What tech is used to work out ticket prices?

[modernrail]

Yesterday I booked a London to Glasgow service for 30th April, via Edinburgh due to the WCML blockades.

The service I wanted to book didn’t have a bike space, but by the time I had found that out because of the absolutely stupid procedure where you have to book a ticket then ask if there is a bike space, I had been into the LNER seat planner and the train was pretty much full, over a week out.

I then tried the next train. The advance was £12 more for a train that, when I went into the seat planner, was more than half empty at time of booking.

I can’t see how a logical system would allow this to happen.

First, if there is a blockade on one main line, surely the advances should be limited on the other to ensure capacity is available. The message the ticketing system should really be sending out is, this is not the weekend for a really cheap fare - it is a weekend to max out limited capacity.

Then there is allowing a train to be pretty much full on advances over a week out. Now anybody wanting that train and who might pay the full off peak fare is locked out, so revenue will be loads less than it could be.

Then there is the oddest bit. Why is the advance fare on a nearly fully allocated train less than the fare on the next, nowhere near as booked up train.

Are we sure they are using the right logic and tech to work all this stuff out? What I have described above feels like a lose lose for railway and passenger.

As a side point I would add that somebody seems to have out the seat allocation programming in backwards. The number of times I have not been allocated my choice of forward facing window table or airline only to find loads available using the seat planner. Why????

 

[takno]

Yesterday I booked a London to Glasgow service for 30th April, via Edinburgh due to the WCML blockades.

The service I wanted to book didn’t have a bike space, but by the time I had found that out because of the absolutely stupid procedure where you have to book a ticket then ask if there is a bike space, I had been into the LNER seat planner and the train was pretty much full, over a week out.

I then tried the next train. The advance was £12 more for a train that, when I went into the seat planner, was more than half empty at time of booking.

I can’t see how a logical system would allow this to happen.

First, if there is a blockade on one main line, surely the advances should be limited on the other to ensure capacity is available. The message the ticketing system should really be sending out is, this is not the weekend for a really cheap fare - it is a weekend to max out limited capacity.

Then there is allowing a train to be pretty much full on advances over a week out. Now anybody wanting that train and who might pay the full off peak fare is locked out, so revenue will be loads less than it could be.

Then there is the oddest bit. Why is the advance fare on a nearly fully allocated train less than the fare on the next, nowhere near as booked up train.

Are we sure they are using the right logic and tech to work all this stuff out? What I have described above feels like a lose lose for railway and passenger.

As a side point I would add that somebody seems to have out the seat allocation programming in backwards. The number of times I have not been allocated my choice of forward facing window table or airline only to find loads available using the seat planner. Why????

There are a couple of factors. For whatever reason the LNER seat planner seems to allocate a set number of the seats to each price point, so it's not clear that seats which are showing as unavailable are actually unavailable, rather than reserved for more expensive advances. This might also account for being allocated and stuck with a backwards facing seat allocation, which is pretty infuriating and means I rarely actually sit in my booked seat. Other factors are that the number of people using walk-up fares may vary quite a lot with time of day and stopping pattern, and currently-filled seats probably include people who are paying full-fare and have already reserved.

 

[thedbdiboy]

There isn't a single system, rather a multitude of systems and processes. Currently, fares and reservations are amalgamated and distributed centrally; but it is down to each TOC how advance fares are priced and allocated, and different TOCs have different systems for managing pricing for such yield managed fares. It's also worth pointing out that until any change takes place in the way such fares are set at GBR level, it is actually illegal for LNER and Avanti (for example) to co-operate on Anglo-Scottish rail fare pricing. This would be treated as collusion under Competition Law and is prohibited.

 

[takno]

There isn't a single system, rather a multitude of systems and processes. Currently, fares and reservations are amalgamated and distributed centrally; but it is down to each TOC how advance fares are priced and allocated, and different TOCs have different systems for managing pricing for such yield managed fares. It's also worth pointing out that until any change takes place in the way such fares are set at GBR level, it is actually illegal for LNER and Avanti (for example) to co-operate on Anglo-Scottish rail fare pricing. This would be treated as collusion under Competition Law and is prohibited.

