Rail report: light at the end of the tunnel

Despite timetable chaos and another failed franchise, rail remains in favour with business travellers. Dave Richardson reports

It was a difficult summer for the rail industry,  with widespread cancellations of services by Govia Thameslink Railway and Northern, and the Department for Transport (DfT) being forced to take back control of the East Coast route after loss-making Virgin Trains East Coast (VTEC) pulled out.

There has also been an overall reduction in passenger journeys for the first time since the financial crisis of 2008-09, according to the Office of Rail and Road, the fastest decrease since rail privatisation in the 1990s. The number of journeys fell by 1.4 per cent to 1.7 billion in 2017-18, and season ticket sales were down by a whopping 9.2 per cent.

This has set off alarm bells that more franchise holders, like VTEC, will be unable to meet their commitments and will need bailing out. The transport secretary, Chris Grayling, is mocked as “Failing Grayling”, while First Group told shareholders it will lose over £100 million running the Transpennine Express franchise. However, it has ruled out walking away from the franchise, and is investing £500 million in new trains and upgrades.

But the business travel industry does not report any fall in demand, while the extra capacity and improved onboard services offered by many train operators are welcome. There’s relief, too, at the review of the fares structure that is under way, with public consultation having recently ended.

Travel managers and business travellers may well agree with the GTMC’s chief executive, Adrian Parkes, who says: “Bad publicity does have a short-term impact, but the alternatives to rail travel are not great as the roads are terribly congested.

“With East Coast, the important thing is that services continue to run and new trains will be introduced. All tickets booked through VTEC were honoured. Continuity is important rather than the brand,” he says.

“We have responded to the consultation on fares and have encouraged our members to do the same. It would be much easier if fares were simpler and more transparent.”

The review of fares is being undertaken by the Rail Delivery Group, which represents train operators, and it will announce the way forward by the end of this year. The current system dates from the 1990s and its complexities have created numerous anomalies, such as a return ticket costing the same or less than a single, and split ticketing – whereby a journey from A to B via C could be cheaper if booked A to C then C to B, all on the same train.

Melanie Glass, head of client services at Evolvi Rail Systems, says: “Everyone recognises that the current structure, with its 55 million different fares and complex rules, causes confusion, adds cost to UK plc and undermines trust in train operating companies. But we are concerned that the process is being framed by the statement that any outcomes must be revenue neutral.

“This suggests that, if the result of the consultation is a likely reduction in overall operating income, which is feasible, some fares may need to be adjusted upwards. 

“While we appreciate that the rail industry has some ambitious plans that will require significant investment, there are areas where efficiency gains can be made as we move towards a more cashless, mobile ticketing environment, which requires less human intervention.

“It seems that these opportunities are not being taken into account, when they are central to future reform. Progress towards a truly smart ticketing environment is something that TMCs and their corporate clients using Evolvi wish to see happening sooner rather than later.”

While the price of some fares may fall, increases are likely in peak travel times. The review could also restrict good value advance fares. Meanwhile, regulated rail fares will rise by an average of 3.2 per cent from January.

Chris Vince, Click Travel’s director of operations, says: “This review of fares is absolutely needed, as although we do offer split ticketing to our customers, it isn’t ideal. If one train is delayed and you miss a connection on which your ticket is only valid, you could be in trouble. You may have to change seats during the journey, but the flip side is you can save up to £100 on some fares.

“There are so many permutations that people get confused and end up buying the most expensive ticket.”

Jon Bolger, who runs the Equilibrium consultancy, says he winces when he sees queues of business people at his local station buying the most expensive “walk-up” fare to London – which could cost three times as much as the advance fare.

“Rail travel is all about how you book, when you book and what you book,” he explains. “People should never need to book the most expensive Anytime ticket. If they schedule meetings after 11am they can save money and travel on less busy trains.

“I advise businesses not to look at rail travel in isolation as a cost on a spreadsheet, but to understand what part it plays in the total picture. If you’ve got a good level of spend and good data, talk to train operators as they are becoming more commercially savvy.”

Several online companies have now sprung up to offer split ticketing, with Raileasy, which operates the Trainsplit site, now having a corporate booking tool. It is urging customers to back the concept in public consultation, saying it has saved 700,000 customers £11.5 million since March 2015. Raileasy claims its algorithm also finds many cheaper alternative journeys than the 25-year-old journey planner used by National Rail and train operators.

Another issue affecting business travel is compensation for delayed journeys, known as Delay Repay, with the DfT bringing down the threshold from 60 to 30 minutes, now 15 minutes, in the latest franchise awards.

It is estimated that up to 80 per cent of delayed passengers don’t claim because they don’t realise they are entitled, can’t be bothered or find the manual process – sometimes online – too daunting. But two companies are now automating that process in partnership with TMCs.

Travel Compensation Services (TCS) started by targeting commuters coming into London, and has since processed 865,309 claims, 546,813 of which were automatically settled. It was then approached by five TOCs to handle their compensation process, which it expects to roll out to more operators shortly. It has now launched Business Travel Compensation for TMCs, with the aim of expanding beyond rail in due course.

Lee Fortnam, TCS head of technical development, adds: “The corporates we have spoken to aren’t receiving a penny in compensation, so anything they get is good. There are also benefits for train operators who are now getting tens of thousands of claims. If they receive claims in bulk it’s good for them. Delay Repay is a necessary evil for them, something they have to support to offer a better customer experience.”

Railguard, meanwhile, won the GTMC’s Entrepreneurs in Business Travel Award for innovation earlier this year. Its system processes all train running information and matches it with TMC bookings. It claims businesses can recoup 3 per cent of their rail spend using its service.

