Rail users will face eye-watering fare increases next March. The risk is that the price is becoming divorced from the proposition
The concept of any increase feels a hammer blow to customers at a time when the service is poor
Last week, my designer clothes mad, 17-year old son, got me traipsing round London’s West End. We visited a Louis Vuitton store and he was fawning over a white baseball cap. He asked the shop assistant the price and she replied “£680”, to which he looked unfazed, whilst I went white, stuttered and stumbled and, in a mad panic, sped out the store before he could try and grind me down. It was a baseball hat, for goodness sake! Surely, he could have bought something just as good in Primark or Marks and Spencer? I might have spent £6.80 on one of these, but £680, you’re having a laugh. Besides, someone could just take it off his head in the street and run off with it!
The Louis Vuitton experience made me reflect on the value for money conundrum, particularly during this cost of living crisis. Whilst I had a choice on whether to waste my money on a stupid cap, rail customers have less choice, when it comes to its equivalent of eyebrow-raising prices, most notably peak time fares.
The Department for Transport has committed that fares will not be pegged to inflation but an increase is still likely. As my mate, the longstanding rail industry commercial guru Paul Cooper explained to me last week: “This challenge can also offer some opportunity. With fares increases moving to March (hopefully permanently), now is the time to move to CPI (RPI now largely discredited). There have been calls to use CPI as it is a more accurate way of calculating inflation. Had CPI been used to calculate the March 2022 increase, fares would have gone up by 2.1% rather than 3.8%. CPI is still likely to be 9% or so, but then if we really wish to make progress on fares and ticketing transformation, we know some fares will need to go up more than others and some may need to go down. Having 9% as a ‘base’ fare increase is a rare opportunity (once in 30 years) to do something within the context of high inflation to flex the ticket prices we have to move fares around the way we need to deliver the transformation so many desire.”
Cooper’s on the money there, but, even the concept of any increase feels like a hammer blow to customers at a time when the quality of service seems worse than in living memory and we’re paying the second highest fares in Europe according to research by the Campaign for Better Transport. Folk are incurring cost of living related increases across pretty well all aspects of life, but most of them relate to services that haven’t deteriorated. Supermarket produce, restaurant meals, entry at tourist attractions, sporting events and so on – by and large the quality has remained the same or in some cases improved, but rail is the exception.
For all the interminable talk around fares reform in recent years, as a customer I don’t think that my rail retailing experience has changed
For all the interminable talk around fares reform in recent years, as a customer I don’t think that my rail retailing experience has changed. I had got into the habit of purchasing long distance tickets online and collecting the ticket at the station, though at my local station, Shepperton, the ability to collect a pre-paid ticket from the sole remaining machine hasn’t worked for ages. More recently, I just purchase the ticket outright at machines because many of the discounted advance tickets have disappeared, probably due to the depletion and unreliability of services following train crew and other industrial action.
Smart ticketing is a concept that has been the subject of endless talk and PowerPoint presentations and there are some excellent solutions, including that which has been recently introduced by GWR – one of the more trailblazing of operators. However, unless these schemes are approved, rolled out and marketed (in a high profile way) nationally on a single supplier basis, their impact will be stymied and we’ll never truly get off the starting blocks. Flexi season tickets too – for all the positive vibes about these being the solution to changes in working patterns, customer awareness is low and there have been flaws, such as customers having to use or lose the quota of tickets they purchase for a month and it being cheaper to buy a traditional season ticket than a flexi if they are travelling more than three days a week.
In fact, the retailing proposition hasn’t really moved forward much in, dare I say it, at least two decades. As indicated, yield management appears to have dried up, whilst affordable first class fares are almost obsolete – and where they are available, confidence around the ability of the product to deliver as per the marketing promise is variable. Would I confidently spend over £100 of my own money extra to travel first not knowing if the meal service will be served and even if it is, I could probably buy for under a tenner an equivalent quality and amount of nosh for my journey at one of the many station outlets before boarding? Recently, when I’ve travelled, disruption has occurred such that First Class has been declassified and my carriage has been overrun.
