How are rail fares split between different TOC's

[CheshirePaul]

Last Saturday I made a journey from Nantwich to Wrexham as I wanted to ride sum differnt trains and loco hauled, you can go either via Shrewsbury or Chester. The day return was only £8.70, can any one tell me how the fare that I paid is shared out between the TOC's as I used the services below:

Nantwich ~ Shrewsbury ATW 153
Shrewsbury ~ Wrexham Wrex & Shrops 67
Wrexham ~ Chester ATW 158
Chester ~ Crewe VT 390 hauled by 57
Crewe ~ Natwich ATW 153

 

[Greenback]

For most tickets, a computer based program with the acronym ORCATS is used as the basis for revenue allocation. It was originally developed by BR, and stands for soemthing I can't quite rememebr exactly but is along the lines of Operational Research Computerised Allocation of Tickets to Services or something similar.

Apparently it takes into account permitted routeings and the data is weighted according to how likely a person is to take a particular route or service along that route.

For a simple journey like Carmarthen to Whitland, ATW will receive all the revenue from a ticket, except for the commission padi to the vendor (so if it's the ATW ticket office in Carmarthen ATW get all the cash, if it's the Trainline, they don't!). A more complicated journey like your example will see the revenue split between a lot more TOC's based mainly on distance that might be travelled on a TOC and the number of services that the TOC provides.

I believe the system is wieghted so as to allow preference to through services, as it's considered that passengers will usually take a direct train rather than having to change.

 

[yorkie]

I believe there are very few people in the country who will know where the revenue for a Nantwich to Wrexham ticket goes. The formula for calculating ORCATS payments is a closely guarded secret. We know very little about it.

I can guess that it is highly likely that the majority of revenue goes to ATW, as a quick look at the timetable shows the majority of the fastest journey opportunities involving 3 ATW trains, but there are some of the fastest journey opportunities that involve either VT or WS for a significant portion, so they'll get a fair proportion too. Other TOCs are unlikely to get much. All applicable TOCs are required to convey customers holding such tickets on valid routes as permitted in the Routeing Guide, subject to ticket conditions & restrictions regardless of revenue allocation.

If any TOC feels that they are not getting a fair proportion of any particular flow, they can request for an audit to be carried out. However this may be costly and it is unknown (that I know of) who pays for the cost of such an audit.

See other threads - this has cropped up several times recently, try searching the forum for ORCATS.

I'd really like to know, for example, how much ORCATS revenue the 2033 King's Cross - Nottingham (change @ Grantham) gets versus the 2030 St Pancras - Nottingham (direct but arrives Nottingham 2 mins later and overall 5 mins slower). I suspect most people here would go for the faster option as it's a vastly superior train and service with better on-board facilities, catering etc, and most here would know it's a simple case of walking from one side of a platform to another, and the chance to get fresh air for a few mins during the journey is usually welcome. But you can guarantee any elderly, disabled, or families using the train would want to get the direct train and wouldn't realise that they're getting a rattling mid-range DMU for such a journey (and they might not even care!). The irony is that those coming from the London Underground station (ie, the majority of passengers I reckon) would do a lot less walking at King's Cross and at Grantham combined than the St Pancras people would! But would ORCATS know any of this? I'd hope that ORCATS would give more money to the faster journey, but I suspect probably not as the direct train is only 5 minutes slower and it is weighted toward direct trains. But we can only guess!

 

[bnm]

Don't know about the ORCATs divvy, but I for one would rather have the rattling mid-range DEMU all the way than a change of trains onto a budget-range 15x DMU at Grantham. Double the trains, twice the chance of problems. Fresh air and a strech may be nice - but in the depths of winter?

 

[wibble]

I believe there are very few people in the country who will know where the revenue for a Nantwich to Wrexham ticket goes. The formula for calculating ORCATS payments is a closely guarded secret. We know very little about it.

The only people who would know, other than the DfT, are any of the TOCs receiving an allocation for the journey.

I'd really like to know, for example, how much ORCATS revenue the 2033 King's Cross - Nottingham (change @ Grantham) gets versus the 2030 St Pancras - Nottingham (direct but arrives Nottingham 2 mins later and overall 5 mins slower). I suspect most people here would go for the faster option as it's a vastly superior train and service with better on-board facilities, catering etc, and most here would know it's a simple case of walking from one side of a platform to another, and the chance to get fresh air for a few mins during the journey is usually welcome. But you can guarantee any elderly, disabled, or families using the train would want to get the direct train and wouldn't realise that they're getting a rattling mid-range DMU for such a journey (and they might not even care!). The irony is that those coming from the London Underground station (ie, the majority of passengers I reckon) would do a lot less walking at King's Cross and at Grantham combined than the St Pancras people would! But would ORCATS know any of this? I'd hope that ORCATS would give more money to the faster journey, but I suspect probably not as the direct train is only 5 minutes slower and it is weighted toward direct trains. But we can only guess!