Capita Travel and Events is the first agency to partner with Railguard to proactively identify eligible claims and alert travellers when compensation is due. The service also reconciles and reports successful claims for delays and refunds the traveller’s organisation.  

The partners also used anonymised data of live customer bookings in 2017 to identify 2.5 per cent of the rail spend that was eligible for Delay Repay compensation. The TMC will pilot the service with multiple customers over the coming months.

The operator’s viewpoint

Susie Palmer, business account manager, TransPennine Express

Transpennine Express (TPE) is investing £500 million over the next two years in new trains and services across northern England and Scotland

Q: What’s the timetable for introduction of the new fleet?
A: The first of our new trains, the Nova 3 fleet, is already operating from Liverpool, Manchester and Leeds to Middlesbrough and Scarborough. Nova 2 trains will start in spring 2019 on Manchester Airport-Scotland services, and Nova 1 trains will start in summer 2019 between Liverpool, Manchester, Leeds, Newcastle and Edinburgh, and from Manchester Airport-Newcastle. In 2019 we are adding a new route, Liverpool-Glasgow.

Q: Are you confident changes can be introduced without disruption?
A: Our planners are working very hard on the launch, and new trains are already being tested and drivers trained.

Q: How will you transform the business travel by rail experience?

A: The 44 new trains will have 100 more seats than the present trains, including first class, with free wifi and plug sockets at every pair of seats, as on our existing refurbished trains. Trains will travel at up to 125mph, so there will be some reduction in journey times, such as Liverpool-Manchester in 35 minutes. Barcode tickets will be introduced on 70 per cent of journeys.

Q: What is the reaction of businesses who don’t use much rail at present?
A: We are showing businesses that there is another option, and many are looking for a sustainable alternative to car travel. We are looking at incentives such as advance tickets to buy on the day of travel, and other inducements through preferred TMCs. We are also working closely with GTMC and chambers of commerce.

Q: First Group lost £100 million over the course of this franchise. Are you confident you can deliver all that’s been promised?
A: We remain absolutely committed to delivering £500 million-worth of investment. We have obligations as part of our business plan, and are pleased to see customer satisfaction already increasing.

How to work with train operating companies

Raj Sachdave, former Capita head of rail, now managing partner of new consultancy Black Box Partnerships, offers some tips for working with train operating companies

Train operating companies (TOCs) are businesses, too, driven by franchise obligations, “yield” (price of the ticket) and “load factors” (bums on seats).

Work with your TMC and understand how its relationship stands with TOCs. Are there benefits you could immediately access or learn from in its approach?

Intercity and regional TOCs have development teams keen to build stronger, smarter relationships with businesses. These are their key objectives:

  • Modal shift from air, mileage/car and short-term rental
  • Recognise loyalty from travellers who trust their service
  • Ensure the customer experience is enjoyable and productive
  • Support growth in future business activity, ensuring rail is a default position
  • On a competitive route, evaluate a realistic potential to switch the right percentages
  • Looking at ticket type behaviour and supporting best practice (via a TMC)

Collate expense data (with your TMC) to understand the potential for all parties; analysing mileage, food and beverage, parking, taxis, etc, to control costs and increase value in traveller experience.

Softer benefits such as reduced parking fees, complimentary wifi, onboard catering vouchers and upgrades may be a smarter approach if your buying behaviour is well established, allowing all parties to build a communication line.

Group bookings add value. Most TOCs will offer significant savings to a group of ten passengers or more. Carnet bookings for regional journeys can offer upwards of 25 per cent savings for regular travel from one location to another, over a 90-day period.

The buyer’s perspective
Katrina Williams, head of travel, Crown Commercial Service

Crown Commercial Service (CCS), a government agency, helps public and third sector organisations buy common goods and services, and offers a suite of commercial solutions to manage the cost of travel.

Digital communication continues to reduce the need for extensive business travel – however, public sector workers may still find themselves faced with demanding travel needs.

CCS recently launched the Public Sector Travel and Venue Solutions, enabling the booking of rail, air travel and accommodation, as well as event services and other travel provisions.

The organisation manages a £250 million annual spend on rail travel via negotiated deals with rail operators and best-in-class booking processes. Encouraging public sector workers to travel by rail could help deliver a modal shift toward more environmentally sustainable solutions – one of CCS and the wider public sector’s key drivers.

Issues to overcome
Some knotty issues impede the take up of rail as a primary business travel solution. Fast, reliable wifi makes rail an attractive option, but free wifi is often restricted to the first 15 minutes in standard class. Reclaiming for wifi via expenses involves time and cost.

The ability to pre-select seating with tables and power sockets is a significant benefit for travellers, but reservations may sometimes be difficult to find.

Station parking also has to be considered. It can cost £12 a day to park at a station, so it could be cheaper to drive all the way. The rail industry needs to consider the end-to-end costs and the overall impact on travel budgets in order to increase usage.

Working with rail operators

Katrina Williams, head of travel at CCS, says: “We welcome the rail industry’s current review of fares, including guidance around split ticketing, which some travellers take advantage of where this offers a lower cost. We also welcome the rail industry’s refreshed approach towards paying compensation after delays but this needs to be automated and easy for people to claim.

“The suite of solutions offered by CCS will enhance customer choice and commercial value for organisations and public sector workers managing rail travel. Combined with other positive industry developments, rail travel could become the public sector’s main ground transport solution for business travel.”

To find out more about the Public Sector Travel and Venue Solutions Agreement, go to crowncommercial.gov.uk

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