Southeastern are slipping in a second rise in fares this year. Some popular fares are going up by 3.4% from 21 May – so an off-peak return from Sevenoaks to London Terminals rises from £11.90 to £12.30. That’s in addition to the increase from £11.70 at the beginning of January.
They’ve tried to keep it very quiet: there was no advance publicity and an email to stakeholders on 2 May did not mention it at all. One of our members asked about it last Saturday, and the BBC spilled the beans on Tuesday. Although Southeastern told the BBC that they do not “routinely announce fare rises”, Southeastern did later put out a press release.
Southeastern’s statement is a masterpiece of spin:
- “we’ve frozen some of our fares for the past three years” – we cannot think of any normal fare from Sevenoaks that has been frozen at all! Southeastern say some Advance fares have been frozen, but Advance fares to other Southeastern destinations are not available from Sevenoaks.
- “this does not affect anyone with a Season Ticket or passengers travelling in peak hours, who won’t pay any extra for their train” – that’s right, but only because these other tickets are regulated by the Government to increase by not more than the RPI inflation measure (and they have already increased this year).
- “we have a range of discounts available” – yes, and there were discounts available before. A discounted off-peak ticket (say with a Senior Railcard) from Sevenoaks to London has still gone up by 3.4%.
- “If any of our passengers want advice on how to buy their train ticket at the best possible price, our station employees are happy to help” – yes, and you could be wise to ask because Southeastern are not required to ensure that ticket machines charge you the best possible price, and the Office of Rail and Road found that 13% of purchases were of a more expensive ticket than actually needed.
However what is also puzzling is why this sudden increase in fares has been introduced. We cannot remember the last occasion when fares have risen twice in a year. Southeastern have not explained it, apart from saying “like any business, we sometimes need to adjust our prices” (‘adjust’ being spin for ‘increase’). What’s going on?
- The Go-Ahead Group Half Year report in early March said “Profit share on Southeastern is expected to reduce in second half of the financial year”. But this was after a reported 6.1% increase in passenger revenue and a 3.6% increase in passenger numbers in the first half. Since Southeastern’s costs are largely independent of passenger numbers the business should be becoming more profitable, not less, by squeezing more passengers onto their trains, even before any fare rises.
- Southeastern did brag recently that in April 94.2% of trains arrived within 5 minutes. When things are going badly Southeastern point out that it is Network Rail that are responsible for the majority of the delays. So the improvement is probably an improvement by Network Rail. If so, it would dramatically decrease the amount of compensation Network Rail pay to Southeastern for unplanned disruption. This was £18.3m in 2015-16, of which only £2.3m was paid on to customers in Delay Repay and other passenger compensation. The remaining £15.9m in 2015-16 was retained as profit. If that has disappeared then that would be a big hole in Southeastern’s profits.
- The end of the current Franchise is in sight, and customers do not get a say in who gets the next one. So a hike in fares now could be a short-term measure to maximise profits in the final 18 months of the Franchise without regard to the long-term impact on the business. Southeastern would not lose relative to other bidders for the next Franchise since all of them will price their bids on the basis of the business they would inherit.
- Basic economics says that raising off-peak fares will reduce the number of passengers, although because for many there is no alternative this probably will work out well on balance for Southeastern. The Department for Transport do have an ambition to “grow off-peak revenue” – but their presentation is about doing so by getting more passengers, not less.
The fact is that Southeastern have not bothered to give any sort of explanation or justification. Some customers might draw their own conclusions from that about how defensible the reasons really are.