ticket revenue are also defined. fares. While the farebox must generate business market, Virgin attracts Revenue is allocated by Rail Settlement as much revenue as possible, the passengers who are cost insensitive but Plan Ltd. (RSP), a company wholly owned marketing department usually stresses the very time sensitive while Chiltern offers by the TOCs and managed on their behalf need for a clear and simple fare structure a longer journey time but cheaper fares by the Association of Train Operating that does not confuse passengers so much both for business and leisure. As a Companies (ATOC). RSP uses a that they decide not to travel by rail. consequence, Chiltern’s business market computerized system called Operational The TOCs must also consider how to get is chiefly made up of small businesses Research Computer Allocation to optimum use of their capacity without and self-employed people although there Timetables (ORCATS) to determine each overcrowding trains at certain times of may be some overlap. This targeting of TOC’s share of ticket revenue based on a day. One criticism of the present different markets is reflected in the fares— prediction of the propensity of a regulatory system voiced by The TOCs is Chiltern’s most expensive Clubman Plus passenger with a particular ticket to travel that capping Saver fares leads to return ticket is £72 while Virgin’s Business at specific times of the day and days of overcrowding on some trains. As a result, Return is £166.20. Although the Virgin the week and thus use one TOC’s trains operators are forced to offer increasingly fare is first class and the Chiltern fare is rather than another’s. lower fares than Saver fares to persuade standard (Chiltern no longer has first The RSP is notified of each rail ticket sale passengers to travel at other times and class), the service levels are similar—they and then begins a complex process of thereby attain a more uniform load factor. both include free refreshments and a working out exactly what has been sold This lower range can offer excellent value London Underground ticket, although by whom and apportioning credits and but tends to be restricted to advance- Virgin does offer the added bonus of free debits to the accounts of the various purchase tickets on specific trains and station car parking. TOCs, travel agents, bus companies, ferry does little to increase farebox revenues. companies, or any company with an Above all, operators must know their obligation under the RSP. Provisional market and target it to their best Allocating Rail Income balances are worked out regularly and advantage. A good example is a settlements are made every 4 weeks in comparison between Chiltern Railways Franchise agreements require TOCs to the case of TOCs. and Virgin Trains, both of which operate cooperate to ensure through tickets are

Figure 1 Forecast of UK Air Passengers

Knowing the Competition 80

Low The TOCs face direct competition not 70 only from each other, but also from road Mid transport and increasingly from domestic High airlines. This section discusses steps that 60 the operators are taking to fight off this competition. 50

Other TOCs and road transport 40 In areas where the TOCs face competition passengers (million) Annual between each other, the industry has seen a range of fares designed to lure 30 passengers from competitors’ routes. The 1998 2005 2010 2015 2020

recently introduced Just 15 ticket at the Source: DfT low end of Chiltern’s London– Birmingham market is a restricted but walk-on fare of £15 return, similar to sections on their website dedicated to day domestic air transport will double by 2020 Virgin’s cheap fare but more flexible. trips by rail and in some cases have even along with similar increases for Reduced fares also help the operator in teamed up with leisure parks to offer international air travel (Fig. 1). their battle against road transport. cheaper entry for train passengers. Other Growth in air travel is a worry for the rail Cheaper fares attract more people to rail new schemes introduced by various industry, especially the long-distance although there seem to be problems with operators include complimentary tea and operators who are in direct competition passengers understanding ticket coffee for all passengers, activity packs with the domestic air industry. This harsh restrictions. These fares are often targeted for children, and vouchers for reduced- business background has spurred directly at the car market with big savings price refreshments on the train. In companies to more innovative fare for families and car-sized groups of addition to these new offers and means schemes. The old BR first introduced people; a good example is Midland of travel, some operators have created advanced-purchase ticketing in the 1970s Mainline’s 4-sight ticket, offering bargain innovative marketing campaigns with and developed it further in the 1990s. It travel for groups of four. offers for cheap shopping trips to London is a similar system to that used by airlines As well as cheaper fares, operators have targeted at regional travellers, and for because the passenger specifies in also introduced a number of innovations cheap holiday trips to the regions targeted advance which service they will use and for both business and leisure travel at travellers in London. is then committed to that service. It was designed to help potential passengers see an instant success for BR because it the benefits of rail. For example, First Competition from air allowed passengers to travel cheaply and Great Western has designated family A recent phenomenon perhaps not allowed BR to use spare capacity. The coaches in their trains, and Chiltern anticipated by rail operators has been the TOCs have kept the system and are now Railways, stressing the value of their huge increase in UK domestic air travel. moving further toward the airline walk-on service has ceased seat This is due in no small part to the new ticketing method, with new automated reservations and removed first class to generation of low-cost airlines such as systems allowing more dynamic provide more standard seats, allowing Easyjet and Ryanair that offer flights at low adjustments to changes in passenger more people to sit at peak times. Since prices by keeping overheads to a bare demand than in the past. Thus it is most journeys on Chiltern are relatively minimum. This in turn has meant that even possible to offer increasingly cheaper short and high frequency, such changes established airlines such as British Airways advance-purchase fares. Although fares will have a significant impact on have been forced to compete to stay in the can only be changed at three specific passengers’ perception of Chiltern’s market. If unchecked, all signs indicate that times each year, which prevents a flexible service. Other operators, such as South this growth will continue; the Department response to the constantly changing West Trains and Midland Mainline, have for Transport (DfT) estimates demand for market, the proportion of cheaper tickets

