The Rail Professional Interview: Richard Robinson, MD of Heathrow Express
It’s not unusual for senior managers of Tocs to have cut their managerial teeth running other types of transport, but Richard Robinson has entered the transport sector for the first time as an MD. Katie Silvester takes a trip on Heathrow Express with him
Heathrow Express is the only mainline railway service in Britain that has never been franchised. In the sunset days of British Rail, BAA, the owner of Heathrow Airport, paid for a new rail link from the Great Western Main Line to Heathrow Airport and in 1998 BAA began running trains along the new route under the brand name Heathrow Express. In fact, compared to the franchised Tocs that span the rest of the country, Heathrow Express’s set up is closer to the way that the Victorian railways were originally built and run, with private companies spotting a niche in the market, putting down some tracks and running their own trains along it.
Managing director Richard Robinson is proud of all the technological firsts that Heathrow Express can claim and would be horrified at the Victorian analogy. Heathrow Express’s Siemens Desiros – bought, not leased – were the first post-privatisation trains to be used that were not designed by BR, Robinson tells me. And it was the first operator to offer on-board television screens.
The youthful managing director – he is just 36 – joined Heathrow Express in May from an internet-based ticket retailer. A chemical engineer by background, he cut his teeth at ICI, before doing an MBA and moving to mining company Anglo American.
So, why did he fancy running Heathrow Express when it was such a complete change from what he’d done before?
‘Heathrow Express is a super strong brand: customer focused, with a good web operation, and a very strong safety and operations part of the business. If you look at my skill set from my early career to the present, it ticked a lot of boxes and it was really going to give me the opportunity to grow my commercial experience.
‘Heathrow Express is unusual for a rail company in a lot of ways. It’s had a lot of firsts technologically, lots of firsts operationally and service wise. With the company landing on the ground, as it were, 10 years ago, a lot of our frontline staff weren’t from the rail industry, although lot of middle and senior management are. Culturally, the company is open and welcoming to new people.
’BAA originally paid £350m for its link to Heathrow – the section it built is all tunnelled. More recently, a spur to Terminal 5 was added, with the Mott McDonald built-line passing underneath the Piccadilly line twice. I met Robinson at Paddington, so that I could interview him on the train and see Terminal 5 at the other end. The state-of-the-art station at Terminal 5 is just a short elevator ride away from the airport proper. The blue lights shining up from the track onto the platform help to give the station a futuristic feel – you know you haven’t arrived by Tube. As Heathrow Express’s MD obligingly poses for Rail Professional’s photographer on the way up to departures, the inevitable security guard comes over to check that we aren’t terrorists. Heathrow Express itself is not immune to the security measures that go hand in-hand with airport operations – each time a train arrives at the airport, staff sweep the train to check for suspect devices.
Does Robinson know how long BAA’s infrastructure investments will take to pay for themselves?
‘I’d probably answer that in a slightly different way. It’s now circa £1bn-worth of investment, including the T5 station. So, does that finance itself with our operations? Yes. But that’s quite a different thing to it paying for itself. Have we paid back £1bn of the bank loans? No. But all of our revenues go into the single till for regulation, and revenues are offset against costs.
‘That’s what sets the airline charges, so we’re part of quite a different set up to the Tocs. We provide a five-year business plan to the Civil Aviation Authority, which includes all the revenues we think we’re going to make over five years, then there’s how much needs to be invested in operations and capital. There’s a difference between those two amounts of money and that’s the bit that has to be funded by airline charges. That’s essentially how they work out the airline charge per passenger.’
Compared to its franchised neighbours, Heathrow Express has a lot of freedoms – no cap on ticket prices, relative freedom to set its own timetables and a longer time span in which to work than most franchisees. But it does have some limitations. In 2023 its position will be reviewed by the government and this may lead to some sort of franchise competition. Other than that, its regulation is closely linked to the airport – and, as Heathrow Express is paid for out of airline charges, it is accountable to the airlines.
