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Should Grand Central be shut down?

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harz99

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Better not to have something than to have it and it be rubbish (and Arriva be profiting off it being rubbish - at least sanctions should ensure they are not able to make any profit until they sort it out).
Very easy for you to say as you're not one of the people at whom the GC routes are aimed to serve, neither do you use them...those of us that are and do use them will doubtless feel the same as I do.

They would like more reliability but accept there is a price to pay which is occasionally things going a bit astray, and very occasionally going badly astray.
 
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Starmill

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Is it profiting? I am by no means an expert at reading company accounts but GC's latest for the year to 31 December 2022 (we're waiting for their 2023 accounts) do not make happy reading to my eye! They show a pre-tax loss of £3.2m (an improvement to be fair on 2021 which was a pre-tax loss of £22.2m) and had net liabilities of £41.9m having seemingly been kept afloat by a line of credit from DB worth up to £45m which was paid off by issuing shares to Arriva Trains UK in exchange for a £50m injection of equity to GC allowing them to pay off DB and presumably give them some operating cash headroom as well.

Again, not an expert but that doesn't read like a company which is returning profits to Arriva at any great scale! Of course those are now basically two years out of date so perhaps the position has markedly changed...
Certainly there's no evidence of meaningful operating profits in that year, nor the ones right before it.

But, of course... there probably wouldn't be.

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Very easy for you to say as you're not one of the people at whom the GC routes are aimed to serve, neither do you use them...those of us that are and do use them will doubtless feel the same as I do.

They would like more reliability but accept there is a price to pay which is occasionally things going a bit astray, and very occasionally going badly astray.
There is no requirement for perfection, only for practicality.

For example, if you can't get a replacement train out, and you can't get ticket acceptance on alternative services, and you can't get road transport, you absolutely must permit customers to pay for their own new tickets and cover the bill for those after the fact, or if that's not possible, pay for their own taxis and cover the bill for those. It's the absolute bare minimum.
 

Watershed

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It seems an odd suggestion - shut down by whom?
The ORR, for persistently and deliberately breaching the conditions of their operating licence relating to PRO and NRCoT compliance. What's the point in having those licence conditions if they can be breached with impunity?

Who is the arbiter of what is “moral”?
No-one, so I agree there's little value in arguing over it.

They have competition on the route and, if they really were that bad, surely they would long since have gone out of business. The fact they haven’t, in many years of operating on the route, suggests they aren’t generally seen as badly as some on here believe. Why should those people be denied the choice to use them if they wish?
Plenty of profitable businesses can survive despite ripping their customers off and/or whilst having a terrible reputation, if they still ultimately provide a service that people want at a price they want to pay. The low cost airlines are a classic example. That doesn't mean they shouldn't be subject to regulation, and if they deliberately and persistently break those regulations, be subject to sanctions up to and including being shut down.

Since their track access is subsidised to such a significant degree, GC can be profitable whilst offering lower prices than LNER and thus attract budget-conscious travellers. As a rail operator, people expect a certain level of provision for when things go wrong, but GC don't live up to that expectation.

If GC were upfront about the fact you're effectively on your own if anything goes wrong - whereas you might be inconvenienced, but would broadly be OK, with LNER or other operators - I imagine that might rather influence people's purchasing decisions.

In many cases the obligations are ridiculously onerous and impossible for even the franchised TOCs to live up to for various practical and logistical reasons - as the threads on here regularly show. So perhaps the solution is more sensibly qualified obligations (eg if there are do not travel warnings, you won’t get any assistance and are on your own, or a modification of the PRO to reflect reasonable endeavours rather than something closer to absolute). Then people can simply decide whether they’re happy to use the railway under those conditions.
Ah, here we go again! It'd be refreshing if you recognised that the law doesn't require TOCs to do the impossible ;) rather than flogging this dead horse. What penalty could there even be for failing to procure a taxi in the blink of an eye at Altnabreac? None, obviously - there are no damages because the passenger could no more incur expenses by procuring one than the train company could.

