I find this a very interesting debate, with many thoughtful contributions. My perspective on the matter is much influenced by having watched over the last few years many national operators on the continent shift from strictly distance-based tariffs to market pricing. That shift has been hugely controversial, especially in Germany where the media love to mock the growing complexity of German rail fares. Yet the reality is passengers numbers are up, and the majority of passengers buying Fernverkehr (ie. long distance) tickets now pay some sort of discounted fare rather than the full kilometre-based tariff.
Looking at how operators in Poland, Austria, Germany, Italy, etc. have used market freedoms to develop innovative pricing, I would suggest a number of way to improve the current UK system.
1. There is I think (please correct me if I am wrong) no UK-wide programme that rewards frequent travellers and no UK-wide railcard available to everyone. In Germany, there is a BahnCard programme. Pay a one-off fee of about 200 and you then get a 50% discount for a year on all tickets. The card costs much more if you want to buy half price first class tickets. Equivalent schemes exist in the Czech Republic and Switzerland. Naturally, in the UK market (where there is hugely more commuting than on the continent) it would be appropiate to place a morning peak time restriction, just as with some existing UK railcards (eg. Young Persons or Network Railcards).
2. Create greater inter-operator availability of Advance tickets. From my limited understanding of the UK, it seems to me that my chances of finding a really cheap deal are determined more by my intended route (and which TOC serves that route) than anything else. As mentioned on another thread, I snapped up a couple of London to York tickets for 9 quid each during a recent East Coast promotion. Great, but I wonder if anyone travelling from March to Aberystwyth or Yeovil to Dover ever benefits from such ridiclously cheap fares. This evident shortcoming in the present system might be addressed through the introduction of a more regulated approach to advance fares, such as we see in the German market. Say an entry-level Advance fare of 25 pounds single for any long distance journey in excess of 150 miles (analagous to the German Dauer-Spezial of 29 for any jouney in excess of 250 km), bound to particular trains where these are capacity controlled, but with more interavailablity between operators. It seems to me I can travel ridiculously cheaply from Euston to Glasgow via the WCML, but as soon as I try to book Tunbridge Wells to Dundee via London, the MML to Sheffield, then Settle & Carlisle, I am penalised for using less busy routes.
3. Introduce far greater fare transparency, so standardised tariff increments across all TOCs for promotional fares. For example 25 pounds, then 35 and 45 for advance fares (perhaps a 15 pound entry level for short hops up to 150 miles).
4. Have a maximum one way fare anywhere in the UK of, say, 120 pounds standard class (180 in first). This is common in many European countries. It actually leads to little revenue dilution, for most folk making very long journeys book in advance. But its psychological impact is considerable, especially as would-be travellers evaluate the merits of plane vs. car vs. train. And the pulling power of rail travel becomes very strong when a nationwide maximum fare can be discounted by 50% for holders of a layalty card like that I described in Point 1 above.
5. If I - as an averagely bright human being (I hope) - find it hard to understand the ATOC Routing Guide, then it is too complicated. In theory, it is an excellent idea, potentially hugely better than any equivalent I know on the continent, but in its implemention it leaves much to be desired. The mere fact that is has been updated so frequently of late attests to its underlying shortcomings.
I trust these few thoughts are of interest.
Nicky