Ticket type Price Time restricted Train specific Advance booking GNER Executive Special Package 2 (First class) £268 No No Not necessary First Open Return £257 No No Not necessary Standard Open Return £181 No No Not necessary First Class Off Peak 3 £99 Yes Yes By 18:00 3 days before travel Business Saver (Standard) £89.50 Peak restrictions No Not necessary Saver Return (Standard) £83.70 Peak restrictions No Not necessary First Class Off Peak 2 £79 Yes Yes By 18:00 3 days before travel Super Advance Return (Standard) £71 Yes Yes By 18:00 day before travel Super Advance Return (Standard) £64 Yes Yes By 18:00 day before travel First Class Off Peak 1 £59 Yes Yes By 18:00 3 days before travel Apex Return (Standard) £55 Yes Yes 7 days before travel Apex Return (Standard) £51 Yes Yes 7 days before travel Standard Class Off Peak 2 Return £36 Yes Yes 7 days before travel Standard Class Off Peak 1 Return £25 Yes Yes 7 days before travel

Source: GNER website, October 2003

can be altered, allowing an essentially example, the most expensive rail tickets Passenger Perceptions of static system to act more like the dynamic are all refundable on cancellation, Current Fare System systems used by airlines. However, something that most airlines do not offer. because the rail market is regulated and There are always walk-on tickets available A major criticism of the UK fare system airlines are not, there is a limit on how for passengers who want to buy their ticket is the level of complexity in the pricing far rail will be able to emulate airlines. when they travel and the company does structure and the resulting difficulties for One difference that rail passengers will not overbook the train, unlike some passengers. This section examines the notice with this move to a more dynamic airlines. There are special deals, like system from the passengers’ viewpoint system is the ability to book a return Executive packages that offer both rail and highlights areas of confusion. It then journey using a combination of single travel and extras such as London discusses common opinions and how fares. Virgin Trains has already moved Underground tickets, free station parking, operators are attempting to mitigate to this system and it is likely that other meal vouchers, etc. GNER has recently problems. long-distance operators will follow suit installed power outlets for laptop soon. Consequently, a passenger now computers in its first class and is Fare choice has the freedom to travel outbound on a introducing wireless Internet connections, For the average passenger, the usual first peak ticket but homebound on an off- all emphasizing the potential of rail to offer point of contact with the railway system peak ticket, giving a greater fare choice an office environment in which the is when they walk into a ticket office, visit and a potentially more even spread of business passenger can work effectively a website or call a call-centre to purchase people travelling throughout the day. and maximize use of travel time. a ticket. The passenger is often faced with However, a more passenger-friendly In the leisure market, many companies an array of tickets for each journey and booking system is not sufficient to tempt have started offering first-class seats at deciding which option is best is not people away from air travel. Long- standard fares during off-peak times to always straightforward. For example, distance operators have had to work hard use spare first-class capacity and offer GNER operates between London and to come up with schemes to claw back passengers a first-class experience at a Edinburgh on the East Coast Main Line market share, resulting in a whole range cut price. In addition, there are the many (ECML), one of the UK’s premier routes. of cheap fares. To ensure that it is really cheap tickets that undercut fares offered The 600-km journey from London to competitive, Great North Eastern Railway by the airlines or buses. They are mostly Edinburgh takes approximately 4.5 hours (GNER) tracks airline prices and terms and advance-purchase tickets but are very and a simple query on the GNER website conditions very closely, and then makes popular with flexible passengers. (www.gner.co.uk) shows that a return sure that its rail fares are comparable. For ticket can cost from as little as £25 to as

Table 2 Railcard Discount Schemes Passengers’ Opinions

Railcard Applicability Discount Annual Cost Assessing the effect of regulation, Disabled Must qualify under certain One-third off standard and £14 criteria, travel with another first class travel for card competition and market-pricing policy on adult holder and one other adult the average passenger is not easy.