What it doesn't allow, though, is the current parsimony and obduration - where TOCs tell passengers to get lost (as in the example that led to this thread), or just give up and declare "do not travel" at the slightest hint of trouble, even when entirely self-imposed and foreseeable (c.f. the west side of Northern most Sundays). In both of those cases there are plenty of things the TOCs could and should be doing, with the absolute minimum being to clearly state they'll reimburse people's expenses for alternative transport arrangements, or overnight accommodation where that's not feasible. But they can't even be bothered to do that, and that's the attitude that needs stamping out.

Whoever is responsible for OAOs complying with all relevant regulations. ORR?
The ORR is certainly responsible for enforcing breaches of operating licences - which include provisions requiring compliance with the PRO. However, they seem to have no interest whatsoever in doing so for Grand Central, or indeed any other TOC. The closest they got was during Covid, when they gently rapped Eurostar on the knuckles for misleading people on their refund rights, and making refunds nearly impossible to obtain.
 

Starmill

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Arriva / Grand Central don't maintain the trains. Alstom do in accordance with laid down maintenance regimes and industry standards.
I really don't see how that has anything to do with the issue.

If the train breaks down, it's GC's own fault. It's nobody else's...
 

Watershed

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As you say we have an existing legal system with enforceable obligations. So if people feel they’ve been wronged by GC in an actionable sense they have recourse to the courts. I suspect few people bother, though. That’s partly because only a tiny minority of their passengers end up stranded, and because those who do probably make other arrangements and any “loss” simply isn’t worth claiming for.
I suspect the vast majority of people don't know about their rights - as demonstrated by the number of people who just refund their tickets and buy a new one when they hear their train is cancelled.

Even for those who do know about their rights, it is a daunting prospect to take a train company to Court. Most companies generally settle claims prior to a hearing or sometimes even before they have to admit or defend them, but if they choose to see a case through to the bitter end there is a lot of legwork required.

This is precisely why the PRO obligation is enshrined as a licence requirement - it shouldn't be necessary to take companies to Court to get what you are entitled to. In turn, the ORR should be enforcing licences much more stringently to make sure that their conditions are actually observed. At the moment it's effectively a free-for-all and only the most outrageous practices, such as Eurostar effectively refusing refunds, will attract the regulator's attention.

GC comply with their contractual obligations the vast majority of the time (I don’t think anyone is suggesting otherwise)
GC have amongst the highest cancellation rates in the industry, so the fact they get perhaps 90% of their passengers to their destination, and the majority of those roughly on time, is nowhere near good enough.

Imagine an airline which complied with its safety obligations "the vast majority of the time" (and so by corollary, had safety lapses on a fairly frequent basis) - it would be utterly unacceptable! This is no different, but because it's "only" money at stake, nobody really cares.

and it isn’t illegal for a company to breach contracts - it is sometimes unavoidable!
It's not illegal to breach a contract, but it is illegal to operate train services in breach of your operating licence.

People probably also realise that GC, LUMO etc are cheaper for a reason. You might have to wait a few hours if your train is cancelled, and you might be more likely to be stranded, but you’re certainly not paying LNER prices. The saying “buy cheap, buy twice” springs to mind. Many people prefer to buy cheap and take the risk!
We, as "super users" of the railway, appreciate it - but most people don't. And fundamentally, we're not talking about nice-to-haves like catering or seat reservations, this is literally about them upholding their end of the bargain and indeed their legal obligations. If they can't be bothered to comply with those requirements they don't deserve to be in business.

Their remit is safety; they aren’t there to get involved in contractual disputes AIUI. There’s the ombudsman for that I believe.
Not on an individual basis - but where, as here, there is clear evidence of wilful and repeated breaches of their legal obligations, they should absolutely be investigating with a view to taking enforcement action.