For the year ended 31 December, 2008, the Heathrow Express Operating Company made a profit of £6.2m on a turnover of £56m. It is not subsidised by the government, so the operator carries all the risk without having the safety net of a cap and collar arrangement. Journeys cost £16.50 for ‘express’, or second class, singles and take just 15 minutes each way, with an extra four minutes to the Terminal 5 stop. Trains depart every 15 minutes.
‘We’re better than half the price of a taxi,’ says Robinson. ‘We’re three times faster than a taxi getting to the airport.’
Punctuality is currently running at 99.9 per cent, with passenger satisfaction scoring consistently highly in the National Passenger Survey. The most recent score was 92 per cent, making Heathrow Express the top Toc. Passenger numbers have grown by around 15 per cent over the last seven years, but the recession has seen that increase level off. Unlike most other Tocs, Heathrow Express has a vested interest in the mooted third runway. Heathrow’s passenger numbers are not going to see any significant growth without an additional runway, so neither are Heathrow Express’s.
When it comes to attracting new passengers, ‘added value’ is the strategy. One of Robinson’s first moves was to make wi-fi free of charge, and electrical sockets to recharge laptops or mobile phones are planned for the future. Customer service is very important – Heathrow Express staff are trained to be able to answer passengers’ most common queries about their onward journeys.
Can the impact of wi-fi and free onboard newspapers be measured in ticket sales?
‘We haven’t measured it against ticket sales, but it has rolled through against things like overall passenger satisfaction for the National Passenger Survey and the Quality Service Monitor, which is done by BAA throughout the airport. I don’t think I should be ashamed to say that we score very highly in just about every category.
‘One of the challenges that we’re meeting head on is how to evolve the passenger experience to add more value. I know that’s real marketing speak, but if you see Heathrow Express as a 15 minute shuttle between Paddington and Heathrow, you set your horizons very differently to if you see it as a passenger journey between London and getting on the plane. That subtle change in definition is something we’ve been working really hard on, to see how we can use technology to increase convenience.
’Another first for the UK is that passengers can now check-in at self-service machines on the platform at Paddington while they are waiting for the train. This has only been operational since the beginning of December. In time, these facilities will be available onboard the train too.
‘Watchwords for taking our brand on are convenience and certainty; that means being able to get flight information and being able to check in if you’ve got a few minutes, although generally you will only have a few minutes before the next Heathrow Express. We’re really building the feeling that as soon as you’re at Paddington, you’re certain to get to Heathrow Airport. We have a very demanding type of passenger because every single person on this train has got an absolutely hard deadline in the next hour and a half.’
A typical Heathrow Express passenger is travelling for business purposes – the majority are male. Just 20 per cent of passengers are travelling for leisure. This makes passengers an attractive target for advertisers with its AB1 demographic. Digital advertising in the station at Terminal 5 has had good take up and rows of display panels inside the tunnels also carry advertising. Despite advertising spend being down 16 per cent nationally, Heathrow Express has actually seen an increase in its advertising revenues. Television screens inside the carriages show BBC news and weather as well as commercials.
‘We have an absolutely prime London city centre high end business audience that people are willing to pay to get to,’ says Robinson. ‘Because of our audience and the quality of our infrastructure, Brand Republic is saying it’s pretty much the best place for digital advertising in Europe.’ One aim is to grow the leisure market without diluting Heathrow Express’s attractiveness to business.
Looking to the future, there are plans afoot for further direct rail connections to Heathrow. There is already an alternative called Heathrow Connect, a slower service run from Paddington to Heathrow in conjunction with First Great Western. Crossrail will take over this service once it is up and running, and the frequency will increase from two to four trains an hour.
BAA wants to build a new line to Staines, alongside the M25, which would be called Airtrack. It would link Heathrow directly with Waterloo and destinations in the south of England, such as Reading. The scheme is currently in the applications stage, having undergone consultation earlier this year. If all goes to plan, construction could start next year, with services beginning in late 2014.
Running services to St Pancras is another aim. ‘We would love to run our service to St Pancras. It would expand our market and it would delight an awful lot of customers who at the moment have to transfer somehow from King’s Cross to get to Heathrow. Crossrail would be a big enabler for that.’
And with that, we arrive back at Paddington and Robinson heads back to Heathrow Express’s central London headquarters.