Easier fares for all The Rail Delivery Group's proposal for a more transparent, simpler to use, modern system of tickets and fares
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Easier fares for all The Rail Delivery Group’s proposal for a more transparent, simpler to use, modern system of tickets and fares
Contents
THANK
YOU
Forewords4-5
Executive Summary 6-15
Section 1: The railway matters 16-21
Section 2: Fares - an outdated legacy 22-29
Thank you to the 19,159 people who Section 3: What did people tell us? 30-41
responded to the Easier Fares Consultation Sections 4: How do we get there? 42-55
and to all the organisations who shared Section 5: What could a new fares
structure enable for customers? 56-67
their views on fares reform with Section 6: Conclusions and next steps 68-73
Rail Delivery Group. Glossary74-75
This document is produced and distributed by Rail Delivery Group.
All material is property of Rail Delivery Group Ltd.
2
February 2019 3
Forewords
Forewords
It’s a big, bold ambitious set The time for piecemeal changes
of proposals which would has gone – we need root and
deliver a more flexible, branch reform to maximise the
intuitive, transparent and benefits and boost value for money
trusted fares system ratings... these proposals provide
a compelling reason to proceed,
carefully, to the next stage.
Paul Plummer, CEO, Anthony Smith, Chief Executive,
Rail Delivery Group Transport Focus
The railway has changed beyond recognition what a reformed fares system should look like. Transport Focus’s extensive passenger Moving on before knowing this, therefore, is
since a new model for running it was In all, nearly 20,000 people responded and research tells us that the case for changing something of a leap of faith, albeit a necessary
introduced in the 1990s. A partnership we heard from 60 groups representing nearly Britain’s outdated and outmoded fares and one. There are some risks, but there are many
between the public and private sectors has 300,000 organisations. While their needs ticketing system is overwhelming. benefits that are worth pushing for as well. It
delivered growth and innovation - increased differed, they were united in wanting a fairer, will be essential that the Rail Delivery Group
Passengers want change, as confirmed by
revenue for the taxpayer, better journeys for more transparent, easier to use experience. and rail industry, in partnership with the
84% of people who responded to the Easier
customers and more services that support Department for Transport and working with
Reconfiguring a decades old system originally Fares consultation last year. The current
local economies. But despite investment and passenger groups, embark on a series of pilots
designed in an analogue era isn’t simple, but process is broken and its faults well known.
improvement over the last 25 years, it is clear where these proposals can be trialled.
this plan offers a route to get there quickly. It The time for piecemeal changes has gone – we
that the system must once again be reformed
forms part of the rail industry’s contribution need root-and-branch reform to maximise the These will provide a safety net in which the
to deliver more.
to the review in to the future of the rail system benefits and boost value for money ratings. consequences of change can be worked
One area that is crying out for change is the currently being undertaken by Keith Williams, through, mapped and understood.
A lot of things in these proposals are sensible
system of fares and ticketing. As a public but for the sake of our customers, we believe
and long overdue: single journey-based pricing On the basis that they are underpinned by a
service the railway is unique in being part- train operators and government, working
will simplify and make the system easier to robust set of trials, these proposals provide
funded by the £10 billion in fares paid by the together with passenger groups and others,
explain. New fares that match the way that a compelling reason to proceed, carefully, to
people who use it, so it is vital that the range should begin the process of change now.
people want to travel today will make rail the next stage.
of fares on offer makes rail an attractive
The prize is to create a system that reflects more attractive. Current fares regulation does
choice by supporting the way people want to
how commuters, business and leisure stand in the way of achieving much of this.
travel today. Crucial too is that the public has
customers travel today. One which makes
confidence and trust in what they are buying. But regulation also caps some prices and
the most of technology while maintaining
any talk of relaxing this could make some
While rail operators have been working with discounts, looking after all groups of society
nervous. So, I’m pleased to see the plan talk of
the UK government and devolved authorities and preserving regulatory protections for
replacing regulation rather than removing it.
to make improvements, for example cutting customers.
jargon and improving ticket machines, further At this stage, it is hard to work out the precise
Ultimately, it is up to governments to pull the
change has been hamstrung by the structural implications of these proposals – most people
levers of change. So, this report is a call on
limits of the system as it was originally will think in terms of ‘what does it mean for
them to work with us to update the necessary
conceived. At the same time, changing my fare’ but understandably, if regrettably, it
regulations and subsequently the system
social and economic needs alongside rapidly will be some time before this is known.
of fares. It’s a big, bold ambitious set of
evolving technology and shifting customer
proposals which would deliver a more flexible,
expectations have meant that to stand still
intuitive, transparent and trusted system,
has been to fall behind.
encouraging people off the roads and on to
That’s why last summer, as part of the the network and catalysing the railway to help
industry’s long-term plan to change and the country to prosper in the decades ahead.
improve, the Rail Delivery Group approached
This document explains how, working
Transport Focus to work with it to conduct the
together, it can be achieved.
biggest ever national listening exercise into
4 Easier fares for all Forewords February 2019 5
Executive
Executive Summary
Summary
6 Easier fares for all Executive Summary February 2019 7
Executive Summary
Executive Summary
The Rail Delivery Group (RDG) brings together Since then, further layers of requirements
the passenger and freight operators on have been added through individual franchise
Britain’s railway with HS2 and Network Rail. agreements, with little or nothing taken away.
