Revenue sharing advance tickets

[trebor79]

I've been pondering this. How does revenue sharing work for advance tickets, and how are the prices agreed?
As an example, there are some quite cheap advances available from Greater Anglia stations to South Eastern stations. The fare setter according to brfares.com is GA.
So how are the prices agreed between GA and SE? And how is the revenue split?
Surely they can't be negotiating every single possible tier of advance on every single possible journey combination?

 

[Paul Kelly]

They aren't allowed to negotiate; my understanding is that it counts as collusion and is illegal under the Competition Act 1998. I have often wondered about this question too. My suspicion has been that the connecting TOC loses out to some extent, and there is a "race to the bottom" whereby more and more TOCs introduce their own advances and bar availability of those where the price is set by other TOCs, leading to more opportunities for split ticketing.

 

[Failed Unit]

They aren't allowed to negotiate; my understanding is that it counts as collusion and is illegal under the Competition Act 1998. I have often wondered about this question too. My suspicion has been that the connecting TOC loses out to some extent, and there is a "race to the bottom" whereby more and more TOCs introduce their own advances and bar availability of those where the price is set by other TOCs, leading to more opportunities for split ticketing.

I have heard about this before. If you take and LNER and connections (where the connections is a regional operator) you often find that you can get to the local station on an AP for a couple of £ more than you could get to the mainline station. But the regional operator gets a lower % of the fare then they would with a flexiable ticket. The may get 2% of an AP and 3% of a anytime return for example.

You could argue that the mainline operator is compensating for loss of car park revenue and it is 2% greater then they would have got.

But I don't think the local operators enjoy APs. In fact on certain busy 1 car EMT services - APs were banned you couldn't get a reservation it at times EMT knew that they would be leaving passengers behind. (the reservations themselves never existed)

 

[Joe Paxton]

They aren't allowed to negotiate; my understanding is that it counts as collusion and is illegal under the Competition Act 1998. I have often wondered about this question too. My suspicion has been that the connecting TOC loses out to some extent, and there is a "race to the bottom" whereby more and more TOCs introduce their own advances and bar availability of those where the price is set by other TOCs, leading to more opportunities for split ticketing.

I'm not sure that such a condition applies per se when it comes to setting and sharing Advance fares, rather I think it's more concerned with avoiding collusion between TOCs regarding regulated fares (specifically collusion between the flow owner and other TOCs).

But I would be interested to know more about the mechanisms at work behind Advance &connections fares, when more than one TOC is involved.

 

[thedbdiboy]

They aren't allowed to negotiate; my understanding is that it counts as collusion and is illegal under the Competition Act 1998. I have often wondered about this question too. My suspicion has been that the connecting TOC loses out to some extent, and there is a "race to the bottom" whereby more and more TOCs introduce their own advances and bar availability of those where the price is set by other TOCs, leading to more opportunities for split ticketing.

It is not illegal to openly negotiate a joint fare where neither operator provides a service for the full length of the route. It is illegal to 'collude' if two suppliers are serving the same market which is not the case with such joint fares.

 

[Andrew1395]

Advance tickets like all tickets which are not priced on a fare route which is one TOC only, have allocation factors generated either by agreement between operators or by the ORCATS model. ORCATS will look at the fares, timetable, sales and its own demand profiles and reference data to create allocations for each flow. All allocation factors are applied to sales by Lennon. All operators can dispute the outcomes of the ORCATS analysis by raising income disputes, which are subject to independent adjudication.

 

[Paul Kelly]

Very interesting. So considering a journey like Ipswich to Ramsgate: the reasonable route involves Greater Anglia and Southeastern, each comprising about half the journey. So one way of looking at it is that these two TOCs comprise a joint monopoly for journeys by rail between Ipswich and Ramsgate - therefore they are not permitted to collude in setting the price. Well that's what I always thought, but something never quite added up there, and I'm wondering now if I've misunderstood?

All the fares for that journey are set by Greater Anglia. The walkup fares are routed ✠ANY PERMITTED, but more interestingly the advance fares have two separate routeings: ✠AP GRTANG&CONCTS and ✠AP GA PLUS HS1, the latter being more expensive for each tier.

So unless Greater Anglia are being incredibly considerate of Southeastern's need to put a premium price on travel via HS1, this does indeed look like there has been co-operation between the two TOCs. Are they also permitted to co-operate when setting the walkup fares? If so, this explains a lot - particularly something else I have been wondering about how so many fares not set by GWR have intricate evening peak restrictions out of Paddington, corresponding to the departure times of long-distance trains.

A final thought: when two TOCs have a joint monopoly like this, must a TOC notify the other affected TOC of its intention to introduce cheap advance fares, or (for example) to change its yield management strategy so that many more cheap advance fares become available for sale? If not, then I'm guessing it defaults to ORCATS allocation of the revenue, but the connecting TOC might have to wait until the next fares round to implement a new agreed allocation, if it is not happy with the "cheapness" of the advance fares that have been introduced? Which seems a bit unfair?

 

[JonathanH]

A final thought: when two TOCs have a joint monopoly like this, must a TOC notify the other affected TOC of its intention to introduce cheap advance fares, or (for example) to change its yield management strategy so that many more cheap advance fares become available for sale? If not, then I'm guessing it defaults to ORCATS allocation of the revenue, but the connecting TOC might have to wait until the next fares round to implement a new agreed allocation, if it is not happy with the "cheapness" of the advance fares that have been introduced? Which seems a bit unfair?

Wasn't there a dispute between East Midlands Trains and one of the south of London operators about the sharing of revenue for advance purchase tickets some years back?

How is the removal of the cheapest tiers of "through" advance purchase tickets by Virgin West Coast explained?