Debate Magazine

Rail Fare Cap

Posted on the 09 October 2013 by Markwadsworth @Mark_Wadsworth
One of the myths about the Conservatives is that they are the party of the free market, and here's more evidence against them:-
The rail industry's power to increase fares in England is to be curbed as part of a government drive to overhaul the rail fare system.

Until now, some regulated fares could potentially have gone up by 9.1% next January.

They will now be capped at 6.1%.

But campaigners say it is not enough, and point out that commuters will still have to pay an above- inflation increase next year.

Regulated fares are those which the government controls, and include season tickets, "anytime" single tickets around major cities, and off-peak inter-city return tickets.

They will go up in 2014 by an average of 4.1%, a number calculated using an average of inflation - as measured by the retail prices index (RPI) for July - plus 1%.

Rail fares are already as high as they are because they can't put everyone on a train that wants to travel, so, you have to ration supply, and the best way to ration supply is on price. Halve fares at peak time to London and you'll create chaos.
I may have criticisms of rail companies, but one observation I have made is that they know their rail fares. The fare from Swindon to Bristol is much lower than the fare from Swindon to Reading, despite being around the same difference, because the Swindon to Bristol train is about half as full. Trains after 11 are much cheaper, because they're much emptier. So, I think that we can assume that if they want to raise prices by 9.1% on some fares, it's because they know it will raise income, rather than driving people away.
And with that extra income, it makes the rail franchises more valuable, so companies that want to run the rails can pay more (or receive a lower subsify) for it. In other words, most of the extra money comes back to the landlord (the government) that does all the rail improvements.

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