Most of all, the railway and government shouldn’t arrogantly and complacently assume it is palatable to increase fares each year without serious reflection on whether the hike is justifiable from the perspective of product quality and the customer’s ability to pay. That’s what normal businesses do. Customers genuinely have more of a choice now, as transport secretary Grant Shapps keeps telling us in his statements to the media about the debilitating effects of strike action. The gap between the marketing promise and the reality is as great as that between the trade unions and the government around the current issues at play in the strike.
I’ve not long returned from a family holiday in Monte Carlo and whilst I fell off my seat at lunchtime meals for five of us habitually costing £300 and a can of coke over a tenner, after a while I tried to convince myself that we were getting quality in return – portions were small but the scran was fresh and elegantly turned out and by hospitable staff in restaurants with lavish décor and great ambience. The Coca Cola had ice and a slice and a smattering of crisps on the side and you pay for the setting. The problem with rail is that, in the main, you’re not even getting that. For your fare, you are paying for the benefit of travelling (unreliably so in many cases), but the surroundings aren’t great and the staff are hit and miss.
In most cases, I’m lucky in that when I travel, predominantly it’s for business and my company pays and have a reasonable level of discretionary spend. If it is for leisure, I’ve a Network Railcard and the kids have the excellent 16-17 or 16-25 cards (the former being poorly advertised). However, I don’t know how I’d feel if I had to routinely part with the £250-plus peak time fares that are necessary just to connect from one city to another across the country – journeys that are integral for people to be able to facilitate their lives. These fares – and that’s just for one person – are a big wedge of the average weekly household budget and I don’t think railway officials (insulated from the pain because of their free travel) or those in government really get it. TOC MDs will no doubt contact me to tell me my anecdotal observations are not backed up by the figures, but outside of those travelling to popular staycation locations, such as Devon and Cornwall, for instance, passenger numbers on traditionally busy flows from London, for instance, appear to be a shadow of their former selves – to Cardiff, Bristol, Liverpool, Leicester, Preston, Leicester, Norwich and many more. I fear that unless a location is worth visiting from a holiday/tourism perspective, it might never generate the demand it did pre-Covid.
If we price folk out of travelling, society will be like it was before the mid 20th century where countless folk went their whole lives never travelling more than 10 miles from their home
Don’t also underestimate the social mobility imperative. If we price folk out of travelling, society will be like it was before the mid 20th century where countless folk went their whole lives never travelling more than 10 miles from their home. It’s potentially worse nowadays with the internet giving ample excuse to stay in one room endlessly gawping at a screen. It’s so sad that the railway, like the theatre or a trip to the Test Match, is, with every passing year, becoming more the preserve of the wealthy.
The press statements from Whitehall and the rail industry are that their stance in relation to the strike is driven by a determination not to pass on the increasingly unsustainable cost of running the railway onto customers. It will be interesting to see if, and once the strike is over and the ‘workplace reform’ initiative to drive down industry costs has been completed, if fares either don’t rise or reduce.
I don’t recall this happening when the industry has previously made structural changes, such as station de-staffing or driver only operation across large swathes of the network.
I call it the marketing promise, yet in truth promotional campaigns themselves have diminished so it’s difficult to even determine what is on offer. The demise of TOC marketing teams has been a factor, so too the sheer paucity of budget they’ve been bequeathed by the pursestring-holding DfT, alongside a reticence to promote a railway that is now operationally so fragile, it would be better off asking customers to stay at home. As the chosen few congratulate themselves on LinkedIn for their secondment to GBR, the less affordable, but arguably more experienced commercial and customer innovators left behind in TOC-land get more disillusioned.
