Your Tax Money At Work

Rail Cuts

June 21, 2021

From our Swindon Correspondent:

Train operators, Network Rail and unions have agreed to talks over cutting rail services and axing thousands of jobs to save the industry up to £2bn a year as it plans for a post-Covid future of fewer passengers.

Under a framework agreement signed by the four main transport unions and rail employers, voluntary redundancies will be sought throughout the railway to close the funding gap from an 80% decline in passenger revenue since the start of the pandemic.

The document states that the current level of government support, of around £800m a month, “is not unlimited and is not sustainable”, and that “train service levels will be curtailed, reduced or flexed in the future”.

While only about 85% of normal timetabled services are running, passenger numbers are just over 40% of 2019 levels, and the industry is not expecting the numbers to grow beyond 80% of pre-Covid traffic.

I think the industry might be kidding themselves about that 80% of traffic, but even if that’s right, it doesn’t mean 80% of revenue as we can observe. 40% of passengers are providing 20% of revenue. Rail is selling cheaper tickets rather than expensive ones. Not all passengers are equal. It’s about £145 to go from Swindon to London at peak, and less than a tenner to go from Swindon to Bath off-peak.

The traffic that is going to be lost most by people switching to work from home is longer, more expensive journeys. That’s self-evident. No-one cares about a 10 minute train ride that costs £4/day. They might even prefer it for all the things like free coffee and camaraderie. They are much more likely to try and avoid hour commutes costing over £30/day. So an 80% return of traffic won’t mean an 80% return of revenue, which has me thinking that £2bn in savings aren’t going to be enough.