Will HS2 require premium fares?

[al78]

Moderator note: split from https://www.railforums.co.uk/threads/gatwick-express-hiding-in-plain-sight.229277/

Premium service means fast service. As long as the trains really get to Victoria faster the premium is justified. This is the reason HS1 charges a premium over low-speed rail as well.

Does that mean HS2 will charge a premium over the WCML services from London to Manchester?

The latter are over £100 so I dread to think how much a ticket on HS2 will cost when it is open.

 

[AlbertBeale]

Does that mean HS2 will charge a premium over the WCML services from London to Manchester?

The latter are over £100 so I dread to think how much a ticket on HS2 will cost when it is open.

Of course it'll charge a premium - the whole absurdity of the HS2 scheme is that it's a "special" and segregated service. Surely even the financial case for the line - such as it is anyway - is on the basis of premium fares?

 

[Taunton]

Of course it'll charge a premium - the whole absurdity of the HS2 scheme is that it's a "special" and segregated service. Surely even the financial case for the line - such as it is anyway - is on the basis of premium fares?

This is where premium priced trains fall over, again and again, as the "regular" train operators, having had their good revenue drained away, step up with an equal, or sometimes better, option.

Gatwick Express might have had some merit when Victoria was the principal terminus for Gatwick passengers, but Thameslink has since come along and provided a much more effective service for many.

London to Birmingham became overpriced in Virgin days on the WCML, and thus Chiltern stepped up to it and provided a useful competitive alternative. One wonders what will be done to stop them doing the same against HS2 when it comes along. Even from Canary Wharf, it's actually easier (and quicker) to get by Tube to Marylebone than to Euston.

The extraordinary belief that airport passengers are all know-nothing millionaires to be milked falls even further short at Gatwick, where (like Stansted) the typical airline mix has progressively changed to mainly the "low cost" airlines rather than the business travellers. Gatwick used to have a lot of the latter from the USA years ago, but these airlines have all decamped to Heathrow and that market has gone.

 

[JonathanH]

This is where premium priced trains fall over, again and again, as the "regular" train operators, having had their good revenue drained away, step up with an equal, or sometimes better, option.

Gatwick Express might have had some merit when Victoria was the principal terminus for Gatwick passengers, but Thameslink has since come along and provided a much more effective service for many.

PAYG provides the ultimate opportunity to charge premium fares for a particular destination because stopping short / using other tickets can no longer be done.

We have already seen DfT put a premium on extension fares on PAYG to recognise what they perceive as value of through trains. It wouldn't surprise me in due course for there to be significant surcharge on all fares to Gatwick once PAYG is the only fare structure in the area, particularly if fares have to be harmonised at one rate in the light of legal action mentioned above.

The extraordinary belief that airport passengers are all know-nothing millionaires to be milked falls even further short at Gatwick, where (like Stansted) the typical airline mix has progressively changed to mainly the "low cost" airlines rather than the business travellers. Gatwick used to have a lot of the latter from the USA years ago, but these airlines have all decamped to Heathrow and that market has gone.

Airport links the world over are seen as a place to milk public transport users - eg Edinburgh where a higher charge is payable on the bus and the tram - and the local bus service was removed. There is talk of a surcharge for using the Piccadilly line to Heathrow. The important thing is that airport workers have some opt out to enable them to use public transport at cheaper rates but everyone else is easy money, coupled with charges for dropping off people in cars.

London to Birmingham became overpriced in Virgin days on the WCML, and thus Chiltern stepped up to it and provided a useful competitive alternative. One wonders what will be done to stop them doing the same against HS2 when it comes along. Even from Canary Wharf, it's actually easier (and quicker) to get by Tube to Marylebone than to Euston.

It is very possible that all fares will be harmonised for London to Birmingham journeys as part of the GBR framework.

 

[JonathanH]

Moderator note: split from


Does that mean HS2 will charge a premium over the WCML services from London to Manchester?

The latter are over £100 so I dread to think how much a ticket on HS2 will cost when it is open.

Probably not. In the case of HS2, it is more likely that fares on the classic routes will increase as well such that passengers are directed to HS2 which will be where the capacity is.

