On-rail competition gets full go-ahead from CMA

After deliberating upon the subject for over a year, the Competition & Markets Authority (CMA) has released its final report which calls for more competition in rail passenger services.

Citing examples of competition in Britain and Europe, the CMA argues: “The evidence suggests that an increase in rail competition could result in benefits for passengers and taxpayers, such as: lower fares and growth in passenger numbers; greater incentives for operators to improve service quality and innovate; greater efficiency by train operators; and more effective use of network capacity.”

To date there has only been limited competition in the UK and it takes two forms: competition ‘for’ the market (between companies bidding for passenger rail franchise awards); and competition ‘in’ the market provided by open access operators (OAOs), and sometimes between franchised train operating companies (TOCs) serving the same places.

OAO operations currently account for less than 1% of all passenger miles and there are only two operators, both confined to the East Coast Mainline (ECML), namely First Hull Trains and Arriva-owned Grand Central. There have only been four successful open access applications out of 19 since the system was introduced in 2000, and one of the these (Wrexham & Shropshire Railway) went out of business in 2011.

Pioneer open access operator Hull Trains was set up by GB Railways in 2000 and acquired by FirstGroup in 2003.
Pioneer open access operator Hull Trains was set up by GB Railways and started running in 2000; then acquired by FirstGroup in 2003. A vintage shot form 2008 when Class 222s were used.

CMA says there have been no new open access applications in the last five years (Alliance Rail, which starts running between London and Blackpool in 2018, is part of Arriva).

The CMA released an interim report in July 2015 (21CR reported) and it outlined four different options (competitive models to follow):

  • Option 1 – maintain the status quo but introduce more open access operations;
  • Option 2 – get two successful bidders to run each franchise;
  • Option 3 – have more overlapping franchises;
  • Option 4 – replace the current system with a licensing regime with many competitive operators.

Option 4 is the most radical and the most favoured, but it should follow on from Option 1 says CMA. All four options are better than the current set up it argues.

However, CMA says other changes need to take place before the existing system is altered. It wants reform of track access charging system to allow OAOs to make a fairer contribution towards costs (franchised TOCs currently pay fixed track access charges whereas open access operators do not). The ORR is currently working to reform track access charges and a new system should be in place by March 2019 (i.e. for the next control period).

CMA also suggests OAOs should contribute towards the cost of providing unprofitable but socially necessary services through a PSO (public service obligation) levy. Without this protection it fears public funding for subsidised services might increase and the premiums paid on profitable ones diminish.

Both the CMA and the ORR have a statutory duty to promote competition, but the latter also has the statutory duty ‘to have regard to the funds available to the Transport Secretary’. Reconciling both duties might prove difficult.

No major change is expected before expiry of current main line franchises. The three inter-city routes most likely to see full bloodied competition are the ECML (from 2023); the WCML (from 2025); and the GWML (from 2026). CMA says that the MML would also be a suitable candidate if it can be divorced from the rest of the East Midlands franchise.

But competition would not be suitable for commuter services, the report acknowledges.  Commuters tend to take the first available train and commuter routes have capacity constraints.

CMA also acknowledges that there might be practical difficulties in introducing more competition: “These obstacles fall in to three broad categories: access to infrastructure, network capacity and rolling stock; funding the network and loss-making services, and the financial sustainability of operators; and operational issues and greater complexity arising from an increase in the number of operators.”

Option 4 would require some authority to allocate and sell train paths. CMA suggests how this might be done:

“The potential for train timetables to be drawn and operations to be allocated between companies by means of an auction process has garnered substantial attention from economists and auction theorists over the past 30 years  . . .  taking a timetable which has been designed by a central body and auctioning bundles of paths within it is likely to be possible and may achieve many of the potential benefits of an auction approach to facilitate competition.”

CMA: Competition in passenger rail services in Great Britain; a policy document



                             List A: open access proposals submitted to ORR from 2000 to 2015
Year Operator Service Approved


A 2000 Hull Trains London KX-Hull Y
B 2002 Hull Trains Additional daily return: London KX-Hull Y
C 2004 Hull Trains Ditto Y
D 2004 Grand Central Newcastle-Manchester via Bradford N
E 2005 Hull Trains Additional daily return: London KX-Hull Y
F 2006 Hull Trains Ditto Y
G 2006 Grand Central Sunderland-London KX Y
H 2006 Grand Central York-Chester N
I 2007 Wrexham & Shropshire Wrexham-London Marylebone Y
J 2009 Grand Central Additional daily return: Sunderland-London KX Y
K 2009 Platinum Trains Edinburgh-London KX N
L 2009 Hull Trains Harrogate-London KX N
M 2010 Grand Central Bradford-London KX Y
N 2011 Grand Central Blackpool-London N
O 2011 Alliance Rail Blackpool, Carlisle, Leeds & Bradford-London Euston N
P 2011 Alliance Rail Bradford, Leeds-London Withdrawn
Q 2012 Grand Central Additional daily return: Sunderland-London KX Y
R 2012 Grand Central Additional daily return: Bradford-London KX N
S 2013 Grand Central Ditto Y
T 2014 Alliance Rail Blackpool, Leeds-London KX Superceded by U
U 2014 Great North Western Railway Blackpool-Queens’s Park, London

