The RDG has set out five principles for ticket reform:
■ Value for money - and transparency over the fare and what it has bought.
■ Fair pricing - and certainty that they are not being overcharged.
■ Simplicity - making buying simple and easy to find the right fare while retaining choice.
■ Flexibility - the ability to tailor fares to meet individual needs.
■ Assurance - clear, effective, transparent regulation to protect rights.
These principles informed the RDG’s proposals and were intended “to create a system that reflects how commuters, business and leisure customers travel today. One which makes the most of technology while maintaining discounts, looking after all groups of society and preserving regulatory protections for customers.”
On one element, there seems to be general consensus: that single-leg ticketing should be the bedrock of a new pricing structure, along with “algorithmic rules underpinned by regulation to allow and encourage the best combinations of single-leg fares for return, through (allowing travel from any point on the network to another regardless of operator) and multi-journey tickets”, according to the RDG.
One caveat is the potential for some loss of flexibility. The outward leg of an open return ticket is valid on the day of issue only, but the return is valid for a month, so passengers will need reminding not to buy until the date of return is known.
An alternative is to create returns at twice the one-way rate, so that on longer distances people going both ways can come back on any day within a month, rather than sell two one-ways which are only valid on the day they’re booked for.
Although the quest for ‘simplification’ means different things to different people, Mark Smith says there is scope “to throw out routes that serve no purpose - redundant legacies of inter-operator ORCATS ‘raids’ by which fares were set by one operator solely to gain revenue from another operator without any obvious passenger benefit - but keep in desirable options such as London-Birmingham via High Wycombe, for example”.
Ian Legg cites Brighton fares and the shadow of three operators. He agrees that the obligation to show everything in the interests of impartiality and the multiplicity of offers and concessions have helped to drive perceptions of complexity.
However, he adds: “We have very limited restrictions in Britain. In Germany, for example, you cannot use inter-city trains with a local ticket, whereas Leeds commuters are free to use a London train as far as Doncaster, or wherever, perhaps occupying a seat instead of someone travelling to the capital.”
Prices based to varying degrees on distance have been a feature since the 1830s, but the rate varies according to the area. Mark Smith suggests basing peak and off-peak fares on distance to create an internally consistent structure, but using a different rate per mile for each service group to reflect current differences in average price levels - London commuter, Wales rural, inter-city, and so on.
“Where there are two routes to a destination and we want both to be valid, prices may need finessing to make sure that the penultimate stations on those routes don’t throw up anomalous fares. As always with fares, the devil is in the detail,” he says.
Even though 9-to-5 commuting, with its relatively inelastic demand, is largely a thing of the past, some form of yield management is still required to smooth the peaks, maximise use of capacity, and improve the passenger experience by reducing overcrowding. Current regulations and extreme variations in price can lead to peak-hour trains being lightly loaded while the following off-peak trains are overcrowded.
How will yield management to maximise revenue work under NRCs?
If the revenue does not flow to the operator, what incentive would there be to fill empty seats when we know that performance suffers with full trains? Will regional pricing managers have delegated authority to set fares, as now with prices based on the lead operator?
As Ian Legg argues, the best customer focus is when delivery is at a local level, using local knowledge to refine the price point for the area’s circumstances.
As the RDG puts it, the new structure will have to accommodate “discounted, premium, train-specific and personalised variations of these fares - for example, charging less at quieter periods, more for First Class, less for reduced flexibility, and so on”.
The RDG proposes replacing existing fares regulation with a new set of regulations covering such elements as price capping and reducing ‘price cliffs’ between peak and off-peak periods - recognising that modern digital technology can manage demand much better (as well as constructing itineraries far more complex) than a booking clerk with a manual and a piece of paper, especially for journeys that are A-B and B-C.
The structure must allow for the co-ordination of train fares with other public transport systems, to reflect the policies of devolved local and regional authorities (this is currently difficult because rail fares are set under different national rules from local travel schemes).
Besides encouraging multi-modal journeys, local authorities need to be involved with setting fares and deciding on the balance of transport funding between fare payers and local taxpayers, requiring a system that can accommodate plural funding.
Card or contactless ticketing is ideal for urban areas where the highest-capped fare is not going to break the bank. The same is not true for long-distance journeys, where passengers need to know exactly what they will be charged before swiping in.
To protect affordable access to long-distance fares, in particular, RDG proposes some regulation of the overall level of revenue that can be raised. Nor can contactless cards store such levels of information as seat reservations and First Class tickets. The process of buying tickets has to provide a clear set of options and information about restrictions applying to certain tickets.
The smart ticketing technology favoured by 90% of RDG respondents could incorporate discounts and entitlements - including railcards, loyalty rewards, and even personal preferences (window, table, forward-/backward-facing seat) - when making a reservation. It would provide assurance that passengers were being given the best value fare. The system also needs to accept late changes to travel plans (already possible with some operators up to 1800 on the day before travel).
Transport Focus Chief Executive Anthony Smith argues that a priority must be a multi-modal capped zonal system for all urban areas, for which funding has been earmarked.
“On longer-distance journeys, single-leg pricing will allow passengers to mix and match advance and flexible fares, as well as Standard and First Class - more choice should be possible,” he says.
