Fewer season tickets.

Growth isn’t a given as commuters buy fewer season tickets

The latest rail traffic statistics emphasise that assumptions about unending growth in passenger demand cannot be taken for granted. The current assumption that journeys will continue to grow by a minimum of 2.5% annually has failed to take place this year, which calls into question capacity enhancement plans to cater for this demand.

The result for the second quarter of the current 2017-18 financial year rings alarm bells about sales trends. Although overall growth in the economy is nudging 2%, rail passenger numbers fell. True, it was a marginal fall of 1%, with numbers reduced from 433 million to 429 million, but within the overall figure there is a warning of things to come.

Advance fare purchases continue their growth, with an increase of 8.7%, but they still continue to make up less than 5% of tickets purchased by passengers. What the Office of Rail and Road, which collates the statistics, describes as ordinary tickets have a share of 24% for peak-hour travel and 36% for off-peak use, and these segments grew by a combined 6.5%.

The decline is in the use of season tickets. There was a 9.4% fall during the summer months compared with the previous year, with market share falling from 36% to 33% for a product that is used by a third of all rail users.

These are fares where price levels are controlled by the Government. That policy had its genesis at the time of privatisation, when there were concerns that privately owned operators would exploit the monopoly position they held for commuters travelling to larger conurbations.

But the notion of consumer protection is now a fiction. Price rises of 3.6% are being imposed in January 2018, reflecting the rate of annual growth in the Retail Prices Index in July 2017. It could have been worse, as inflation measured by this index increased by 3.9% in November.

The policy is part of a strategy that underwrites the ability of the train operators to make ever- increasing premium payments for the right to operate services. But in market terms, it ignores the continuing weakness in the rate of increase for take-home pay (currently 2.1% per annum). As a result, price rises are an unconscious return to the policy adopted by BR to price off demand if it became too expensive to provide the necessary capacity.

The reverse situation is now the case. Billions of pounds have been committed to provide capacity in the anticipation of growth, but there is now the prospect that peak-hour train services will feature large swathes of empty seating.

With close to 1,750 million annual trips being made in 2016-17, the level of forecast growth suggested that the national network would need enhancement to cater for close to 50 million additional users annually. The result has been a benefit: cost justification for projects such as Thameslink and Crossrail, as well as station enlargement at locations such as Waterloo, Reading and Glasgow Queen Street.

This could turn out to be reactive planning to trends that were not fully understood, as in the past economic growth did not result in any significant increase in demand for rail travel during the period of BR stewardship.

The most obvious difference after privatisation has been the determination of train operating companies to sell seats that were otherwise unused at offpeak times. This coincided with the new phenomenon of a sales channel created by the internet that allowed both advance and ordinary ticket products to be marketed to a wider audience. This is only part of the story, however - it is clear with the benefit of hindsight that a lot of other things happened to make rail more attractive.

There has been a concentration in city centre economic activity - in terms of employment, education, retail and leisure, and in public service provision - that has migrated from smaller towns and rural areas. The rail product is ideally suited to city centre travel, as faster journey times are offered than is possible on a congested road network, and there have been policies to discourage the use of cars in cities.

A less desirable economic feature that has emerged is the relative poverty of a younger generation who often do not have the disposable income to afford cars. The result is greater dependence on public transport than was the case in the recent past.

It is a function of Government to take a longer-term view of likely economic trends, and everyone in the rail industry has been heartened by the place rail has occupied in the allocation of investment to provide improved connectivity in London and increasingly elsewhere in the country.

However, this optimism has been tempered by the inability of Network Rail to implement planned investment projects such as electrification. Too much was taken on for the skills and experience available, and a catch-up is now taking place with enhanced workforce training and recruitment that will hopefully deliver the £ 48 billion budget in the next Control Period (2019-24).

A second failure is looming that will require a more complex response. This has to be laid at the door of the Rail Delivery Group (RDG), which must find product solutions that reflect the changing nature of demand for travel at affordable prices. Nothing has been done to recognise that a 3.6% increase in controlled fares, following rises in previous years that have exceeded what individuals are earning, can only ultimately result in reduced demand.

There is now the revelation that passengers are being sold tickets for services that will not run over the Christmas period, caused by a failure of the interface between NR’s electronic National Rail Timetable and Darwin software provided by the RDG.

Not everything is gloomy. It was a revelation when looking at Christmas timetables to see that during the fourday Paddington Christmas closure Great Western is using the new Chiltern infrastructure by running West of England expresses from Marylebone with a nonstop run via Oxford to Swindon.

This response is heartening because it counters the view that there is an inevitability that journeys cannot be undertaken in the event of route closures. I don’t think engineers always get that if you plan long possessions, some who wanted to travel may not try again.

“There is now the prospect that peak-hour train services will feature large swathes of empty seating.”