Higher inflation = increased fares
Rail users are facing a rise of 4.8% in the cost of tickets from January 2022. This is in respect of controlled fares where prices are set by Department for Transport. The ticket types covered are standard class season tickets, ordinary and saver fares.
The calculation is based on the level of inflation using the retail prices index recorded in July 2021, which amounted to 3.8%, plus a supplement of 1% that has been levied by the Government as a contribution to the cost of infrastructure enhancement to cater for rising passenger numbers.
The increase follows a 2.6% rise in the level of controlled fares in March 2021, which reflected the RPI increase of 1.6% in July of the previous year plus the 1% add-on.
TOC DISCRETION
Train operators have discretion about fare increases applied for First Class travel and advance purchase tickets and in 2021 the permitted increase was not implemented, with a lower level being set, which averaged 1.6% mainly because there was a 2.0% reduction in the cost of First Class travel and price discounting of 4.1% for advance purchase tickets available on longer journeys.
The current landscape for implementing an increase in fares that generates more revenue is highly problematic. There has been a continuing decline in the use of season tickets as, even before the Covid-19 travel restrictions came about, working from home or other locations distant from a fixed place of employment had been a growing trend.
Before digital technology enabled this, revenue statistics from the prePrivatisation era showed that 50% of rail users made their journey using a season ticket. This had declined to 35% before the advice to avoid public transport other than for essential journeys was given by the Government in March 2020.
DILUTED REVENUE
The revenue dilution is not only about buying ordinary full fare single use tickets during peak periods, but also travelling at times when off-peak fares are available, so the previous calculation that if travel was for more than three days a week it was cheaper to buy a season ticket no longer applies.
In an attempt to counter these trends a new flexible season ticket that could be used for two or three days during the week was introduced in June. This was an ill-thought out and muddled offer because the obvious expectation was there would a pro-rata reduction in the price for a ticket valid for five days (although the current rules allow for weekly tickets to be used at the weekend if wished).
This has not been the case, with reductions of as little as 10% in some instances for a 40% reduction in weekday validity. It is hard to see that there will be any impact on the current journey trends as a result of the changes that have been made.