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Railhub Archive
1998-10-22 OPR-001


Regulated rail fares to rise by less than inflation

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Regulated rail fares to rise by less than inflation

related documents

List of fares caps

Passenger rail fares 1995/96, 1996/97 and 1997/98


22 October 1998
source OPRAF
type Press release

Regulated fares across the network will be held to below inflation increases
next year by new caps announced today by Franchising Director John
O'Brien. Most London commuter fares will fall even further in real terms, as
disappointing performance over the last year is reflected in even tougher

After three years of regulated fares being held to RPI, next year 's increases
will be held to RPI minus 1% for all except London commuter services. Using
July's RPI figure of 3.5%, most operators will therefore be held to a maximum
2.5% increase for the year.

For the ten London commuter operators the Fares Incentive Adjustment
Payment (FIAP) allows a variation of up to 2% above or below the cap,
depending on whether an operator's performance has got better or worse over
the year. Reflecting falling performance levels by most of the operators, the
average permitted increase on London commuter fares will be 1.9% (1.6%
below inflation). The caps for individual operators are

[[see attached pdf]]

The actual fares changes within the FIAP limits will be a matter for individual
operators to decide. If they have not made allowable increases in previous
years they could make up that allowance through bigger increases next year.

The caps apply to a fares 'basket ', or group of fares, and some flexibility is
allowed in the price increases on individual fares within a basket. These can
be up to 2% higher than the cap each year, provided there are decreases of
equal value on other fares to balance the basket.

Only key fares are regulated by OPRAF, and there have been many ins tances
of individual unregulated fares being increased above the rate of inflation.
However, research carried out for OPRAF by TCI Rail shows that since
regulation fares increases overall have been restrained. The research is
based on ticket revenue and passenger miles data and therefore reflects the
fares actually being paid by passengers. It shows that between April 1996 and
March 1998 the average price paid per mile by passengers increased each
year by less than the rate of inflation. This goes against the trend of the
previous ten years, when in every year but one the price per mile increased in
real terms. Last year's average of 13.4 pence per mile was an increase of only
3% - a full percentage point below the RPI figure for 1997/98.

Announcing the caps, John O'Brien said:

"I have spoken frequently of my disappointment over deteriorating
performance levels over the last year. Today 's news should provide some
compensation for passengers, many of whom will be paying less for their
tickets next year in real terms. One of my main objectives is to increase the
number of passengers travelling by rail, and today's news can only help
towards that goal.

"The research on average fares paid by passengers over the last two years is
very encouraging news. It suggests that, despite some large increases on
certain unregulated tickets, our policy of regulating key fares on a route has,
as intended, had the effect of driving fares overall down, turning around the
trend of a decade."

Notes to Editors

1. Regulated fares are normally Weekly Season tickets and the Saver or, for
shorter distances, the Standard Return. For London commuter services, and
in certain other large urban areas, a wider range of fares, including most
tickets purchased by commuters, are regulated by means of fares 'baskets' .

2. FIAP entails balancing subsidy adjustments - i.e. the operators will have
already have had their subsidy adjusted under the incentive regimes,
depending on performance against benchmarks set pre-franchising. When
that same performance is reflected in fares caps the following year, the
subsidy payments must be readjusted or the operator would be penalised (or
would benefit) twice.

PASSENGER RAIL FARES 1995/96, 1996/97 AND 1997/98
Research for OPRAF by TCI Rail

[[for details of this research see attached pdf]]

Railhub Archive ::: 1998-10-22 OPR-001


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