It is proposing a root-and-branch reform of This means that long-standing anomalies
the current system of fares and tickets. With have become locked-in, resulting in a system
regulatory changes the industry can deliver with over 55 million fares, created in fixed
what customers want: an up to date, easier bundles (packaged combinations of fares)
to use system where they have more control within a restrictive structure and in some
over when they travel and how much they cases, prices. Customers and ticket office
pay. workers then have to try and untangle
which ones might suit them best, making it
The railway is the backbone of the economy,
increasingly difficult to guarantee the right
moving people and goods across the cities,
one. While operators have with the support
We just need a regions and nations of Britain, spreading
of government worked to improve things
wealth and opportunity. The sustained
simple, easy to growth of the system over the last 25 years
- for example removing unhelpful jargon
understand fares from over half a million tickets, making
is welcome, but reforms are needed so that
ticket machines easier to use, and making
system. operators can utilise advances in technology
advance tickets available 10 minutes before
to deliver the experience today’s customers
travel - the underlying complexity of the
rightly expect. We recognise that maintaining
system has bred distrust for customers. At
the status quo is not an option – the railway
the same time regulations have hamstrung
and its customers will simply be left behind.
the ability to offer better fares options to
The Williams review in to the future of the
suit the rising numbers of self-employed and
railway system recognises this, and these
flexible workers. The result is that up to 35%
proposals represent our first contribution to
of people for whom rail travel is an option are
its work.
put off by the complexity of fares.*
Consultation respondent -
One area which is long-overdue for reform
Leisure traveller, female,
is the system of fares and ticketing. Well-
65-69, North West
intentioned but ultimately counterproductive
regulations underpinning rail fares have
remained unchanged from the mid-1990s,
when the 1995 Ticketing Settlement
Agreement (TSA) spelled out how fares
should be set and sold. It sets out in detail
how customers must be able to buy a ticket
from each of the 2,500 stations in Britain to
every other station in the country.
* Accent and PJM Economics, 2016 ‘Fares
Structures and Simplification – Advance Fares’.
8 Easier fares for all Executive Summary February 2019 9
Executive Summary
Executive Summary
To help us devise our proposals for reforming In our judgement, these priorities are not in These principles need to be balanced with: Based on what we have learned, we have
fares and ticketing, the RDG and passenger conflict and can be aligned in the design of arrived at proposals with a simple proposition
• the need for fares to generate revenue
watchdog Transport Focus worked with a new system of fares and tickets which also at their core: that customers should only pay
for government, industry and devolved
SYSTRA, the independent consultation enables Britain’s railway industry to succeed. for the travel they need and the system is
authorities to enable investment and
experts, to conduct a major listening exercise Before devising our proposals, we established designed to give them the best value fare.
growth.
which received nearly 20,000 responses. some principles for reform based on what To deliver this, we are proposing a two-
We also met with representatives from people told us in the consultation: • linked to the above, the need for stage approach to reform, underpinned by
organisations across the length and breadth operators to be able to manage prices commercial trials which would give customers
of the country, including passenger groups, to respond to their markets and more opportunity for engagement with the
business groups, accessibility groups and local reduce crowding by spreading demand. proposed changes:
Value for money
authorities, to hear what their priorities were
reflecting the feedback that fares should • the need for local and regional authorities
for reforming fares. This was backed up by
make rational sense and that people want to be able to manage transport as part of
economic analysis and commercial modelling
by consultants KPMG.
greater transparency over what they pay integrated transport systems. Stage One - Industry and
for and what they get. government work together
The research clearly showed that while
customers don’t seek a simple, one-size-fits-
to reform the way that fares
Fair pricing are worked out. This means
all fares approach, they do want fares that reflecting customer’s desire not to have to
reflect their needs, and which are simple to find ‘work arounds’ or ‘loopholes’ to get
government replacing the
use. They told us they wanted: value-for- the best price and for a guarantee that outdated Ticketing and Settlement
money and flexibility; an easy to understand they are not overcharged. Agreement (TSA) with a new set of
offer; tickets which are easy to buy; greater
personalisation; protections maintained and The new fares system needs system regulations.
redress if things go wrong; a system which Simplicity to be flexible, adapting
reflects national and local needs; and, a sense making buying simple while retaining
of trust and confidence in the tickets they’re
buying.
customers’ choice. Reform is not about
taking choice away, it is about innovating
to new working patterns,
people working part-time, ↓
to make it easy to find the right fare.
Our consultation showed us that for public commuting to different
policy-makers, the objectives for change drive
Flexibility
locations on different days Stage Two - With these new system
towards a tailored and responsive system regulations in place commercial
which supports national and local economic reflecting customer’s desire to see and so on. It is also key that
growth, strong customer protection and different needs accommodated; they want business people are not changes will then need to be agreed
confidence over fares revenue. For the the ability to tailor fares and deals to what with operators, reflected in new
rail industry, the priority is a system that they need. penalised when they need pricing regulations written in to
improves the experience of customers, key to make last-minute travel their government contracts.
to which is regulatory reform that delivers a Assurance plans.
financially sustainable fares system fit for the reflecting the feedback that customers
long-term. want clear, effective, transparent
regulation to protect their rights.
Adam Marshall, Director General,
British Chambers of Commerce
10 Easier fares for all Executive Summary February 2019 11
Executive Summary
Executive Summary
These changes would enable: These changes would also enable local In commuter markets using the current Our analysis has shown that these
political leaders across the country to have price of a 7-day Season Ticket as the basis for adjustments can be made while maintaining
The ‘unbundling’ of fares, through a move more control over their local and regional capping the maximum payable price for travel current average fare levels. For longer
to a single fare as the basic unit of all pricing transport systems where the decision has on a route or defined area, is a much more distance markets, this would mean lower
in the new system, with algorithmic rules been taken (or is taken in the future) to devolve flexible way of protecting customers’ interests fares for at least some Peak services, but with
underpinned by regulation to allow and the relevant powers and responsibility. These than regulating specific fare types and one some slightly higher fares for busier services
encourage the best combinations of single reforms would increase their ability to co- that would enable the development of part- in the current Off-Peak period, designed to
leg fares for return, through (allowing travel ordinate train fares alongside other local time and flexi Season Tickets, as well as pay- encourage better spreading of demand so
from any point on the network to another transport in and around their cities. This is as-you-go schemes. Commuter fare levels are that everyone can travel in more comfort.