The allocation doesn't go as far as basing allocations on individual services, stock type etc.

Between London and Nottingham, the Any Permitted ticket is priced by EMT and they receive nearly all the revenue from the ticket. Route Grantham (priced by EC) has most of the money allocated to East Coast, with some allocated to EMT and Hull Trains.

 

[Mr Spock]

Not sure why anybody other than the TOC's need to know what proportion of tickets go where, as long as the TOC's are happy with the split it must surely be ok.

As for surveys about travel patterns I thought that these were done on a fairly regular basis.

 

[shinkansen1966]

Not sure why anybody other than the TOC's need to know what proportion of tickets go where, as long as the TOC's are happy with the split it must surely be ok.

TOCs are mostly supported with taxpayer money. And their operations, regulation and tensure is determind by officials accountable to the public. Such regulations and government intervention suggests the railways are deemed a public service.

For these reasons, the ORCATS books should be available to the public. As should payments made between TOCs and Network Rail when delays occur. For instance, back in 2001 my FGW train was 3.5 hours late arriving into Paddington. I asked FGW what payments they'd get from Railtrack whose cable probs had caused the delay. FGW would not say how much they'd get.

 

[Greenback]

Full information on all of the hidden intricacies of the railway should be publicly availabe, but the Freedom of Information Act does not even apply! Despite the fact that there are large amounts of public money being moved around between various organisations!

 

[wibble]

TOCs are mostly supported with taxpayer money. And their operations, regulation and tensure is determind by officials accountable to the public. Such regulations and government intervention suggests the railways are deemed a public service.

Does that include TOCs that pay premia to the government?

For these reasons, the ORCATS books should be available to the public.

Why? They would only be of benefit to a small number of people who can be bothered to trawl through them. Who would pay to have them published at each timetable change and publish any updates or changes that take place throughout the year?

As should payments made between TOCs and Network Rail when delays occur. For instance, back in 2001 my FGW train was 3.5 hours late arriving into Paddington. I asked FGW what payments they'd get from Railtrack whose cable probs had caused the delay. FGW would not say how much they'd get.

The information is commercially sensitive and TOCs aren't covered by the FOI unless the data has been supplied by the TOC to the DfT.
--- old post above --- --- new post below ---

Full information on all of the hidden intricacies of the railway should be publicly availabe, but the Freedom of Information Act does not even apply! Despite the fact that there are large amounts of public money being moved around between various organisations!

There are loads of businesses that have received public funding, either directly or indirectly through subsidies or tax breaks.

 

[shinkansen1966]

There are loads of businesses that have received public funding, either directly or indirectly through subsidies or tax breaks.

Some TOCs receive a subsidy, some pay a premia. Overall, approx £5 billion of govt money is annually given to rail companies.

I'm all for transparency rather than obfuscation. Would keep these rail companies on their toes. And may help to explain why these railways companies seem to cost so much of our money to run.

 

[Greenback]

It would be nice to know the actual costs involved in engineering closures. How much do NR pay to TOC's? How much does it actually cost to hire in replacement buses? How much does a TOC save on staff costs? Is the end financial result a good one for TOC's at NR's expense?

 

[shinkansen1966]

How much does a TOC save on staff costs? Is the end financial result a good one for TOC's at NR's expense?

I've wondered this, too. Do any TOCs actually save money during engineering works ? Then some of this saved money could be shared with the public who specifically travel on the days of engineering works.

Similarly, with my 3.5 hour delayed FGW train. Exactly how much compensation did FGW get from Railtrack (as it was) ? This compensation should be shared in full amongst the passengers on the train. FGW should take the full hit for extra staffing costs when our train rolled into Paddington 02:00 in the morning. Why? This is part of the risk of running a railway. No one forced FGW to run trains, so they should take some of the financial hit when things go wrong...

 

[wibble]

It would be nice to know the actual costs involved in engineering closures. How much do NR pay to TOC's?

How much does it actually cost to hire in replacement buses?

I believe the TOC pays for it and claims the cost back from NR.

How much does a TOC save on staff costs?

Very little I should think, unless the saving is on overtime. The costs will be largely fixed - i.e. if a diver is contracted for 40 hours a week, then the TOC is unlikely to give them a day off at their expense.

Is the end financial result a good one for TOC's at NR's expense?