It would be interesting to know whether they only have a “best endeavours” type obligation to comply with them. If so they could conceivably discharge their obligations to the DfT under their access agreement while falling short of the onerous rerouting obligations in the PRO etc. to the passengers!
The requirement to comply with the PRO is absolute. The PRO is not, however, absolute in the way you always claim it to be. It is, as with all laws, subject to the constraints of what is physically possible. What it's not subject to is whether a train company feels like spending the money to comply; cost is (and should be) no object to compliance.
 

YorkRailFan

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I don't see GC changing anything, or the ORR stepping in, until an incident like the one we saw on Sunday involves a high profile person and the incident blows up on social media thanks to that. (Thinking of the incident involving a House of Lords Peer being stuck on a LNER service at KGX)

At minimum, the ORR should be issuing some form of warning to GC (whether that be a fine or something else) as this cannot continue.
Many communities would, for a period of time, lose their direct link to London, or York in the case of stations Sunderland to Eaglescliffe, and possibly never get it back.
TPE calling at Eaglescliffe on their Saltburn service wouldn't be too hard and provide Eaglescliffe with a York service, one that could be more frequent than it already has.
 

Starmill

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"they can sue if they don't like it" isn't appropriate in a highly-regulated environment such as railways. Access to the railway is controlled because what it can provide is a) strictly limited and b) massively subsidised by public funds. In this context it makes sense that ORR and Parliament have placed extra obligations on TOCs that other sellers of services do not have.

Railways in this country have not been able to exist without the generous support of the public purse for over a century, and that includes the current OAOs. I think complying gracefully is reasonable from them in return, rather than "well if they don't like it let them sue".

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GC have amongst the highest cancellation rates in the industry, so the fact they get perhaps 90% of their passengers to their destination, and the majority of those roughly on time, is nowhere near good enough.

Imagine an airline which complied with its safety obligations "the vast majority of the time" (and so by corollary, had safety lapses on a fairly frequent basis) - it would be utterly unacceptable! This is no different, but because it's "only" money at stake, nobody really cares.
And of course, some people have paid more to use GC than for a competitor company, because the franchised operator has decided not to serve their town...
 

ainsworth74

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TPE calling at Eaglescliffe on their Saltburn service wouldn't be too hard and provide Eaglescliffe with a York service, one that could be more frequent than it already has.
And indeed they are doing so from this December timetable change! Eaglescliffe will have an hourly service to York (and elsewhere) direct with TPE.
 

357

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Since their track access is subsidised to such a significant degree, GC can be profitable whilst offering lower prices than LNER and thus attract budget-conscious travellers.
Are the access charges published anywhere to take a look?

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I really don't see how that has anything to do with the issue.

If the train breaks down, it's GC's own fault. It's nobody else's...
You're the one that said they skimp on maintenance!
 

357

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Is a new fleet now on order?
It's been confirmed that a new build fleet is part of the next Track Access application

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They are available on Network Rail's website here:

Cheers. Is there an easy way to compare how much GC pay on their "subsidised" access charges compared to LNER for example?

I can find the charges for vehicle type (180 being 27p per mile, about 7p more expensive than an Azuma when I had a very quick look on my phone) but nothing about subsidy.
 
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Starmill

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You're the one that said they skimp on maintenance!
The rate they break down at isn't unpredictable or unexpected, it's pretty consistent with the history of the units isn't it? If they choose not to lower availability they're aiming for or pay more for the extra parts and labour to keep it higher then by definition yes that is skimping on maintenance. TfW admitted in public that this was what had happened when they announced they would withdraw theirs.

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I think this is absolutely key, and I think they deliberately didn't. If they had (as e.g. SWR do quite often) this thread probably wouldn't exist - I do recognise the practicalities of arranging mass alternatives somewhere like Northallerton (I actually know the place fairly well).
They won't be making that clear though will they? That'd require their customer relations department to, er, actually pay up!
 

357

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If they choose not to lower availability they're aiming for or pay more for the extra parts and labour to keep it higher then by definition yes that is skimping on maintenance.
I was under the impression that GC had acquired two Voyagers due to 180 reliability? I think they were Class 221's. Maybe I am mistaken?
 

