Rail fares continue to fall in real terms

Rail fares rose less than the rate of inflation in two of the last three years, says the ORR.

The annual Rail Fare Index (RFI) – calculated from the rail industry’s ticketing and database LENNON – measures the average changes in different ticket categories from the first month in each year. Between January 2015 and January 2016 the average rail fare increase was 0.7%. Since the corresponding RPI (Retail Price Index) measured 1.3% during the same period this amounted to a 0.6% real terms decrease.

All three passenger sectors recorded below inflation average increases: London & South East (L&SE) 0.7%; Long Distance (or Inter City) 0.6%; and Regional (or Provincial) 1.0%. All three sectors recorded their lowest annual increases since 2010, and the Long Distance increase is the lowest since 1995.

The three sectors designation is a leftover from BR days. Long Distance now constitutes: Virgin Trains West Coast; Virgin Trains East Coast; First Great Western high speed services; the Midland mainline portion of East Midland Trains; Arriva Cross Country services; but not First TransPennine Express.

In 2015 total revenue was shared: L&SE 46.2%; Long Distance 39.4%; and Regional (which includes Scotland) 14.4%.

Five of the six main ticket types recorded below inflation average increases: anytime (0.9 %); off-peak (1.1%); season (0.6%); and super off-peak (0.7%). Advance tickets fell by 0.1%, and the remaining ‘other’ category increased by 1.3% (i.e. was on par with the inflation rate).

Although the trend is down it is still high in historical terms:  Average rail fares since 2004 increased 66.6% as against the RPI of 41.3% for the same period. Long distance notched up the biggest increase (72.2%), followed by L&SE (63.5%) and Regional (62.6%).

Average real term increase of standard regulated tickets has been 6.1% since 1995, whereas the unregulated first class and unregulated standard class average fares rose by 62.5% and 31.8% respectively during the same period. Between January 2015 and January 2016 the real term falls in the average standard regulated fare and the average standard unregulated fare were 0.5% and 0.8%. However, first class unregulated fares increased in real terms by 0.5%.

Regulated fares have been set at the RPI July rate but take effect from the following January. Before 2004 it was RPI minus 1%; between 2004 and 2013 it was RPI plus 1%; from 2014 it has been capped at the RPI rate. The current rate stems from July 2015 (which is 1%).

Regulated fares include saver returns, standard returns, off-peak fares between most major cities, and season rickets for most commuter journeys. Unregulated fares include all first class travel, advance fares, and tickets (other than travel cards) which include through travel to London destinations served by other forms of public transport.

Regulated fares contributed 44.9% (of L&SE), 39.5% (of Regional) and 21.9% (of Long Distance) sector revenues.


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