Possibly. As well as the direct cost of the actual work, there will be some passengers who decide not to travel which NR may compensate for. Look at how many people avoided the WCML at weekends during weekend closures - they're all flocking back now!

 

[shinkansen1966]

These TOCs seemed to be a foolproof financial wheeze. They get some compensation from NR, their figures are partly obscured because it's 'market sensitive'.

When Virgin and Railtrack got the cost of WCML upgrade wrong, taxpayer came to the rescue through a barely publicised annual public subsidy paid to Virgin. They should have been handing over money to govt now, the improved service was to be soo profitable.

When GNER and National Express got their business profile wrong, they simply walked away from their TOC franchise. With only a minimal stake lost. They never paid the rest of their govt premia for the remainder of the franchise.

Might get into this TOC business myself. Financially you can scarcely go wrong.

 

[Greenback]

Quite. There doesn't appear to be a great dela of risk involved in reality.

There are several fundamental questions that arise from Wibble's post.

1. If the TOC pays for the replacement coaches and claims it back from NR, what processes ar ein place toe nsure that the best value has been found?

2. Any leave is effectively at the TOC's expense. As engineering work is often at weekends, the TOC will often save on any Sunday enhancements by marking up additional train crew as not required. Why should the whole process not be open and transparent?

3. Who decides on the amount of compensation that should be paid to TOC's for passengers avoiding the railway due to engineering? How are these figures checked and audited?

Where there is public money being out by NR I think it's fair and reasonable to expect a greater degree of transparency than we have.

 

[shinkansen1966]

Where there is public money being out by NR I think it's fair and reasonable to expect a greater degree of transparency than we have.

We live in an age of public sector austerity. Every taxpayer penny spent has some be scrutinised for best value. Let's look at the railway industry and get them to throw open their books.

Are we really getting best value for our annual £5 billion ?
How much financial risk do TOCs really take on when they ask to run franchises? After all, they often profit when they run these franchises.
What exactly are the financial arrangements between TOCs and NR ?

 

[Greenback]

Answers:

I don't think so!
I don't know for sure, but it seems like hardly any!
No one outside the roganisations appears to know

If the industry was transparent, I suspect the answers would be

No
None
Guaranteed to provide further help to the TOC's at taxpayers expense

This is probably why we are not allowed to know the answers!

 

[Mr Spock]

These TOCs seemed to be a foolproof financial wheeze. They get some compensation from NR, their figures are partly obscured because it's 'market sensitive'.

When Virgin and Railtrack got the cost of WCML upgrade wrong, taxpayer came to the rescue through a barely publicised annual public subsidy paid to Virgin. They should have been handing over money to govt now, the improved service was to be soo profitable.

When GNER and National Express got their business profile wrong, they simply walked away from their TOC franchise. With only a minimal stake lost. They never paid the rest of their govt premia for the remainder of the franchise.

Might get into this TOC business myself. Financially you can scarcely go wrong.

Not sure that you can blame Virgin for getting the WCML upgrade wrong - Railtrack/Network Rail were responsible for the upgrade and Virgin were to procure the trains.

As for Virgin getting subsidies still this is a result of the Government/ORR/SRA changing the track access rules. All access costs were originally spread equally (depending on number of trains, size of trains, etc but this was then changed so that users of the WCNL had to pay higher fees due to the amount of money being spent on the upgrade thus a premium became a subsidy.

 

[shinkansen1966]

Not sure that you can blame Virgin for getting the WCML upgrade wrong - Railtrack/Network Rail were responsible for the upgrade and Virgin were to procure the trains..

To what extend did Railtrack/Network Rail pay for WCML upgrade overruns out of their own pockets ? And to what extent did government step and bail out their mistakes ?

And why is Virgin franchise subsidised now ? Surely, no need for taxpayer help. We were told it was going to make money when Virgin franchise was set up.

As for Virgin getting subsidies still this is a result of the Government/ORR/SRA changing the track access rules. .

Why did the government change track access rules ? I do not understand why Virgin needs subsidy from government. EC (and previously NX, GNER) all make money. What is so special about Virgin that it needs our money?

 

[Mr Spock]

As explained when Virgin signed up for the WC franchise there was a certain amount included for track access charges and these charges were changed to a higher amount so Virgin were then entitled to receive extra money to cover this increase. This applies to all franchises so that any change in track access levels result in more (or in some cases less) money from the government.

The idea Virgin receive a subsidy is a bit of a misconception as all it means is that the DFT are paying money to them so that they can give it to Network Rail rather than just paying the money direct.

As for the East Coast making money this is based on the fact that their track access charges are a lot lower than those for the West Coast.