Across all corners of the nation, the service has sunk to subterranean levels and yet still there will be senior leaders who will heap opprobrium on me when reading this article by defensively suggesting all in their own back garden is rosy
Hopefully by March 2023, when the fares have gone up, the cost of living crisis will have lessened and rail strikes will be a distant memory. It’s optimistic to think this will be the case, but we can hope. A fanfare around fare hikes couldn’t be worse right now and for those of you who haven’t been on the network lately, you’d be crestfallen at how bad it has become in places. Some of the most experienced leaders in rail have texted me this week saying the service is now so bad it is showcasing all the ills of ‘third world Britain’. For every well run exercise of which the Commonwealth Games was one (though it was very much a case of pulling through in adversity), service reductions, short notice cancellations, websites crashing, reservation systems failing, unstaffed gates, on-board catering ‘suspended’, call centre phones and emails unanswered, spectators at major events across the UK left stranded because their trains have been cancelled without notice, are now more routinely at the heart of the experience for the majority of customers than they have been in my lifetime. Across all corners of the nation, the service has sunk to subterranean levels and yet still there will be senior leaders who will heap opprobrium on me when reading this article by defensively suggesting all in their own back garden is rosy. 3.6% of trains were cancelled in the 12 months to July 2022 – the worst since 2015. We don’t even have a robust, consistent nationwide customer satisfaction survey that is well regarded and agreed by all parts of the industry to tell us how customers are feeling right now.
Before the railway increases its fares it needs to ditch all of its Louis Vuitton astronomical prices, get the service back on track so there are enough trains and confidence in its ability to run such that it can reinstate the mix of ‘bargain’ advance fares and also across the entire network, ditch the peak time travel restrictions until further notice. Customers need to feel that they are paying not just for the ability to get from A to B, but for the whole experience – the equivalent of a view from the table in the plush restaurant or atmospheric surroundings and luxury table and chairs, where the staff exist just to delight customers. Once that’s in place, then it’s more tactful and appropriate to start talking fares increases. To do that now is just brazen cheek.
ABOUT THE AUTHOR: Alex Warner has over 29 years’ experience in the transport sector, having held senior roles on a multi-modal basis across the sector
This article appears in the latest issue of Passenger Transport.
Don’t let fares soar as service sinks
by Passenger Transport on Aug 25, 2022 • 3:04 pm No CommentsRail users will face eye-watering fare increases next March. The risk is that the price is becoming divorced from the proposition
Last week, my designer clothes mad, 17-year old son, got me traipsing round London’s West End. We visited a Louis Vuitton store and he was fawning over a white baseball cap. He asked the shop assistant the price and she replied “£680”, to which he looked unfazed, whilst I went white, stuttered and stumbled and, in a mad panic, sped out the store before he could try and grind me down. It was a baseball hat, for goodness sake! Surely, he could have bought something just as good in Primark or Marks and Spencer? I might have spent £6.80 on one of these, but £680, you’re having a laugh. Besides, someone could just take it off his head in the street and run off with it!
The Louis Vuitton experience made me reflect on the value for money conundrum, particularly during this cost of living crisis. Whilst I had a choice on whether to waste my money on a stupid cap, rail customers have less choice, when it comes to its equivalent of eyebrow-raising prices, most notably peak time fares.
The Department for Transport has committed that fares will not be pegged to inflation but an increase is still likely. As my mate, the longstanding rail industry commercial guru Paul Cooper explained to me last week: “This challenge can also offer some opportunity. With fares increases moving to March (hopefully permanently), now is the time to move to CPI (RPI now largely discredited). There have been calls to use CPI as it is a more accurate way of calculating inflation. Had CPI been used to calculate the March 2022 increase, fares would have gone up by 2.1% rather than 3.8%. CPI is still likely to be 9% or so, but then if we really wish to make progress on fares and ticketing transformation, we know some fares will need to go up more than others and some may need to go down. Having 9% as a ‘base’ fare increase is a rare opportunity (once in 30 years) to do something within the context of high inflation to flex the ticket prices we have to move fares around the way we need to deliver the transformation so many desire.”
