Rail franchises operators & contracts

18.12.18

Rival operators to run on same rail routes in bid to drive up competition

Passengers will have the choice of choosing which train operators they travel with under new plans to allow rival TOCs to operate on the same routes to drive up competition.

The new competitive system will be introduced to the rail network from April, allowing ‘open-access’ operators to run services, provided they pay for more of the upkeep of the railway, and to compete directly against established franchise operators with government contracts.

The ORR said “this should encourage more competition in the passenger rail market,” leading to lower fares for passengers and more overall trains on the line, as well as encourage innovation amongst the competitors.

Open access operators such as Hull Trains and Grand Central have already shown that the competition they introduce leads to service improvements and growth in rail travel, and they were also the first services to introduce innovative services such as free Wi-Fi.

The Competition and Markets Authority has supported the move, suggesting that allowing open-access operators would have a similar affect on the railways as the impact budget airlines had on the airline industry.

The ORR’s senior manager for competition economics, Beth Tasker, did warn that there was a risk that these operators would “cherry pick” the most profitable services which would in turn lead to rising costs for the government going up as it subsidises many of the franchises.

Paul Plummer, chief executive of the Rail Delivery Group, commented: “Competition, provided through open access operators or through competitions to run franchises, has delivered real benefits both for customers and taxpayers.”

The rail regulator is also introducing the ‘Economic Equilibrium’ test which will be used to assess track access applications by considering the impact on the finances of the existing franchise operator alongside passenger benefits.

The test is required under EU legislation, and will compliment the existing access policy to promote competition in passenger rail markets across Europe.

The ORR says it will be engaging with the industry to develop a framework for monitoring the impact of and response to the ongoing growth of open access to ensure the operators continue to face fair market conditions.

The RMT union criticised the move, warning of “even more fragmentation and profiteering on Britain’s broken rail system” which it says would allow private companies to make fast buck by cherry-picking lucrative routes.

Image Credit - Beyond Images

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