COMMENT/Sim Harris

Rail Delivery Group: ‘Easier fares for all’

MOST of us have watched a fairground roundabout at some time.

Here’s the red horse, and the blue one, and the toddler-sized double decker bus. And then the hippo, and the giraffe, and the toy car and – look – there’s the red horse again.

It is all pretty predictable, rather like industry attempts to reform railway fares.

The RDG’s submission to the Williams Review looks like another red horse, claiming that fares will be simpler, and more flexible, and easier to understand, so that another 300 million people will use the railway each year. Maybe.

The RDG's document, ‘Easier fares for all’, is based on five ‘principles’. These are Value for Money (‘reflecting the feedback that fares should make rational sense’, and be transparent), Fair Pricing (‘reflecting the customer’s desire not to have to find workarounds’), Simplicity (‘making buying simple while retaining choice’), Flexibility (‘reflecting customers’ desire to see different needs accommodated’) and Assurance (‘reflecting the feedback that customers want clear, effective, transparent regulation to protect their rights’).

Once upon a time fares really were pretty simple. In 1961, for example, each second class mile was charged at about 2.5 old pence by British Railways.

If you knew that London Paddington to Reading was 36 miles, you could work out with reasonable certainty that a second-class single would be about 90 old pence, or seven shillings and sixpence. (That’s 37.5p, but the change in money values since 1961 makes the conversion all but meaningless.)

There were also day returns, ‘mid-week’ returns and monthly returns, all of which were cheaper than full-price returns (valid three months, at twice the single fare).

If you absorbed all that then you understood British railway fares. But this happy time did not last much longer, because the economists then arrived at BR headquarters.

They pointed out that some journeys were ‘worth’ more than others, because they were faster, or involved newer trains, or had a buffet car, and so ‘selective pricing’ was introduced.

This meant that every section of line now had its own rate, calculated ‘according to what the traffic would bear’.

The combined effects of selective pricing and newer innovations like Advance tickets have resulted in a total of 55 million fares on National Rail.

The greatest variety can be found on intercity routes, so that on 19 February there were 24 possible single fares on the 10.00 Virgin Trains service from London Euston to Manchester Piccadilly.

This kind of thing happens thanks to the science of Yield Management, which involves working out how many passengers are likely to travel and then pricing the remaining seats accordingly.

One result is complexity at the retailing end. There is also another complication when a through journey is booked over routes with different rates along the way.

Enter ticket-splitting. This can reduce the total fare, but not every time.

The RDG acknowledges that passengers don’t understand the present system, and would like more ‘transparency’. Its proposals include an end to rigid peak/off-peak divisions, and perhaps a gentler slope of changing prices during the day. This could mean many more possible fares, and seems likely to cause more confusion rather than less. Flexible season tickets are also on the horizon, which do not only offer a fixed five return journeys a week but fit in with part-time working. This is long overdue, and in itself is a good idea.

Although 80 per cent of people surveyed wanted fares to be based on distance (allied with quality), the RDG then blurs this clarity again by suggesting that ‘train companies will be able to create discounted, premium, train specific and personalised variations of these fares, for example, charging less at quieter periods, more for first class, less for reduced flexibility, and so on’. That seems to be the point at which we wave goodbye to simplicity.

Ticket-splitting is the real show-stopper, although the new system would allegedly give travellers the ‘best’ fare for their journeys. But ticket-splitting is often worth doing because of the boundary between peak and off-peak, as well as the distortions which selective route pricing can cause.

Let's take a journey from Taunton to Penzance, which is cheaper if you split at Plymouth.

It is possible to devise software which selects such a split if the result is a lower fare. Indeed, some third-party websites do just that. But then what would be the point of maintaining a through Taunton-Penzance fare at all? It would never be the cheapest option, unless there were trains to Cornwall which did not stop at Plymouth.

(There aren't, and if there were such things, how would the ticket retailing software know whether to split or not -- unless the rule that a train must call at stations between 'legs' was scrapped? Abolishing that rule could make many thousands -- perhaps millions -- of new 'splits' possible, indeed automatic, with who-knows-what effects on revenue?)

There is also the journey which starts in the peak but continues into the off-peak. Would the system ‘know’ that an 08.00 departure from Taunton would need an Anytime rate as far as Plymouth, but that the Plymouth-Penzance leg would qualify for off-peak? This would depend on the services being used, but we are not talking about train-specific tickets here. As now, the passenger would need to know the rules.

If we add the RDG’s softer peak/off-peak boundary, with prices gradually falling and then perhaps rising again later in the day, the deal gets even more complicated.

The real cause of much inconsistency at the moment is selective route pricing, but if that is abolished railway finances could be in trouble unless there are even more fundamental reforms, because charging ‘what the traffic will bear’ has become embedded in the system.

There also seems to be an assumption that passengers will (a) be using a smartcard or electronic device and (b) start to travel as soon as they have passed the ticket gate. In other words, that the National Rail system is just one big Metro. It is not.

Dashing from Lambeth North to Oxford Circus on the Bakerloo Line is a very different kind of journey than travelling from Windermere to London Euston, where a passenger might choose to stop for coffee on the platform side of the ticket gate, and let the first train go – or miss a main line connection further on.

The validity of that passenger’s ticket might disintegrate in the meantime as afternoon fares began to ease upwards. There would be no warning.

‘Break of journey’ could also become expensive in pay-as-you-go areas, because leaving the system and re-entering it means that each leg is charged for separately. In other words, a passenger from A to C who breaks the journey at B pays for two tickets, A-B and B-C. These might work out more than the through rate, particularly if peak fares had started to apply by the time B was reached.

As MP Lilian Greenwood of the Commons Transport Committee rightly observed: ‘The devil will be in the detail.’

Not to panic, though. These changes (if they happen at all) are likely to take three to five years, and there will probably be another red horse coming around long before then.