There wouldn't be any collusion involved. Changing your advance availability based on predicted higher usage as a result of published disruption to your competitor's service is fine

 

[507020]

It's also worth pointing out that until any change takes place in the way such fares are set at GBR level, it is actually illegal for LNER and Avanti (for example) to co-operate on Anglo-Scottish rail fare pricing. This would be treated as collusion under Competition Law and is prohibited.

Absolutely pathetic, but sadly true.

There wouldn't be any collusion involved. Changing your advance availability based on predicted higher usage as a result of published disruption to your competitor's service is fine

Obviously there is no actual collusion involved, nor would it be to the detriment of the consumer, quite the opposite, but the reality of these EU regulations (which are yet to be repealed) is that such actions which may be beneficial to passenger and railway alike are deemed to be illegal collusion. If we hadn’t left the EU when we did, it would still be illegal for politicians to even alter these rules at all! How it was allowed to end up like this in the first place I’ll never know.

 

[takno]

Absolutely pathetic, but sadly true.

Obviously there is no actual collusion involved, nor would it be to the detriment of the consumer, quite the opposite, but the reality of these EU regulations (which are yet to be repealed) is that such actions which may be beneficial to passenger and railway alike are deemed to be illegal collusion. If we hadn’t left the EU when we did, it would still be illegal for politicians to even alter these rules at all! How it was allowed to end up like this in the first place I’ll never know.

Do you have a link to a specific EU rule which would regard this as collusion or ban it?

 

[507020]

Do you have a link to a specific EU rule which would regard this as collusion or ban it?

Article 101 of the Lisbon Treaty. It seems a common interpretation is that ANY contact between companies which must nominally be in competition may be treated as illegal collusion, requiring them to forfeit 10% of their annual turnover to the European Commission.

Also note the European First Railway Package and subsequent railway packages.

 

[Cantab26]

Article 101 of the Lisbon Treaty. It seems a common interpretation is that ANY contact between companies which must nominally be in competition may be treated as illegal collusion, requiring them to forfeit 10% of their annual turnover to the European Commission.

Also note the European First Railway Package and subsequent railway packages.

Assuming that you are referring to the 2007 Treaty of Lisbon, this has only seven articles.

Did you have anything else in mind? A link would be useful.

 

[Dai Corner]

Article 101 of the Lisbon Treaty. It seems a common interpretation is that ANY contact between companies which must nominally be in competition may be treated as illegal collusion, requiring them to forfeit 10% of their annual turnover to the European Commission.

Also note the European First Railway Package and subsequent railway packages.

But as a previous poster said, there isn't any contact between the TOCs so there can be no collusion. The reason for the closureisn't even within Avanti's control.

LNER simply note from information in the public domain that the WCML is closed and conclude that they should be able to sell their tickets at higher prices. Or even just notice sales are much higher than they'd expect.

 

[takno]

Article 101 of the Lisbon Treaty. It seems a common interpretation is that ANY contact between companies which must nominally be in competition may be treated as illegal collusion, requiring them to forfeit 10% of their annual turnover to the European Commission.

Also note the European First Railway Package and subsequent railway packages.

No contact between the companies is required. Companies are unambiguously allowed to respond to public announcements from their competitors, or from the infrastructure company

 

[thedbdiboy]

Do you have a link to a specific EU rule which would regard this as collusion or ban it?

It's the 1998 Competition Act.

Competition Act 1998

An Act to make provision about competition and the abuse of a dominant position in the market; to confer powers in relation to investigations conducted in connection with Article 85 or 86 of the treaty establishing the European Community; to amend the Fair Trading Act 1973 in relation to...

www.legislation.gov.uk

As noted above this does not prevent LNER or Avanti responding to public price signals, but whilst governed by Competition Law, they are also no longer 'competing' with each other as the revenue risk is now held by Government for both. They still have completely separate yield management systems; plus any attempt by one or the other to hike prices when the other is shut would run the risk of being perceived in the political melee of exploiting passengers.

