New service opportunities for passengers: A consultation document on the development of the competitive framework for passenger rail services (ORR, 1997)

_______________________________________________________________

date 7 October 1997
source Office of the Rail Regulator
type Press release

note ORR/97/26

The Rail Regulator, John Swift QC, today asked the rail industry, its funders and the public for their views on the likely effects of his proposals, announced in 1994, to introduce competition from 1999, and whether the regulatory framework would need to be modified to prevent competition operating against the interests of passengers.

Publishing a consultation document Mr Swift said, "There has to be a balance of cooperation and competition if the network is to be developed for the greatest benefit to passengers. Within a framework where train operators must cooperate to provide the network benefits which passengers rightly expect - published timetables with good connections, an even spread of services, accurate and impartial information and retailing of tickets, and the ability to purchase through or interavailable tickets - competition can also generate benefits for passengers.

"Competition brings pressure to introduce innovative new products and services and to reduce costs. Passengers could reasonably expect to see the emergence of more attractive fares packages, higher frequencies of service on popular routes and new direct services, the development of which are currently constrained by the existing protection from new competition.

"It is my role to ensure that where competition does develop it is in the public interest. Of course, before relaxing the constraints on competition, I would need to be satisfied that adequate controls were available to prevent the emergence of 'rail wars' type competition, and to ensure that network benefits were maintained."

Mr Swift reminded consultees of the concern there had been prior to franchising the passenger services that unrestricted competition would create such uncertainty that private sector companies would be unwilling to bid for franchises.

"That is why, in 1994, I set out a policy of moderating competition until 2002. Until 1999 I effectively constrained competition to those routes where two or more franchisees already provide competing services. But at that time I concluded that there should be a firm prospect of competition before the expiry of the initial access agreements, and proposed a limited relaxation of controls on competition in 1999, followed by a full review of policy prior to 2002."

"But that relaxation in 1999 is not automatic. We now have experience of a multi-operator railway in operation, and all franchises are now in the private sector. That is why I believe it is time to seek the views of those new operators, as well as those of passengers, funding bodies and other interested parties. I would welcome their views on the effect relaxing the rules as envisaged might have, and whether I should go ahead as planned. I would also welcome views on how new competition could be controlled to ensure that passengers and taxpayers could expect to gain overall."

The consultation asks for responses by 21 November 1997 and the results of the consultation, together with the Regulator's programme for analysing the issues raised, will be published as soon as possible after that date. The Regulator expects to publish a policy statement in March 1998.



Notes to editors

1. New Service Opportunities for Passengers: a Consultation Document on the Development of the Competitive Framework for Passenger Rail Services, together with a Technical Appendix, The Technical Issues Affecting Implementation of Stage II, are available, free of charge, from Sue MacSwan, ORR Library, 1 Waterhouse Square, 138-142 Holborn, London EC1N 2 ST (Tel: 0171 282 2001; Fax 0171 282 2045; or e-mail orr@dial.pipex.com).

2. Copies of the Regulator's December 1994 policy statement, Competition for Railway Passenger Services, are available from ORR Library, as above. This set out the Regulator's then policy for 'Stage II of Moderation of Competition', to operate post 1999 - i.e. operators would be invited to nominate routes on which they required protection against competitive new entry, but would get only partial protection on those routes, while other routes would not be protected at all. New entry on nominated routes would be allowed up to a threshold - which was envisaged as 20% (by revenue). This framework was designed to encourage operators to make realistic nominations of markets which could be expected to attract competition: if they were to nominate too few they would risk leaving potentially attractive markets exposed; if they were to nominate too many, including those which may not in reality be attractive to competitors, they would allow more genuinely contestable markets to be opened up before the threshold was reached.

3. Responses to the consultation should be addressed to Phil Smith, Manager, Competition Policy, Office of the Rail Regulator, 1 Waterhouse Square, 138-142 Holborn, London EC1N 2ST, to arrive by 21 November. Unless confidentiality is requested, responses will be placed in the ORR Library at the end of the consultation period and will be made available to interested parties on request. They may also be referred to when the Regulator publishes the results of the consultation exercise.

Railhub Archive ::: 1997-10-07 ORR-001