Government review could put the brakes on rail operators’ earnings
In the next few weeks the Government is set to publish a review of the UK rail industry which is likely to recommend a major shake-up in the way trains are run and the way we pay for them.
The Williams Review, led by former British Airways boss Keith Williams, has been a year in the making and is expected to call for changes to both the current franchise model and the ticketing model, with implications for the rail operators and ticket sellers.
Under the current franchise system, train operators collect fares and pay a cut to the Treasury. As the franchise is effectively a monopoly, the operators are free to set prices to maximise profits.
The review is likely to suggest scrapping the franchise model and replacing it with fixed contracts whereby operators would receive a fixed fee from the Government, which would set the fares and ‘run’ the networks.
This not only takes pricing out of the hands of the operators, it gives Government control of the rail network at both mainline and local levels.
The review is also likely to recommend replacing the UK’s over-complicated ticketing system with a ‘single leg’ pricing model where fares are charged on a per-journey basis.
A new Government body would award contracts, set fares and monitor the performance of the train operators and Network Rail. There are even hints that the review will suggest some stations be privatised.
A spokesman for FirstGroup (FGP) says: ‘We await publication of the report and will work together with DfT and industry partners to implement its recommendations.
‘Our focus will remain on delivering improvements for customers from our current rail portfolio, including the introduction of additional services and longer, faster and more reliable trains with more seats.’
FirstGroup operates the Great Western Railway, which runs express services to Bath, Bristol and Cardiff, together with South Western Railway, Hull Trains and the TransPennine Express.
Meanwhile Go-Ahead (GOG) operates Govia Thameslink Railway, which extends from Brighton to Bedford and Cambridge and which accounted for 24% of all UK rail journeys last year according to the firm’s website.
It also operates the Gatwick Express service and the SouthEastern franchise which is due to expire in April this year.
As well as the train operators, the review could pose a problem for Trainline (TRN) which makes money by comparing fares to save customers money and then charging a booking fee for ticket transactions.