The system/structure in place right now is not a normal one, the industry is in the middle of a complete reorganisation so there is at this time no systemic logic; it is instead being micromanaged by competing (!) Whitehall departments until GBR can be mobilised to sufficient degree (and providing that Government can be persuaded to delegate sufficiently).

 

[Dai Corner]

It's the 1998 Competition Act.

Competition Act 1998

An Act to make provision about competition and the abuse of a dominant position in the market; to confer powers in relation to investigations conducted in connection with Article 85 or 86 of the treaty establishing the European Community; to amend the Fair Trading Act 1973 in relation to...

www.legislation.gov.uk

That's a lot to read through and understand.

Could you point us to the relevant section and explain it in simple English?

 

[Watershed]

It seems a common interpretation is that ANY contact between companies which must nominally be in competition may be treated as illegal collusion, requiring them to forfeit 10% of their annual turnover to the European Commission.

The notion that TOCs cannot collaborate on fares is an utter myth.

Collaboration happens all the time, and indeed is required on many issues, such as ORCATS (revenue distribution) and joint fares.

There is also clear evidence of collusion on matters such as EMT asking for East Coast's consent to remove the permitted route from Newark to London via Nottingham (as revealed under FoI) to allow them to increase the price of Nottingham to London to more than Newark to London.

There are some practices which are illegal, principally anti-competitive pricing (for example if LNER and Avanti collaborated to keep the price of Edinburgh to London Advances artificially high). But that doesn't mean that all such collaboration is illegal.

 

[Wallsendmag]

Yesterday I booked a London to Glasgow service for 30th April, via Edinburgh due to the WCML blockades.

The service I wanted to book didn’t have a bike space, but by the time I had found that out because of the absolutely stupid procedure where you have to book a ticket then ask if there is a bike space, I had been into the LNER seat planner and the train was pretty much full, over a week out.

I then tried the next train. The advance was £12 more for a train that, when I went into the seat planner, was more than half empty at time of booking.

I can’t see how a logical system would allow this to happen.

First, if there is a blockade on one main line, surely the advances should be limited on the other to ensure capacity is available. The message the ticketing system should really be sending out is, this is not the weekend for a really cheap fare - it is a weekend to max out limited capacity.

Then there is allowing a train to be pretty much full on advances over a week out. Now anybody wanting that train and who might pay the full off peak fare is locked out, so revenue will be loads less than it could be.

Then there is the oddest bit. Why is the advance fare on a nearly fully allocated train less than the fare on the next, nowhere near as booked up train.

Are we sure they are using the right logic and tech to work all this stuff out? What I have described above feels like a lose lose for railway and passenger.

As a side point I would add that somebody seems to have out the seat allocation programming in backwards. The number of times I have not been allocated my choice of forward facing window table or airline only to find loads available using the seat planner. Why????

We recently picked up an error in the way that the website allocates seat, this should be handled by RARS2 National reservation system) unless the customer expresses a preference.LNER uses a bespoke system to maximise revenue from each service. It may look strange at times but generally works very well. If you look at the trains on the hour from Kings Cross the availablility may be very different from the semi fast on the half hour for many reasons.

== Doublepost prevention - post automatically merged: 24 Apr 2022 ==

The notion that TOCs cannot collaborate on fares is an utter myth.

Collaboration happens all the time, and indeed is required on many issues, such as ORCATS (revenue distribution) and joint fares.

Absolute rubbish

 

[Watershed]

Absolute rubbish

Which bit are you suggesting is rubbish, and why? Are you denying that TOCs have agreements with each other, for example on ORCATS revenue distribution, or joint fares?

 

[Wallsendmag]

Which bit are you suggesting is rubbish, and why? Are you denying that TOCs have agreements with each other, for example on ORCATS revenue distribution, or joint fares?