Let's not also forget that if we have a few years of high inflation, that £100 fare is going to increase considerably in any case. RPI in July 2022 is likely to be very close to 10% so £100 will become £110 in 2023. By 2030, if inflation levels don't reduce, that could easily be £200 before any premium is considered.

I think the view in previous discussions has been that HS2 has a lot of seats to fill and lower operating costs, not least because one driver can take 1,000 passengers from London to Manchester on one 400m train and the trains can do more journeys in a given period of time. Moreover, all the main trains will be moved to the route.

However, as a whole, train fares are only going in one direction.

 

[LNW-GW Joint]

The current plan is for Avanti to run both the HS2 services and the legacy long-distance WCML services (ie Pendolino and 80x) from Euston.
There's a lot of time to go before that model is confirmed, and Avanti's contract doesn't extend that far (yet), though they won the competition in 2019.
DfT, NR/GBR and Avanti are "working together" on the plans, probably in that order of influence.
Trenitalia's high speed expertise is also in there somewhere.

 

[PeterC]

Last time I saw this question the press, presumably fron an "unattributal" source, said that they would while people here were adamant that they wouldn't.

I'll just wait and see.

 

[miklcct]

Does that mean HS2 will charge a premium over the WCML services from London to Manchester?

I think yes. HS1 is already charging a premium over the classic line.

 

[edwin_m]

The business case for HS2 was based on the assumption that fares would be broadly similar to existing, in real terms.

The project objectives are to increase rail capacity and thereby increase national prosperity by allowing fast and convenient journeys between cities. This is unlikely to happen if the fares are so high that people just stay on the old route. The laws of economics say that if supply increases, the price will actually reduce.

 

[Trainbike46]

Isn't part of the reason WCML fares are so high (even compared to other IC routes), that there is more demand than capacity? If that's the case the extra capacity would create a case for reducing (some of) the fares

 

[Kite159]

Just look at HS1 for a comparison where you pay a premium to use the high speed service from Ashford to London, compared to the "classic" network.

But who knows what the fare structure will look like when HS2 eventually opens

 

[plugwash]

Afaict there isn't much spare capacity on the network north of Crewe, so presumablly when the initial phase of HS2 opens HS2 trains will be repacling rather than supplementing classic trains.

Given that if they put too much of a premium on HS2 I could see it causing overcrowding issues on the remaining classic trains.

 

[Tetchytyke]

I would bet my money that HS2 will follow the HS1 model:

1. Above inflation rises on classic lines to prior to opening pay for it;
2. Additional premiums on top for High Speed;
3. Deliberate slowing down of classic lines to encourage people on to High Speed.

There's no way this government won't increase fares to pay for their vanity project.

And even with all that, HS1 has achieved passenger numbers way below expectations.

HS2 won't just be a white elephant, it'll be a 24-carat gold, diamond-encrusted, gleaming edifice of a white elephant.

 

[JonathanH]

3. Deliberate slowing down of classic lines to encourage people on to High Speed.

This is entirely the point of building the line in the first place, to allow more trains to stop at the intermediate stations on the 'classic' lines. Moreover, north of HS2, there is no additional capacity to run both 'classic' and HS2 services.

1. Above inflation rises on classic lines to prior to opening pay for it;

Yes, and alignment of fares on the different routes to Birmingham to simplify the fare structure under GBR.

2. Additional premiums on top for High Speed;

Not necessarily, because the operational costs are cheaper and the existing services are effectively just 'moving over' once Euston is open.

There's no way this government won't increase fares to pay for their vanity project.

Corrected for you.

HS2 won't just be a white elephant, it'll be a 24-carat gold, diamond-encrusted, gleaming edifice of a white elephant.

There wasn't really an alternative way of installing additional capacity between London and the Midlands / North West to cope with the WCML being full. You may have a view that it is pointless but people still want to get between London and the places HS2 will serve, even after everything that has happened since March 2020. If anything, it is the extra capacity on the WCML that will become the white elephant as it will no longer use all the available capacity.

 

[LNW-GW Joint]

Just look at HS1 for a comparison where you pay a premium to use the high speed service from Ashford to London, compared to the "classic" network.
But who knows what the fare structure will look like when HS2 eventually opens

Domestic services on HS1 were an afterthought, the original business case being made by Channel Tunnel traffic.
The ownership and operation of the line is also unique, not being part of the "NR" estate or even regulated in the same way, as it was for international services.
It has higher access fees that need to be paid.