regardless of operator) and multi-journey currently difficult even where those powers are an important factor in the functioning of local This has the potential to reduce overcrowding
tickets. This is similar to the way fares are already devolved, because rail-only fares are economies and we consider that the detail of by up to a third on some of the busiest
currently structured within London, which set under different national rules to local travel such regulation should be developed as part services. In commuter markets, the biggest
has its own rules distinct from the rest of the schemes. of the standard consultation and specification change is likely to be more opportunity to
network. process for relevant contracts. save money where it is possible to travel Off-
Additionally, with our proposed reforms, a
Peak at least some of the time, where under
new system based on a single leg structure In long-distance markets current regulation
Train companies would be able to create the current system the only choice is to buy a
would allow the pricing of local fares to protects customers who can travel within
discounted, premium, train specific and full price Season Ticket.
be disaggregated from the national fares very specific off-peak times. This regulation
personalised variations of these fares, for structure of which they are a part. This could has created quite significant distortions in KPMG analysis indicates these changes could
example, charging less at quieter periods, enable local decisions about pricing to be the pricing structure, leaving some peak stimulate over 300 million more journeys on
more for first class, less for reduced applied. For example it could allow low-wage time services with empty seats while off- services with capacity for growth over a ten-
flexibility, and so on. This ensures that fares employees in a city to be given cheaper travel peak services either side are overcrowded. year period, on top of the 1.7 billion journeys
are priced appropriately to market and are if the devolved authority decided to prioritise Independent analysis conducted by KPMG which currently take place on the network.
not simply the sum of their parts. and fund such a policy. Or, at a macro level, indicates that the current system could be These effects would take time to work through
devolved authorities could be allowed to hampering the ability to offer a range of good and predicted customer behaviours would
Protection from excessive fares through change the balance of funding between local prices throughout the day. need to be validated through early experiences
regulation of price levels rather than of taxpayer and local fare payer or choose when, of implementation. For this reason, a funding
We consider that external market forces
a limited number of specific fares types how and if regulated fares should rise in their process would need to be identified to manage
exert a powerful incentive in this market but
that may not reflect customers’ needs. locality. Where devolution of transport control the transition.
are aware of the need for assurance around
For example, moving from regulating the has taken place the result would be a fares
protecting affordable access to the walk-up
day return and 7-day Season Ticket for system which better supports local economies.
railway. We are therefore proposing that
commuters, to regulating the maximum Delivering a better fares structure also involves for contracted or franchised long-distance
price paid when travelling over the course rebalancing fare levels to better reflect the services, there could be some regulation
of a week - with systems programmed to value provided and to enable the benefits of of the overall level of revenue that can be
deliver this automatically. technology developed since the Ticketing and raised while allowing appropriate demand
Fares Settlement (TSA) was written, to be fully management on individual services, so fares
realised. This should, where it applies, focus can be adjusted to make journeys more
on protecting price levels rather than being comfortable and customer experience is
tied to specific products as the former inhibits better aligned with the price paid. This would
innovation and exacerbates over-crowding. provide protection while ensuring a better
spread of affordable fares across the day.
12 Easier fares for all Executive Summary February 2019 13
Executive Summary
Executive Summary
Benefits to customers reform would enable include:
A simplified buying process - so people could buy from an easy to understand
range of tickets online and on smart devices, or use pay-as-you-go, where payment
is made automatically, giving them the same (or an even easier) buying experience
as they have when paying for cinema tickets, groceries or hotel rooms. This would
be supported by a retailing process that screens out irrelevant choices and which
incorporates discounts, including railcards and fare caps, automatically.
Tickets that better reflect modern ways of working - existing old-style Season
Tickets assume that commuters make the same journey at the same time five days a
week. For many people, this regimented style of work is being replaced with flexible
hours, days working from home, and visits to other sites, which means they’re not
getting the full value of their Season Ticket. New types of ticketing for frequent,
but flexible, travellers could encourage them to journey Off-Peak by giving them
alternatives to paying up front for unlimited travel, with no opportunity to save
money by travelling at quieter times. These changes would also enable a
system where:
Customers having control over the journeys that they pay for - no more guessing • it’s easy for customers to move between
whether to buy a return or two singles; customers would be able to mix and match
trains and different modes of transport
their requirements from basic single fares and get the best price. With digital
ticketing, in many cases they could just travel and let the system work out the best with a single payment; The most important thing
fare. This addresses head-on the question of fairness and the principle of customers
only paying for what they need.
• smart ticketing technology can meet when buying a ticket is for
its full potential; with a better and
more flexible fares system behind new
it to be easy to buy the
Easy change of plans - if customers want to change their choice, they could see interfaces; cheapest ticket available for
immediately what their options are, how much it would cost, and they could make the
change straightaway. • third party retailers are able to sell fares the journey you want to make.
to customers through a bigger and better
range of outlets and platforms; and,
Hassle-free refunds - if a ticket is refundable and customer was entitled to their • authorities are better able to manage
money back, they could sort it easily and quickly. This includes the possibility of their own local transport needs.
automating Delay Repay payments where this is specified in contracts.
