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BBC article-further competition?

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Polarbear

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Just spotted this article on the BBC news site;

Competing on the same tracks
http://www.bbc.co.uk/news/uk-scotland-scotland-business-33582013

I'm on a train, in case you're wondering. It departed Glasgow Central platform 2 at 13.40, bound for London Euston.
At platform 1, another train was preparing to depart 20 minutes later. It's also run by Virgin trains, identical in every way - as you might expect.
But what if it were a rival service, with different pricing, a different configuration of seating and coaches, perhaps quieter or perhaps more crowded, free coffee, free wifi, a cinema carriage and a different approach to customer service?
I could have made a choice on cost or on service levels, and not just between First Class and Standard.
A Ryanair of the west coast line, or an Emirates? That's the question the Competition and Markets Authority (CMA) has been asking.

Overlapping

It's taken a look at the rail market, two decades after it became the benchmark for complex, botched privatisation, and wondered out loud if - next decade - competition could actually go further.

So far, the market competition for most rail operators is in bidding for the franchise. If you win, you are expected to deliver on services and quality, as agreed with the UK or Scottish government and monitored by the rail regulator. If you lose, the best you can hope is to compete again, perhaps 15 years later.

From the passenger point of view, very few rail routes offer choice between operators. If you don't like the service, tough luck - there might be a bus along in a while. Or if you have a long journey in mind, the competition is airborne.

The CMA points out that freight competes for track time on the same rails. So how about passengers?

It's careful to spell out some of the problems - that the current model relies on an adequate level of profit to invest in the service, and that could be undercut by competition.
There would also have to be a fair allocation of the less profitable or loss-making services which operators are obliged to provide as a condition of their franchises.
But with those provisos, the question being asked is whether there could be two franchisees competing on one line.
Or more overlapping franchises. Or several licensed operators, as with buses, carrying public service obligations.
East, west and further west
The CMA says the idea is most likely to work on the west coast line, the east coast line between Edinburgh and London, and the Great Western links between south-west England/South Wales and London.

The evidence, including some from countries which already have this, is that we could see downward pressure on fares, greater incentives to raise service quality and to innovate, operational efficiencies, more effective use of network capacity, and cost savings.
That's what you tend to find in Italy, Sweden, Austria and the Czech Republic, where they have open-access competition on the more lucrative routes, and to a lesser extent in Germany. In France, the main operator has started a budget brand on some routes.

Similar results have come from competition in Eastern England on London-Hull services. Arriva's Grand Central brand has set up in competition with Virgin East Coast on the London-York part of the eastern spine.
Competition is being driven by prices on advance tickets, and also by the offer of free wifi, extending to 4G. Challengers can offer a full range of tickets on board, rather than penalising late arrivals with the top fare.
Repeatedly, innovation on price and service has forced the incumbent franchisee to respond, and passenger satisfaction hasn't suffered. On Virgin Train services, where Stagecoach is the main partner, the Perth company's Megabus online budget ticketing system also offers Megatrain options.
'People's railway'
So it's not a bad set of outcomes, if it can be made to work, without the downsides.
However, to those potential downsides should be added the fact that the UK experience of this is only on some busy journeys linking into London.
It's a reminder that more distant sectors, such as those north into Scotland, may be less attractive to challenger firms, and could perhaps subsidise competitive routes elsewhere. Aviation shows us how that can work.
It's also less likely to work in Scotland if political pressure, from Labour at least, is for a return to a nationalised 'people's railway'. Some are instinctively suspicious of the drive towards more competition.
The CMA says this is longer-term thinking. Don't expect anything to change before 2023, least of all where a franchise has years to run.
In the meantime, we can probably agree that at least it's an interesting idea.

For me, this is all nice in theory, but the reality of operating rail services means that without a significant uplift in capacity, any large scale competition as suggested by the article is not going to happen any time soon. Also, it's been discussed before as many ideas floated at the time of privatisation were similar.
 
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jopsuk

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with the structure of the IEP contracts the chances of more competition on the ECML & the GWML is close to zero
 

yorksrob

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The articles done a pretty good job of explaining why competition works on a few flows but would be nigh on impossible across the whole network.

I could see it working on London - Scotland flows and also London - South West though.
 

mbreckers

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identical in every way

Apart from the fact that the 1400 is the slow train to Euston

Edit: Sorry for being pedantic, I'm that type of guy
 
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didcotdean

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The options the CMA are considering are:

Option 1 – retaining the existing market structure, but with significantly increased open access operations
Option 2 – two franchisees for each franchise
Option 3 – more overlapping franchises
Option 4 – licensing multiple operators, subject to conditions (including public service obligations)
 

Gareth Marston

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The options the CMA are considering are:

Option 1 – retaining the existing market structure, but with significantly increased open access operations
Option 2 – two franchisees for each franchise
Option 3 – more overlapping franchises
Option 4 – licensing multiple operators, subject to conditions (including public service obligations)

Bless were back to the cheap and cheerful trains for typists an the weekly bids for train paths.
 

Aldaniti

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My choice would be (in preferred order):

Option 1 - return to a nationalised system, run along the lines of a sectorised British Rail.

