What’s in store for the UK’s big rail fare shake-up?
The Department for Transport recently announced far-reaching changes to UK rail fares in an attempt to make it easier for passengers to buy the cheapest tickets. Trials on selected routes are due to start in May and could lead to the most radical overhaul of the fares system in more than 30 years.
In February a set of radical changes were jointly announced by the government and key rail industry bodies as a measure to modernise archaic rail fares and routing structures that hamper passengers from finding the cheapest tickets available.
The Department for Transport (DfT), together with the Rail Delivery Group (RDG), Transport Focus, Which? and the Office of Rail and Road (ORR), published an all-encompassing Action Plan that promises simplified ticket options, more user-friendly ticket machines, and easier journey planning.
The proposals come after long-standing criticism from passenger advocacy groups regarding the highly complex ticket pricing structure, which has become one of the leading causes of passenger dissatisfaction when it comes to UK rail travel.
Transport Focus’ 2016 National Rail Passenger Survey showed that only 47% of passengers were satisfied with the value for money of their ticket. Satisfaction with value for money by individual routes within train operating companies varied between 33% and 84%.
Just a week after the Action Plan was published, ORR revealed that one-fifth of rail passengers buy the wrong tickets from machines and 13% would have suffered financial detriment as a result of not choosing the appropriate ticket.
The three trials, poised to be rolled out from May on selected routes, will look to introduce new ‘best value through fares’, route overhauls and a new journey planning system fashioned to resemble that of airline bookings.
“We recognise that the fares system is complicated and hard to navigate, and the impact this has on people’s trust in the railway,” Rail Minister Paul Maynard wrote in the report. “This is a first step to improving the passenger experience of fares and ticketing, and there remains more to be done.”
What’s gone wrong in rail fares?
A streamlined, clearer fares system has been on the agenda since 2008, when the fares system was described as a “fares jungle” by one passenger watchdog at the time. Soon after, train operators announced new fare categories, known as the advanced, off-peak and anytime tickets.
Since then, however, the fare structure and regulation have only gotten more complex.
“The very simple reason for that is the UK franchise structure,” says CEO and founder of ticketclever, Jeremy Acklam, who in 1999 helped launch Trainline, one of the biggest third-party retailers today. Acklam spent 30 years in the rail industry, and over the last two decades he turned to finding new, innovative solutions to purchasing rail tickets online.
“In order to meet their franchise obligations, train companies tend to use quite complicated fare structures to build offers,” he says. “So, by definition, the whole industry has become more complex and that is exactly why we created ticketclever and why we're doing future roll-outs of products – because the customer doesn't need that level of complexity.”
The impetus for the action plan came from the government, following the ministerial reshuffle from last summer.
Some of the issues stem from the fact that the route structure that exists today is the same one that British Rail had in 1995, explains Andy Wakeford, head of fares and retail support at RDG.
“It's a British Rail fare designed before the internet and before the advent of a lot of technologies,” Wakeford says. “It was leisure, off-peak, semi-flexible ticket that the industry has to continue to offer in pretty much exactly the same format as it existed in the mid-1990s.
“If someone wants to make a return journey, depending on the times they want to [travel], they sometimes find that two singles are cheaper, and sometimes the return is cheaper. And that adds to the sense of confusion that people have, saying, this is difficult to work out, why can't I just work out the best value fare for each way?
“[The government] look at what the problem is and they tell the rail industry to sort it out, but what we have to highlight is that their own their regulatory structures impose those things on train companies,” he says.
The big ticketing shake-up
The series of trials starting in May focuses on routeing changes, best-price through-fares and single-leg pricing.
Route changes will be introduced to do away with existing clashes, where new services have been introduced, or have become more frequent, while the fare structure underneath doesn't reflect those choices. This will be tested on the London to Sheffield itinerary.
“There were plenty we could've chosen, but we chose this route because Sheffield has a fast, direct service through St Pancras that was a lot more infrequent in 1995,” Wakeford says.
“Back then, the choice of tickets was the direct service, or for a bit more, you had something called an any permitted ticket.”
Best-price through-fares will be tested with CrossCountry Trains, which currently struggles with an obsolete requirement to list prices for very long connecting journeys, even where customers can beat that price by combining different types of ticket – a requirement that predates the internet era.
And finally, single-leg pricing will be tested on the London-Glasgow and London-Edinburgh routes, allowing customers to always find the cheapest fare for their chosen journey, out and back, a system similar to airline bookings.
“It basically means that when you want to make a return journey, you pick the best value fare, the best price you need for the way there and the way back, and that's the fare you pay,” says Wakeford.
The rise of third-party retailers
The overall lack of transparency pushed more and more consumers towards third-party retailers, such as ticketclever.
The platform applies a series of algorithms in order to look at combinations of fares and different routes between one point and another, which can offer savings up to 58% over the cost of buying a ticket at a railway station on the day of travel. In recent years, the proportion of tickets sold by third-party retailers has dramatically increased compared with ticket sales through train operators.
For example, net ticket sales reported by Trainline increased from approximately £71m in 2004 to £978m in 2014. The platform had an average of 18 million visits per month across its website and mobile apps in 2014, and over 6.5 million downloads on mobile.
“Third-party retailers exist only because we are doing something that the customer wants and we believe that that is essentially where the future of this industry lies,” Acklam says. “That is why the proportion of tickets sold by third-party retailers like ourselves has dramatically increased compared to ticket sales through train operators.
“In this post-Brexit economy, we believe that there is much greater demand both for transparency and for being able to choose the lowest available fare for the journey.”
As he points out, the changes will, no doubt, help passengers make better choices when it comes to ticket purchases, particularly when buying directly from the operators’ website or via National Rail.
But the new fares system, which is at least two or three years away from a national rollout yet, doesn’t pose a threat to the multitude of online retailers. Digitally native passengers are becoming increasingly familiar with the array of options available and know they can easily shop around online for the best price.
A long journey ahead
No doubt, the rail industry has embarked on a challenging and convoluted path to restructure fares from the inside out. The efforts have been mostly welcomed by advocacy groups, but some still see this as nothing more than ‘a good start’.
"The changes to the rail fares and ticketing system recently announced by the government provide lots of small, but important, steps towards making the system a bit simpler and more usable,” said Lianna Etkind, public transport campaigner at Campaign for Better Transport.
“This is a good start, but it simply doesn't go far enough towards the fundamental reform that's needed. Without larger reforms, like the introduction of equal season ticket discounts for part-time commuters, these proposed changes simply tinker around the edges and passengers will still be left with an insanely complex and unfair fares system."
Wakeford admits that a huge challenge awaits, mainly because “what seems like fairly straightforward changes to everyone else in reality requires an incredibly complex set of approvals and agreements by government. Because you're not just changing a train operator's franchise agreement, some of the agreements sit in cross-industry structures, some of it sits in individual franchise structures.
“So our biggest challenge is to work with the DfT and identify how we can make these changes quickly so we can get these trials out into the public domain, ideally beginning of May, but as soon as possible,” he says.