The existing intercity franchise model is broken-

1. Multiple failures – ECML for one
2. Very limited competition or choice for passengers
3. Basically fixed annual access amounts (how do they relate to usage?) This leads to uneconomic fare regimes.
4. Franchise holders encouraged to run more trains to improve ‘efficiency’. Virgin East Coast talked of running more trains on a Saturday – maybe some marginal income for them but no economic benefit for UK rail – possibly denying access for freight
5. Inefficient rolling stock procurement – dictatorial and inappropriate specification No investment from franchise holders over the life of the franchise – let’s be clear on this if there was no net cashflow surplus over the life of the short franchises then shareholders should complain or quit (as they do)
6. NO long-term strategy for the UK intercity rail

 

These flaws are being replicated in the ‘planning’ for HS2 services. The Department for Transport (DfT) is –

seeking to attract a world class partner to develop and enhance the existing InterCity West Coast (ICWC) operation and help shape the development of HS2 and operate its first services in 2026.

1. What kind of strategy is this?
2. Why do we pay ministers and public servants?
3. How will whoever is selected for the above task cope with extravagant forecasts of likely users of HS2
4. Further what is seldom mentioned how will the dramatic effect on lost revenue on existing lines be recovered? The economic case for HS2 assumes 69% of traffic will be extracted from existing routes.

What would be better?

1. Have realistically priced access rights, possibly with some public service obligations, for a reasonable and practical number of competitors and services on each route.
2. This can be done by charging realistic access charges – funding for the infrastructure, and thus
3. Make Network Rail have to earn its revenue like a normal company
4. Let competitive demand for service quality, timeliness, rolling stock etc lead to attractive but profitable services.
5. The railway companies with their portfolio of paths (with some public service obligations) could then plan and invest as long term investors – purchasing or leasing rolling stock that meets their demand.

 

There are signs that some in the industry are brave enough to challenge the diktats of the DfT and short-termist ministers.

• There’s talk of changes to the UK ticket pricing system. About time – Yield management no doubt works for airlines – they just fly routes and schedules that suit them.
• There’s talk of questioning the ridged, dictated timetabling.
• Even the nonsense of preventing ‘abstraction’ is being challenged
• Maybe more of the big players realise that the idea of the short term franchise money earner is short sighted for their ‘sustainable’ (to use that fashionable word) companies.

 

We need action now to bring long term strategy and investment to UK intercity rail – or maybe British Rail is the answer?