We want to work with government to begin Consultation respondent - Commuter,
reforming regulation and set-up a series of female, 45-54, East of England
real-world trials over the next year to further
Good deals for everyone’s travel needs - not only those able to lock down and stick test and refine how the propositions would
to their travel plans weeks in advance. Most people live busy lives and need a degree work in practice. Commercial contracts
of flexibility. Our changes would enable a better range of cheaper fares to become would then need to be revised and agreed,
available, including enhanced availability of affordable on the day walk-up fares.
starting a programme of reform which, with
all parties working together, has the potential
to be rolled out operator by operator across
Being able to trust their ticket – wherever a ticket is bought, online, at a machine, the network over the next 3-5 years. Such
or in person at the ticket office, the system would incorporate discounts, including trials can really demonstrate the benefits
railcards, and maximum fare caps into the new rules, so the customer would know to customers of reforming fares as set
they have the right ticket for their exact journey, at the best available price, every out above. They can also allow further
time.
commercial modelling on a train operator by
train operator basis - a fundamental part of
delivering a sustainable and successful new
No need to ‘split tickets’ – our proposals would mean that split-ticketing would fares system.
no longer be necessary, because people would automatically be offered the best
combination of tickets for their journey therefore paying the lowest price for Reforming the system of fares and tickets
their needs. will make fares simpler to understand, and
easier to buy, while offering better value-for-
money. This document sets out our proposals
Where reform is fully implemented, and fares modernised the rail industry could stand for reform, backed by evidence, analysis, and
behind this with a Best Fare Guarantee, ensuring that customers pay the cheapest fare
popular opinion with a rolling programme of
that meets their requirements available at the time and place where they buy their
ticket, without needing to wonder whether there is a better option. change deliverable quickly, based on sound
principles and a clear understanding of what
people want.
14 Easier fares for all Executive Summary February 2019 15
The
The railway matters
Section 1
railway
matters
16 Easier fares for all The railway matters February 2019 17
The railway matters
Section 1
The railway is too important for Britain’s By moving customers and freight, by
economy to fall behind. We welcome the investing in new trains and lines, by
current Williams Rail Review and these employing thousands of workers and training
proposals constitute our first contribution apprentices, by embracing the digital
to that review. However, we recognise that revolution, the railway is fundamental to
our customers want to see improvements Britain’s prosperity. A new rail line or station
to fares regardless of the model for running can boost a local economy, create new
the railway and we believe the first steps communities, generate jobs, and rebrand a
towards reforming fares can begin in whole town or neighbourhood, as we saw in
parallel. the Victorian railway boom, and are seeing
today with projects such as Crossrail, and
Britain’s railway has been at the heart of our
tomorrow with HS2.
society and culture for nearly 200 years. It
is a dynamic, vital and irreplaceable part of We now have the safest major railway in
our economy and an essential public service Europe. There are over 4,500 more trains on
underpinned by £10 billion of fares revenue the network every day than in the 1990s – an
a year, generated by a partnership for the increase of almost a third - better connecting
public and private sectors working together. communities and people to work and leisure,
while reducing carbon emissions.
For millions of customers and thousands
of businesses it is a fundamental part of
daily life, bringing people to and from
work, delivering goods, and keeping people
connected to friends and family.
18 Easier fares for all The railway matters February 2019 19Britain’s railways have made a significant improvement since the 1990’s
The railway matters
Section 1
The railway employs
240,000
men and women.
Railway’s running costs have gone
We shift thousands of tonnes of freight a further £85 billion to the British economy in
from £2 billion a year in the red every day, supplying Britain’s businesses with the coming years. It included a commitment
to £200 million in the black. the goods they need. Our freight services
are worth £1.7 billion to the economy each
to work with governments to bring forward
much needed proposals to deliver the
year. The railway employs 240,000 men and modern fares system our railway needs, which
women directly and through our supply chain, this document delivers.
from the factory workers of Bombardier in
While working together to improve, we have
The switch to railways has Derby, to the signallers in York or Didcot, to
the train drivers and station staff from Thurso
also pressed for a fundamental no-holds
barred inquiry into the future of the railway
reduced carbon emissions. to Penzance.
and welcomed the announcement that
The nation has shared in the proceeds of Keith Williams, the former chief executive of
this growth, with the railway’s running costs British Airways, has been appointed to lead
going from £2 billion a year in the red to £200 an independent review of the industry. The
million in the black, freeing up taxpayers’ Williams review is ongoing and we are playing
4,500 more trains on money to grow the network or invest in
schools and hospitals. In short, Britain’s
a full role in its deliberations.
The work we are undertaking is
the network. railway matters, but we must not take the
complimentary to the review but we also
progress of the last two decades or our place
recognise that our customers want real
in the nation’s daily life for granted.
change to the fares system now, and it is
Britain’s rail companies are proud of what necessary regardless of how the industry is
our industry has achieved, but we are not organised. As this document sets out, there
Our freight services are worth satisfied. To continue to play such a vital is an opportunity for meaningful, long-term,
£1.7 billion economic role, bolder change is needed, from
how the railway is structured to the range of
sustainable improvements, with joint work
to drive positive change beginning almost
to the economy each year. fares people can choose from and how they immediately, and reform deliverable across
are sold. Our industry’s plan to change and Britain.
improve, set out in our ambitious prospectus
In Partnership for Britain’s Prosperity, will add
We now have the safest major railway in Europe.