YorkRailFan

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I was under the impression that GC had acquired two Voyagers due to 180 reliability? I think they were Class 221's. Maybe I am mistaken?
Correct, the 2 Voyagers used to be with Avanti. But they're only used on Bradford services.
 

Starmill

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I was under the impression that GC had acquired two Voyagers due to 180 reliability? I think they were Class 221's. Maybe I am mistaken?
The class 221 don't seem to cover for the Sunderland route, unfortunately. Nor does the one they use for cover on the Bradford route appear to have released a unit.
 

357

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The class 221 don't seem to cover for the Sunderland route, unfortunately. Nor does the one they use for cover on the Bradford route appear to have released a unit.
Looking at RTT allocations, Monday to Friday there are two 221s in use on most days.

Surely this releases "good" 180s, with their significantly higher seating capacity, for the Sunderland route?

Surely every day there is a train cancelled due to a fault, and both 221s are in use, it would otherwise have been three cancelled trains?
 

Watershed

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Cheers. Is there an easy way to compare how much GC pay on their "subsidised" access charges compared to LNER for example?

I can find the charges for vehicle type (180 being 27p per mile, about 7p more expensive than an Azuma when I had a very quick look on my phone) but nothing about subsidy.
Those are the variable track access charges, which only make up a small proportion of NR's total income.

It's the fixed track access charges where the big difference arises. Even when adjusted for their much smaller scale of operations, GC don't pay nearly as much in fixed charges as LNER and other (formerly) franchised TOCs.

They also benefit from Network Rail's overall operations being subsidised by the government to a substantial degree, whereas for franchised TOCs this is effectively viewed as part of the cost of operating.

If GC had to pay for track access based on their pro-rata share of Network Rail's actual operating costs (based on vehicle miles operated) it seems unlikely they would have a business case to profitably operate.
 

matacaster

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Indeed. There are two separate issues:

Can GC comply with today's obligations in law and contract?

Could GC comply with potentially more expensive provisions in the future?

If the answer to both is no then I think the entire business is in doubt. It's not really an existential problem if they just follow the former but couldn't the latter.
Is there any case for suggesting that grand central making an application to run a service using stock which had a poor reliability record should have been refused?
 

ainsworth74

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Cheers. Is there an easy way to compare how much GC pay on their "subsidised" access charges compared to LNER for example?
It's some what complicated but basically the subsidy is because Open Access Operators only have to pay the variable usage charge whilst (formerly) franchised TOCs have to pay both the variable usage charge but also the fixed access charge as well on top of their variable usage. For instance LNER have to pay in CP7 an additional £292m in fixed track access charges whilst GC have no such charges to pay as they only pay the variable charge which gives them quite the cost advantage compared to LNER (or any other TOC). I think there have been rumblings of reforming this but I'm not sure if they've ever amounted to anything.
 

Dr Hoo

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It's some what complicated but basically the subsidy is because Open Access Operators only have to pay the variable usage charge whilst (formerly) franchised TOCs have to pay both the variable usage charge but also the fixed access charge as well on top of their variable usage. For instance LNER have to pay in CP7 an additional £292m in fixed track access charges whilst GC have no such charges to pay as they only pay the variable charge which gives them quite the cost advantage compared to LNER (or any other TOC). I think there have been rumblings of reforming this but I'm not sure if they've ever amounted to anything.
(Passenger) Open Access Operators (at least the long-distance ones) also have to pay an Infrastructure Cost Charge per train km as well as the Variable Track Access Charge applicable to the particular class of rolling stock.

As I understand it, the formerly franchised TOCs have the Fixed Charge paid by the DfT (or other 'sponsor'). They do have to pay the Variable Track Access Charge on the same basis as Open Access. However, if a formerly franchised TOC wants to operate additional/marginal services, e.g. LNER wanting to operate more trains to Bradford to compete with Grand Central, they only have to pay the variable charge. The fixed charge remains, err, fixed.

