Rail fares rise as flight costs fall

The apparently irresistible rise of rail travel is starting to look a bit less irresistible...

by
Last Updated: 31 Aug 2010

Earlier this year, it looked as though rail travel was set to be one of the big winners from the economic shocks convulsing the UK. As the price of fuel soared, many were predicting an end to the era of low-cost air travel – and with the trains offering a cheap, convenient and more environmentally-friendly alternative, they seemed perfectly placed to cash in. But it appears this interpretation ignored one important fact: that the UK’s rail infrastructure is rubbish…

A new report out from the National Audit Office today suggests that rail passengers will have to endure even more overcrowding on trains in the coming years – and yet will be paying a lot more for the privilege. Although another 1,300 train carriages have been ordered, and the network infrastructure work continues to rumble on (albeit much more slowly than planned, with dismal predictability), the NAO suggests passengers will have to put up with increasingly packed trains for the next few years until this new capacity comes on stream.

Worse still, this is happening at a time when rail travel is actually getting more expensive. Regulated fares rose by 1% above retail price inflation in 2007, while non-regulated fares shot up by about 7% (including some that rose by as much as 20%). So although direct government control of the railways may have saved the taxpayer money by getting better deals out of the rail companies, this is presumably because they’re making us stump up the difference. In other words, for passengers, the costs are going up even as the service is getting worse.

Meanwhile it looks as though the demise of cheap flights may have been greatly exaggerated. In recent weeks the oil price has plummeted from its midsummer heights of almost $150/ barrel to less than $80/ barrel, which will reduce operating costs for airlines (unless they’re locked in at a higher price, of course). Sure enough, Virgin Atlantic said today that it was reducing its fuel surcharges. Admittedly the reduction is pretty measly – £78 to £68 for short-haul and £109 to £96 for long-haul – and knowing boss Sir Richard Branson, it’s been done with one eye on some cheap publicity (Branson will also know that BA is hedged at $130/ barrel until the end of the year, so he's presumably doing this because he knows they can't). But the fact remains that all the big airlines are now going to come under pressure to cut fares again in the coming months.

After spending last Sunday standing for six hours on a train from Edinburgh to London, having paid £100 for the privilege, MT is inclined to concur with Commons Public Accounts Committee chairman Edward Leigh that rail travel is ‘still too often an unpleasant experience’. Until this changes, the chances of commuters deciding to ditch the plane for the train look remote...


In today's bulletin:

Banks seek new deal on nationalisation
City feels the pinch as jobless total rises
Rail fares rise as flight costs fall
Public sector needs to think small
MT's Little Ray of Sunshine: Unlocking management horsepower

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