Injuries and fatalities per billion passenger miles
6
5
4
3
2
1
0
20 Easier fares for all The railway matters February 2019 21Fares – an
legacy
Title
Section 2
Section
Fares – an outdated
outdated
legacy
22 Easier fares for all Fares – an outdated legacy February 2019 23Fares – an outdated legacy
Section 2
The current fares system was designed in The TSA, introduced in the wake of the move The inability of the current fares system to
the 1990s and has not kept pace with the from state-run railway to the partnership automatically always find the best deal is one
evolution of technology and how people approach we have today, exists in part to of the main reasons why a small minority
work and travel today. Working together, ensure retention and promotion of through of customers feel they have to ‘split ticket’
train companies have made improvements ticketing (allowing travel from any point - where two or more fares can undermine a
where we can within the constraints of the on the network to another regardless of through fare – in order to pay the cheapest
current system, but real reform requires operator) and network benefits (ensuring price.
regulatory change. common terms, conditions and protection
As the franchise model has evolved, new
across different operators, for example
Selling and checking tickets and ensuring that layers of complexity have been added, with
Railcards giving discounts to specific groups
everyone pays their way is a major part of our few existing regulations being removed.
of customers).
operation. We transact £10 billion a year in Long-standing anomalies have been left
ticket sales. This is no small activity. Buying These are important goals. However, the undisturbed in the system, like geological
tickets, and the perceived ease and fairness of TSA was based on the system of pricing, layers of rock, each settling on top of the last.
the transaction go to the heart of how people technology and processes used by the former We calculate there are 55 million different
judge the railway. It is central to the British Rail up until the 1990s. The intention train fares currently on sale on Britain’s
customer experience. of the original design was to maintain some railway.
degree of consistency across the network
In recent years, it has been one of the biggest This creates real difficulties for customers,
as new franchises were awarded to different
causes of concern to the travelling public. In with a structure based on having to retrofit
companies. The idea was that through-
many cases due to anomalies brought about journey requirements to the fare available.
ticketing and national discount cards would
by outdated regulation, there is a perception Fares are created as fixed packages by train
be protected in a new world of different
that ticket prices are illogical, unfair and companies, within a restrictive structure and,
franchisees. But the good that was intended
confusing. We need to address these concerns in some cases, set of prices. The customer has
twenty years ago has not been reflected in
head-on and it cannot be done with a to work out which of the prescribed bundles
modern realities, with changes in legislation
cosmetic change or a quick fix. The problem is of tickets matches their needs. The result is
elsewhere undermining the TSA’s ability to
historic and systemic. that they trade time of travel against cost,
work in practice. It serves as a classic case of
trying to understand the different terms and
While many areas of the railway have kept unintended consequences.
conditions and, for example, buying a Peak
pace with societal and technological change,
The result is a ticketing system which at times return ticket because they cannot guarantee a
the system of fares and ticketing has not
creates bafflement in the minds of those certain time to make the journey back.
fulfilled its potential in the digital age. The
who navigate it. For example, competition
root cause lies in the regulatory framework
legislation quite rightly prevents different
for how tickets are sold, the Ticketing and
companies in the same sector from discussing
Settlement Agreement (TSA). This is an inter-
pricing. However, the railway regulations on The fares system is not
operator agreement that applies to anyone
who is a signatory to it through a franchise
through-ticketing predate this legislation, responsive and flexible
assuming that train companies will discuss
agreement or bound to it in whole or part
fares with each other to make sure they don’t
enough to adapt to business
through an ORR passenger license. It was
established in 1995 and covers the price,
undermine other fares. This conflict creates needs.
anomalies and loopholes which
discounting, concessions, retailing, branding
breed distrust.
and other aspects of ticketing. These
arrangements apply throughout England,
Wales and Scotland but not in Northern
Ireland. James Ramsbotham, Chief Executive
North East England Chamber of Commerce.
24 Easier fares for all Fares – an outdated legacy February 2019 25Fares – an outdated legacy
Section 2
While it often makes sense for customers to
change their travel according to the service
on offer, sometimes customers have their
behaviour altered by the type of ticket – either
cutting activities short in order to catch the
‘right’ train, or else wasting time watching the
clock until a certain type of ticket becomes I am forced to buy
valid. Frustrated customers can be seen
being held at ticket barriers, waiting for the non-flexible tickets
clock to strike the magic hour. It is estimated
that up to 35% of people for whom rail travel
is an option are put off by the complexity
and spend hours in
of fares. train stations waiting
When buying a weekly or monthly Season
Ticket, the customer must gaze into their for the ‘specified’
crystal ball and see how many journeys they
might make and at what times, which is often train while many
impossible to judge. In the current set-up,
customers can be left overpaying or under other empty trains
using their tickets and not able to travel when
they really want to. pass me by!
The ticketing system does not take into
account the seismic changes in our habits
of shopping or seeking out information. It
predates Google, Amazon and Facebook, and
rests on the idea that people must always
queue up in a ticket office at a railway station
to buy their ticket and get information from
staff or from leaflets. Ironically, many of
the people queuing for tickets are on their
smart phones buying goods and services, or
getting information ahead of their journeys,
from a range of other organisations such as
lastminute.com, CityMapper or TripAdvisor.
But fares regulations were developed before
those phones were even invented.
People expect flexibility if their plans change,
the best available price for the service they
receive, easy digital access, and rewards for
loyalty. These reasonable desires, available
from a wide range of companies and Consultation respondent - business traveller,
organisations, are not reflected in the current female, 45-54, London
system of tickets and fares.
26 Easier fares for all Fares – an outdated legacy February 2019 27Fares – an outdated legacy
Section 2
There is also little account given to the
changes in working patterns in recent years. Given customers better information about
For example, part-time working and self- what they can do with their ticket.
employment is up by a third over the past
20 years, according to the Office of National Introduced ‘cheapest fare finder’ on
Statistics (ONS) in April 2018. Many of the National Rail Enquiries and across train
people we know do not work a traditional company and third-party websites to let
nine-to-five job in the same location year-in, people search for a journey by cheapest
year-out, yet our ticketing system assumes fare (excluding those anomalous fares
that they do, as reflected in products such as that can be sourced through split ticketing
Season Tickets which are mandated in fares loopholes).
regulation.
We are already working to improve the buying
Rolled out smart ticketing on routes across
process for tickets and should not lose sight
Britain, with many customers now able to
of where things have got better. Working
together with governments and passenger
travel with their tickets on their phone and Example case study - Louise, the occasional long-distance business traveller
on smart cards.
groups, we have: Louise is a small business owner who travels Neither option really suits Louise, who doesn’t
long-distance once or twice a month to meet know exactly when her meeting will finish.
