Rail 2014 Consultation Analysis

6 Scottish rail fares

Q20 - What should be the rationale for, and purpose of, our fares policy?

Popular themes

1. - Rail fares should be competitive with other modes of transport, or more affordable than car or air travel
2. - Fares should encourage and maximise the use of rail travel, with many respondents noting rail's environmental benefits over the car
3. - Fares should be consistent, with all travellers paying the same, including for the same journey and for journeys of similar length across the network

Key themes

6.1 A number of clear messages emerged from responses to this consultation question. First and foremost, respondents noted that the key rationale for fares policy should be to ensure that rail travel is competitive with the private car for day-to-day travel and with air travel for longer distance trips. Respondents emphasised the Scottish Government's legally binding carbon reduction targets and modal shift targets and indicated that they considered competitive rail fares an integral element of this strategy. Several respondents went as far as to suggest that fares should be set on a road-equivalent / distance basis, as is currently the case with ferry services to the Western Isles, Coll and Tiree.

6.2 Respondents also raised a number of concerns about the complexity of the fare system. The current system is seen by many to be complex, opaque and, in many cases, unfair. This is a particular issue on long-distance travel from northern Scotland, where purchasing a ticket to an intermediate station, and then another ticket from that station to the final destination, can be cheaper than a single end-to-end ticket. Such examples were frequently cited and are a cause of real frustration for respondents. Respondents were also concerned about what they consider as the very high cost of walk-up tickets, often on low patronage services. Whilst respondents recognised the operator's revenue/profit incentives, they saw these high costs as a perverse concept, undermining the use of the rail network.

6.3 Affordability and value for money is a key issue for both commuters and off-peak travellers

6.4 Rail is seen by many as an instrument of social, economic and environmental policy. Many respondents believe that focusing purely on the financial aspects of railways does not appropriately capture the benefits of the system, particularly in rural areas. They therefore see a role for the Scottish Government in aligning fares policy to the Government's Strategic Objectives and National Indicators. This view was, to some extent, subject to the caveat put forward by other respondents that the balance between subsidy and fare box revenue must be broadly maintained.

6.5 There was broad support for integrated ticketing and the adoption of a smart ticketing platform. The SPT Zone card is seen as a Scottish leader in this respect and a number of respondents recommended development of similar systems for other areas of Scotland. There is also a belief that developing a smart ticketing platform will allow Scotland to overcome a number of the fares issues identified. The Oyster Card in London was held up as best practice.

6.6 Whilst there is agreement that fares should attract people onto trains, encourage modal shift, be consistent and, ultimately, affordable, the answers to questions 21-23 of the consultation show that there is no clear consensus on how this should be done.

Organisational and individual responses

6.7 Organisations were more likely than individuals to say that rail fares should be more competitive with other modes and more affordable than the car or aeroplane. This was particularly important to local authorities, other government groups, the NHS and community groups. To a lesser extent, groups said that fares should balance the needs of the taxpayer, the passenger and the franchisee.

6.8 A greater proportion of individuals simply stated that rail fares should be 'affordable' or provide 'value for money'. They were also more likely to say that fares should be consistent, with all travellers paying the same, for the same journey and for journeys of similar length across the network.

Equality issues

6.9 Equality of access was a key theme throughout the responses to this question. Equality groups often pointed out that affordability, social inclusion and concessionary fares are important. There appears to be a perception that rail travel in Scotland is overpriced for the people represented by equality groups and other socially excluded groups.

"Travelling by rail is expensive and fares increase frequently. Rail travel is often the only option for women who live outwith main transport centres, especially those accessing employment and education. More women would use trains if the fares were not so costly. Lower fares would encourage more passengers which would generate more income."
Scottish Women's Convention

6.10 Other organisations and individuals noted the importance of a fair fares policy to achieving social inclusion for all groups within society.

"…policy should seek to challenge social exclusion, promote economic development and encourage modal shift. Policy should also seek to simplify what is currently a very complex, opaque system. Fare policy can also have an impact on better integration between transport modes."
Scottish Trades Union Congress

"Fares policy should work towards the proposed outcome of enabling a modal shift towards rail travel in Scotland. To this end, fares should be kept to a minimum and free travel should be used to improve accessibility of the service to key groups - for example, a recent study on free public transport for older age groups suggests an association between use of such services and lower levels of obesity in this age group."
NHS Health Scotland

Geographical Analysis

6.11 A geographical analysis was undertaken of all responses which included location information. Considering responses to the question and in particular each of the three key themes, response rates from the HITRANS area were particularly strong.

