Adam Smith Institute

On the news that train fares are to be simplified, I think Damian Hockney (possibly the leader of the One London Party, though I can't be sure) made a good point in a letter to Friday's Metro:

YES, let's all cheer that rail travel will become even more expensive. Let's all leap around and bang the drums to celebrate that all the "confusion" invloved in booking really cheap, early tickets will be scrapped and that we will have less choice. Next, let's stop all that "confusion" in other things like telecoms competition, and then we can go back to the good old days when you had to wait nine months to get a phone installed.

Essentially, the Association of Train Operating Companies has decided that the current ticket pricing structure, under which some companies offer as many as 12 different types of ticket, will be scrapped in favour of a system with just three options: advance, off-peak and anytime. Now, that may simply be good business practice - i.e. what consumers want - in which case, fine. But I suspect that this simplification will just be used as an excuse to raise ticket prices accross the board. Imagine if the supermarkets got together and decided that they would all only offer three particular kinds of, say, milk at three different prices. That would probably be regarded as an anti-competitive practice - sellers clubbing together to offer buyers less choice, and therefore get away with charging more for the product.

On the other hand, it's really no wonder that train operators are desperate to squeeze as much money out of passengers as possible. 40 percent of tickets sold have their prices capped by the government, which is to say that 40 percent of a train operator's business may take place at below market prices. They need to make up for that somehow. The reality is that some tickets - those on busy routes at peak times - should become more expensive, while others should probably be much cheaper. It's supply and demand. Such a pricing structure would also act to encourage people to travel at quieter moments, rather than all pile onto the train at 8.30am with everyone else. It is ridiculous that more than a decade after the privatization of the railways, the government is still preventing this from happening.

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