No easy fix to rail’s challenges
Union disputes continue, the gap between revenues and costs looks set to widen, and anger builds at proposed ticket office closures.
NEW Transport Secretary Anne Marie Trevelyan, the MP for Berwick-upon-Tweed who has taken over from Grant Shapps, has reached out to trade union leaders with a series of meetings.
As this issue went to press, these meetings do not appear to have achieved much, as both the RMT and ASLEF unions announced further strikes on Saturday, October 1, with ASLEF adding a further day on Tuesday, October 5.
The basics of the dispute are a demand for pay increases that reflect inflation, with the employers – the rail operators controlled by the Department for Transport in all but name - offering no more than a 2% increase, with a promise of more if productivity enabling job cuts and reduced operational costs can be agreed.
In the background, the rate of inflation has started to fall slightly, with the consumer prices index (CPI) recording a 9.9% annual increase in August compared with 10.1% in July, which is largely the result of reduced prices for vehicle fuel at forecourts. There are also the measures being taken by the Government to cap energy prices, which some analysts think could cut inflation by up to 5%.
If the bigger picture is considered, the Government has clearly preferred to tackle the source of high inflation instead of funding public sector pay rises for the railway workforce and other publicly funded sectors.
There could be an argument that if rail fares were increased to match inflation, this might provide headroom for greater rewards to be offered to the staff. But the reality is that in March 2022, the increase in regulated fares was restricted to 3.8% as against the retail price index
(RPI) the previous July of 7.1%. The RPI figure for July this year was 12.3%, and there would clearly be an uproar if the 2023 fare increase matched this.
The difference between the CPI and RPI measures is that the cost of housing finance, such as mortgages, is excluded from the CPI.
In any event, despite recent fare increases, the average fare level is declining as 2022’s figure of £5.95 is 4.9% less than two years ago. For longer distance travel, the fall is particularly marked, as there was a decline in average fares from 16.7 to 14.2p per kilometre travelled. Overall it indicates that when faced with fare increases, passengers are opting to buy cheaper tickets by travelling at different times.
The continuing weakness in rail’s overall income from passenger travel has been revealed by Kevin Foster, the newly-appointed Rail Minister who is the MP for Torbay. In answering a Parliamentary question from a London MP about the reduced frequency of Southern services following the withdrawal of 46 Class 455 four-car units that have been sent for scrap, he stated that for some Govia Thameslink services, revenue remained at 60% of the pre-pandemic level.
The result is that the annual cost base for GTR remains several hundred million pounds above revenue based on the level of service provided in the latest timetable operating from September 4.
It appears the DfT is now determining the timetable, as the minister stated that a demand forecasting model had been issued to all train operators so they can better match the provision of train services to the level of demand. Something that seems to be missing from this theoretical work is that the current lack of revenue protection is leading to a significant amount of ticketless travel, meaning that journey numbers are understated.
It is no doubt meant to be a reassuring statement that all services are being kept under review to reflect fluctuations in demand, but it is not in the interest of passengers that an official in London is set to decide the timetable and capacity provided for regional services where knowledge of customer requirements must be limited.
Any hope of integration with local bus services is also likely to be lost if train service provision is decided in isolation.
Widespread ticket office closures
THE current East Midlands Railway National Rail Contract expires on October 16, and a four-year extension is currently being negotiated with the Department for Transport, which has declined to fund the continued provision of ticket offices at all but five stations where these are currently provided.
This suggest that the only remaining facilities will be at the busiest locations, such as Sheffield, Nottingham, Derby, Leicester and St Pancras.
The decision is being justified on the grounds that national statistics show the use of ticket offices by passengers to purchase tickets has declined from 34% in 2012/13 to 12% in 2021/22, with the downward trend expected to continue. Despite this, use remains relatively large as, with a 10 million passenger throughput at Sheffield and eight million at Nottingham, there will be a demand for a counter service.
Trade unions say that up to 1000 stations could see the closure of ticket offices, fearing that it is a repeat of the decision by Transport for London to close its complete network of 268 outlets between 2015 and 2017.
TfL’s idea was said to have the benefit of moving staff from counter service to an increased presence in the ticket hall to provide help with using ticket vending machines and offer travel advice at the gateline.
But London Underground has very different characteristics to the national network, as it is self-contained and has zonal pricing. It is also a fully-gated system which, in terms of revenue protection, is credited with reducing ticketless travel to 2% compared to the previous estimate of 7%. It also uses smart card technology, introducing Oyster cards in 2003 to allow passengers to purchase credit which is then automatically deducted by ticket readers at stations as journeys are undertaken. Automatic top-ups are available based on credit amounts set by users.
National ticketing characteristics are very different as they do not reflect zonal fares and many different prices are available for a journey between any two stations that include turn up and go products, a variety of railcard discounts, and booking in advance.
Although online ticket retailers are improving the ability to identify the cheapest ticket for a journey, this is not the case for ticket vending machines that simply sell a customer the ticket selected without regard to whether it is the cheapest fare available.
Online retailers face the challenge of fulfilment in sending the ticket purchased to the intending passenger. This is relatively easy with smartphone technology, but to ensure
“The RPI figure for July this year was 12.3%, and there would clearly be an uproar if the 2023 fare increase matched this”
revenue protection, a reader is necessary at the start and finish of the journey, and many stations do not have these, which has the potential to lead to a very leaky revenue protection system if the ticket has a validity for multiple journeys.
In addition, the assumption cannot be made that everyone who intends to travel by rail has access to the internet, and so they must opt instead to purchase a ticket at the station. If this is not possible, a substantial rise in ticketless travel is going to take place. In fact, from recent experience, it is noticeable that on-board ticket inspection has all but disappeared, and where gatelines have been installed these are often unstaffed.
Although it has been pointed out that before changes are made to ticket office opening hours public consultation is required, it is unlikely this will have any effect on the intended outcome.
New attempt to break into the parcels market
VARAMIS is a new company based in Doncaster that is targeting the movement of parcels by rail, and it has recently been granted an operating licence by the Office of Rail and Road as a first step towards the acquisition of rolling stock, which is likely to be repurposed EMU sets. This follows a similar initiative by the Rail Operations Group, which received an operating licence in 2016 that has been used for rolling stock movements in advance of an anticipated entry into the parcels market. The five Class 360/2 units previously used on Heathrow Connect services were purchased from Heathrow Airport Holdings, but evidently the expected use has not materialised as the vehicles have been sent for scrap.
The parcels market was once an important contributor to railway volume, and at one time was differentiated from freight activity by being classified as passenger-rated traffic. In that era, the brake van of a passenger train would convey many items as well as parcels, such as unaccompanied passengers’ luggage, newspapers, and Post Office mail and parcels.
The growth of online retailing has transformed the parcels market, with an increased demand for home deliveries supported by a supply chain run by large retailers. This is essentially an updated version of buying from a mail order catalogue – where rail had a significant share of the business – which ended when it was decided to withdraw from collection and delivery operations to focus on Red Star consignments carried on a station-to-station basis.
Red Star activity declined in part because of a decision not to carry on conveying parcels as part of the passenger sector, which resulted in a reluctance to carry the traffic on timetabled services, thus defeating the basic concept that had evolved.
At present, rail has little presence in the parcels market other than an element of the former Railnet distribution system (that established a network of Royal Mail terminals served by the Class 325 postal units built in 1995 and conventional locomotive hauled trains). Several trains continue to run from the Willesden hub on a limited number of routes.
For new operators, terminals may be problematic as stations are no longer configured to handle parcels, and areas where this was undertaken in the past have been reused at several locations to provide new passenger platforms and retail units.