The Rail Delivery Group (RDG) concluded its consultation on fares regulation on 10 September. The exercise is driven by a view that ‘decades of well intentioned but outdated regulation have led to a range of fare options that have not kept pace with technology or how people work and travel today’. In principle, I have enormous sympathy with this assertion. One of the big mistakes at the time of privatisation was the decision to regulate the Saver fare for longer-distance journeys; with hindsight, I’m convinced that it would have been much better to regulate the open return.
For years, inter-city train operating companies (TOCs) took the view that the business market was inelastic, so progressively increased open ticket prices in real terms. Pricing up for an apparently inelastic market does of course potentially represent abuse of monopoly power, and it’s almost certainly true that, for business markets such as Manchester or Leeds to London, Virgin and LNER have a dominant market position, although this is not true for the West Midlands, as Virgin faces strong price competition in the rail market from Chiltern and London Northwestern. However, business passengers are increasingly savvy, and the use …
