Neil Micklethwaite, commercial director of Stagecoach Rail, is a key player in this trial. Stagecoach owns East Midlands Trains, and is the driving partner of both the Virgin East and West Coast franchises.
“We are trying to champion the customer cause,” he says. “Twenty years ago, when regulated fares were set up, it was a decision made for honourable reasons. It was about protecting customers in a new environment.
“But the internet has overtaken that system. Back then, nobody bought their journeys online. It was much harder to compare prices and journeys. Buying patterns have overtaken the regulatory framework that was put in place.
“Our East Midlands franchise is taking part in the London to Sheffield pilot. There are lots of products on this flow. It was based upon the situation in 1995 when there was one direct train an hour, so it was often quicker to take a longer route. Now there are two trains an hour, and three years ago they were upgraded to 125mph. Getting rid of some of the products that people no longer buy will reduce confusion - you no longer need to go via Doncaster and King’s Cross, unless you particularly want to.
“We are not throwing out the old system, though. This is a controlled pilot to remove regulation to make it easier for customers to buy the right ticket. Customers who already know what they are doing will probably not change their habits. The focus is on first-time users. It may put them in control, rather than the ticketing system being in control.”
This initiative is being led by the RDG. Previous calls for change have come from outside the train operators.
“I talk to people in the Department for Transport and I don’t think there is any sense of responsibility,” says the head of one of the technology companies involved in ticketing.
“When I talk to the RDG, I see them looking to the Department for leadership. They are not getting it. Everyone is seeing only their part of the problem. Nobody actually claims the full problem.
“The system has led every train operator to want to be seen to offer the most flexible range of fares within the parameters allowed. For decades the solution to selling more tickets has been to increase the complexity of the system. Instead of maintaining a system, it has added so many more layers that it is almost irreparable.
“It is so complex that the majority of people do not get the benefit of it. You have to be skilled, and you need to have time, to find the best deals.
“Should we be asking people to pay per mile, or to pay depending on how busy the train is, or do we reduce the cost the further a passenger travels? I’m not sure anyone has thought this through in a nationwide holistic sense.
“We have to change to what the country as a whole needs, not what individual companies need. It requires a leadership that is absent.”
“The slow march to reform has begun,” counters Smith. “We’ve been around this issue since before I joined the industry in 1999. This is the biggest step I have seen. The purpose of these trials is to overcome the barriers to change. It is immensely complicated - the accretion of three decades of fares is mind-boggling, and reform is going to take years.”
So do passengers want an easily-understood and regulated system of peak, off-peak and advance single fares? Or do they accept the airline model under which the same journey can cost £30 one day and £300 the next?
“I think the core is single-leg pricing,” says Smith. “Having a Saver Return that costs 10p more than the Single Saver has to go. Yes, it has to be yield-led, but I think the Single Saver will become the regulated fare. It won’t be the end of regulation - we need the protection. Services are largely operated by monopolies, and they cannot be left to manage the market through fares alone because the most popular ones will just go through the roof.
“This is a public service, and a huge amount of taxpayer money is still involved. A lot of rail travel is not discretionary, and you cannot just let the market loose on it. That is not tenable.”
Stagecoach’s Micklethwaite adds: “We have to make it easier for customers to choose what they want. That means they could have two singles or a return. So there will still be returns. They will buy a trip - they should not need to worry whether it is peak or off-peak. It needs to be of value to them for the time of day or day of the week. The price is for the journey they want to make.”
Does that sound closer to the airline model than to the simplified structure yearned for by many?
“We need to get a balance between those people who book far in advance and those who just walk up when they need to go. We need a mechanism that covers those who travel a long way occasionally as well as those who travel on the same train every day, and who often sit in the same seat.
“We are working with the Department to test what it is customers want, and how we can remove some of the regulatory constraints on these test flows. The Minister wants real customers to try this, and see what it does to the patterns of passenger movements. May is our target date to put the trials out there. We’ve not put an end date on them - we need to get a proper set of data, so they will run for a while.”
“We have the worst of both worlds,” says the managing director of one of the large rail consultancies.
“With airlines you see a multitude of fares sold by many different operators, and nobody is surprised by them. They understand prices change from day to day according to demand.
“We are getting closer to that on the railway because the demand forecasting systems are getting better. Yet there is still an inbuilt public assumption that there is a fixed fee for a fixed journey. This is rooted in the concept of public transport - there has to be a published tariff for everything with a regulated fare. It is the antithesis of the airline process.
