Mind the gap
Originally published on businesstraveller.com 31/03/2009
Niche rail operators are providing fierce competition for the big players in terms of price, service and choice, reports Alex McWhirter.
Alternative train firms are the rail equivalent of aviation’s Virgin Atlantic or Bmi. Just as the latter provide passengers with innovation and choice, so too do the likes of Hull Trains and Wrexham and Shropshire. These so-called “open access” operators were given the right to compete when the railways were privatised in 1996. The Conservative government believed such smaller, entrepreneurial rail companies would compete with the bigger players and provide passengers with choice.
Ashwin Kumar, passenger director of rail watchdog Passenger Focus, explains: “It’s a formula that found favour with travellers. Open access operators offer passengers product and pricing innovations.”
Not only have these operators pioneered routes neglected by the big firms, but they also specialise in the sort of services and benefits that are so valued by the travelling public and yet are being either downgraded or phased out by the rest of the industry. For example, National Express East Coast (NXEC) is cutting back on onboard catering, while Virgin and NXEC insist passengers book ahead to avoid seeing ticket costs escalate.
In contrast, not only does Wrexham and Shropshire maintain a full restaurant car service but it goes to the trouble of serving local produce on board. And unlike NXEC, its fellow East Coast Main Line (ECML) operator, Hull Trains, sells keenly priced “walk-up” fares for single journeys. Another operator on the line, Grand Central Railway, allows passengers to buy tickets on board at the lowest rates.
A prime example of open access benefits can be seen on the route linking London Marylebone with the Midlands. Kumar says: “Wrexham and Shropshire has developed an entirely new market for direct services linking London with Shrewsbury and Wrexham. It became the trigger for Virgin Trains’ decision to start its own Wrexham service out of London Euston.”
Virgin Trains is the odd one out. Under its franchise deal with the government, it is immune from open access competition. That’s why when Wrexham and Shropshire calls at Wolverhampton, a station within the Virgin network, it cannot take passengers to and from London.
Elsewhere, the open access operators are free to compete provided they can make a business case for their services. So, barred from treading on Virgin’s toes, the bigger open access players compete with NXEC on the extensive East Coast Main Line out of King’s Cross to centres such as Grantham, Doncaster, York, Hull and Sunderland.
Hull Trains was first off the block. Since 2000 it has developed a neglected route – between London and Hull via Grantham and Doncaster – into a business expected to carry 720,000 passengers this year. A spokesperson for Hull Trains says: “Our business has grown steadily and we have expanded to meet demand. We would like to operate one more service a day [there are currently up to seven trains each way] provided a spare ECML ‘path’ can be found.”
Last year, Grand Central entered the ECML with three times a day through-trains to Sunderland, calling at the key railhead of York. A spokesperson for Grand Central says: “Our basic philosophy is to have ‘walk up and go’ fares. We are not based on the airline model that the big operators use.”
The success of these firms hasn’t gone down well at NXEC, which is struggling to pay £1.4 billion in franchise fees to the government between now and 2015 for the right to be the major player on the East Coast Main Line. By contrast, open access firms aren’t burdened with franchise fees.
Under rail law, NXEC is allowed to operate the ticket office at a busy station such as King’s Cross. In the case of York, it’s allowed to manage the entire station. This is a strange rule as it’s an invitation for bias. There have been reported cases where NXEC staff at the ticket offices haven’t recommended rival train firms even though they may have a better ticket for passengers’ needs.
A spokesperson for Grand Central says: “There used to be an issue of impartiality at King’s Cross but there is certainly one today at York.” Passenger Focus adds: “We believe the station manager should treat all firms fairly. But we admit it can be a problem anywhere where there is multi-access [of train firms]. We rely on the good faith of the station operator to show neutrality.”
More pressure is being put on Grand Central at York by NXEC’s decision to install ticket barriers to minimise fraudulent travel. That’s fair for NXEC but not for Grand Central, because if the move goes ahead its passengers departing York can no longer buy on board. A solution is being sought.
Another useful train company, but not an open access operator, is Chiltern Railways, which operates between London Marylebone and Birmingham Snow Hill. This firm had the bright idea of stringing together a collection of little-used lines to create a through rail service between the UK’s two biggest cities. The track was upgraded, trains speeded up, and Parkway stations along the line make it convenient for motorists to take the train. Although not as fast or frequent as Virgin’s rival Euston-Birmingham service, it competes easily on price. Chiltern plans a new London-Oxford service from 2013.
Meanwhile, Grand Northern, sister firm to Grand Central, has just been allowed to operate three times a day between Bradford and London King’s Cross via Wakefield Kirkgate and Pontefract.
All these firms seem to be on the rise – at a time of declining standards, their products are striking a chord with the travelling public.
The main players
Wrexham and Shropshire operates between Marylebone, Shrewsbury and Wrexham but schedules are geared more towards travellers heading into London. Besides the attractive prices, local food is served on board and passengers can make use of mobile phone ticketing. Its owning company is Germany’s Deutsche Bahn.
Grand Central plies the King’s Cross-Sunderland route, with stops in York and other north-eastern stations. Tickets can be booked ahead but if you are in a rush all tariffs can be bought on board. Walk-up fares substantially undercut NXEC. A one-way peak-time London-York ticket costs £34 standard class or £54 first class. The same rates with NXEC are £96.50 and £167. It operates 201km per hour diesel trains and is privately owned.
Hull Trains runs between King’s Cross and Hull, with main stops at Grantham and Doncaster. For London-Doncaster you can buy a standard class one-way “walk-up” fare for £36, compared with National Express East Coast’s equivalent rate of £86. A similar first class rate is £99, compared with £127.50 at NXEC. It operates 201km per hour diesel trains and is owned by First Group.
Chiltern Railways operates half-hourly between Marylebone and Birmingham Snow Hill and has mobile phone ticketing. Its selling point for travellers out of London is a £32 peak-hour day return (off-peak costs only £19.50 return) compared with Virgin’s equivalent walk-up price of £132 out of Euston. It’s also owned by Deutsche Bahn.
Great Northern is Grand Central’s sister firm, and expects to operate King’s Cross-Bradford from mid-December with a similar fares policy. It will operate 201km per hour diesel trains and is privately owned.