DfT proposes third class of tickets

[Greenback]

That's a lot of ideas you have, please don't tell me you want to see them all! Sounds like survival of the wealthiest to be honest... For want of better expression.

7. Business Standard - Guaranteed seat where available, the power to physically remove Economy ticket holders from their seat, PLUS a sandwich, crisps, a biscuit and up to three hot drinks or one alcoholic drink.

And so on. All it needs is some imagination and the freedom needed from the dead hand of the DfT! [/QUOTE]

Physical?! Not sure [certain] passengers will comply to that kindly![/QUOTE]

Don't worry, it wa sonly a tongue in cheek attempt to illustrate what might be the result (admittedly exaggerated) of allowing operators total freedom to do what they want!

 

[HH]

Don't worry, it wa sonly a tongue in cheek attempt to illustrate what might be the result (admittedly exaggerated) of allowing operators total freedom to do what they want!

Operators aren't totally stupid; they are only going to put in offers that increase overall takings. About the only thing to do that is to persuade more people to trade up than will trade down. So there's pretty much only one way you can try that - cater for the people who'd like to travel First but can't afford to (or their firms won't let them).

It's no surprise that the attempted solution to this (and on airlines too) always takes a similar form.

 

[yorksrob]

Operators aren't totally stupid; they are only going to put in offers that increase overall takings. About the only thing to do that is to persuade more people to trade up than will trade down. So there's pretty much only one way you can try that - cater for the people who'd like to travel First but can't afford to (or their firms won't let them).

It's no surprise that the attempted solution to this (and on airlines too) always takes a similar form.

Yes, but we've all caught Inter-City type trains and had to walk past lots of relevantly unoccupied first class carriages only to end up in wedged standard. Splitting the train into an additional layer of accommodation would make the process of filling the different sections even more difficult for the TOC's to achieve.

 

[LE Greys]

Yes, but we've all caught Inter-City type trains and had to walk past lots of relevantly unoccupied first class carriages only to end up in wedged standard. Splitting the train into an additional layer of accommodation would make the process of filling the different sections even more difficult for the TOC's to achieve.

There's also the option of doing a Weekend First-type arrangement to fill up some of the excess capacity there. I've done that many times, quite a bargin for a long-distance journey.

 

[dstrat]

Indeed.

Somebody needs to add up TOC/ROSCO profits for 2011 and figure out how many trains could have been bought with it.

 

[snail]

Somebody needs to add up TOC/ROSCO profits for 2011 and figure out how many trains could have been bought with it.

While you are doing that, will you tell us how many services would not be running now if the TOCs didn't make any profit?

 

[dstrat]

Thats not of interest - they exist to run trains on rails, not fill the pockets of those who saw it as a nice financial investment.

Clearly if services are cut because TOCs are making zero profit (which incidentally is the fundamental basis in economics as why free-markets are efficient; that they work to said condition....which we know they clearly don't) then something is dastardly wrong if services are then cut to 'create' profit.

If there was no profit being made by a firm that does not exist to create profits but rather to provide a service, then clearly that would be more efficient way of running things.

 

[snail]

If there was no profit being made by a firm that does not exist to create profits but rather to provide a service, then clearly that would be more efficient way of running things.

Oh yes, just like the wonderful days pre-privatisation when there were seats for everyone and no pressure from Government to cut costs or reduce subsidies.

Just why is it wrong for a TOC to make profits, if those profits bring in investment? There is a place for both.

 

[HH]

Yes, but we've all caught Inter-City type trains and had to walk past lots of relevantly unoccupied first class carriages only to end up in wedged standard. Splitting the train into an additional layer of accommodation would make the process of filling the different sections even more difficult for the TOC's to achieve.

You've missed the point. These carriages would be taken from First and aimed at Standard, so they would achieve exactly what is needed - freeing up space in Standard and reducing it in First. If it works OFC.

--- old post above --- --- new post below ---

Thats not of interest - they exist to run trains on rails, not fill the pockets of those who saw it as a nice financial investment.

Clearly if services are cut because TOCs are making zero profit (which incidentally is the fundamental basis in economics as why free-markets are efficient; that they work to said condition....which we know they clearly don't) then something is dastardly wrong if services are then cut to 'create' profit.

If there was no profit being made by a firm that does not exist to create profits but rather to provide a service, then clearly that would be more efficient way of running things.

Nothing is clear at all. DfT is non-profit. BBC is non-profit. Profit tends to focus the mind, and for many it needs focusing.

Do you have any examples of services being cut to make profits, or is it just hot wind?

 

[HSTEd]

Just why is it wrong for a TOC to make profits, if those profits bring in investment? There is a place for both.

What investment?