HS2 was originally going to be funded by a combination of pension funds and Chinese capital, but all that seems to have evaporated.
It hasn't been clarified who will own/operate/maintain HS2 long term; currently NR is not involved, and HS2 Ltd is a different beast under the DfT umbrella.
(NR does operate and maintain HS1, but under contract to privately-owned HS1 Ltd).

I expect fares will be set so as to maximise the new capacity and journey opportunities, also to reuse the freed-up WCML capacity.
Existing fast services on the WCML are likely to have lower frequencies and extended journey times, so that's another incentive to transfer to HS2.
Anyway, there's a lot of time to sort all that out, and needs to start with getting the WCML back to the passenger numbers and efficiency it had in 2019.

 

[jon0844]

The business case for HS2 was based on the assumption that fares would be broadly similar to existing, in real terms.

The project objectives are to increase rail capacity and thereby increase national prosperity by allowing fast and convenient journeys between cities. This is unlikely to happen if the fares are so high that people just stay on the old route. The laws of economics say that if supply increases, the price will actually reduce.

I agree. I am sure there will still be premium fares at certain times (and will there still be first class provision?) but with increased capacity, it makes business sense to fill seats and that means affordable prices, special offers etc.

It was always one of those anti-HS2 arguments that doesn't make sense, except that it's easy to convince people that if you're spending billions building a new line then of course the fares are going to be extortionate (hence the claims it would only be used by rich people).

That said, I also agree that there will be some sort of premium compared to going to the 'classic' way, much as it's already cheaper to take slower services from London to Birmingham if you're willing to give up your time to save money. It's all about choice and planning ahead.

 

[HSTEd]

Ultimately every passenger doing a HS2 possible journey on the classic line is costing the railway, and thus the state, extra money.

 

[swt_passenger]

The business case for HS2 was based on the assumption that fares would be broadly similar to existing, in real terms.

The project objectives are to increase rail capacity and thereby increase national prosperity by allowing fast and convenient journeys between cities. This is unlikely to happen if the fares are so high that people just stay on the old route. The laws of economics say that if supply increases, the price will actually reduce.

I’m surprised this question comes up so often. It’s always seemed to me that whatever the DFT said, “high fares” are an article of faith for objectors. Many mainstream news articles were aimed at objectors, and still are, so that’s what they’re going to write.

But comparison with HS1 seems futile, because people do clearly accept the small premium. IIRC the HS1 domestics were also almost guaranteed to be a white elephant by objectors.

 

[edwin_m]

I’m surprised this question comes up so often. It’s always seemed to me that whatever the DFT said, “high fares” are an article of faith for objectors. Many mainstream news articles were aimed at objectors, and still are, so that’s what they’re going to write.

But comparison with HS1 seems futile, because people do clearly accept the small premium. IIRC the HS1 domestics were also almost guaranteed to be a white elephant by objectors.

I think the premium fares on HS1 are a lot of the reason this question keeps being brought up, along with a false expectation that HS2 is expected to make a commercial return on investment. Like almost all other railway projects, it's justified by the benefits to the wider economy and society.

It's an interesting question why the logic likely to apply to HS2 fares didn't apply to HS1. I think it's because the domestic capacity on HS1 was rather limited by the need to share with Eurostar, but there was no significant capacity constraint on the existing Kent Coast services. If the fares had been the same a lot of existing commuters would have chosen to go to St Pancras and travel across London to save a few minutes to their offices. Thus there would have been no room on the trains for the new residents or new commuters that the services were intended to attract. HS2 is a bit different because to achieve its objectives, journeys like London-Birmingham need to divert to the new services to free up space on the existing route for passengers using intermediate stations.

That said, I also agree that there will be some sort of premium compared to going to the 'classic' way, much as it's already cheaper to take slower services from London to Birmingham if you're willing to give up your time to save money. It's all about choice and planning ahead.

I think there may well still be something similar to the cheap through fares on the stopping services, where there would otherwise be empty seats (but not adding extra capacity just to carry those people). These attract people who are price-sensitive but less worried about journey time, and it all helps to get people out of cars.

