Reader Comments:

Views expressed in submitted comments are that of the author, and not necessarily shared by Railnews.

• david c smith, Bletchley

  Yes, road transport has marginal costs low, whilst fixed costs are high. The low marginal costs give rise to what the economists might call perverse outcomes
  
  One or two measures round the World to alleviate this are to charge road vehicles on a per- mile basis ( road metering) for road use, instead of through annual charges. In one case, the State provides third party insurance , paid for through extra on fuel tax.

• Richard Wheeler, Chippenham

  While we continue to heavily subsidize road transport/freight industry, public transport will never compete against the marginal cost of a road journey. So people cannot make an effective choice because they cannot see the true cost of a decision.
  
  if you want proof just look at the fare rises each year but Exchequer happily for goes 10 billion pounds revenue to placate the trucking industry (i.e. we could have paid for HS2 (given compound loss of revenue). Car journeys are ridiculously cheap against Rail journeys, and rail has nothing like the death and injuries we accept from our roads

• Rail User, OXFORD

  Thanks for your comments Ed. As I understand it, serving the short-run urban commuter market is unprofitable, whereas the longer-distance business from the home counties, where the spend is £5-£6k or more per user, can break even. SWT used to just about break even serving this market, and it is an important one nationally.
  
  At any rate, I wasn't necessarily suggesting that the commuter market was profitable, just that it was a significant slice of the revenue pie. We go back to trying to rely on it at our peril. Now is the time to reconfigure our whole product - train layout, fares, branding and marketing - at more discretionary travel. For instance will part-time 2/3 days/week commuters be prepared to travel further and will they want more comfortable trains? What will families want? What will business travellers want?

• david c smith, Bletchley

  It seems there is general agreement that railways appear unprofitable on a conventional narrow profit / loss basis. Maybe we need to have "hidden" costs and benefits ( what the economists would call "externalities") represented in the transport market, in which rail would generally become more attractive to users and to investors.

• Rail User, OXFORD

  The previous model, highly reliant on commuter revenue, is dead. Even before Covid, homeworking was eroding the commuter model. To survive, he industry will have to capture discretionary travel, ie leisure travel for shopping, day trips and holidays, and long-distance non-daily business travel. To do this the industry needs to completely rearrange its offer: instead of poor, cramped conditions for commuters even on long-distance trains, we need to be providing comfortable seating around tables aligned with windows, superfast free wifi and proper catering. We also need to tear up the ticketing system and start with reasonable, cheap single-leg fares. With fewer commuters do we even need peak pricing?? THe best way to do this, now it's all under public ownership anyway, is to scrap production-led regional franchising, and go back to a sectorised model: premium InterCity product supported by regional and local urban networks, with limited open access to keep InterCity on their toes.
  
  As John B points out however there is an upside: lower traffic levels means less need to invest in expensive infrastructure to cope with peak demand. It also means we can spend more time maintaining the track and thin out services to reduce congestion and increase reliability.
  
  [I think I pointed out to John that less infrastructure is needed if peaks are less intensive! The previous model was not 'highly reliant on commuter revenue'. It is a widely-held myth. Commuters cost money.--Ed.]

• John B, London

  There will be a new era but not the one Mr Harris imagines. Covid is changing everything, in particular the way we work. The franchising arrangements, already defective when put in place in the 90s, are based on business models which are now as dated as fax machines and payphones. We can argue all we like on the terms of concession agreements or whatever the govt want to call them but the fundamental fact remains that the majority of TOCs are now unprofitable.
  
  Even when passengers return, it is unlikely to be in the same numbers as before. The 2010s rise in traffic will, I predict, be compared with the late 40s, early 50s surge in traffic; the Indian summer before Beeching. The unpalatable fact is that many lines will have to survive on far less traffic than they are used to and not all will make it. Talk of opening new lines should be put on hold, with CrossRail 2 being consigned to the dustbin completely.
  
  [I am not sure I was 'imagining' any new era, but rather trying to work out what the new Arriva contract actually is. And, if you will forgive me, nearly all the TOCs were always unprofitable, and this fact (unrecognised by the fatuous business model introduced by Major/Parkinson etc. in the 1990s) was always going to lead to the downfall of franchises sooner or later. If the peaks are flatter in the future that will be a good thing. Providing for the peaks is an expensive business.--Ed.]

• david c smith, Bletchley

  In some respects, this system is "the worst of both worlds" -- government controlled private monopolies ( the sort of model beloved by prewar fascist dictators) -- what a prominent rail commentator calls "pretend privatisation".
  
  This prevents the exercise of enterprise , innovation and adaptation , and the accompanying investment, with "power to the people (rail customers and workers) " replaced by "power to Westminster / Whitehall ",
  
  Yes, on a local level,such as commuters into big conurbations, public control seems much more justified, as such operations are unavoidable natural monopolies, with local democratically chosen managements being feasible. But intercity national services are much more suited to a multi operator model where interoperator competition , as well as the competition from other modes gives power to the passenger.