Option 2 - Issue 20-25 year franchises based on the old regional system, London Midland, Eastern, Western etc. It seems to work OK for Scotland.

Option 3 - Issue alternate paths to two companies for each franchise:

06:30 Glasgow - Franchisee A
07:30 Glasgow - Franchisee B
08:30 Glasgow - Franchisee A
09:30 Glasgow - Franchisee B

etc. etc.

None are perfect, but I really do feel that either of the three would result in something better than what we have at the moment.
 

Bald Rick

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Competition, generally, requires spare capacity. See US Health service providers.

When capacity is tight, competition requires regulation. See the ECML.
 

Philip C

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I think it is about time the Competition and Markets Authority was put up against a little bit of competition itself. Perhaps it would soon find that there was no future for their potty ideas and the work creation scheme of which they form a part. Alternatively they could be allowed, by their nutty sponsors, to conduct an experiment on an underground line serving their master's home turf (say the District Line or the Jubilee Line) and be permitted to see how wondrous their ideas prove to be, after half an hour's real life implementation!
 

route:oxford

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But what if it were a rival service, with different pricing, a different configuration of seating and coaches, perhaps quieter or perhaps more crowded, free coffee, free wifi, a cinema carriage and a different approach to customer service?

Forget "cinema carriage", I was on a United flight last year that still had one screen - there were a lot of unhappy passengers who were accustomed to travelling BA with individual seat back screens.

Virgin have already identified "quiet coaches" are unenforceable.

Free coffee - maybe in the olden days when people had low expectations, but these days there are far too many options.

Free (basic) Wi-Fi - should be a standard service requirements.

Seating - bums on seats is what makes the money. There aren't enough people (or businesses) willing to pay for a premium service to fill the 1st class coaches on Pendolinos - so any competition attempt would result in immediate adjustments to pricing to retain contribution.

So in reality, the competitor would have to be heritage Ryanair style operations.

New trains, maximum seats per carriage, intensive at seat sales of food and beverage, restricted luggage to one item of aircraft style cabin-bag plus soft personal bag. What the customer is prepared to pay for, but not what the enthusiast wants.
 

WatcherZero

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Its a bit ironic we get this investigation at a time when both government and the industry perceives that competition forces up costs not lowering them and there is less and less motivation for OAO. I imagine this investigation has been requested by a certain company whose been ignoring advice that they have to wait until the WCML recast and has been continually making near identical applications that were inevitably rebuffed.
 

Stats

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Its a bit ironic we get this investigation at a time when both government and the industry perceives that competition forces up costs not lowering them and there is less and less motivation for OAO. I imagine this investigation has been requested by a certain company whose been ignoring advice that they have to wait until the WCML recast and has been continually making near identical applications that were inevitably rebuffed.

It's not an investigation, it's a policy review. It has no legal standing and commenced at the beginning of the year. This publicity in it now has been prompted by a consultation on a discussion document released by the CMA last week. Here is the project page for those interested https://www.gov.uk/cma-cases/passenger-rail-services-competition-policy-project
 

Harpers Tate

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Perhaps "they" should undertake a full review of the huge benefits that wholesale deregulation and privatisation has brought to the Bus industry, with innovation, better services and cross-subsidy with less busy routes and times, and lower fares throughout.

Oh, wait...........
 

MarkyT

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Perhaps "they" should undertake a full review of the huge benefits that wholesale deregulation and privatisation has brought to the Bus industry, with innovation, better services and cross-subsidy with less busy routes and times, and lower fares throughout.

Oh, wait...........
At first bus deregulation seemed to work in busy areas with frequency often doubled etc as companies fought for traffic (we'll overlook the intervalidity of tickets etc) . Then some competitors introduced free or 'peppercorn' fares in order to gain market share. Passengers thought it amazing but perhaps didn't realise it was a fight to the death. Eventually one player rolled over and withdrew when their contingency or attack fund ran out and it was back to a monopoly operator who promptly slashed frequency and put fares back to sustainable levels again. Perhaps some on-track competition could work on the railways but it's only going to be on certain already lucrative longer distance routes and it clearly needs to be regulated to prevent the excesses of the bus wars. I think the best kind of competion is via alternative routes like in the west country to Exeter. Some would say the SWT route can't compete with the FGW timing but I would say that is only one factror. The SWT route also competes very favourably on price and ticket validities especially on non London journeys, and considering that all journeys between the south west and south east are not to the west end of London or the City, many real journeys are actually more convenient changing at Salisbury, Basingstoke or Clapham Junction. Oxford will soon get some real competition with the start of Chiltern services via Bicester - a different route serving different intermediate stations to London bu with a similar journey time. That's good and healthy whilst also introducing new journey opportunities changing between operators at Oxford.
 