Removed unhelpful jargon from over half However, after 20 years, through outdated a client. Under today’s rules, she has to She could end up overpaying - buying a fully
a million ticket descriptions, with an aim to regulation - not design or intent - customers choose between a less busy, Peak-time train flexible ticket but travelling Off-Peak, or she
remove another 1.6 million instances over have been left with a largely unpopular which gets her to her meeting in good time might book a specific train and end up waiting
the next couple of years. kaleidoscope of ticket types and costs. The but costs a lot, and the first Off-Peak train, around if her meeting finishes early.
system is not only confusing for customers; which is much cheaper but crowded and
as our global competitiveness becomes ever This happens because existing regulation
Made ticket machines simpler and easier to means rushing at the other end.
more important, it acts as a drag on our results in prices that mean it doesn’t make
use, resulting in an 11% increase in people This situation exists because current sense for Louise to mix and match fully
nation’s economic potential. Reform is
buying the right ticket for their journey, all regulation results in a sharp drop from Peak flexible and Off-Peak single tickets for her
long overdue.
backed up by a price guarantee if people to Off-Peak prices. outward and return journey.
do still get the wrong fare.
With a new fares system, this drop would be With our proposed changes, new ticket types
smoothed out. The Peak time train would be would mean she’d have more options to
Made advance purchasing available up to a little cheaper and therefore a bit busier than choose a walk-up, service specific fare costing
10 minutes before travel on many routes, before and the first Off-Peak train would be less than the fully flexible ticket. So, if her
instead of a cut off the night before. a bit more money but it’s a lot less crowded meeting runs over or she finishes early, she
than it was. can just turn up and buy a ticket back for the
Introduced standard rules to let customers next train with less worry about cost. And if
For her return journey, under the current
change an advance ticket before their her plans change, checking the price of a new
system Louise has to decide when she buys
travel, if their plans have changed. ticket and switching will be much easier.
her outward ticket between a more expensive
Anytime Return, allowing her to travel on
any train, and a cheaper advance ticket which
means pre-booking on a specific train.
28 Easier fares for all Fares – an outdated legacy February 2019 29What did
tellTitle
us?
Section 3
Section
What did people
people tell us?
30 Easier fares for all What did people tell us? February 2019 31What did people tell us?
Section 3
Working together in partnership with In recognition of the need to balance the
passenger watchdog Transport Focus, the competing priorities of those who use the
rail industry conducted the biggest ever railway in different markets, we asked for
listening exercise into what Britain wants respondents to express their preferences
from its fares system, attracting nearly against a series of options, ranging from
20,000 responses, supplemented with standardised versus personalised (for
feedback from over 60 organisations. While example, one price for everyone or a range of
views varied, there was a unified position prices for different peoples’ needs), flexible
that the system is not fit for purpose and verses inflexible (for example, fares valid
must be made fairer, more transparent and for different trains or linked to one specific
easier to use. These insights were used to service), and bundled verses unbundled
inform five principles we believe need to (for example, return fares classified as Peak
underpin what a modernised fares system or Off-Peak fares as opposed to fares that
could deliver. allow out and back journeys to be mixed and
matched by time of day). We also asked open
As the precursor to our proposals for reform,
questions so that people could express any
as part of our long-term plan In Partnership
other views they may hold about
for Britain’s Prosperity, we sought the views
fares reform.
of people and organisations the length and
breadth of the country. As with most public In addition we wanted to hear from a range
services, from schools to the NHS, the of groups including businesses, trade unions,
problems are most acutely felt by the people passenger groups, staff, campaigners and
using the service, and the solutions are often representatives from the nations and regions,
contained in the common sense of the so we supplemented the major national
people at the sharp end. Big reforms will survey with a series of workshops, focus
not be easy and the industry does not have all groups and one to one meetings.
the answers.
After three months of intensive activity, with
With this in mind, in summer 2018, in nearly 20,000 responses and conversations
partnership with passenger watchdog Transport with over 60 umbrella organisations
Focus, the industry launched the largest ever representing over 300,000 organisations,
public listening exercise on rail fares and tickets: authorities and individuals, we created a
the ‘Easier Fares’ consultation. picture of what Britain wants from fares and
ticketing on the railway.
Between June and September 2018, using
independent consultation company SYSTRA,
we invited the whole country to participate.
32 Easier fares for all What did people tell us? February 2019 33What did people tell us?
Section 3
84%
In our modern, diffuse, society it is rare for the
public to speak with one voice on any issue.
Yet, on the need for root-and-branch reform,
the view of the public and stakeholders was
clear: 84% of people say that the current
system is not fit for purpose and should
Reform of Britain’s
be reformed, with fewer than one in ten rail fare structure is
(8%) considering changes unnecessary. The
most frequent comments made in support long overdue.
of change were that there are too many
fare options currently, and the need for
consistency and transparency.
Vernon Everitt, MD, Customers,
Communication and Technology,
Transport for London
of people say that the current
system is not fit for purpose
and should be reformed
34 Easier fares for all What did people tell us? February 2019 35What did people tell us?
Section 3
Percentage of people who believe the following scenarios should be
considered in changing the structure of fares.
Both outward and return fares based on time of day travelled
82%
Provide savings for certain groups in society
82%
The consultation asked people about a
number of specific topics, and how important
Fares based on distance travelled
80% they felt they were to reform of the fares
system. On ticketing, 90% of respondents felt
smart or electronic tickets, with the potential
for a ‘price cap’ should be considered,
78%
while 88% wanted online accounts used to
Fares to encourage travel to fill up empty seats purchase, monitor, review and change travel
arrangements for multiple types of public
transport to be considered. Respondents
wanted to see fares reflect a combination of
76%
distance travelled (80%), quality of service
Fares based on service levels (76%), peak demand and flexibility (74%).
