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November 18, 2015updated 20 Nov 2017 11:19am

Automatic refunds in the UK: a fair deal?

The eagerly anticipated automatic refunds seem to have finally arrived in the UK. Soon after the Rail Minister announced a future trial scheme on the c2c network in 2016, Virgin Trains unveiled its own ‘Automatic Delay Repay’ system at the start of October. But as smart ticketing technologies have seen slow progress and Virgin’s scheme comes with its own set of caveats, should passengers expect a nationwide rollout in the near future?

By Eva Grey

The difficulty to claim compensation for frequent delays on the UK’s railway network has been one of the key reasons for plummeting passenger satisfaction over the past years.

But on 18 August, Rail Minister Claire Perry unveiled government plans to roll out a pilot automatic refund scheme on the c2c line between London and Essex starting in summer 2016.

|The industry had little time to speculate before Virgin Trains jumped on board and became UK’s first train operator to launch its Automated Delay Repay (ADR) system across the West Coast Mainline service on 3 October.

These advancements come only months after a change in policy finally scrapped railway vouchers and allowed cash as compensation payment for late trains.

The initial model was clearly not working for passengers. Research from 2013 by rail watchdog Passenger Focus revealed that 88% of commuters never submit their claims for compensation, and as a result, up to £100m goes unclaimed every year. This happens even as 3% of trains were “significantly late” or cancelled in the last year, according to government estimates.

However, there has been a surge in the overall level of compensation train operators have paid back to passengers over the last seven years: government figures show that between 2009 and 2015, the total sum paid by train operators rose from almost £3m to more than £25m per year.

Commenting on Virgin’s new ADR system, Secretary of State for Transport Patrick McLoughlin said: “Making it easier to get compensation when trains are delayed is a vital part of our plan for passengers.”



Rail fares in the UK are the most expensive in Europe, while the ticketing system is one of the most complex.


“Virgin Trains are making the most of modern technology to improve the service customers get. Our plan is to make sure passengers across the country benefit from schemes like this and we are encouraging other operators to roll out similar schemes nationwide.”

However, some might take issue with the view that a highly restricted system, subject to a number of limitations on Virgin’s part, represents “making the most of modern technology”. A recent study by non-profit organisation Campaign for Better Transport found that the UK “lags behind the rest of Europe” when it comes to smart ticketing, with 20 EU countries already offering some form of flexible ticketing to their commuters.

“Compared to other countries in Europe, we are light-years behind them in terms of ticketing simplification, smart ticketing, paperless ticketing and the overall passenger experience when it comes to rail fares and ticketing,” says Better Transport public transport campaigner Martin Abrams, pointing out that other EU countries have been using some sort of smart payment technology on their railways for the past 15 years.

Virgin’s refund scheme: mind the gap in guidelines

Although setting a great example in its initiative, Virgin Trains’ ADR is still far from an all-encompassing, free-for-all compensation scheme many had hoped for.

Currently available to an estimated 3.5 million passengers travelling on the West Coast Mainline, refunds are available only for delays of 30 minutes or more. To be eligible, passengers also need to purchase their ticket via Virgin’s official website or mobile app, and it applies only on advance tickets where a specific train has been booked (seat reservation not included), and only for direct journeys with no connections.

Even so, the operator estimates that the amount paid in delay compensation is expected to rise by £2.8m in the first year as a result of ADR, according to a press release – triple the amount Virgin Trains currently pays out. Depending on its success, the company says that it is looking at introducing the system on its East Coast service in the future as well.

“[Campaign for Better Transport] welcome these announcements because anything that makes travelling simpler for passengers we are generally in favour of,” Abrams says. “So the compensations plans from Virgin and c2c are welcome. But there is so much more to do.”

“Critics have argued that both announcements were used to deflect attention from a host of other bad news for commuters.”

