Fall in rail passenger numbers raises new fears for franchises
Rail passenger numbers in Britain fell last year to 1.7 billion, the biggest decrease since the 1990s privatisation, casting fresh doubt on the viability of struggling franchises.
According to figures published by the Office of Rail and Road, usage fell by 1.4% in the 2017-18 financial year, the first annual fall since 2009-10 and the biggest since 1993-4.
Season ticket sales have dropped by 9.2%, suggesting commuters no longer place faith in the rail network, as fares have risen inexorably while services are beset by strikes and overcrowding.
Fares rose by 2.3% in 2017 and a further 3.4%, the highest in five years, in January, which meant overall revenue has continued to grow for operators – though by only 2.3%, the industry’s lowest since 2000-01.
The decline in train usage has been particularly large in the first three months of 2018, with 9m fewer journeys than in the same period in 2017. South Western Railway showed its lowest ever recorded figure for the period, a 7% fall from last year, partly ascribed to industrial action and the adverse weather in February.
The numbers could spell more grim news for struggling First Group, which admitted last month that it would lose £106m on its TransPennine Express franchise owing to stagnating passenger numbers. It won the South Western franchise last year with a £2.6bn bid that its then chief executive, Tim O’Toole, said was “disciplined”, with clauses reducing its risk if the UK and regional economy tanked after Brexit.
Last month First parted company with O’Toole but said South Western remained profitable despite “challenges”. Operators usually pledge higher payments to government in the later years of the franchise.
A spokesman for First said it had won the franchise with a focus on quality, with new trains and more capacity to come, and its bid had not been the highest in cash terms.
Concerns over franchising are high, with Virgin Trains East Coast due to cease operating in nine days’ time after its owners, Stagecoach and Virgin Group, were unable to meet their promised £3.3bn payments with passenger numbers below forecasts.
The East Coast franchise will be taken back into public sector operation, and the latest figures will increase speculation that more franchises could fail. MPs have raised questions over whether Abellio overbid for Greater Anglia, which suffered a further 2% decline in passengers last quarter, or Arriva for Northern, where customer numbers fell 9% in a strike-hit period.
An industry source said: “There were four or five franchise agreements which relied on massive growth rates ... instead of which we are seeing them in decline. There is a structural problem here which could dwarf the timetabling issues, because it is more widespread.”
Labour said passengers were being priced off the railway. The shadow transport secretary, Andy McDonald, said: “With fares rising three times faster than average wages since 2010 and severe disruption across the network, it’s no surprise that we’re seeing the biggest drop in passenger numbers in 25 years.
“This not only worsens congestion and air pollution and contributes to climate change, it also threatens the sustainability of the railways [and] increases the likelihood of further bailouts, bank-rolled by the taxpayer.”
The rail industry insisted the drop was a blip.
Paul Plummer, chief executive of the Rail Delivery Group, which represents train operators and Network Rail, said: “There are over 1.7bn rail journeys made every year and despite some slowing down, this growth isn’t expected to hit the brakes in the long term.
“While technology may mean fewer people are travelling into work every day, anyone taking the train into our major cities will know that investment to run more trains is essential.”