The graph shown opposite sets out responses
to questions on the structure of fares. 82%
74%
thought the cost of a ticket should reflect
Fares based on amount of flexibility required what time of day someone travels and
returns, with less than one in five believing
that the cost should be the same at all times
of the day and days of the week. Other
73%
important issues were: savings for certain
Removing the need to buy a ‘split-ticket’ groups in society, such as young people (82%)
and fares which encourage the filling up of
empty seats (78%).
70%
Other issues raised in the consultation were
Loyalty schemes for regular travellers the importance of customers only paying for
what they use, and the different and distinct
needs of flexible and part-time workers who
use trains at different times of day, often
68%
without discernible patterns of travel. For
Fares based on time of booking these people, existing offers such as Season
Tickets are too rigid and not seen to be value-
for-money.
Fares to cost the same at all times of day
and days of week 39%
0% 20% 40% 60% 80% 100%
Source: SYSTRA Ltd, Easier Fares Consultation Summary Findings 2018
36 Easier fares for all What did people tell us? February 2019 37What did people tell us?
Section 3
We also asked KPMG to conduct market national structure, a view mirrored by the national and local needs; and, above all
research on behalf of the rail industry, with representatives of city regions. a sense of trust and confidence in the
three broad groups: commuters, leisure users, system.
Stakeholders stated a need to trust being
and businesses. Each group, especially leisure
offered the cheapest ticket and clear value 2. For public policy-makers at national,
users, wanted greater flexibility, especially
for money; affordable flexibility; and the devolved and city region level, the
as their plans changed. Commuters wanted
need to purchase tickets ‘how I want, when priorities are strong customer protection; Contactless pay-as-you-
to travel on any train during the day and to
be able to get discounts for tickets bought
I want’, highlighting the need to better
enable smart ticketing, mobile ticketing,
greater innovation including the use of
smart technology; the facilitation of
go, including capped
in advance. Businesses want clearer seat
bookings and advance discounts. Each group
account-based ticketing, and pay-as-you-go multi-modal integration including zonal fares, would provide
(PAYG) pricing. Stakeholders also stressed fare schemes; to protect the £10 billion
wanted faster, automatic ‘Delay Repay’
the need to maintain consumer protections, in fares revenue which underpins a vital
convenience, simplicity and
systems to compensate for delayed or
cancelled trains.
including discounted railcards for those with public service; clear, consistent and fair flexibility for customers.
accessibility needs, ensuring the railway pricing; and, a tailored and responsive
Some of the institutional respondents we met remains open to all. system which drives local and national Contactless pay-as-you-go
in workshops and one to ones commented
that split ticketing, lack of consistency
From the consultation we drew some
economic growth. can also allow customers
between different rail companies in different
conclusions about the objectives of different
stakeholders for our proposals for reform.
3. For the rail industry, the priorities are
long-term root-and-branch reforms, not
to travel seamlessly
regions and high Peak fares contributed to
an overall diminishing trust in the running 1. For customers, fares that reflect their
a sticking plaster. Reforms that focus between transport modes
on the customer while delivering for the
of the railway. Many, especially the regional needs and which are simple to use are
economy, sustainability of finances, and a
stakeholders, emphasised the need for any valued over a one-size-fits-all approach.
process of change led by the industry with
changes to ‘reflect regional nuances’ and to People want: value-for-money and
the support of governments and devolved
enable multimodal travel. flexibility; an easy to understand offer;
authorities.
tickets which are easy to buy; greater
Scottish and Welsh authorities were keen
personalisation; protections and redress if Stephen Rhodes, Customer Director,
to ensure that any new structure enabled
things go wrong; a system which reflects Transport for Greater Manchester
them to reflect devolved requirements in a
38 Easier fares for all What did people tell us? February 2019 39What did people tell us?
Section 3
There was general agreement that customers These principles need to be balanced with:
need to be at the heart of any changes and
• the need for fares to generate revenue
that new systems need to deliver products
for government, industry and devolved
that they want, need, understand and value.
authorities to enable investment and
The benefits of improvements in technology
growth.
should be realised to encourage greater
personalisation of fares, greater innovation of • linked to the above, the need for
product design and in retailing, and in greater operators to be able to manage
integration across transport modes. prices to respond to their markets and
reduce crowding.
These insights form the core starting position
for considering ‘easier fares’. • the need for local and regional authorities
to be able to manage transport as part of
Five principles for reform
integrated transport systems.
Using what we have learned, we developed
We believe that there is a solution capable
five principles that underpin our proposed
of ending years of confusion, which is
approach to fares reform. An up-to-date, fit-
sustainable, deliverable, and popular with the
for-purpose system must deliver:
public, government and devolved authorities,
Value for money and industry, while unlocking more for the
reflecting the feedback that fares should economy.
make rational sense and that people want
greater transparency over what they pay
for and what they get.
Example case study - He has easy access to the best fares through
Fair pricing Harry, the ticket office worker the new system and can make sure that
reflecting customers desire not to have to everyone gets the right ticket, knowing that
Under the current system, Harry has to deal he is able to offer the best price for their
find ‘work arounds’ or ‘loopholes’ to get
with customers who are frustrated because needs. He can do this because the new fares
the best price and for a guarantee that
they’ve waited in line to buy a ticket from a system is more logical and easier to use
they are not overcharged.
range of fares they struggle to understand than today’s, giving him confidence that he’s
and do not trust. Harry wants to spend more always giving customers the best available
Simplicity time speaking to his customers to ensure deals to meet their needs.
making buying simple while retaining they buy the best priced fare that meets their
customers’ choice. Reform is not about needs, but the long queue makes it difficult.
taking choice away, it is about innovating
to make it easy to find the right fare. With a reformed system, more people
with straightforward journey requirements
would buy their ticket online or via their
Flexibility smart phone or rely on pay-as-you-go. This
reflecting customers desire to see different would give Harry more time to spend with
needs accommodated; they want the customers making more complicated journeys
ability to tailor fares and deals to what or who want help and advice.
they need.
