Do open access operators benefit or hinder our railways? (and how could the situation be improved?)

[route:oxford]

Given how we now have a few open access operators, what are people opinions of them, do they help provide passengers with crucial links that other toc's can't? Or are they a hinder, taking away passengers from franchise, taking away much needed rolling stock which could be better used elsewhere?

Well, the Open Access operator that springs to mind for me is "The Jacobite".

I'm not convinced that Scotrail would be interested in either the stock or traction to run their general services - indeed it would probably cause considerable issues with loading if they were to use it on the closest comparable loco hauled "Fife Circular" services.

If anything it does seem to me that it's a perfect example of private Open Access operators working in partnership with the public sector.

 

[Iskra]

I'm going to say that OA operators do benefit the network by providing additional passenger choice and services to marginal locations (*awaits the Bradford mafia*) without risking tax payers money, providing a social benefit as well as net revenue increase to the railway. Other operators may benefit from this through additional spend at stations or on connecting services that otherwise may not have happened. Equally, having proved and developed a market, there is nothing to stop the DFT from mandating (more) franchised services to these locations, which could provide a gain to the taxpayer.

They then deserve lower track access charges, having taken this risk.

 

[Purple Orange]

But surely it's better to have the choice, which in itself is a significant benefit compared to no choice. Especially when one may work out cheaper than the other?

Of course, the GC service is not exclusively about Sunderland...

Surely you are projecting your 'personal view' onto other individuals, who may well not attach so much significance to flexibility. Someone in Sunderland, Bradford, Hull, etc. has the alternative of frequent local/metro services to Newcastle, Leeds or Doncaster and frequent connections forward to London, with Open tickets available if they want flexibility on the way to London.
But a significant number of people seem happy to accept a lower Advanced fare for specific trains and a through journey.
As already stated, it is about expanding the market through choice.
And open access does pay at least its variable track costs in accordance with EU law.

All of this assumes a belief that a privatised railway is the best way to go. If, like me, you think we should not have privatised services, the competition on price would not be taking place between train services (other than the peak/off peak situation), but the competition would be with car, bus and air transport. The open access operators also only benefit occasional usage, whereas the paths they take up could be used to bolster a much more frequently used commuter route.

 

[6Gman]

why is it fair that people are made to stand on a packet train, when lets say only a half full mini HST's trots its way to Sunderland?

What's "fairness" got to do with it?

 

[Iskra]

All of this assumes a belief that a privatised railway is the best way to go. If, like me, you think we should not have privatised services, the competition on price would not be taking place between train services (other than the peak/off peak situation), but the competition would be with car, bus and air transport. The open access operators also only benefit occasional usage, whereas the paths they take up could be used to bolster a much more frequently used commuter route.

The railway is a lot less privatised than you imagine, considering the government specify what services the TOC's run.

Why don't you believe in railway fare competition? Without it fares would be much higher.

Without OA, the extra passengers carried wouldn't exist. Surely losing those contributors to the upkeep of the railway is a negative thing for all rail users?

It is perfectly possible to commute on an OA operation. I'm sure many people do.

All that your argument seems to be is that you don't like it/it doesn't suit you so it isn't worthy of existing- quite a childish view. Considering OA operators survive, enough people obviously think otherwise.

 

[37424]

and that is why it will be rejected.

Well maybe, maybe not, they are running non stop to Bristol Parkway so I doubt it should be two much of a problem especially if they knock a couple of carriages out of the formation. Plus the intention is to go to 802's within a couple of years.

Providing they are not taking revenue out of a subsidised franchise effectively increasing the cost to the Tax Payer then I don't have a problem with Open Access.

 

[route:oxford]

All of this assumes a belief that a privatised railway is the best way to go. If, like me, you think we should not have privatised services, the competition on price would not be taking place between train services (other than the peak/off peak situation), but the competition would be with car, bus and air transport. The open access operators also only benefit occasional usage, whereas the paths they take up could be used to bolster a much more frequently used commuter route.

Isn't a bit unfair on people who don't have access to a railway station not to nationalise the bus, coach, ferry and air sevices too?

If price competition is wrong, should the state also control the mobile phone networks?

 

[6Gman]

Isn't a bit unfair on people who don't have access to a railway station not to nationalise the bus, coach, ferry and air sevices too?

If price competition is wrong, should the state also control the mobile phone networks?

I can remember when telecoms was a nationalised industry.

It was terrible !

 

[Bald Rick]

No, they cause net gain to the rail industry by serving markets barely served by Franchised Operators, thus creating additional revenue. What you're talking about is negatively affecting franchised operators margins, which is a different thing.

Ah, I thought this might happen. I misworded, my comment, it should have said a net cash loss to the industry, not net revenue loss.

OAOs may well create additional revenue, although that is not certain. By introducing competition on the route it is likely to depress fares (great for the customer, obviously), but that represents lost revenue to the industry if the price elasticity is less than one, which it usually is for rail fares. Often that is not made up for by the revenue generated through the new service.

