Will Rail Fares Increase Forever?

[mrd269697]

Been wondering, the annual rail fare rise always makes headlines but it’s almost a given now. It is a bit of sobering thought that they will increase year on year forever. The way I look at it is simple - the cheaper the fare, the more attractive to the consumer. Then, more people buy tickets and revenue should then be at a similar level to a reduced patronage with higher priced tickets. We need to encourage people out of cars - and a yearly price increase doesn’t help this.

An example. Don’t ask why I have it, but I found under my bed a Port Sunlight - Liverpool return from 2006. My dad used to take me on the train when I was a kid. His ticket was £1.80. Mine was 90p. Now, an adult fare from there is £4.20, and a child is £2.10. That’s over double the price, have wages doubled since 2006?

a few anomalies I’ve wondered about - peak fares are normally more than off peak fares, by around 20% at a guesstimate, however, a Liverpool to London off peak return is currently around 94.50, which an anytime return is an eye watering £347. Why is it four times the price? No other anytime tickets excluding London termini are to my knowledge.

some fares are very cheap, northern do very cheap advance tickets. Some are very expensive, Prestatyn to Chester is around £13-14 despite only being a few stops (a good 25 miles but still seems extremely extortionate)

Apologies for the rambling. Do you think we will we ever see rail fares fall, or at the very least, freeze?

 

[Horizon22]

Most things have increased over time - its called inflation. Maybe rail fares have increased more than other things, but the trend is always upward.

Besides since 2006, governements have taken proactive measures to shift the cost of the railways from the taxpayer to the farepayer. This is the result of that decision.

 

[jfollows]

Average wages have increased by 45% October 2006 to October 2021 (https://www.ons.gov.uk/employmentan...ns/averageweeklyearningsingreatbritain/latest).

That's an average of +2.5% a year, by the way.

The clear intention is to make fares increase at more than inflation so that the fare-payer pays more and the taxpayer pays less over time. Of course they're the same people. Some people who don't use the train would say that they're not, and they're not completely wrong, but they might represent a significant type of voter too. One characterisation could be that the motorist (who has suffered little or no interest in fuel duty) is voting for a government which will take more money off rail fare payers. However Labour had a similar policy before 2010 so it's not black and white.

 

[LNW-GW Joint]

some fares are very cheap, northern do very cheap advance tickets. Some are very expensive, Prestatyn to Chester is around £13-14 despite only being a few stops (a good 25 miles but still seems extremely extortionate)

You might be surprised to learn that local fares in North Wales were actually reduced a year or so ago, to correct the anomaly that per-mile fares in North Wales were significantly higher than those in South Wales.
That was the result of different fares policies over the years in the LM and WR camps before being unified in TfW.
Merseyrail has some of the lowest fares in the UK, also part of local transport policy, as they are not part of the DfT fare-setting machine.

Liverpool-London (along with Manchester, Preston, Birmingham and any intercity routes into Euston) have high fares firstly from a BR policy of increasing fares on modernised lines (electrification in the 60s), and secondly because since 1996 the privatised TOCs increased unregulated fares (which Anytime are) by far more than inflation, while regulated fares (eg the off-peak return and seasons) stayed low.
Broadly, the same applies on all intercity routes (ie LNER, GWR, MML and XC all have high Anytime and First Class fares), although there are cheap advances to compensate.
Often there is a lower-cost way of doing the journey on slower trains involving changes or longer routes.
DfT wants to change the entire fares system, but we have no details yet.
The current DfT rule is that fares rise at RPI + x% each year, where the "x" is a political decision.

Fares are also high because the railway costs a fortune to run, and recently Covid has ruined the business model because there are fewer peak-hour commuters paying really high fares (not your £4.20!).
The government is looking at a large black hole in railway finances, even with the current high level of fares.
So fares are unlikely to come down, but they might become a little less extreme.

 

[philosopher]

Been wondering, the annual rail fare rise always makes headlines but it’s almost a given now. It is a bit of sobering thought that they will increase year on year forever. The way I look at it is simple - the cheaper the fare, the more attractive to the consumer. Then, more people buy tickets and revenue should then be at a similar level to a reduced patronage with higher priced tickets. We need to encourage people out of cars - and a yearly price increase doesn’t help this.

I think it is impossible to tell for two reasons, first we do not know what government policy will be the future and second we do not know what the inflation rate will be in future years. If inflation is high and government policy is to shift the burden more to the farepayer, then increases would be almost certain.

If inflation is low or there is deflation and the government decides to increase rail subsides, then a fare freeze or cut could happen.

 

[mrd269697]

Thanks for your feedback folks. Yes Merseyrail fares are quite cheap - especially the day savers. I used these as an example as they are my local Toc.

 

[TravelDream]

You might be surprised to learn that local fares in North Wales were actually reduced a year or so ago, to correct the anomaly that per-mile fares in North Wales were significantly higher than those in South Wales.
That was the result of different fares policies over the years in the LM and WR camps before being unified in TfW.

TFW reduced a large number of fares when powers moves from the UK to Welsh Government.
North Wales had unfair pricing for quite some time and it was only right they came down.
Though North Wales fares didn't actually fall the most. They fell by 10% on average whilst Valleys Lines fares fell by 12.5%.

 

[thedbdiboy]

Been wondering, the annual rail fare rise always makes headlines but it’s almost a given now. It is a bit of sobering thought that they will increase year on year forever. The way I look at it is simple - the cheaper the fare, the more attractive to the consumer. Then, more people buy tickets and revenue should then be at a similar level to a reduced patronage with higher priced tickets. We need to encourage people out of cars - and a yearly price increase doesn’t help this.

What you are describing is elasticity of demand - this is a mathematical model. Where the value is greater than 1, reductions in price are more than offset by increases in demand; less than 1 and a reduction in price is not offset and money is lost.
Your simple observation omits the latent need for travel. Of course lower prices are more attractive, but if you were going to travel anyway then money is lost. If you had no intention to travel by train at all then no amount of price changes will matter. The secret is to lower the right prices for the right customers at the right times so that they fill otherwise empty seats.
The main issue at the moment is that the Treasury have a black hole in railway finances to fill and tend to be very conservative (verb, not political party) about elasticities. At some point, Government is going to need to let GBR be more ambitious and risk-taking in lowering the right sorts of fares in order to stimulate recovery.