6.12 Outwith the key themes, affordability and value for money is a key issue for both commuters and off-peak travellers. There was an interest, particularly amongst those in the SPT area, south-east Scotland and the north of Scotland, for more regionally based fares. A selection of respondents commended the approach of low and socially targeted fares in the SPT area. There was a particular interest in this across rural areas where service provision is patchy and fares were regarded as expensive. A variation on this theme was to target fares to support the development of certain routes, particularly those where there is low rail patronage at present.

Q21 - What fares should be regulated by government and what should be set on a commercial basis? Do your recommendations change by geographic area (the Strathclyde area for example), or by type of journey (for example suburban or intercity)?

Popular themes

1. - All fares should be regulated (perhaps to the Retail Price Indicator)
2. - Capped by government, but operators able to offer reduced fares
3. - Varied costs based on geographical area

Key themes

6.13 There was almost universal agreement amongst respondents that fares should be regulated by government, although views varied on the extent and approach. A large number of respondents suggested that fare increases should be directly linked to an inflation based measure (either Retail Price Index or Consumer Price Index) and that there should be a regulatory relationship between peak and off-peak fares (particularly walk-up fares).

6.14 However, a number of respondents preferred a more flexible approach, with a capped maximum fare, with flexibility to reduce prices where the operator sees this as commercially attractive. A small number of respondents suggested that fares should be set on a purely commercial basis.

6.15 There was significant interest in different levels of regulation for fares in different geographical areas and/or routes. A number of respondents suggested using regulation to lower fares on the rural routes serving fragile communities and those routes serving socially and economically deprived areas. However, this view was counter-balanced by a desire for a more transparent, fair and consistent fares system (i.e. with fewer exceptions to the standard).

6.16 There were mixed views on the regulation of inter-city fares. The majority of respondents state that it is important to regulate these services as at present. However, some respondents favoured a more light tough level of regulation, consisting of a minimum service standard and some commercial flexibility for the operator.

6.17 Other suggestions included:

• ensuring that there is no situation where two tickets are cheaper than one between the same origin and destination
• deregulation of first class fares
• introducing competition on the four Edinburgh-Glasgow routes
• clear definition of the term 'permitted routes' on tickets, as a number of respondents thought that this can be misleading
• introduction of performance related fares and/or a profit-sharing agreement with the Scottish Government

6.18 In summary, there is a strong appetite for continued regulation of rail fares by government. However, there also appears to be a desire for a more flexible regulatory system, where operators are given the opportunity to innovate within defined parameters.

Organisational and individual responses

6.19 Responses were broadly similar between both organisations and individuals across each of the key themes identified. The top three themes were consistent in terms of content and order between both individuals and organisations. Proportionately, slightly more individuals than organisations commented that all fares should be regulated. This was an important point for economic and business groups, local government groups and passenger groups.

6.20 More organisations than individuals, thought that fares should be capped by government, but with operators being able to offer reduced fares: Local authorities in particular supported this idea.

Equality issues

6.21 A significant number of responses stated that fares regulation should take into account circumstance and social needs; this was often accompanied by views on the positive effect the concessionary travel scheme has had on peoples' lives and travel habits.

"Fares should be regulated based on the social needs."
Public Response

6.22 Respondents sometimes illustrated the positive economic effect concessionary travel can have on other sectors.

"I ask you to retain the Scottish Executive subsidised travel for all pensioners. The subsidy encourages travel to our cities and boosts retail trade, pubs and restaurants also benefit from our trips to town as do theatres and art galleries."
Public Response

6.23 Equality groups essentially noted that there should only be one system in Scotland for setting fares. This system should be consistent across the country, with the rail concessionary fare scheme no longer being left to the discretion of local authorities.

6.24 In addition to the above issue, groups also highlighted that greater use and implementation of the companion scheme should be made consistent throughout the country.

"We believe that there needs to be only one simple and easy to understand system at any one time for setting fares. Additionally, there should be a free Scotland wide blind person's free companion concessionary scheme introduced and not left to the discretion of individual local authorities."
National Federation of the Blind, UK

Q22 - How should we achieve a balance between the taxpayer subsidy and passenger revenue contributions in funding the Scottish rail network? At what rate should fares be increased, and how feasible would it be to apply higher increases to sections of the network which have recently been enhanced?