Cooper’s on the money there, but, even the concept of any increase feels like a hammer blow to customers at a time when the quality of service seems worse than in living memory and we’re paying the second highest fares in Europe according to research by the Campaign for Better Transport. Folk are incurring cost of living related increases across pretty well all aspects of life, but most of them relate to services that haven’t deteriorated. Supermarket produce, restaurant meals, entry at tourist attractions, sporting events and so on – by and large the quality has remained the same or in some cases improved, but rail is the exception.
For all the interminable talk around fares reform in recent years, as a customer I don’t think that my rail retailing experience has changed. I had got into the habit of purchasing long distance tickets online and collecting the ticket at the station, though at my local station, Shepperton, the ability to collect a pre-paid ticket from the sole remaining machine hasn’t worked for ages. More recently, I just purchase the ticket outright at machines because many of the discounted advance tickets have disappeared, probably due to the depletion and unreliability of services following train crew and other industrial action.
Smart ticketing is a concept that has been the subject of endless talk and PowerPoint presentations and there are some excellent solutions, including that which has been recently introduced by GWR – one of the more trailblazing of operators. However, unless these schemes are approved, rolled out and marketed (in a high profile way) nationally on a single supplier basis, their impact will be stymied and we’ll never truly get off the starting blocks. Flexi season tickets too – for all the positive vibes about these being the solution to changes in working patterns, customer awareness is low and there have been flaws, such as customers having to use or lose the quota of tickets they purchase for a month and it being cheaper to buy a traditional season ticket than a flexi if they are travelling more than three days a week.
In fact, the retailing proposition hasn’t really moved forward much in, dare I say it, at least two decades. As indicated, yield management appears to have dried up, whilst affordable first class fares are almost obsolete – and where they are available, confidence around the ability of the product to deliver as per the marketing promise is variable. Would I confidently spend over £100 of my own money extra to travel first not knowing if the meal service will be served and even if it is, I could probably buy for under a tenner an equivalent quality and amount of nosh for my journey at one of the many station outlets before boarding? Recently, when I’ve travelled, disruption has occurred such that First Class has been declassified and my carriage has been overrun.
Most of all, the railway and government shouldn’t arrogantly and complacently assume it is palatable to increase fares each year without serious reflection on whether the hike is justifiable from the perspective of product quality and the customer’s ability to pay. That’s what normal businesses do. Customers genuinely have more of a choice now, as transport secretary Grant Shapps keeps telling us in his statements to the media about the debilitating effects of strike action. The gap between the marketing promise and the reality is as great as that between the trade unions and the government around the current issues at play in the strike.
I’ve not long returned from a family holiday in Monte Carlo and whilst I fell off my seat at lunchtime meals for five of us habitually costing £300 and a can of coke over a tenner, after a while I tried to convince myself that we were getting quality in return – portions were small but the scran was fresh and elegantly turned out and by hospitable staff in restaurants with lavish décor and great ambience. The Coca Cola had ice and a slice and a smattering of crisps on the side and you pay for the setting. The problem with rail is that, in the main, you’re not even getting that. For your fare, you are paying for the benefit of travelling (unreliably so in many cases), but the surroundings aren’t great and the staff are hit and miss.
In most cases, I’m lucky in that when I travel, predominantly it’s for business and my company pays and have a reasonable level of discretionary spend. If it is for leisure, I’ve a Network Railcard and the kids have the excellent 16-17 or 16-25 cards (the former being poorly advertised). However, I don’t know how I’d feel if I had to routinely part with the £250-plus peak time fares that are necessary just to connect from one city to another across the country – journeys that are integral for people to be able to facilitate their lives. These fares – and that’s just for one person – are a big wedge of the average weekly household budget and I don’t think railway officials (insulated from the pain because of their free travel) or those in government really get it. TOC MDs will no doubt contact me to tell me my anecdotal observations are not backed up by the figures, but outside of those travelling to popular staycation locations, such as Devon and Cornwall, for instance, passenger numbers on traditionally busy flows from London, for instance, appear to be a shadow of their former selves – to Cardiff, Bristol, Liverpool, Leicester, Preston, Leicester, Norwich and many more. I fear that unless a location is worth visiting from a holiday/tourism perspective, it might never generate the demand it did pre-Covid.
