“Pricing people off peak services won't work”
June 2012
Anthony Smith
In the passenger seat
There is much to welcome in the government’s recent fares consultation – a commitment to stopping the endless rounds of above-inflation fare rises and make it easier to buy tickets, as well as improving ticketing information. Much analysis is based on work we have done in the last three years.
The most immediate implication for passengers is the move towards greater demand management. This will affect passengers in two main ways: longer-distance travel (currently caught by the off-peak fares regulation, formerly ‘Saver’ tickets) and commuting peak. Making better use of capacity is a laudable aim. However, there are those who argue that the best way of achieving this is to move to ‘airline-style’ pricing models that lead (in theory) to fuller trains.
We think this misses some vital points. It is argued that the huge difference between fares for peak and off-peak travel creates a cliff-face that distorts travel behaviour and prevents a more efficient use of capacity, meaning relatively poor loadings on the last ‘peak-fare’ trains while the first ‘off-peak’ trains are packed.
The argument continues that removing regulation from off-peak fares (the erstwhile saver) will allow train companies to implement a more graduated structure, similar to airlines, which will generate more revenue while promoting better network utilisation. However, this is a direct consequence of train companies ramping up the cost of the unregulated peak anytime single/return and creating this man-made cliff in the first place.
Airline cost models are not applicable to much of rail travel. How many people commute daily by air? Would an airline have flights every 20 minutes between a London airport and Manchester? They are different products with different expectations. The benefits of greater frequency are lost if you are tied to a specific train.
Many commuters have little, or limited, ability to change travel patterns in response to rising fares, with their decisions often tied into longer-term choices on where to work or live. So this is our solution:
• Try everything first to tempt passengers to quieter times before train companies start penalising them for daring to travel in the ‘peak’;
• Shorten the reservation window to make advance tickets more useful. Develop ranges of products that reward or incentivise different patterns of travel – carnets loaded on to smartcards, for example; and
• Sell the advantages of off-peak flexible tickets – don’t hide behind ‘see restrictions’. The regulated off-peak price should be the advertised entry point. Let passengers trade up if they want to travel in the peak or, if they want better value for money, sell them an advance tied to one train.
The development of a grown-up relationship with passengers is in its infancy – let’s develop that relationship before more draconian measures are imposed which, we think, passengers may resent. The furore over the idea of ‘Lexus Lanes’ on potentially privatised roads could be matched by anger about ‘Lexus trains’ that only some can afford. We welcome the review but the changes must pass a double test: to be affordable and acceptable to passengers.
Anthony Smith is the chief executive of Passenger Focus.
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