Critics have argued that both Perry’s and Virgin’s announcements regarding fare compensation were used to deflect attention from a host of other bad news for commuters. On the one hand, Perry’s promise to advance flexible ticketing was joined by yet another increase in rail fares in January.

On Virgin’s part, the operator is severely struggling to maintain its passenger satisfaction levels: this month, its West Coast service topped the list of the most complained about rail operator for the eleventh quarter in a row, according to the Office of Rail and Road (ORR).

This follows the harsh criticism Virgin received in September after a drastic change in its railcard policy. Under the new rules, railcard owners cannot buy off-peak tickets for peak-time travel. In some cases, this meant that journey prices tripled or even quadrupled.

“This has caused a lot of hardship for young people especially, who are commuting from further and further away from London because of the extortionate cost of living in London,” Abrams says. “Now with a stroke of a pen they’ve changed that and it has led to people having to give up their jobs.”

“It’s swings and roundabouts with Virgin. If their automatic refunds are going to soften the blow, it’s going to soften the blow from the PR disaster of changing their railcard policy.”

An uneven system with patchwork regulation

Although no details are yet available on the future c2c scheme, its version of automated refunding is expected to be quite different, not least because c2c is currently the best performing train operator in the country, the jarring opposite of Virgin West Coast.

In the past year, c2c had the largest percentage of trains arriving within five to 10 minutes of schedule, while at the same time scoring lowest in Transport Focus’ “cancellations and significant lateness” category of its quarterly National Rail Passenger Survey.

The lack of both blanket regulation and a national standard concerning delay times means that train operating companies can set their own rules and thresholds for delay times, resulting in a complex and confusing system for passengers.

“There should be an industry standard,” says Abrams. “We’re light-years away from it, but that’s what we should be aiming for and as a campaigning organisation, that’s what we call for.”



Two decades on from the Railways Act, many believe that the UK rail system has failed to deliver.


“There should be a government regulation, it should be set by the Office for Rail Regulation and it should be across the board, across all train operators – it shouldn’t be depending on what train you’re travelling on to see what level of compensation you can get.

Because a delay is a delay. It doesn’t matter what train operator you use,” he says.

When disruption to services is caused by Network Rail, train operators can claim compensation on a minute-by-minute basis, whereas for passengers, allowances usually start after anywhere between 30 minutes and an hour’s delay.

“I think what we need to have is a little bit of fairness put into the refund system, where passengers are able to claim for delays universally, across every train operator, from a set given point – I would argue 15 minutes’ delay is an acceptable point and that should be across all train operators,” suggests Abrams.

Automated refunds: the future’s in smart ticketing

Campaign for Better Transport, alongside a host of other industry insiders, insists that the solution unequivocally lies in the rollout of smart ticketing across the board.

Smart ticketing in the UK has been on the planning board since the publication of the ‘Rail Fares and Ticketing’ report in October 2013, when the Department for Transport (DfT) first introduced the South East Flexible Ticketing (SEFT) programme as a pioneer in smart ticketing technology on railways outside London.

“The problem with the UK is that only a few lines now have smart ticketing technology, but the pace towards smart tickets is painfully slow, and in fact shamefully slow. There’s no excuse why we are so far behind other European countries,” Abrams says. After a period of stalling and a few missed deadlines, new life was breathed into SEFT in July, when DfT announced a £5.5m investment to roll out smart cards across Southeastern’s network.

Although this will be introduced on journeys between London, Kent and East Sussex, DfT states that “smart ticketing in the north has also received backing from the government, with £30m announced in the summer budget 2015 to Transport for the North, part of which will go towards the rollout of Oyster-style smart ticketing”.

Abrams is certain that the future of a network-wide automated refund scheme lies in the speedy development of smart cards.

“That’s where the government has got to be and they’ve got to sort their acts out,” he concludes. “We really need to get our act together when it comes to smart ticketing, as that will open doors to many things, not just automatic refunds – flexibility, simplicity and accessibility.”

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