Leeds-Queen’s Park, London

V 2014 Great North Eastern Railway Edinburgh-London KX TBC
W 2015 Hull Trains Extension of some trains to Beverley Y
X 2015 Great North Eastern Railway Bradford-London KX

Cleethorpes-London KX

Y 2015 East Coast Trains Ltd Edinburgh-London KX TBC
Source: CMA


                          List B: overlapping & parallel franchises in Great Britain in 2016
Franchise Type Route(s)
Great Northern & Virgin East Coast Parallel London-Stevenage & Peterborough
Great Northern & Abellio Greater Anglia Overlapping London-Cambridge
First Great Western & Chiltern Overlapping London-Oxford
London Midland, Chiltern & Virgin Trains Both London-Birmingham
London Midland & Virgin Trains Parallel London-Milton Keynes, Coventry, Rugby, Nuneaton, Tamworth, Lichfield, Stafford, Crewe & Stoke-on-Trent
London Midland & Virgin Trains Parallel Rugby-Coventry & Birmingham International
Thameslink & East Midland Trains Parallel London-Luton & Bedford
C2c & Abellio Greater Anglia Overlapping London-Southend
South West Trains & Southern Overlapping London-Portsmouth
South West Trains & Southern Overlapping London-Southampton
South West Trains & Southern Overlapping London-Epsom, Dorking & Guildford
South West Trains & First Great Western Overlapping London-Reading, Exeter & Bristol
South West Trains & First Great Western Overlapping London-Basingstoke
Cross Country, First TransPennine & Virgin East Coast Parallel York-Newcastle
Cross Country & Virgin East Coast Parallel York-Edinburgh
London Midland, Virgin Trains, Arriva Trains Wales & Cross Country Parallel Birmingham International – Wolverhampton & Shrewsbury
First Great Western & London Midland Parallel Worcester-Hereford
Great Northern, Abellio Greater Anglia & Cross Country Parallel Cambridge-Ely
East Midland Trains, Cross Country & Abellio Greater Anglia Parallel Peterborough-Ely
Cross Country & Abellio Greater Anglia Parallel Ely-Norwich
Cross Country & First Great Western Parallel Bristol Parkway-Tiverton, Exeter, Plymouth & Penzance
Cross Country & First Great Western Parallel Reading-Oxford & Banbury
Cross Country & First Great Western Parallel Reading-Basingstoke
First TransPennine, East Midland Trains & Northern Rail Parallel Liverpool-Manchester
First TransPennine & Northern Rail Parallel Manchester-York & Leeds
First TransPennine & Northern Rail Parallel Manchester-Blackpool & Barrow-in-Furness
East Midland Trains, Cross Country & Northern Rail Parallel Derby-Sheffield & Leeds
First TransPennine & Northern Rail Parallel Leeds-Scarborough
First TransPennine & Northern Rail Parallel Leeds-Hull
Northern Rail & Virgin East Coast Parallel Doncaster-Hull
First TransPennine & Virgin Trains Parallel Wigan-Preston, Carlisle & Glasgow/Edinburgh
Arriva Trains Wales & Virgin Trains Parallel Chester-Holyhead
Arriva Trains Wales & First Great Western Parallel Newport-Cardiff, Swansea & Carmarthen
Virgin East Coast, Cross Country & ScotRail Both Edinburgh-Glasgow
Virgin East Coast, Cross Country & ScotRail Parallel Edinburgh-Aberdeen
Virgin East Coast & Scotrail Parallel Edinburgh-Perth & Inverness
South West Trains & Cross Country Parallel Basingstoke-Winchester, Southampton & Bournemouth
Abellio Greater Anglia& Cross Country Parallel Cambridge-Stansted Airport
First Great Western & Southern Parallel Brighton-Southampton
London Midland, Cross Country & Virgin Trains Parallel Wolverhampton-Stafford
London Midland & Chiltern Parallel Kidderminster-Birmingham & Leamington
Source: CMA & 21CR


Note: Competition between franchised operators is said to be either ‘parallel’ or ‘overlapping’. The former happens when two or more operators serve the same stations on the same route; the latter occurs when the stations are served by different routes. In a few cases both forms of competition take place (e.g. between London and Birmingham).




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