ORCATS is an industry system the agreements are with the TOC and RDG/DfT not each other. Our pricing managers over the years have been very aware of the fact that they can't talk about fares with other TOCs.

 

[Cantab26]

I think people are getting a bit over excited here.

Competition law does not prohibit TOCs from discussing such matters in toto, but it is very easy to slide into illegal collaboration or practices. Hence, it is generally easiest simply not to have the discussion in the first place.

 

[Haywain]

I think people are getting a bit over excited here.

Competition law does not prohibit TOCs from discussing such matters in toto, but it is very easy to slide into illegal collaboration or practices. Hence, it is generally easiest simply not to have the discussion in the first place.

Quite. Don’t risk breaking the law by not getting close to the risk.

 

[Starmill]

ORCATS is an industry system the agreements are with the TOC and RDG/DfT not each other. Our pricing managers over the years have been very aware of the fact that they can't talk about fares with other TOCs.

Trade bodies such as RDG are absolutely still bound by the rules of competition law. Indeed it is actually relatively common for abuses of market dominance to be carried out by trade organisations.

 

[thedbdiboy]

That's a lot to read through and understand.

Could you point us to the relevant section and explain it in simple English?

Not quickly. My background is in its practice within the industry as directed by legal departments, and I'm not a lawyer. However, the instructions and directions given to any rail staff involved in fare setting or pricing have been unequivocal and mean that it is not possible for TOCs to plan or discuss anything but the broadest aspects of fare setting with each other; or for ATOC/RDG to facilitate this. It's a major driver of anomalies and split ticketing. The Competition Act is drafted assuming 'normal' business rules, for example, that competitors would not set prices that are also valid for rivals' goods or services - but fare regulation and the TSA rules actually require TOCs to do that, so the two sets of rules operate in conflict with each other.

The GBR structure will likely overcome this as Competition Law does not apply to Government or public bodies; even now, DfT can direct, but what they can't do is ask TOCs to discuss it between each other and come back with a proposal.

== Doublepost prevention - post automatically merged: 24 Apr 2022 ==

I think people are getting a bit over excited here.

Competition law does not prohibit TOCs from discussing such matters in toto, but it is very easy to slide into illegal collaboration or practices. Hence, it is generally easiest simply not to have the discussion in the first place.

Thanks, that sums it up very well. In order to avoid the risk of non-legally trained staff breaching what is a very complex area of law, the legal instruction was basically 'just don't discuss anything outside the company or group'.

 

[Cantab26]

Thanks, that sums it up very well. In order to avoid the risk of non-legally trained staff breaching what is a very complex area of law, the legal instruction was basically 'just don't discuss anything outside the company or group'.

Exactly. It’s a commercial decision rather than a matter of legality.

My employer (a law firm) has actually developed a piece of bespoke software which can audit client email and document servers to identify potential red flags. This means that clients can catch things before they become a problem whilst still getting the benefit of external collaboration if they consider that there is a business need for it.

I believe we charge the earth for this service though!

 

[Dai Corner]

Competition Law does not apply to Government or public bodies; even now,

I think this may be a key point, in that LNER is owned by DfT OLR Holdings Ltd which in turn is owned by the Secretary of State for Transport. So competition law shouldn't apply to it or other Government-owned TOCs?

 

[507020]

Assuming that you are referring to the 2007 Treaty of Lisbon, this has only seven articles.

Did you have anything else in mind? A link would be useful.

My understanding is that the Treaty of Lisbon represents the 3rd revision of the Treaty on the Functioning of the European Union (TFEU) and given that we invoked Article 50 of this treaty in order to leave the European Union, it is common knowledge that it has well over 7 articles!

But as a previous poster said, there isn't any contact between the TOCs so there can be no collusion. The reason for the closureisn't even within Avanti's control.

LNER simply note from information in the public domain that the WCML is closed and conclude that they should be able to sell their tickets at higher prices. Or even just notice sales are much higher than they'd expect.