Check the ORR's own figures, total private investment in the railways is a tiny fraction of state support, it is infact less than TOCs and ROSCOs make in profits every single year.
--- old post above --- --- new post below ---

Do you have any examples of services being cut to make profits, or is it just hot wind?

No, services are not cut to increase profits, because it is easier to simply threaten to cut services in order to extort additional subsidies from the DfT.
Or leak information about possibly starting new services to the press in order to accomplish the same.

 

[yorksrob]

You've missed the point. These carriages would be taken from First and aimed at Standard, so they would achieve exactly what is needed - freeing up space in Standard and reducing it in First. If it works OFC.

I don't think so.

If you've got too much space in first, you drop the price, offer more advanced fares or do a weekend first offer to even out occupancy across the train. However, this is an inexact science, because you cannot tell how many people are likely to take up these offers, so there is still a likelihood that there will be an imbalance between the two sections on the train. This will be even more the case with 3 classes as the majority of people choose one class when they buy their ticket and stay there.

 

[Wath Yard]

If you drop the price in 1st you would have to attract quite a few new or upgrading passengers just to get back to where you started. If you introduce a Standard Plus option then all the additional revenue is new, unless of course 1st class passengers decide to semi-slum it.

 

[dstrat]

Oh yes, just like the wonderful days pre-privatisation when there were seats for everyone and no pressure from Government to cut costs or reduce subsidies.

Just why is it wrong for a TOC to make profits, if those profits bring in investment? There is a place for both.

I'm not saying BR did anything special, I am simply advocating the model. Since when were profits used to purchase more trains?

Nothing is clear at all. DfT is non-profit. BBC is non-profit. Profit tends to focus the mind, and for many it needs focusing.

I'm not saying that all non-profit ventures are flawless. Profit is not needed to 'focus' minds. You tell somebody to run a service, for a price. The people running it are paid to do their job.

I can't say I've come across many people who work for corporates and their motivation to work is 'to increase the bottom line on a company's balance sheet'. Thats just cloud cuckoo land.

Do you have any examples of services being cut to make profits, or is it just hot wind?

Nope nothing solid but I'm sure theres something out there. In the attempt to streamline ops, firms will just attempt to continually squeeze down the line. So you get to the stage where you have cleaning and what not contracted out to firms that pay the people bottom of the barrel wages.

'Train managers' on Southeastern HS perhaps? Managed to rewrite their job to devolve them of the ability for them to earn commission on ticket sales.

But I tell you HH, you can get your house on the fact that if the TOCs had the ability to cut routes like bus companies can, they would cut anything that lost them money. Cross subsidisation from profitable routes wouldn't even come into it...its all about improving the bottom line..year on year profit etc.

 

[ainsworth74]

Nope nothing solid but I'm sure theres something out there.

There's the East Coast cutbacks on catering but I suppose that isn't a great example as they're state owned.

 

[HH]

But I tell you HH, you can get your house on the fact that if the TOCs had the ability to cut routes like bus companies can, they would cut anything that lost them money. Cross subsidisation from profitable routes wouldn't even come into it...its all about improving the bottom line..year on year profit etc.

Did you mean bet? What I could bet my house on, although I'd rather bet yours, is if services were cut it would be the treasury that took the money.

--- old post above --- --- new post below ---

There's the East Coast cutbacks on catering but I suppose that isn't a great example as they're state owned.

LOL. And it's hardly cutting services anyway. But we're having another dose of the usual rose-tinted specs.

--- old post above --- --- new post below ---

If you've got too much space in first, you drop the price, offer more advanced fares or do a weekend first offer to even out occupancy across the train.

ROFL. What do you think this "middle class" is?

 

[Starmill]

Stick a Pacer on the back of every train, there we go, third class.

I wonder what the price elasticity of demand would be? I'd say it would be perfectly elastic, but to a negative price!

i.e. Nobody would use it no matter the price set, unless said price were less than £0.

 

[snail]

Since when were profits used to purchase more trains?

Where have all the new trains running on the network come from then? Someone has to have paid for them.

 

[Starmill]

Where have all the new trains running on the network come from then? Someone has to have paid for them.

Who did pay for them? Does the government turn around, tender £millions of rolling stock with our money, then just GIVE these to banks (it always used to be so simple: RBS, HSBC and Santander. Who the hell owns Angel and Porterbrook now!?) so that they might extort TOCs (or at least pretend to, so they can claim high costs and put up prices)?

Or are they sold? Or does the DfT provide some form of undertaking that the trains will be leased (and the investors will hence see their return) and the bank pays the whole lot?

The "brand" - if you will, of the UK Government still shifts mass in the bond market (it has NEVER defaulted on a loan payment - or anything underwritten by HMT), so why not in this market as well? Issue the guarantees and order the effing trains! The bank isn't going to say "No".

