Firstgroup offers cap on rail fares to ease CMA concerns

PRICE caps look set to be implemented on some rail fares for passengers travelling between Exeter and London after an intervention by the competition watchdog.

At present, two train operators – Firstgroup and Stagecoach – run services to the Devon city from London’s Paddington and Waterloo stations respectively. But Firstgroup’s recent win of the contract to run services out of Waterloo prompted the Competition & Markets Authority (CMA) to warn that the subsequent monopoly could result in the service deteriorating and prices rising.

In an attempt to avoid an in-depth Phase 2 investigation of the contract win by the CMA, Firstgroup, and its partner on the franchise, Hong Kongbased MTR, were given the opportunity to provide their own resolution.

Now the pair have offered to cap unregulated fares between London and Exeter on both South Western trains, which run from Waterloo, and its Great Western services from Paddington.

The caps will be imposed by linking them to prices on a number of other comparable routes, the CMA said, adding that the rail companies had also proposed maintaining the availability of cheaper, advance fares on both lines, again based on prices of similar routes.

The CMA said it thought there were “reasonable grounds” to think the proposals, or a version of them, would remedy its concerns. Competition concerns were raised by the CMA about both Arriva, on the new Northern franchise, and Stagecoach, on the new East Coast franchise. They were addressed when the companies offered remedies to the CMA. A public consultation will now take place regarding the First Group proposal and the CMA has until Sept 20 to decide whether the price caps are suitable.