No contact between the companies is required. Companies are unambiguously allowed to respond to public announcements from their competitors, or from the infrastructure company

This is a good point. I’m unaware of the implications of the shared, public infrastructure operator on the pseudo-competition between TOCs. Under such a system, there can never be true competition even if they use physically separate routes. Of course the previous LMS and LNER 1923-48 and their predecessors were vertically integrated, owning their own infrastructure, but predated (in quite dramatic fashion!) the formation of the European Union with its right-wing competition laws.

As noted above this does not prevent LNER or Avanti responding to public price signals, but whilst governed by Competition Law, they are also no longer 'competing' with each other as the revenue risk is now held by Government for both. They still have completely separate yield management systems; plus any attempt by one or the other to hike prices when the other is shut would run the risk of being perceived in the political melee of exploiting passengers.

The system/structure in place right now is not a normal one, the industry is in the middle of a complete reorganisation so there is at this time no systemic logic; it is instead being micromanaged by competing (!) Whitehall departments until GBR can be mobilised to sufficient degree (and providing that Government can be persuaded to delegate sufficiently).

I think this may be a key point, in that LNER is owned by DfT OLR Holdings Ltd which in turn is owned by the Secretary of State for Transport. So competition law shouldn't apply to it or other Government-owned TOCs?

What I don’t understand is why DfT/OLR didn’t begin to reconsolidate the TOCs immediately upon them returning to public ownership, especially Northern and LNER given they duplicate several of each other’s routes in Yorkshire.

 

[takno]

predated (in quite dramatic fashion!) the formation of the European Union with its right-wing competition laws.

I'm not sure why you'd regard the basic competition laws which prevent collusion as right wing, or particularly driven by Europe. Most of the western world has this kind of law in place.

I can only imagine that you're getting exercised by the most recent package of measures on rail, which don't have any particular relevance to this at all.

 

[Cantab26]

My understanding is that the Treaty of Lisbon represents the 3rd revision of the Treaty on the Functioning of the European Union (TFEU) and given that we invoked Article 50 of this treaty in order to leave the European Union, it is common knowledge that it has well over 7 articles!

This is not the case. The Treaty of Lisbon has seven articles and effected amendments to the earlier Maastricht and Rome treaties which are now ‘branded’ as the Treaty on European Union (TEU) and the Treaty on the Functioning of the European Union (TFEU).

Article 50 TFEU deals with freedom of establishment i.e. the right to run a business.

Have you ever actually read any of these treaties?

 

[thedbdiboy]

I think this may be a key point, in that LNER is owned by DfT OLR Holdings Ltd which in turn is owned by the Secretary of State for Transport. So competition law shouldn't apply to it or other Government-owned TOCs?

They are still bound by it, because they are taking commercial decisions. A Government body itself is not bound by Competition Law but a company owned by Government is (otherwise a nationalised company would have an unfair advantage in a mixed economy).

 

[modernrail]

Absolutely pathetic, but sadly true.

Obviously there is no actual collusion involved, nor would it be to the detriment of the consumer, quite the opposite, but the reality of these EU regulations (which are yet to be repealed) is that such actions which may be beneficial to passenger and railway alike are deemed to be illegal collusion. If we hadn’t left the EU when we did, it would still be illegal for politicians to even alter these rules at all! How it was allowed to end up like this in the first place I’ll never know.

I am very unclear as to what you think would have happened if they did speak to each other? Do you think they would have actually chosen to coordinate fares? Bearing in mind there is no transparency about the number/level of advance fares even within a TOC, what do you think the TOCs would have chosen to do? Agree a transparent set of advance fares that are lower than what they have set separately. Fat chance.

I suspect the key point going forward is that the TOCs are on management contracts. As they are contracted by the Government and the Government takes revenue risk they probably couldn’t breach competition law by speaking to each other, because ultimately their fare plans have to be signed off by Government.

