Opinion
Institute of Directors
Waking up to the potential of competition
Corin Taylor says the DfT should seriously consider allowing more open access operators to run more services to more stations. Competition could be the one good thing to come out of the franchising debacle
W
ith the new franchising timetable in place, the rail industry can breathe a sigh of relief. After months of uncertainty, there is now a clear path ahead. But at the same time, there are serious risks that much-needed improvements to the services that passengers receive won’t be delivered, and that the chance to increase competition in the passenger market will be missed. The most immediate problem is the delay to almost all the franchising tenders. Given the serious mistakes made in the West Coast Main Line tendering process, it’s important that the Department for Transport (DfT) has sufficient resources to manage each competition appropriately, and so a staggered timetable is unfortunately necessary. But the delays to the rail franchise schedule add up to a staggering 22 franchise-years. It’s clear that the DfT’s preference is for the incumbent operators to continue to run their franchises, and in the case of South Eastern, for an extra four years. This is understandable. The government cannot, through Directly Operated Railways, run all of Britain’s passenger rail services, even if only temporarily. But it puts the incumbents in a strong position to dictate terms and threaten to walk away if these are not met – especially given that most of the new franchises will now begin after the 2015 election. And as a result, we’ll probably see moves to cut staffing levels and increase fares and car parking charges.
London Midland provides a good example of the bind the government now finds itself in. A disastrous failure to provide sufficient staff in the last three months of 2012 – even more unforgivable given the UK’s high levels of unemployment – saw nearly 1,000 trains cancelled and many ticket offices operating with fewer staff or for shorter hours. The operator’s Public Performance Measure, which combines reliability and punctuality data, fell from around 90 per cent to 77 per cent. London Midland was forced to offer an apology and to provide some compensation to season ticket holders, but several months on, the woes for passengers have not ended, as new staff are still being trained and services continue to be cancelled with alarming frequency. At the time of writing, the operator’s Public Performance Measure remained below 80 per cent. But despite these setbacks, the DfT has agreed a 21-month extension to the franchise, which will now run until June 2017.
The potential of rewards for poor performance is not the only problem arising from the elongated franchise schedule. Innovation and investment in improved services are also at risk. The reason is simple. Most investments do not generate a return immediately, so any rational train operator will be more likely to spend money on service improvements at the start of the franchise, rather than towards the end. Passengers hoping to see improvements in ticketing services, for example, are likely to be waiting a while yet. Virgin Trains does offer print-at-home and mobile tickets, but only for Advance fares and only when travelling exclusively on Virgin or Cross Country services. That’s fine if you’re travelling from London to Birmingham on a specific train, but if you want some flexibility or if you’re travelling from London to Shrewsbury, these convenient ticket purchasing options are not available. And for rail commuters, it’s anyone’s guess as to when Oyster-style smart ticketing outside of the London travelcard zones will be introduced. Ultimately, the biggest driver of improvement is not a tightly-specified franchise contract but a level of genuine competition. According to evidence recently compiled by the Centre for Policy Studies (CPS), allowing more than one operator to run passenger services on a particular route can lead to significant benefits.
The CPS report analysed data from the LENNON rail ticket database for the East Coast Main Line, which is served by East Coast (through Directly Operated Railways), together with two open access operators – Grand Central and First Hull Trains. A number of stations on the line, such as York, are served by more than one of these operators, while others, such as Leeds and Edinburgh, are served by East Coast only.
Between 2007 and 2012, the report found that passenger journeys increased by 42 per cent at those stations on the East Coast Main Line which enjoy competition, compared with 27 per cent for those without competition, while average fares increased by only 11 per cent on those stations served by more than one operator, compared to 17 per cent at stations without competition. At the same time, the open access operators are now providing a number of towns with direct services to London, where passengers would previously have had to change trains.
May 2013 Page 19
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122 |
Page 123 |
Page 124