DeeGee

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I think the best kind of competion is via alternative routes like in the west country to Exeter. Some would say the SWT route can't compete with the FGW timing but I would say that is only one factror. The SWT route also competes very favourably on price and ticket validities especially on non London journeys, and considering that all journeys between the south west and south east are not to the west end of London or the City, many real journeys are actually more convenient changing at Salisbury, Basingstoke or Clapham Junction. Oxford will soon get some real competition with the start of Chiltern services via Bicester - a different route serving different intermediate stations to London bu with a similar journey time. That's good and healthy whilst also introducing new journey opportunities changing between operators at Oxford.

I was thinking something similar myself. Looking at Liverpool to London, there are actually a couple of genuine options, with Virgin offering the more traditional "InterCity", service, but with the opportunity to get on a slower LM train doing the same journey at much cheaper rates, without the niceties of a buffet. I don't quite have the same offer from my home on the East Coast, but I can save money by sacrificing the number of journey opportunities I have and travelling on part of the journey by either EMT or Hull Trains; likewise on Southeastern paying a premium for an express service.

I thought that was the original plan for privatisation - what they did at Euston with one local and one Intercity operator duplicating services between terminals. Although subsequent thinking (Greater Western, for instance) has moved away from that.
 

talldave

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Gatwick to London did have some interesting "competition" between Thameslink and Southern. But it's been somewhat spoilt by Thameslink being crippled to a walking pace and Govia getting their incompetent paws on Thameslink :cry:.

Of course it makes ticket purchase a very complicated affair. But, for the dedicated amongst us, it was satisfying to stand at a Southern ticket machine, buying a cheaper "Thameslink" fare that enabled travel on supposedly pricier Southern trains.
 

AM9

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I was thinking something similar myself. Looking at Liverpool to London, there are actually a couple of genuine options, with Virgin offering the more traditional "InterCity", service, but with the opportunity to get on a slower LM train doing the same journey at much cheaper rates, without the niceties of a buffet....

The opportunity for LM to compete seems very constrained by VT's dominance of paths. I don't know whether this actually happens, but it seems that there is an insistence that no LM trains go direct from EUS to LIV, instead passengers have to change form London originated services onto Liverpool bound services somewhere in the West Midlands or at Stafford/Crewe. The paths are also quite inconvenient, sometimes missing connections by as little as 5 minutes.
None of this helps competition on exactly the same route covered by two different TOCs' services.
 

misterredmist

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These are the type of "quangos" who forget who they are trying to help and represent and tend to lose sight of the final beneficiaries of their proposed objectives.....

The Premier league TV live-football franchise was a prime example , whereby the EU insisted on breaking Sky's monopoly, but ending up forcing Joe Public to pay TWO subscriptions for live football instead of one.

My thoughts are that the limited paths available on the railway would make it impossible for two different operating companies to compete on a main line franchise and subsequently be able to put any money back into the system.

Also, if one of the operators was mortally wounded after a few years of savage competition, the victor would have the opportunity to rake in the lost spoils....
 

TDK

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Who decides who gets the lucrative paths? Highest bidder?

Is it not the TOC that pays the highest track access costs and also has to pay NR the highest amount for delay minutes? Surely NR regulate trains in order of delay per minute costs opposed to regulating trains using their intuition?
 

MarkyT

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The opportunity for LM to compete seems very constrained by VT's dominance of paths. I don't know whether this actually happens, but it seems that there is an insistence that no LM trains go direct from EUS to LIV, instead passengers have to change form London originated services onto Liverpool bound services somewhere in the West Midlands or at Stafford/Crewe. The paths are also quite inconvenient, sometimes missing connections by as little as 5 minutes.
None of this helps competition on exactly the same route covered by two different TOCs' services.

HS2 should help to solve this problem. All the really fast services would be moved to the new line under operator A, then all the remaining services on the WCML fast lines under operator B can have a regular stopping pattern south of Rugby. Operator C can mop up some of the inner and outer suburban out to Tring and at a push Milton Keynes. Now it hardly matters whether fast line services are run with Pendolinos or souped-up 110+MPH Desiros as with the 'All major towns and junctions' stopping pattern the achievable point to point timings will be almost identical. i.e. - There's no need for 'semi-fasts' to skip stops or switch to the slows to keep clear of rapidly approaching expresses behind.
 

mrmartin

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Anyone know the breakdown of LM vs Chiltern vs Virgin ticket sales to Birmingham? Some Chiltern services looking tomorrow morning only take 30 mins more but are nearly £40 cheaper. Unless you're on £80/hour, then it's not worth it. Plus phone signal will be way better on the Chiltern trains as the 390s destroy coverage. Plus free WiFi, vs Virgin's comedically expensive broken wifi.
 
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anme

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with the structure of the IEP contracts the chances of more competition on the ECML & the GWML is close to zero

Very good point! Our rail system is now so constrained by all kinds of decades-long contracts that there's almost no flexibility to change anything. The nationalised British Rail was a nimble, flexible and fast moving organisation in comparison (which is not to say I necessarily support wholesale nationalisation).

How did we come to such a ridiculous, rigid and inefficient system?
 

kjhskj75

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How did we come to such a ridiculous, rigid and inefficient system?

Too many lawyers. Departments of BR never had to sign binding contracts with other departments of BR.

At one time it was reported that the rail industry was employing more of them than drivers. That may still be the case.
 
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