Passengers pay more but traffic continues to grow
The fare-paying passenger continues to shoulder an increasing proportion of the full cost of his or her ticket, while the proportion funded by the state steadily declines. That is one of the main findings of the ORR’s 4thannual financial report for the rail industry, covering the period 1 April 2013 to 31 March 2014.
The passenger contribution in 2013-14 was 61.5% as against 55.6% for 2010-11. Passenger numbers during this period also increased by 16.6% (by 260 million journeys).
Total income for the industry during 2013-14 was £13.3bn. Passengers paid £9.0bn; the government contribution was £3.8bn; and other sources (income from property, stations and freight operators, etc) added another £0.5bn.
Total costs for the industry amounted to £12.7bn. This comprised: (1) £6.5bn TOC train operating costs (made up of staff costs £2.4bn; rolling stock leasing charges £1.3bn; and other costs £2.8bn); and (2) £6.2bn Network Rail infrastructure costs (comprising operating costs £2.0bn; maintenance £1.0bn; financing costs £1.4bn; and depreciation £1.8bn).
Track access and other intra-industry charges came to £2.4bn.
Income from passenger fares in 2013-14 was £8,160m, 3.5% higher than 2012-13, and 10.8% higher than 2010-11 (as adjusted for inflation).LENNON analysis showed that the regulated/unregulated revenue mix was 36:64%, and that the largest single flow (35%) came from unregulated standard discounted fares.
An additional £772m passenger income was generated from other sources (car parking, on train catering, etc).
Industry expenditure for 2013-14 was £12,678m; up 0.7% on 2012-13; and up 0.03% on 2010-11 (RPI adjusted). Spending has remained stable over the last four years.
Total government funding for the rail industry for 2013-14 was £3,788m; or 8.1% down on 2012-13; and 16.4% down on 2010-11(as adjusted for inflation). The £3,788m funding was sourced through: DfT £2,613m; Transport Scotland £762m; Welsh government £152m; TfL £83m; and PTEs £178m. The distribution was Network Rail (network grant) £3,653m, and the TOCs £135m.
The latter figure was derived from total TOC franchise receipts (£1,211m) plus PTE grants (£178m) from government, less franchise premiums (£1,255m) to government. (The Northern franchise is the only recipient of the PTE grant).
The results for the 19 TOCs showed wide variations, and there were some discrepancies between some figures (depending whether company accounts or government sources were used, the differences being due to different accounting cycles). While nine TOCs paid premiums to the government – c2c, Chiltern, East Coast, Abellio Greater Anglia, First Great Western, Southern, South West Trains, First Capital Connect and Virgin Trains – only South West Trains and East Coast were net contributors to state coffers. That is to say their premium payments exceeded their apportioned track access charges.
The three largest premium payments were made by: South West Trains (£297m); East Coast (£217m); and First Capital Connect (£195m). The three largest recipients of total state funding were: First ScotRail (£506m); Northern Rail (£346m); and Arriva Trains Wales (£152m).
The three largest recipients of the Network Rail network grant were: First Great Western (£336m); Northern Rail (£323m); and Virgin Trains (£322m).
Nationally, state funding as a proportion of total passenger income was 28.5%. This is an average figure; only SWT and ECT were net contributors as previously noted, whereas in the case of four TOCs, the state contribution amounted to more than 50% of receipts, namely: Northern Rail (66.4%); Arriva Trains Wales (62.8%); Merseyrail (62.7%); and First ScotRail (57.7%).
The ORR analysis excluded income and expenditure from freight operating companies and open access (non franchised) passenger service providers, mainly because they were not direct recipients of government support.