If I ruled the world or the relevant part of it, I think I would impose a higher price for season tickets valid on HS2 but keep the rates for other tickets the same. This would encourage its use for business and leisure journeys, keeping the cities of the Midlands and north as centres in their own right rather than turning them into dormitories for London commuters. Future commuting trends after Covid may however make such a measure less important.

 

[stuu]

HS2 won't just be a white elephant, it'll be a 24-carat gold, diamond-encrusted, gleaming edifice of a white elephant.

Are there any high speed lines anywhere in the world that fit that description? Whether it's the best use of limited resources is a worthy question, but there is no chance it will be empty

 

[Snow1964]

I think the view in previous discussions has been that HS2 has a lot of seats to fill and lower operating costs, not least because one driver can take 1,000 passengers from London to Manchester on one 400m train and the trains can do more journeys in a given period of time. Moreover, all the main trains will be moved to the route.

However, as a whole, train fares are only going in one direction.

It rather depends on policy, do they want a hundred passengers paying a lot, or 1000 passengers paying about a fifth, which of course is double the revenue of first option

There really is no common sense in providing 1000 seats if you only fill a tiny fraction of them.

Obviously there will be just as many seats going north as south, and it remains to be seen if it is priced for a day trip for Londoners to visit the north. Much of the fare talk so far seems to be about northerners visiting London

 

[JonathanH]

It rather depends on policy, do they want a hundred passengers paying a lot, or 1000 passengers paying about a fifth, which of course is double the revenue of first option

There really is no common sense in providing 1000 seats if you only fill a tiny fraction of them

I'd imagine somewhere in between at a level which maximises the revenue. There is no point having it full from day 1 because it doesn't leave room for growth of traffic over the following years.

 

[SynthD]

HS1 is only slightly a white elephant because it was privately funded, it has owners who want it to be premium. If they changed their mind then it would only have the smaller premium attached to the genuine higher cost of high speed (I hope). The government have so far set their mind on this second position for HS2.

 

[Purple Orange]

Moderator note: split from https://www.railforums.co.uk/threads/gatwick-express-hiding-in-plain-sight.229277/


Does that mean HS2 will charge a premium over the WCML services from London to Manchester?

The latter are over £100 so I dread to think how much a ticket on HS2 will cost when it is open.

In the sense that HS2 tickets are in-line with today’s Avanti West Coast fares, and that future ticket prices on slower WCML services will be cheaper than they are today, then yes. But it’s a fallacy people keep falling for that HS2 will automatically be more expensive just because it’s a new line. One 400m HS2 train needs to attract 1,100 people on to it.

 

[Irascible]

There's no way this government won't increase fares to pay for their vanity project.

"This government"? you have some *wild* optimism about construction times.

It is possible that the economics of car travel might collapse by the time it opens, in which case there's pretty much carte blanche for pricing - or alternatively you can look at it as there being a vital need for a) usable mass transit just to keep the economy going and b) freight paths on the WCML because we haven't moved away from diesel for logistics quick enough, in which case it might need to be as cheap as practical.

 

[MattRat]

Would it be stupid to have high fares? Yes. Do I trust the government to understand this? *Looks at lockdown parties*

 

[zwk500]

Would it be stupid to have high fares? Yes.

It's only stupid to have fares higher than people will pay. If enough people are willing to pay a premium, why cost yourself more money by holding prices artificially low?

 

[MattRat]

It's only stupid to have fares higher than people will pay. If enough people are willing to pay a premium, why cost yourself more money by holding prices artificially low?

But they won't be willing to pay. UK customers pay the bare minimum hence the popularity of low costs flights within the UK.

 

[JonathanH]

But they won't be willing to pay. UK customers pay the bare minimum hence the popularity of low costs flights within the UK.

Those flights cost much less on a Tuesday than they do on a Friday evening. The Friday evening flights are full because people have to pay the prices charged.

Ultimately, something is worth what someone else is prepared to pay.

 

[zwk500]

But they won't be willing to pay. UK customers pay the bare minimum hence the popularity of low costs flights within the UK.

And yet, Concorde made a profit catering exclusively to business traffic. If you're charging more per ticket you don't need as many people to be willing/able to pay.