why don’t operators buy more trains?
We often hear complaints that some trains are overcrowded.
Critics respond by saying that the operators should ease the problem by investing in more trains.
Since demand is rising, why don’t the operators do just that?
Why don’t the operators buy more trains?
First of all, operators very rarely ‘buy’ trains. The average franchise lasts between seven and ten years, and the asset life of trains is at least 30 years. In other words, since an operator cannot rely on keeping a particular franchise for such a long time, it can’t afford to commit itself to paying for expensive assets, because that would represent a disproportionately high capital investment which would only be recovered (in part) at the end of the franchise.
Who does pay for trains?
This problem was foreseen when British Rail was being broken up in the 1990s, and railway privatisation included the creation of ‘ROSCos’, or rolling stock companies. Investors launched these companies, which between them bought virtually all British Rail’s trains. Many more trains have been built and paid for by the ROSCos since.
The ROSCos earn their living by leasing their trains to the operators while their franchises last.
The risks are reduced for all concerned. The train builders receive full payment when the new trains are delivered. The operators only pay leasing charges at a known rate while their franchises last. The ROSCos know that their trains will probably be needed by the next franchise holder and if not, that they will almost certainly find a home elsewhere sooner or later, since most rolling stock is in demand.
So why not lease more trains?
Higher leasing charges add to the cost of running a franchise, and these will probably affect its profits. The Department for Transport would not like this, because some of the increased costs could then fall on the public purse. And in any case, the extra trains might only be used fully in the rush hours – in other words, for three or four hours a day. This does not mean that the number of trains available to an operator never rises (the size of the national fleet is indeed growing), but it’s a decision which is not taken lightly and, in the case of a franchised operator, never without the approval of the DfT.
In other words, operators cannot sign up for more trains unless there’s a sound case for them, and only then if the Government approves. There’s another issue, too – whether there is room for more trains on the railway anyway.