Don’t also underestimate the social mobility imperative. If we price folk out of travelling, society will be like it was before the mid 20th century where countless folk went their whole lives never travelling more than 10 miles from their home. It’s potentially worse nowadays with the internet giving ample excuse to stay in one room endlessly gawping at a screen. It’s so sad that the railway, like the theatre or a trip to the Test Match, is, with every passing year, becoming more the preserve of the wealthy.
The press statements from Whitehall and the rail industry are that their stance in relation to the strike is driven by a determination not to pass on the increasingly unsustainable cost of running the railway onto customers. It will be interesting to see if, and once the strike is over and the ‘workplace reform’ initiative to drive down industry costs has been completed, if fares either don’t rise or reduce.
I don’t recall this happening when the industry has previously made structural changes, such as station de-staffing or driver only operation across large swathes of the network.
I call it the marketing promise, yet in truth promotional campaigns themselves have diminished so it’s difficult to even determine what is on offer. The demise of TOC marketing teams has been a factor, so too the sheer paucity of budget they’ve been bequeathed by the pursestring-holding DfT, alongside a reticence to promote a railway that is now operationally so fragile, it would be better off asking customers to stay at home. As the chosen few congratulate themselves on LinkedIn for their secondment to GBR, the less affordable, but arguably more experienced commercial and customer innovators left behind in TOC-land get more disillusioned.
Hopefully by March 2023, when the fares have gone up, the cost of living crisis will have lessened and rail strikes will be a distant memory. It’s optimistic to think this will be the case, but we can hope. A fanfare around fare hikes couldn’t be worse right now and for those of you who haven’t been on the network lately, you’d be crestfallen at how bad it has become in places. Some of the most experienced leaders in rail have texted me this week saying the service is now so bad it is showcasing all the ills of ‘third world Britain’. For every well run exercise of which the Commonwealth Games was one (though it was very much a case of pulling through in adversity), service reductions, short notice cancellations, websites crashing, reservation systems failing, unstaffed gates, on-board catering ‘suspended’, call centre phones and emails unanswered, spectators at major events across the UK left stranded because their trains have been cancelled without notice, are now more routinely at the heart of the experience for the majority of customers than they have been in my lifetime. Across all corners of the nation, the service has sunk to subterranean levels and yet still there will be senior leaders who will heap opprobrium on me when reading this article by defensively suggesting all in their own back garden is rosy. 3.6% of trains were cancelled in the 12 months to July 2022 – the worst since 2015. We don’t even have a robust, consistent nationwide customer satisfaction survey that is well regarded and agreed by all parts of the industry to tell us how customers are feeling right now.
Before the railway increases its fares it needs to ditch all of its Louis Vuitton astronomical prices, get the service back on track so there are enough trains and confidence in its ability to run such that it can reinstate the mix of ‘bargain’ advance fares and also across the entire network, ditch the peak time travel restrictions until further notice. Customers need to feel that they are paying not just for the ability to get from A to B, but for the whole experience – the equivalent of a view from the table in the plush restaurant or atmospheric surroundings and luxury table and chairs, where the staff exist just to delight customers. Once that’s in place, then it’s more tactful and appropriate to start talking fares increases. To do that now is just brazen cheek.
ABOUT THE AUTHOR: Alex Warner has over 29 years’ experience in the transport sector, having held senior roles on a multi-modal basis across the sector
This article appears in the latest issue of Passenger Transport.
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