At least that's what the Periodic Review 2023 documents seem to say.
 

Clarence Yard

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The fixed charge is a misnomer. It is basically another form of Network Grant laundered through the franchise TOCs. It varies every year, sometimes by a large amount, and plays no part in the “franchised” TOCs business decisions. It never has done.

It only exists because NR (and Railtrack before it) has a residual funding requirement after Network Grant and all the variable charges are taken into account. The sum for that year (it varies during a 5 year control period) then gets divided up amongst the franchised TOCs, who are protected from the yearly changes by their NRC or in previous days, their Franchise Agreement.

So OA and “franchised” TOCs really are on a level playing field in real variable charges with one exception, the ICC which was introduced so that OA operators on significant flows could contribute to some of the fixed costs of the railway. Lumo pays it and the cost per train mile is greater than LNER’s Fixed Track Access, but then the latter is not really a properly worked out charge - just a residual funding payment.

If FTA had never been thought of and we had introduced proper per train mile path charges for everyone instead, there would never have been this confusion over what FTA really is.
 

357

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The fixed charge is a misnomer. It is basically another form of Network Grant laundered through the franchise TOCs. It varies every year, sometimes by a large amount, and plays no part in the “franchised” TOCs business decisions. It never has done.

It only exists because NR (and Railtrack before it) has a residual funding requirement after Network Grant and all the variable charges are taken into account. The sum for that year (it varies during a 5 year control period) then gets divided up amongst the franchised TOCs, who are protected from the yearly changes by their NRC or in previous days, their Franchise Agreement.

So OA and “franchised” TOCs really are on a level playing field in real variable charges with one exception, the ICC which was introduced so that OA operators on significant flows could contribute to some of the fixed costs of the railway. Lumo pays it and the cost per train mile is greater than LNER’s Fixed Track Access, but then the latter is not really a properly worked out charge - just a residual funding payment.

If FTA had never been thought of and we had introduced proper per train mile path charges for everyone instead, there would never have been this confusion over what FTA really is.
Thanks for the detailed explanation:)
 

harz99

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The fixed charge is a misnomer. It is basically another form of Network Grant laundered through the franchise TOCs. It varies every year, sometimes by a large amount, and plays no part in the “franchised” TOCs business decisions. It never has done.

It only exists because NR (and Railtrack before it) has a residual funding requirement after Network Grant and all the variable charges are taken into account. The sum for that year (it varies during a 5 year control period) then gets divided up amongst the franchised TOCs, who are protected from the yearly changes by their NRC or in previous days, their Franchise Agreement.

So OA and “franchised” TOCs really are on a level playing field in real variable charges with one exception, the ICC which was introduced so that OA operators on significant flows could contribute to some of the fixed costs of the railway. Lumo pays it and the cost per train mile is greater than LNER’s Fixed Track Access, but then the latter is not really a properly worked out charge - just a residual funding payment.

If FTA had never been thought of and we had introduced proper per train mile path charges for everyone instead, there would never have been this confusion over what FTA really is.
So does that mean the views expressed upthread by @Watershed which allege GC has an unfair costs advantage over say LNER are in fact incorrect?
 

Watershed

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The fixed charge is a misnomer. It is basically another form of Network Grant laundered through the franchise TOCs. It varies every year, sometimes by a large amount, and plays no part in the “franchised” TOCs business decisions. It never has done.

It only exists because NR (and Railtrack before it) has a residual funding requirement after Network Grant and all the variable charges are taken into account. The sum for that year (it varies during a 5 year control period) then gets divided up amongst the franchised TOCs, who are protected from the yearly changes by their NRC or in previous days, their Franchise Agreement.

So OA and “franchised” TOCs really are on a level playing field in real variable charges with one exception, the ICC which was introduced so that OA operators on significant flows could contribute to some of the fixed costs of the railway. Lumo pays it and the cost per train mile is greater than LNER’s Fixed Track Access, but then the latter is not really a properly worked out charge - just a residual funding payment.