As a result, it is almost certain is that they create less revenue than if the service was provided for by the franchised operator, who could almost certainly do it at a lower cost with their existing cost base.


It’s a similarly position for Railfreight. The competing freight operators have driven prices down to minimal margins to try and win traffic from each other. Great for the logistics industry, but lost revenue to the industry.

 

[Iskra]

Ah, I thought this might happen. I misworded, my comment, it should have said a net cash loss to the industry, not net revenue loss.

OAOs may well create additional revenue, although that is not certain. By introducing competition on the route it is likely to depress fares (great for the customer, obviously), but that represents lost revenue to the industry if the price elasticity is less than one, which it usually is for rail fares. Often that is not made up for by the revenue generated through the new service.

As a result, it is almost certain is that they create less revenue than if the service was provided for by the franchised operator, who could almost certainly do it at a lower cost with their existing cost base.


It’s a similarly position for Railfreight. The competing freight operators have driven prices down to minimal margins to try and win traffic from each other. Great for the logistics industry, but lost revenue to the industry.

This is where it gets interesting.

By allowing OA, what the DFT is basically doing is growing revenue, but accepting that that additional revenue comes at a lower profit margin. But they must think that's worth it, especially when it is growing rail routes/passenger numbers/revenue without using their own cash, taking a risk on services that might not work out.

There is therefore an overall revenue gain but that revenue is made at a tighter profit margin. However, you have still gained profit overall because it is additional profit you would otherwise not have made, however marginal. The customer wins too. Providing the TOC is still making a profit everyone is happy; considering that their profit margins are dictated anyway and not left to the free market, they can't really lose (well, the DFT wouldn't allow them to lose out to an OA operator).

 

[Bald Rick]

This is where it gets interesting.

By allowing OA, what the DFT is basically doing is growing revenue, but accepting that that additional revenue comes at a lower profit margin. But they must think that's worth it, especially when it is growing rail routes/passenger numbers/revenue without using their own cash, taking a risk on services that might not work out.

There is therefore an overall revenue gain but that revenue is made at a tighter profit margin. However, you have still gained profit overall because it is additional profit you would otherwise not have made, however marginal. The customer wins too. Providing the TOC is still making a profit everyone is happy; considering that their profit margins are dictated anyway and not left to the free market, they can't really lose (well, the DFT wouldn't allow them to lose out to an OA operator).

Two points:

1) from what I hear, the DfT are by no means happy with OAO, but there’s not much they can do about it without primary legislation, or asking franchised operators to put in competing paths (see SWML, GWML, WCML, Etc)

2) A tighter profit margin doesn’t necessarily mean more profit with a higher revenue; and the assumption that the franchised TOC is ‘still making a profit’ is unsafe.

 

[westv]

It is perfectly possible to commute on an OA operation. I'm sure many people do.

I did every Monday morning from Hull to London.

 

[Purple Orange]

The railway is a lot less privatised than you imagine, considering the government specify what services the TOC's run.

Why don't you believe in railway fare competition? Without it fares would be much higher.

Without OA, the extra passengers carried wouldn't exist. Surely losing those contributors to the upkeep of the railway is a negative thing for all rail users?

It is perfectly possible to commute on an OA operation. I'm sure many people do.

All that your argument seems to be is that you don't like it/it doesn't suit you so it isn't worthy of existing- quite a childish view. Considering OA operators survive, enough people obviously think otherwise.

I believe that the prices should be regulated centrally as opposed to being left to market forces. This works in plenty of countries around the world and has worked here too. I completely understand that it is only the service provision that is privatised. I’ll overlook your childish comment.

Isn't a bit unfair on people who don't have access to a railway station not to nationalise the bus, coach, ferry and air sevices too?

If price competition is wrong, should the state also control the mobile phone networks?

No, that is not the same thing at all. Buses should be regulated across the country. It is due to the deregulation of the bus services that has allowed many communities to lose their bus services completely.

 

[Domh245]

Wouldn't it be fair to say that the only increased revenue the DfT would potentially see is from sales of non-advance tickets via franchised operators premiums (via ORCATs?) - which given the nature of OAOs wouldn't be much? Or is there another revenue stream?

 

[Iskra]

Two points:

1) from what I hear, the DfT are by no means happy with OAO, but there’s not much they can do about it without primary legislation, or asking franchised operators to put in competing paths (see SWML, GWML, WCML, Etc)

2) A tighter profit margin doesn’t necessarily mean more profit with a higher revenue; and the assumption that the franchised TOC is ‘still making a profit’ is unsafe.

The DFT ultimately controls which OA routes and services get approval. If it messes that up, then that is on them alone. They have always been quite keen to safeguard TOC profits because they get a nice slice themselves.

 

[Bald Rick]

The DFT ultimately controls which OA routes and services get approval.

No they don’t. That’s the ORRs job.

I can assure you there are some ‘interesting’ conversations between the parties on the subject.