Family Families—min. one adult one Adults save one-third on £20 Experiences of the UK rail system today child, max. four adults four standard fares, children depend greatly on where and why the children 5–15 save 60% passenger is travelling. However, Network (travel in Anyone aged 16 or over Adults save one-third on £20 research by the Rail Passengers Council south-east England) standard fares (restrictions (a body representing UK rail passengers) apply), children 5–15 60%. Min. fare of £10 suggests that there are some general patterns to opinions. Senior Over 60 One-third off most £18 standard and first class fares Positive Young Persons 16–25 (or full-time One-third off most rail £18 There is no doubt that flexible passengers education) fares can access some incredibly cheap rail

Source: http://www.railcard.co.uk travel, providing they book far enough in advance, are aware of the availability of discount tickets, and can stick to the much as £268. There are fourteen Railtrack) responsible for the times they have booked. different types of ticket, ranging from the infrastructure and 25 TOCs responsible The TOCs do generally offer a fare for very cheapest Standard Class Off Peak 1 for passenger operations. There is every type of passenger no matter what Return (£25), which is available on a very considerable overlap on some routes; for their priority and leisure passengers with limited basis and restricts the passenger example, a journey from London to access to advance bookings can save to certain trains, to the most expensive Birmingham offers the passenger a choice hundreds of pounds. GNER Executive Special Package (£268), of three different operators: Virgin Trains, Due to the regulations, a large percentage which is first class, fully flexible and Chiltern Railways, and Silverlink. They of commuters enjoy comparatively cheap includes numerous extras such as free all offer different service levels and have travel to and from work, although this is station parking, meal vouchers and their own specific fare structures. There more the opinion of commuters outside London Underground tickets (Table 1). is a wide choice of fares for the route London. Although commuters frequently The ticketing structure for most long- depending on how flexible a passenger complain that they cannot get a seat on distance operators is similar to that of can be in terms of price and journey their journey to work, the sheer number GNER with full-price tickets being the timing, and reviewing all the options is of people now commuting, especially most flexible and with cheaper tickets time-consuming. into London, means that the present UK limited in terms of purchase time, train rail system simply cannot provide a seat and peak service use. All the TOCs have Railcard discount schemes for every passenger. Of course, a faster their own discount and premium fares (as Aside from the different fares and and more efficient rail system would well as the obligatory through fares), some operators, there are a number of discount certainly help mitigate this problem but of which are marketed under different railcard schemes that every TOC must that debate is outside the scope of this names to those in Table 1, creating participate in (Table 2). article. additional potential for confusion. The main railcards are listed in Table 2, There are also the numerous although a number of special railcard improvements to customer services, such Choice of operators schemes are also in use, such as those as telephone and online booking, There is a different and often more for members of the armed forces, people improved catering onboard with complex set of circumstances on routes on certain unemployment benefits, etc. Travelling Chefs, etc., improved business served by several operators. Following Passengers can save money using these facilities and extras for both business and privatization, the railways were separated railcards, although varying degrees of leisure passengers. vertically with Network Rail (ex- restriction apply to all cards.

