In 'Rail Fares and Ticketing: Next Steps' published in October 2013, the Department for Transport sets out its vision for 'a modern, customer-focused fares and ticketing system' to support its wider policy objectives.
Responding to what it considers to be passengers' overriding concern: the cost of some fares, DFT's headline proposal is to cap the upper limit of any individual fare rise at 2% above the permitted average of inflation +1%, for all regulated fares – as illustrated below.
Department caps the increase for individual regulated fares at RPI+3%
Although train operators are responsible for setting fares, the Secretary of State has a duty under the Railways Act 1993 to ensure that fares are reasonable and it, therefore, imposes certain restrictions on train operators through their franchise agreements.
Whilst franchise agreements currently limit the average annual increase to the fares basket to RPI+1%, individual regulated fares may rise by up to RPI+6%. So some passengers have experienced substantial increases in their fares.
From the fares setting round in January 2014 operators will only be allowed to increase any individual regulated fare by RPI+3% per year.
The review includes a range of other proposals
- Flexible ticketing trial – In 2014 DFT will identify a train operator in the 'South Eastern Flexible Ticketing' programme area to run a flexible ticketing trial offering discounts for those travelling in the 'shoulder-peak' and for part-time workers. Whilst reducing commuters' travel costs and encouraging passengers to use less busy services the trial will also provide valuable insights to inform future initiatives.
- Adopting new technology – DFT is committed to using new technology such as smartcards, contactless bank cards, near-field communication and barcodes. DFT’s SEFT programme will pilot smart ticketing technology next year with other commuter areas to follow in 2015/2016 and the entire network over the next 10 to 15 years. In the meantime, DFT will roll out a simplified magstripe ticket from early 2014.
- 'Mix and match' long-distance ticketing – the current policy of only regulating off-peak returns has led to cases where a single fare costs nearly as much as the return. DFT proposes a pilot scheme under which it will regulate off-peak single fares instead so that passengers can choose the most appropriate fare for each leg of their journey.
- Code of Practice on ticket information at point of sale – the industry is tasked with adopting a Code of Practice within the next 12 months which clearly explains to passengers the level of service that they can expect at the point of sale to enable them to choose the best ticket for their journey. ORR will oversee development of the Code.
- Ticket office opening hours – whilst operators are encouraged to modernise ticketing facilities, DFT notes that changes to ticket office opening hours can be controversial. In the future such proposals will be dealt with via the Franchise Agreement rather than under the Ticketing and Settlement Agreement as now.
Brioney Thomas and Lydia Bailey advise clients operating in the rail industry on a wide range of regulatory issues and are part of our Rail Policy and Regulation team.