 

[Iskra]

I believe that the prices should be regulated centrally as opposed to being left to market forces. This works in plenty of countries around the world and has worked here too. I completely understand that it is only the service provision that is privatised. I’ll overlook your childish comment.




No, that is not the same thing at all. Buses should be regulated across the country. It is due to the deregulation of the bus services that has allowed many communities to lose their bus services completely.

How will this happen, who will do it and how will anyone benefit?

Can you provide specific examples of where this works?

 

[Iskra]

No they don’t. That’s the ORRs job.

I can assure you there are some ‘interesting’ conversations between the parties on the subject.

Okay, but it's still a Government Department, answerable to the Treasury...

 

[Ianno87]

[

The DFT ultimately controls which OA routes and services get approval.

No, that's the ORR's job.

 

[Purple Orange]

How will this happen, who will do it and how will anyone benefit?

Can you provide specific examples of where this works?

TfL sets prices for the tube, overground, DLR, buses, tram. It has benefited Londoners far more than the free market has benefited the rest of the country for their local train and bus service.

 

[gsnedders]

OAOs may well create additional revenue, although that is not certain. By introducing competition on the route it is likely to depress fares (great for the customer, obviously), but that represents lost revenue to the industry if the price elasticity is less than one, which it usually is for rail fares. Often that is not made up for by the revenue generated through the new service.

As a result, it is almost certain is that they create less revenue than if the service was provided for by the franchised operator, who could almost certainly do it at a lower cost with their existing cost base.

It seems worthwhile to consider why the franchised operator wasn't providing the service or is doing so at a higher price than the OA operator would: that the railway is heavily incentivised (despite regulated fares) to maximise profit (and not passengers carried), and given winning franchise bids have historically been weighted heavily on return to the Treasury, there's no reason to believe that returns to the Treasury won't strongly influence policy now HMG carries the revenue risk; and that franchises were designed to cross-subsidise across routes (so profitable routes tend to be overpriced versus the cost of provision).

On the whole I'm against OA operators competing against franchised operators: if a route is inherently profitable, it should be ran entirely on an open-access basis, and the franchisee can bid for track access paths along with anyone else. There are some obvious downsides (we would want to oblige ORCATS membership for the vast majority of services on the route, for example), and it gets into questions as to how we subsidise routes (it would effectively end cross-subsidy of rail routes, which would shift the burden of the subsidy from passengers on profitable routes to the taxpayer as a whole).

 

[devonexpress]

The whole idea of the franchise system is to transport passengers, TOC's the DFT and government as a whole don't like OAO but can't do anything about them. My point is valid, why should people paying expensive tickets be forced to stand on a main corridor route, whilst a small sized train of the exact same stock runs only half full, when the coaches being used for that service could be used to increase capacity the main corridor, that's not stupid, that's just good common sense! Every TOC has wanted to do this, the reason they can't is because the stock is already in use by the time they need it.

 

[Ianno87]

If (say) Grand Central weren't running 5 car trains on the ECML then places like Sunderland, Hartlepool and Halifax may deem it "unfair" to be marginalised from direct ECML services when taxpayers in those places contribute just as much to its running costs as everywhere else.

 

[Iskra]

TfL sets prices for the tube, overground, DLR, buses, tram. It has benefited Londoners far more than the free market has benefited the rest of the country for their local train and bus service.

It's not quite the same is it. Mass transport in a mega city with significant investment Vs providing the service on the Far North Line which probably hasn't changed much since the 1970's/80's.

 

[devonexpress]

If (say) Grand Central weren't running 5 car trains on the ECML then places like Sunderland, Hartlepool and Halifax may deem it "unfair" to be marginalised from direct ECML services when taxpayers in those places contribute just as much to its running costs as everywhere else.

And for the 6TH time TODAY i've already praised GC for this, please before posting.

 

[Ianno87]

The whole idea of the franchise system is to transport passengers, TOC's the DFT and government as a whole don't like OAO but can't do anything about them.

The point of the UK rail network is to support and develop the priductivity, economy and social inclusion of the whole UK.

 

[westv]

My point is valid, why should people paying expensive tickets be forced to stand on a main corridor route, whilst a small sized train of the exact same stock runs only half full, when the coaches being used for that service could be used to increase capacity the main corridor.

You have specific examples are where that is happening?

 

[devonexpress]

The point of the UK rail network is to support and develop the priductivity, economy and social inclusion of the whole UK.

So why do wide parts of Devon & Cornwall not have a railway service, North & West Devon, Large parts of North Cornwall???

 

[Ianno87]

And for the 6TH time TODAY i've already praised GC for this, please before posting.

I didn't say you hadn't said it. Just balancing the "fairness" point and how subjective it is and can mean different things.

 

[6Gman]

It is due to the deregulation of the bus services that has allowed many communities to lose their bus services completely.

Do you have any evidence for that?

Isn't it more to do with increased car ownership and reduced local authority funding?