32 Japan Railway & Transport Review 37 • January 2004 Copyright © 2004 EJRCF. All rights reserved. Negative particular ticket as they have in the past. We cannot escape the fact that the fare Moreover, the general perception is that TOCs’ Solutions to Problems structure is very difficult to understand rail travel is expensive. Although there for very many passengers. For infrequent are many cheap fares, unregulated and The 25 TOCs all sponsor the National travellers, the first problem is not only unrestricted open return fares have in Rail Enquiries Service (NRES) telephone where to look for information on their some cases increased substantially since service giving impartial advice on which journey, it is also what questions they privatization. In 1995, a standard single train is best for a particular journey in need to ask to find the information they ticket from London to Manchester was terms of speed, flexibility, value for need. Not every passenger knows that £50. Now, on Virgin Trains, it has money, etc. Some operators are already there may be a choice of operator on the increased substantially to £87.50. It is trying to give their tickets less confusing particular route they wish to take, or that not surprising that Saver-valid trains are names, particularly those with similar there may be restrictions on when they crowded when there is such a huge restrictions. For example, GNER’s First want to travel, so buying the first ticket difference between the full fare and the Class Off-Peak 1, 2 and 3 tickets. Clearly, they discover may actually cost much Saver. Some RPC research suggests that the TOCs realize that fares are difficult more than they need to pay. There is also business users (the least flexible of for the average passenger to understand, the issue of passengers being misquoted travellers) in particular feel that rail travel but they stress that they offer a fare for fares. There are many places to get is overpriced, although they do every type of passenger in their market, information on train fares, some of which appreciate the service difference between while at the same time working within a are TOC-specific, some of which are not. standard and first and that the price complex regulatory system. While the It seems that passengers are sometimes difference is necessary. Research by the TOCs generally accept the need for quoted different fares, leading to Liberal Democrat party and quoted in regulation of commuter fares, many suspicions that they are not getting the The Independent on Sunday newspaper believe that if there were no protected best deal. This problem is further (15 June 2003) found that rail travel in fares, their job of setting fares at an exacerbated by the fact that the very the UK is the most expensive per mile in appropriate level for everyone and cheap tickets are often quota-controlled, Europe for long-distance journeys, simplifying the structure would be a lot meaning that a passenger may try to book although the research did not take easier. However, RPC research suggests the cheapest ticket on the appropriate economic differences between countries that most passengers see a need for some train but find that they cannot because into account. kind of regulation and the fact that the the quota has already been sold. Passengers also find it difficult to understand the reasons for differences in ticket prices. Because the system is no longer mileage-based, there are anomalies where the same length of journey costs a lot more in one part of the country than in another, and it is difficult for passengers to understand that the market forces acting on their particular line are very different to those acting on another. Commuters also complain that they do not understand the rules governing calculation of season tickets and season-ticket refunds, while leisure travellers complain that restrictions on tickets are difficult to understand. In addition, fares and various restrictions are often changed and updated, leaving passengers feeling ‘cheated’ that they can no longer use a Train departures and arrival bulletin board at Waterloo Station in London (T. Suga)

nor the SRA would suggest that the current system is absolutely the best, it seems that passengers, the SRA and operators would all like to see a fairer and more transparent system (although their priorities are understandably different). As long as all the interested groups are all travelling in the same direction there is hope that their thinking will converge along the line and the UK will have a system of fares offering everyone a fair deal. I

Further Reading T. Gourvish, British Rail 1974–97 From Integration to Privatization, Oxford, Oxford University Press, 2002. J. Simmons and G. Biddle, eds., The Oxford Companion to British Railway History, Oxford, Passengers checking train information at Paddington Station (T. Suga) Oxford University Press, 1997. Strategic Rail Authority, Fares Review Conclusions SRA is still imposing regulation on TOCs features: a huge variety of choice and a 2003, www.sra.gov.uk, 8 October 2003 means they see a need for it too. lot of complexity. Passengers who know KSMR, Report prepared for the Rail Passengers the system can and do have the choice Council, Value for Money Qualitative Research of a vast array of cheaper fares in the off- among Rail Users, London, 2001. Conclusion peak leisure market, although this is not HPI Research Group, Report prepared for the Rail always true for the business or Passengers Council, Fares Fair Exploratory It does appear that there is a growing commuting markets. In addition, the Qualitative Research, London, 2002. recognition of the problem of the TOCs have been able to spread their The Railway Consultancy Ltd., Report prepared for complex fare structure in the UK and the capacity throughout the day, although the Rail Passengers Council, Fares Consultation need to address it. The Saver regulation there is some anecdotal evidence to Research Final Report, London, 2002. changes in 2006 might be a step towards suggest that the complexity of the fare a better system but since no details are system puts off some potential train Acknowledgements: available yet, we can only hope that the travellers. As travel markets are The author wishes to acknowledge the valuable help changes will allow operators to bring full- constantly changing, the TOCs can never of UK rail industry members interviewed for this price walk-on fares in line with the be satisfied that they have the right article. cheaper fares that are already in place. pricing structure, and they are constantly The ‘turn up and go’ market is a key striving to get the best balance between advantage of rail over air and one footing market, regulation and passenger where it can compete successfully with demand. Although none of the operators road. Although the TOCs are trying to ensure that this market is catered for, care Linda Hatano is needed to ensure that an adequate balance is struck between the advance Ms Hatano is a research assistant in the Railway Research Group of Imperial College, London. purchase and walk-up markets, otherwise She graduated from the University of Leeds with a BA in Japanese and Russian before working in Japan for 3 years and then for the London Office of JR Central. the rail industry could be in danger of pricing a large proportion of its passengers off the trains. The UK’s rail fares offers passengers two