Discalimer: I don't actually understand how the process works, it seems completly opaque to me. I am attempting to apply common sense and economics, and would not be surprised to find both absent from this part of the rail industry, as with much of the rest of it.

 

[snail]

Who did pay for them?

The ROSCOs. They get their money from the TOCs through leasing agreements, who get their income through fares and subsidies. (So us, ultimately)

The Government don't want billions of pounds of rolling stock cluttering up the balance sheets.

 

[ainsworth74]

Though of course the DfT provide the guarantee to the ROSCOs that the shiny new trains they're buying will actually have a home for xyz years in the future.

 

[snail]

Though of course the DfT provide the guarantee to the ROSCOs that the shiny new trains they're buying will actually have a home for xyz years in the future.

Yes they do, without that there wouldn't be the investment to buy the stock in the first place.

Please don't think I am of the opinion it's a good model, but to deny that it has brought investment into the railways that would probably not have happened otherwise is a little naive (that's not aimed at you, btw). It's much easier for the Government to issue guarantees that they hope will never need to be paid than come up with hard cash to pay for new rolling stock.

 

[HH]

Yes it's a clunky model, but it sort of works. The main downside is that DfT gets to specify and procure the new rolling stock. For instance these Siemens Class 700s are a disaster waiting to happen (if they ever finish the purchase). Siemens the builder and Siemens the maintainer will be separate companies (due to the involvement of third parties), which seems to open up the problem of each being able to blame the other when the trains fail and the poor TOC playing piggy in the middle.

 

[mrbond009]

The 3rd class would be like sitting on the top of the train :P Like how railways in India used to be. Even they are improved than us

 

[ainsworth74]

The 3rd class would be like sitting on the top of the train

That could have some shocking results on routes like the ECML.

 

[island]

Business Class is no different to 1st class. This is the confusing thing. It is basically there version of 1st class. But because they have no wish to charge extortionate fares, its not really possible to call it 1st class, just in case people tried to use it on other operators. Plus to stop people buying a 1st class ticket if they only intend to use Chiltern. Obviously no need to do that. They havent admitted such, but it would surprise me if that had something to do with it. Afterall, if you took away the free food from Virgin and EC (which is quite hit and miss by the sounds of it anyway), then Chiltern's Business Class is arguably the best 1st/ Business Class on the network.

Couldn't Chiltern have just put on first class tickets route CHILTERN ONLY to accomplish this?

 

[snail]

Couldn't Chiltern have just put on first class tickets route CHILTERN ONLY to accomplish this?

But that would remove some of their potential market. People like me that have to travel Standard but can get away with an extra £20 (out of my own pocket if need be) for the better facilities.

 

[HSTEd]

Yes they do, without that there wouldn't be the investment to buy the stock in the first place.

In other words, if there is absolutely no risk they lose the investment.

I thought businesses were supposed to take risk to make money.

 

[HH]

Yes, well it seems like ROSCOs are being not so subtly shown that they're not very appreciated. Neither IEP nor the Class 700s will be funded by ROSCOs.

 

[dstrat]

Yes they do, without that there wouldn't be the investment to buy the stock in the first place.

Please don't think I am of the opinion it's a good model, but to deny that it has brought investment into the railways that would probably not have happened otherwise is a little naive (that's not aimed at you, btw). It's much easier for the Government to issue guarantees that they hope will never need to be paid than come up with hard cash to pay for new rolling stock.

Or. OR you could have the government who own the stock and lease it to the train operators. Therefore instead of ROSCOs making £350m in 2011 to line their pockets (come on don't fool yourself that they just leave themselves with pennies in profit after investment in stock), said 350 million could have been spent to get rid of some Pacers perhaps? Or to reduce fares to decrease the burden of ticket prices?

So the current system only encourages LOWER investment in the railway. I don't even know why I have to explain this; is it not obvious?

You just have to look at the flagrant robbery of the state that the government permitted by allowing the ROSCOs to buy newly privatised stock in the first attempt for the prices that they did. They and the government at the time were reprehensible in allowing what happened. But that, to the those who privatise is one of the pillars of why they do it...get as much as we can for as little that they have to give.

Its obvious that it is convenient siphon of the monies of the travelling public. Trains are not an unsafe investment for the government - more so they are fundamental tenet in many respects to the backbone of the economy.

 

[Skimpot flyer]

The 3rd class would be like sitting on the top of the train :P Like how railways in India used to be. Even they are improved than us

NEWS UPDATE:
We will continue to have First and Standard Class tickets. The third ticket-type will be known as Parliamentary Class, being tickets that are claimed on expenses but not actually used