As for competition law itself, it is there solely to protect consumers. Whilst all laws produce some odd/infuriating results I am struggling to think of a particularly perverse one within competition law. Competition law originates from the US and was introduced when Standard Oil was getting too big for its boots. It is not and EU concept and the UK has always been a keen adopter and will continue to have a strong competition law regime, by choice. There is little if any political disagreement on that.

 

[507020]

They are still bound by it, because they are taking commercial decisions. A Government body itself is not bound by Competition Law but a company owned by Government is (otherwise a nationalised company would have an unfair advantage in a mixed economy).

When you have private companies attempting to compete to run essential public services, surely nationalised companies should have the advantage? By all means have a mixed economy but certain things should be off limits.

I am very unclear as to what you think would have happened if they did speak to each other? Do you think they would have actually chosen to coordinate fares? Bearing in mind there is no transparency about the number/level of advance fares even within a TOC, what do you think the TOCs would have chosen to do? Agree a transparent set of advance fares that are lower than what they have set separately. Fat chance.

I suspect the key point going forward is that the TOCs are on management contracts. As they are contracted by the Government and the Government takes revenue risk they probably couldn’t breach competition law by speaking to each other, because ultimately their fare plans have to be signed off by Government.

As for competition law itself, it is there solely to protect consumers. Whilst all laws produce some odd/infuriating results I am struggling to think of a particularly perverse one within competition law. Competition law originates from the US and was introduced when Standard Oil was getting too big for its boots. It is not and EU concept and the UK has always been a keen adopter and will continue to have a strong competition law regime, by choice. There is little if any political disagreement on that.

Given that transparency is by far one of the most important values and unfortunately one that is too often overlooked, a single transparent set of fares based on the reality of a single railway which has engineering works taking place on different main lines at different times, that would be an excellent thing for them to “collude” on, although it isn’t best achieved by companies talking to each other, but by all train services being run by a single operator which decides all its own fares internally, or failing that, the only other acceptable scenario being to have a separate InterCity operator with its own slightly different fares for a premium service, although the single operator could still run separately branded InterCity services.

If all TOCs are going to be run by the government directly, then what exactly is the point of them remaining carved up into different operating sectors, when they can all be merged back into a single large one with many strategic efficiency benefits.

I am aware that competition law exists outside the EU and do not believe that it should be abandoned entirely, but that the current implementation is not fit for purpose and should be completely written in a way that works for the UK.

 

[tomuk]

A Government body itself is not bound by Competition Law but a company owned by Government is (otherwise a nationalised company would have an unfair advantage in a mixed economy).

Wrong they are bound by competition law just as any other 'undertaking' when carrying out 'economic activity'. I was involved with a Dept For education scheme which fell foul of this.

 

[modernrail]

When you have private companies attempting to compete to run essential public services, surely nationalised companies should have the advantage? By all means have a mixed economy but certain things should be off limits.

Given that transparency is by far one of the most important values and unfortunately one that is too often overlooked, a single transparent set of fares based on the reality of a single railway which has engineering works taking place on different main lines at different times, that would be an excellent thing for them to “collude” on, although it isn’t best achieved by companies talking to each other, but by all train services being run by a single operator which decides all its own fares internally, or failing that, the only other acceptable scenario being to have a separate InterCity operator with its own slightly different fares for a premium service, although the single operator could still run separately branded InterCity services.

If all TOCs are going to be run by the government directly, then what exactly is the point of them remaining carved up into different operating sectors, when they can all be merged back into a single large one with many strategic efficiency benefits.

I am aware that competition law exists outside the EU and do not believe that it should be abandoned entirely, but that the current implementation is not fit for purpose and should be completely written in a way that works for the UK.

My point is that they would not have chosen to collude on it to make the situation more transparent. Why would they, other than to agree to both hold higher prices. They had no economic interest in colluding for good purposes. Also, the problem is not with competition law but with the way the system was set up with some regulated and some unregulated fares. Had all fares been regulated the transparency could have been secured at a national level.