If FTA had never been thought of and we had introduced proper per train mile path charges for everyone instead, there would never have been this confusion over what FTA really is.
With respect, I disagree. OAOs are still benefitting from access charges that are subsidised since they do not reflect a true apportionment of NR's operating costs. In essence, their business model is reliant on the government subsidising NR's continued running - whether through "laundered" fixed charges or the Network Grant.
 

43066

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Ah, here we go again! It'd be refreshing if you recognised that the law doesn't require TOCs to do the impossible ;) rather than flogging this dead horse. What penalty could there even be for failing to procure a taxi in the blink of an eye at Altnabreac? None, obviously - there are no damages because the passenger could no more incur expenses by procuring one than the train company could.

Here we go again indeed. The PRO in particular imposes onerous obligations that are essentially impossible to meet in situations where taxis cannot be procured, or where other operators deny ticket acceptance etc. That is the simply reality of the situation as thread after thread on this website shows.

What it doesn't allow, though, is the current parsimony and obduration - where TOCs tell passengers to get lost (as in the example that led to this thread), or just give up and declare "do not travel" at the slightest hint of trouble, even when entirely self-imposed and foreseeable (c.f. the west side of Northern most Sundays). In both of those cases there are plenty of things the TOCs could and should be doing, with the absolute minimum being to clearly state they'll reimburse people's expenses for alternative transport arrangements, or overnight accommodation where that's not feasible. But they can't even be bothered to do that, and that's the attitude that needs stamping out.

This is a strange and loaded way of describing what is perfectly sensible demand management. There’s nothing illegal about telling people not to travel when if they attempt to do so they will likely end up stranded somewhere, or contribute to dangerous crowding levels.

I have agreed with @Bletchleyite above that if GC are misleading people then that is unacceptable of course - It’s not clear that’s happening though. TOCs should certainly be prepared to refund accommodation booked by passengers, but whenever that has happened it gets shot down in flames incase 0.01% of passengers can’t afford to pay for hotels on a credit card.

I suspect the vast majority of people don't know about their rights - as demonstrated by the number of people who just refund their tickets and buy a new one when they hear their train is cancelled.

Even for those who do know about their rights, it is a daunting prospect to take a train company to Court. Most companies generally settle claims prior to a hearing or sometimes even before they have to admit or defend them, but if they choose to see a case through to the bitter end there is a lot of legwork required.

Alternatively most people aren’t reflective of the prevailing views on here, and simply want to get from A to B and have no wish to engage in battles with train operators over “their rights”. Hence accepting a refund and booking a new ticket will be regarded as a perfectly adequate solution by many.

As for companies settling claims late and being awkward - that’s fairly standard business practice. We all know budget airlines, etc will often be as obstructive as possible and won’t make it easy to get anything out of them. It’s a way of doing business many people are happy with for reasonable prices.


This is precisely why the PRO obligation is enshrined as a licence requirement - it shouldn't be necessary to take companies to Court to get what you are entitled to. In turn, the ORR should be enforcing licences much more stringently to make sure that their conditions are actually observed. At the moment it's effectively a free-for-all and only the most outrageous practices, such as Eurostar effectively refusing refunds, will attract the regulator's attention

This would be the PRO that has been watered down in the EU, but we for some reason still have the 2007 version in UK law?

Perhaps the powers that be simply consider that the “breaches” are so de minimis, and affect so few people, that they’re simply not worthy of attention, and aren’t serious enough, or happening on a large enough scale, to constitute a breach of the operator’s access agreement.

Speaking of flogging dead horses, your position once again appears to be that the industry is wrong, that the regulator are wrong and that you are right. You’re entitled to that view, of course, but the discussion is somewhat moot!

GC have amongst the highest cancellation rates in the industry, so the fact they get perhaps 90% of their passengers to their destination, and the majority of those roughly on time, is nowhere near good enough.