Assurance
reflecting the feedback that customers
want clear, effective, transparent
regulation to protect their rights.
40 Easier fares for all What did people tell us? February 2019 41How do we
Title
get there?
Section 4
Section
How do we
get there?
42 Easier fares for all How do we get there? February 2019 43Title
get there?
X.X
Section 4
Section
How do we
Based on the consultation, we have come up to be agreed with operators, reflected in A new system process The new system process would incorporate
with a simple proposition: that customers new pricing regulations written in to their terms and conditions as well as regulatory
By managing the new rules through a single
should only pay for the travel they need and government contracts. This can ensure the right requirements. In many cases they will need
system process, we can address one of the
the system is designed to give them the best products are developed for the right markets to replace and update existing rules that
other drawbacks of the current complex
value fare. incrementally, with new pricing structures although well-meaning, have resulted in
regulatory structure – where requirements in
better able to reflect what people want to see outputs that are unhelpful. A good example
To deliver this, we are proposing a two- different sets of rules (the TSA, the National
from fares including fairness, flexibility and concerns how fares are presented, where
stage approach to regulatory reform. First, Rail Conditions of Travel, or those attached
a pay for what you need approach - allowing ticket machines sometimes display a page of
government, industry and other stakeholders to a specific type of national fare), conflict
operators to adapt to changing customer fares for a simple journey request because
working together to replace the outdated with one another. This leaves the rules open
behaviours and offering products better the rules focus on displaying all fares rather
Ticketing and Settlement Agreement (TSA) to interpretation, causing confusion for
tailored to their exact needs. than how to ensure the most relevant results
with a new set of regulations that underpin customers and railway staff.
are shown. This means customers may not
the fares system and ensure effective, These changes would enable:
The current regulation requires operators to select the correct fare or be unsure they have
national joined up rail fares. Secondly, this
The ‘unbundling’ of fares through a move accept fares set by other operators without paid the right price.
would allow fares (including regulated prices)
to a single fare as the basic unit of all any process of agreement. Originally this
to be addressed in individual contracts. We want to work with government and
pricing in the new system, with algorithmic was subject to a degree of consultation but
These changes would enable the single fare devolved authorities to review current
rules underpinned by regulation to allow this ceased in 1998 and, since then, there
to become the core building block of pricing, regulations and where necessary, update
and encourage the best combinations for has been no mechanism to jointly agree the
allowing for a better configuration of products them to reflect their intended purpose. By
return, through and multi-journey tickets. terms or price of such fares. This is a major
to match people’s needs and removing many devising a process that reviews and then takes
This is similar to the way fares are currently source of anomalies and conflicts in the fares
of the inconsistencies experienced today. into account all of the rules, we can remove
structured within London, which has its structure. Working with governement, we
conflicts and the associated confusion.
For commuter markets, a reformed structure own rules distinct from the rest of the want reform to include moving the industry
could de-couple regulated price rises from network. to an agreed joint contractual or commercial The reforms would also ensure that as new
what is currently a very limited range of process compatible with competition law and parts of the network such as HS2 come on
defined specific products (for example Season regulatory oversight for setting fares valid on stream they can be integrated seamlessly
Tickets) introducing a capped system across a Train companies will be able to create the services of more than one operator. into without imposing legacy obligations
range of fares used by commuters instead. For discounted, premium, train specific and inappropriate for their requirements.
long-distance markets, moving away from the personalised variations of these fares, for
regulated Off-Peak fare and replacing it with example, charging less at quieter periods,
an alternative mechanism that could enable more for first class, less for reduced Current fares system
the rebalancing of fares across the day would flexibility, and so on. This ensures that
reduce overcrowding on the busiest services. fares are priced appropriately to market Fares set by operator for entire
and are not simply the sum of their parts. Retailers offer these fares.
Having set out the principles for what a new journey with Terms and Conditions
Customers and systems have to
subject to overall regulatory
↓
fares system should deliver, we are proposing a
try and assess which ones
phased approach for reform: Protection from excessive fares through structure and individual fare
might suit them best.
regulation of price levels rather than of regulation (which can conflict).
Stage One: Industry and government work
a limited number of specific fares types
together to reform the way that fares are
that may not reflect customers’ needs.
worked out. This means government replacing Reformed fares system
For example, moving from regulating the
the outdated Ticketing and Settlement
day return and 7-day Season Ticket for
Agreement (TSA) with a new set of regulations
commuters, to regulating the maximum Customers get
that underpin the overall fares system. The Fares set by
price paid when travelling over the course
new fares regulations must protect existing System process to see choices
of a week - with systems programmed to operators in
customer benefits, for example the ability to
deliver this automatically. contains rules for relevant to them,
buy a ticket between any station on the network accordance
joining up and already screened
↓
↓
and any other, or railcard discounts being valid with market
The changes above would need to be comparing fares to make sure more
across all operators on the network. However, needs, discount
the new regulations must also enable the best augmented by trials of new fares and types of (including discount expensive options
entitlements and
use of twenty-first century technology in a way ticket retailing to further develop commercial entitlements). for doing the same
modelling and give customers more fare regulation.
that the current TSA does not. thing don’t appear.
opportunity for engagement with the
Stage Two: With these new system regulations proposed changes.
in place commercial changes will then need
44 Easier fares for all How do we get there? February 2019 45You can also read
