30 Nov 2012 by Alex McWhirter

‘Open access’ train firms rate highly in passenger surveys. They tend to have better prices, they keep the incumbent train operating companies (TOCs) on their toes and they serve neglected cities.

But despite the government’s original intention for privatisation to encourage open access competition, there are only two such firms – Grand Central and First Hull Trains. Both operate from London King’s Cross to destinations in Yorkshire and the north-east. So while northern travellers are reaping the benefits of open access competition, those in other parts of the UK mainland are not.

Government policy to encourage competition never really took off. In a 1992 transport white paper, Conservative transport secretary John MacGregor wrote: “Our objective is to improve the quality of railway services by creating new opportunities for private sector involvement. This will mean more competition, greater efficiency and a wider choice of services more closely tailored to what customers want.”

Open access operators cost the taxpayer nothing. While they pay no franchise fees to the government, unlike the existing TOCs – which get bailed out should business fall below expectations – they take on the financial risks themselves.

So why haven’t they taken off? Unlike domestic aviation, which is deregulated, open access rail firms need to be approved by the Department for Transport, so politics comes into it. And the indications are that the government has now cooled on rail competition.

In a letter to The Times, Tony Lodge, research fellow at the right-leaning Centre for Policy Studies, says: “Twenty years [after the white paper], the Department for Transport has effectively ruled out more competition on the railways. It now seems that more competition has been abandoned in favour of highly prescribed, 15-year monopoly rail franchises. Open access competition is in the interests of passengers and should be encouraged by the coalition as a priority.”

But even when they get the green light, the barriers to entry don’t go away. Open access firms must acquire suitable rolling stock. Obtaining new trains is not an option because of cost and time. Getting the stock built and approved by government safety inspectors can take ages – Virgin Trains’ Pendolinos were ordered in 1999 didn’t enter service until 2003. So it means using second-hand trains, and the current railway boom has led to a shortage of suitable stock. That is why the existing open access firms use hand-me-down diesel trains, previously built for British Rail.

Assuming routes with good passenger potential can be identified, the next problem is getting the project approved in the face of stiff opposition from the incumbent. GNER, which held the East Coast franchise until 2007, accepted competition from Hull Trains but drew the line at the prospect of Grand Central muscling in on its patch. This is understandable seeing as GNER could ill afford more competition in case it jeopardised its huge franchise payments.

Another problem is securing the “paths” or slots along the line. The main lines into London are extremely congested so spare paths are difficult to secure.

When incumbent TOC East Coast revised its timetable last year, the open access operators played second fiddle, with East Coast taking their pick of the paths. It meant that not only did the open access operators have to retime their trains, they had to run them more slowly so as not to conflict with East Coast.

After all this, one might wonder why open access firms bother. But they do. Prospective open access firm Alliance Rail hopes to run trains out of Euston to cities in West Yorkshire and the north-west under the GNWR (Great North Western Railway) brand. Some of the cities in question have no direct service to London over the West Coast line.

Previously, this wouldn’t have been possible because Virgin Trains was protected from competition. But the franchise is being rebid so the rules may be changed, which would be welcome news for passengers.

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