Popular themes

1. - Fares should not rise by more than RPI / CPI (or in relation to it)
2. - Do not apply fare increase to a particular route where improvements have been made
3. - There has to be significant (or some) government subsidy (for example to achieve environmental/social goals)

Key themes

6.25 As expected, there are strong feelings amongst rail users about the year-on-year increases in fares, which are seen by the majority of respondents to be decoupled from actual performance. Rail passengers are also concerned about the inflation-plus rises at a time when wages growth is either zero or negligible - respondents stated that any increase in fares represents a real terms growth in the cost of rail travel for passengers. Respondents, however, acknowledged that this is common across all modes of transport, with the growth in motoring costs also outstripping both wage growth and inflation.

6.26 Despite the above, a significant number of respondents did state that fares increases are necessary to maintain and improve the railway network. There was broad agreement that fares increases should be pegged to a maximum of inflation plus 1%, although there were many variants around this, including inflation only, inflation +2%, inflation -1% etc. There was no support for the option of inflation +3% - this was seen to be excessive in the current economic climate. There was also no firm agreement as to whether the chosen rate of inflation should be the Consumer Prices Index (CPI) or the Retail Prices Index (RPI). Many respondents reinforced the point that the cost of rail travel should be, at most, equivalent to that of car travel.

6.27 Whilst many respondents do support some form of inflation based increase, a number of other respondents see no justification for increases in fares in the short to medium term. They stated that the 'investment' which fares increases are paying for simply represents a catching-up on the backlog in maintenance and renewal work. They also point out that Scottish rail fares are amongst the highest in Europe. This group generally emphasized that the Scottish Government should invest in the network and bring it 'up to standard' before increasing fares.

6.28 Numerous respondents noted that as well as focusing on raising revenue, Transport Scotland, Network Rail and the franchisee should work to reduce the high cost base. There were many suggestions as to how to do this, and a broad view was that the value for money argument should assume increasing prominence in these economically challenging times.

6.29 There was only limited support for the option of increasing fares on routes where improvements have been made. Organisations stated that if this was to happen it should be for a time-limited period and clearly reflect the improvements made. Improvements would also have to be seen to be of value to the customer. In addition, respondents noted that this should not be a means of 'dressing up' maintenance works as enhancements and then increasing fares off the back of it. In general, however, there was overt disagreement with the concept of improvement related fares increases. Many respondents noted that improvements will increase demand and revenue for the operator, so do not see a need to raise fares. A number of respondents also commented that, if such an option did go ahead, there should be corresponding fare reductions on lines where performance is poor or where there have been no enhancements.

"The balance between the taxpayer subsidy and passenger revenue contributions must reflect the Government's financial policy and the social, economic and environmental objectives it wants to fulfil. The fares increase mechanism should be used to better balance regulated fares (relative to distance travelled) throughout Scotland while taking account of the nature of the service."

"This could be achieved through a range of fares increase differentials applied over a number of years. One possibility could be that should the current formulae of RPI+1% continue to apply, it may be that fares deemed too high (relative to others) could be restricted to RPI-1%, with others being subjected to the 'official' increase of up to RPI+1%. It is unacceptable for fares on recently enhanced sections of the network to be charged at a higher rate. It would be difficult to distinguish clearly what journeys should be 'targeted' for higher fares due to improvements .. and would such 'premium' fares be returned to 'normal' levels after a few years? Over time, the whole network will benefit from improvements (e.g. new rolling stock) so all fares could be deemed to be 'premium fares'."
RTPs Joint chair

6.30 There was relatively widespread support for at least continuing the current level of government subsidy. The desired subsidy/fares split was not defined by respondents, but many noted that the Scottish Government should see the railways as a means of achieving economic, social and environmental objectives and therefore subsidise them appropriately.

Organisational and individual responses

6.31 Responses were broadly similar between both organisations and individuals across each of the key themes identified, although there were differences in the order of the key themes. Proportionately, slightly more individuals than organisations commented that fares should not rise above RPI or CPI. This theme was strongly supported by passenger groups.

6.32 Organisations, particularly economic and business groups, favoured the idea of some sort of significant government subsidy, in order to achieve economic or social goals.

6.33 Outside the most significant themes, other differences observed were:

• a larger proportion of individuals than organisations stated that fares should not increase at all and in fact should be kept to a minimum
• a significantly larger number of organisations, particularly tourism and leisure groups, thought that operators must look for other means or methods for reducing costs

Geographical analysis

6.34 As explained within section 2.26, a geographical analysis was undertaken of all the responses that included location information.

