06.09.16
More competition on inter-city routes 'would improve passenger services'
More opportunities for open access operators on inter-city rail routes would improve services for passengers, the CEOs of the Competition and Markets Authority (CMA) and Office of Rail and Road (ORR) have told the Transport Committee.
During a hearing yesterday, Dr Andrea Coscelli, acting chief executive of the CMA, said that the CMA has had “initial conversations” with the DfT about the possibility of introducing a levy on open access operators, which it plans to “take forward in consultation” in the autumn.
In addition, the ORR is in consultation with Network Rail about changing track access charges for open access operators so that they pay fixed as well as varying charges, like other operators do.
Dr Coscelli said that although this would mean increased costs for open access operators in the short term, in the long term it would benefit them by making open access a more financially attractive prospect for the DfT.
“The reforms that we’ve been talking about in terms of track access charges and the possibility of a levy would address that tension between the secretary of state’s funds and the benefits that competition could bring across the network,” he said. “Currently, if you don’t get the franchise, you’re not in the market. If open access was across the network, you’d have another opportunity for your business.”
Dr Coscelli added that current operators wouldn’t suffer because the changes would come into effect on future franchises.
“It’s really about planning a change in the rules for the future set of franchises,” he said. “The passengers would have much more of an active choice to walk with their feet and choose the competing operator, so that would help. In terms of any extra pressure on the competing operators, it would be very much what we have today.”
He also said that there should be at least two operators on each inter-city line, one franchised and one open access.
Instead of having only one franchise which can be awarded to one company, he said this would “create two opportunities, maybe three opportunities to win something”.
This, he said, would “make it easier for foreign entrants to justify remaining in the UK market”.
“Obviously it’s in the interests of passengers to retain enough bidders who are serious about remaining in the UK in the medium and long term,” Dr Coscelli added.
There are concerns about foreign companies leaving the UK following the country’s vote to leave the EU. The ORR has also proposed changes to the UK’s franchising arrangements in order to promote open access operators.
Joanna Whittington, chief executive of the ORR, said that increased competition should apply to the three big inter-city routes (West Coast Main Line, East Coast Main Line and Great Western Main Line).
“I don’t think it’s a model that we would like to see extended into other markets at the moment,” she added.
Dr Coscelli said that competition will be piloted on the East Coast route, where the ORR recently approved additional services. This could then be used to inform the next round of appointments for the West Coast and Great Western franchises.
Whittington said that competition can deliver better services and lower fares for passengers. She added that existing open access operators have already introduced new innovations – for example, Grand Central was the first to introduce on-board wi-fi, and First Hull was the first to introduce real-time operational information on trains.
She also said that the ORR should have the power to publish more information about operators, in order to provide a “reputational incentive” for operators to increase their performance.
MTR Corporation West Midlands recently withdrew from bidding for the West Midlands franchise after announcing that it was joining with First Group to bid against Stagecoach for the South Western franchise. This left London Midland and West Midlands Trains competing for the West Midlands franchise, meaning that two of the biggest franchises in the UK have just two competitors bidding.
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