Rail industry an “undoubted success in growing its market” 20 years after privatisation, says new report

Britain’s rail industry has scored “undoubted success in growing its market over the 20 years or so since the industry was privatised”, according to the latest Rail Industry Monitor published by Passenger Transport Intelligence Services on August 22.

The report concludes that patronage on many routes has doubled, and that train operators have succeeded in increasing capacity when and where they have been allowed to do so by government.

Author Chris Cheek adds: “The slowness of the latter’s decision-making and the micromanagement which took place between 2001 and 2010 has undoubtedly slowed the response and made life for passengers and train operators particularly difficult during the last two or three years.”

The study vividly illustrates the trends in passenger usage since 1950, with more passengers carried by Britain’s railways in peacetime than at any point since 1923.

In cash terms, passenger revenue has risen threefold, from 1997-98’s figure of £2.82 billion to £9.2bn in 2015-16. After allowing for inflation, it shows revenues have risen by a factor of 2.3. However, the yield per passenger-kilometre has only increased by 27.9% after inflation is taken into account.

Real terms incomes have grown by an average of 69.2% since 1980, with rail fares rising below this rate (at 67.1%). Bus fares by contrast have risen by 86%, while the cost of motoring has fallen drastically since 1980 (by 41.8%).

Cheek highlights other issues the rail industry faces, particularly for regional networks. These include the fact that heavy operating subsidy continues to be required, that revenue yields are up to a third lower than in London and the South East, and that the economics of many lines are “so poor that providing extra capacity simply increases the need for operating subsidies at a time when public funds will still be in short supply”.

He argues that patronage growth since privatisation “largely rests” on external factors such as population growth, the performance of the economy and the jobs market, warning that if employment falls then rail demand and revenue could also decline.

Rail Industry Monitor also charts changing patterns in passenger behaviour, such as the decline in popularity of season tickets from a high of 32.4% of all fares in 1989 to the current figure of 27.5%, and the upturn in rail’s modal share from its nadir in the mid-1990s. It points out that despite the rise of budget airlines, on journeys up to 350 miles rail’s long distance market share has increased since 2000.

There could be implications for the railway should a concerted effort be made to switch people from cars - a 1% modal shift would result in another 6.5 billion passenger-km moved to rail (9% of current rail demand). A 5% shift would generate an extra 32.7 billion passenger-km on rail. ■ The full report can be bought from http://passtrans.uk/content/ index.php