6.35 In terms of key themes, responses from the SEStran region made up almost 40% of responses on theme 1 - 'rail fares should not rise by more than RPI/CPI'. SPT, SEStran and tactran accounted for more than 75% of responses to theme 2 - 'fare increases should not be applied to particular routes where improvements have been made'. Similarly, SPT, HITRANS and tactran combined to account for more than three quarters of all responses to theme 3 - 'there should be government subsidy to achieve environmental and or social goals.'

Q23 - What should the difference be between peak and off-peak fares? Will this help encourage people to switch to travelling in the off-peak?

Popular themes

1. - There should be no difference, people often have no choice but to travel at peak times
2. - There should be more difference between peak and off-peak fares
3. - There should be no difference. The concept of peak and off-peak is geographically flawed (particularly in rural areas with limited services)

Key themes

6.36 This question gave rise to considerable interest with a range of conflicting views being expressed. Whilst some respondents recognised the need for smoothing out peaks in demand, many recognised the necessity for many people, particularly the lowest paid, to travel at fixed times of the day. Indeed, a large number of respondents, roughly 25%, forcefully stated that there should not be a disproportionate increase in peak-fares relative to off-peak fares. They regarded this as punishing those who must travel in the peak periods, particularly in the morning time. Indeed, a number of respondents emphasised that the peak period should be scrapped altogether, as it represents an example of monopoly pricing - i.e. the operator charging a disproportionately high price to a group of passengers who do not have alternative times of travel.

6.37 However, there was a significant body of opinion that considered the need for cheap off-peak fares to be available. This group was split between those who stated:

• that there should only be a small discount
• the current system is suitable and should be kept
• that discounts for off-peak travel should be as large as 50%-90%

6.38 Of those who favoured larger discounts, many noted that these differences should be achieved by lowering the current off-peak fare rather than increasing current peak fares. Some respondents even suggested that off-peak fares should be free, hence filling empty trains and encouraging economic activities such as shopping, tourism, attending events and so on.

6.39 There was a very strong body of opinion which argued that differential peak and off-peak fares are only relevant in urban and suburban areas. Many respondents from rural areas (including those using the West Highland Line, Far North Line, Glasgow and South Western Line and the Stranraer Line) noted that they have little choice but to travel on 'peak' trains, even though these trains are largely empty. There was almost widespread agreement amongst rural respondents that peak fares should be scrapped out-with the Central Belt.

6.40 It should be noted that whilst there are similarities with themes 1 and 3, there are clear differences in reaching these conclusions. Respondents who advocated theme 1, called for the removal of peak period pricing due to rail users having no option but to travel at these times of day. Those who supported theme 3, however, suggested that peak and off peak fares should be removed based upon geography, particularly within rural areas.

6.41 One of the methods suggested by respondents to lessening the peak/off-peak conflicts was to introduce smart ticketing systems and stored value travel cards. They consider that these provide more flexible travel options and do not bind passengers to particular services. Respondents also suggested that non-price approaches to encouraging off-peak travel, such as free Wi-Fi or dedicated parking for off-peak travel, should be promoted. Low cost first class off-peak travel was also suggested.

6.42 A number of respondents recommended the development of a shoulder-peak period, particularly for very early morning services. This could include shoulder-peak season tickets, and would help encourage genuine peak spreading. Season tickets for part-time workers were also suggested, particularly as many people unable to get full-time jobs are taking up part-time work.

6.43 A number of respondents also recommended scrapping or at least shortening the evening peak period. There is currently no evening peak pricing within the SPT area and this is seen by many as a model that should be replicated across Scotland.

6.44 One organisation also thought that promotion of discounts for youths should also be encouraged with youth railcards being made valid for travel in peak times.

6.45 On the Edinburgh-Glasgow routes, a number of stakeholders suggested introducing competition between the four different rail lines, creating travel options and encouraging lower prices.

Organisational and individual responses

6.46 There was agreement between organisations and individuals on the three key themes for this question. However a slightly higher proportion of organisations then individuals commented that for most people there is no choice but to travel in the peak period due to work commitments. This seemed to be important across most sub groups of organisations, particularly local authorities and equality groups.

6.47 Individuals, on the other hand, were more inclined to state that there should be a greater difference between peak and off-peak fares. Passenger groups agreed with this theme.