Who’s to decide what is or isn’t good enough!? It’s evidently good enough for their customers. Ultimately people might well choose a cheap ticket with a 90% chance of arrival over a ticket with a 96% chance that costs twice as much.

Imagine an airline which complied with its safety obligations "the vast majority of the time" (and so by corollary, had safety lapses on a fairly frequent basis) - it would be utterly unacceptable! This is no different, but because it's "only" money at stake, nobody really cares.

This is a false comparison as we aren’t discussing safety.

The requirement to comply with the PRO is absolute. The PRO is not, however, absolute in the way you always claim it to be. It is, as with all laws, subject to the constraints of what is physically possible. What it's not subject to is whether a train company feels like spending the money to comply; cost is (and should be) no object to compliance.

So the PRO isn’t absolute, but requires spending unlimited amounts of money to comply with, regardless of practicality. That seems a rather contradictory argument to me. And, as noted, if it isn’t unreasonable why has the legislation been watered down by the EU?

The suggestions above along the lines of operators keeping buses on standby all over the country “just in case” I’m afraid show a level of naïveté as to how businesses actually operate, and what is commercially viable.

Very easy for you to say as you're not one of the people at whom the GC routes are aimed to serve, neither do you use them...those of us that are and do use them will doubtless feel the same as I do.

They would like more reliability but accept there is a price to pay which is occasionally things going a bit astray, and very occasionally going badly astray.

This is probably the most importantly post on here. An actual user of the service who accepts that everything isn’t perfect but evidently wants it to continue. It’s interesting that some of the “pro passenger” voices on this forum - including the OP who admits he never uses it himself - would like to see you denied that service!

I’m not going to continue the usual back and forth, and I will agree to disagree with @Watershed as usual :). However I for one hope GC continue operating and serving their customers long into the future.
 
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Dr Hoo

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Quite possibly better than stranding a load of people in a place that is (a) neither their origin nor destination, (b) doesn't have many taxis and (c) doesn't have many hotels. But obviously for entirely different reasons and notified in advance.
Noting that this was in the inaugural post for this thread, it now appears from the ‘original’ thread that in fact nobody was stranded at Northallerton after all because they went forward on the following TransPennine.
 

Clarence Yard

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With respect, I disagree. OAOs are still benefitting from access charges that are subsidised since they do not reflect a true apportionment of NR's operating costs. In essence, their business model is reliant on the government subsidising NR's continued running - whether through "laundered" fixed charges or the Network Grant.

This argument was tested in the High Court and found wanting. Every operator of trains on the NR network does not properly pay a proportion of NR’s total costs according to usage so they only truly pay for their marginal costs and a “mark up” where there is an ability to pay (the ICC falls into this category). That is the legal system for charging, not one for full infrastructure cost recovery through users. That is currently illegal.

If the Government decided that NR’s funding would be cut, under the present law cuts would have to made in the network - the charges could not be raised beyond marginal rates and an “ability to pay” mark up.

So OAO do not benefit from an unfair advantage, another thing that was determined in the High Court by the then Mr Justice Sullivan.
 

Watershed

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This argument was tested in the High Court and found wanting. Every operator of trains on the NR network does not properly pay a proportion of NR’s total costs according to usage so they only truly pay for their marginal costs and a “mark up” where there is an ability to pay (the ICC falls into this category). That is the legal system for charging, not one for full infrastructure cost recovery through users. That is currently illegal.

If the Government decided that NR’s funding would be cut, under the present law cuts would have to made in the network - the charges could not be raised beyond marginal rates and an “ability to pay” mark up.

So OAO do not benefit from an unfair advantage, another thing that was determined in the High Court by the then Mr Justice Sullivan.
That is merely the legal position under the Railways Act as it stands. It doesn't change the fact their business model is reliant on the aforementioned subsidy.

The Railways Act could be changed to make it lawful to charge OAOs their fair share. The current government isn't thus inclined, but who knows about future governments.
 
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