how fair are fares?
Fares are always controversial, particularly when they go up.They can also be confusing, because there can be many different prices for a journey, particularly longer journeys on intercity services.
But who decides how much should be charged?
Who decides how much should be charged?
The answer is that it is often the Government, with the other decisions being made by the train operating companies. (However, the Competition and Markets Authority announced on 2 November 2016 that it was seeking to cap unregulated fares on three Northern routes, as the award of the Northern franchise to Arriva in April 2016 had effectively ended competition on those routes because other rail operators serving the area were also owned by Arriva.)
Many of the most commonly-paid fares are regulated – that is to say, the formula for any increase (which is usually applied in early January) is decided by the Government.
Train operating companies with franchises have very little say in the matter of regulated fares, although no one can say for sure what discussions take place behind the scenes. What we can be sure about is that the proceeds of any regulated increase beyond inflation do not benefit the operators, in spite of media suggestions otherwise.
Instead, the extra revenue either increases the premiums they pay, or is taken off any subsidies. For the operators, any increases beyond inflation (in other words, increases in real terms) are intended to be ‘revenue neutral’.
Regulated fares include most season tickets, saver tickets on intercity and regional services (journeys over 80km) and full-fare ‘Anytime’ tickets on commuter routes in the south east of England. Unregulated fares include ‘Advance’ tickets, ‘Anytime’ tickets on intercity services and First Class.
Changes to regulated fares in January are customarily based on the Retail Price Index increase in the previous July, often adjusted by a fixed formula, such as RPI + 1%. (Such an increase means that regulated fares rise in real terms by 1%, beyond the official rate of inflation.)