Viewpoint

Review highlights issues for retailers

Hazel Dawson, Focus Travel Partnership’s Commercial Manager outlines some of the issues and frustrations third party sellers of rail have faced and how the new Great British Railways can have a positive impact

As the leading business travel consortium for the independent and SME sector with 50 travel management company (TMC) partners (or business travel agents), Focus Travel Partnership had the opportunity to present its Partners’ issues to both the first and second stages of the Rail Delivery Group’s Retail Review and was pleased to have their frustrations recognised.

Pre-pandemic, Focus Travel Partnership had a collective buying power of £1billion, £125 million of which was rail revenue, and its size enables the Focus buying team to negotiate mutually beneficial partnership agreements with suppliers across multiple travel sectors including aviation, technology and rail.

During the pandemic, Focus Travel Partners have worked tirelessly to ensure that their clients who still had to travel on essential business could do so in a responsible way. Focus Travel Partners increased their dedication to duty of care and high service levels. Before the end of November 2021, domestic travel recovered at a steady pace – giving rise to a greater demand for rail – which was elevated by the heightened interest in sustainable travel. As both domestic and international travel remain complicated, business travel clients have come to rely more on their travel management company to provide safe travel; agile technology and up-to-date, on-theground intelligence, as well as access to the best, most flexible fares.

The Retail Review is part of the UK’s rail transformation process following the recommendations from the Williams-Shapps Plan to create a new public body ‘Great British Railways’, which dismantles the franchise system and aims to make railways easier and cheaper to use.

During these stages of the Retail Review, Focus Travel Partnership attended one-toone meetings and drop-in sessions to ensure its sector was fully recognised and heard.

For too long, our TMC Partners have been deeply frustrated by the overly complicated, outdated and unprofitable nature of selling rail. This mode of transport holds the key to more sustainable business travel – but for agency retailers, the model needs to be updated to suit the changing needs of travellers.

We firmly believe that TMCs can really help with the recovery of the rail industry and boost passenger numbers by selling high volumes of tickets as well as providing a higher yield of revenue to the train operators. Our travel management Partners can also encourage greater use of rail services and partner successfully with the rail industry to improve customer service and satisfaction.

The Rail Delivery Group’s report on the initial stage of the Retail Review found that rock bottom remuneration structures mean that third-party retailers often have to charge booking fees that train operators don’t.

Third party retailers need equality and a ‘level playing field’ when it comes to terms and conditions, based on the same remuneration.

Travel management companies pay additional fees for the use of the retailing infrastructure while receiving lower commissions, resulting in examples of lower value tickets costing more in fees than the industry remuneration received.

Retailers should have an equal ability to retail to their customers. Within the licence

conditions, there should be no restrictions on retailers to sell any products or services and all new products (including promotions) established by rail operators should be made available for retail via all appropriately licenced retailers.

The costs associated with being a thirdparty retailer of rail are significant and the return on investment is very slow due to the need to establish a high volume of business. This discourages new entrants and potentially limits innovation.

Retailers support quality control through licencing as a licence provides legitimacy and commitment to the industry, however, we do believe that there needs to be greater support for market entrants.

Third party retailers feel that there needs to be more transparency and a clearer relationship between themselves and the rail industry with better access to industry data to support retail innovation and increase revenue.

Rail industry data is poor and inconsistent and needs to be improved so that revenue streams are better understood and can drive growth in the sector, particularly when Partners are trying to develop ‘door-to-door’ products.

The income and charging structure of UK rail often disincentivises the retail of rail tickets or products when compared to other modes and tactical fares should provide an opportunity to drive revenue, recovery and growth.

Retailers have greater API capabilities and should have greater access to rail product through these digital tools as they are low-cost to access and can drive innovation and market growth especially when it comes to developing products to meet current and future customer demand.

The majority of agency retailers rely on third-party ticket issuing system providers, who are often retailers in their own right causing conflict in some cases.

The retail structure is both overly complicated and no longer fit for purpose as it was designed for the franchise system and has been in existence for a very long time with limited changes. Simplification could reduce costs and encourage growth. One recommendation was that licenses need to be updated to reflect greater use of digital services, with just one licence required with no attempt to duplicate accreditation terms.

Clearer and easier accreditation should be made available, including automated accreditation services or self-accreditation as part of the licence. Retailers believe this would reduce the cost and time to implement new services and products and improve the responsiveness of the industry.

Retailers also requested clarity and simplification of retailer roles to differentiate more clearly between those who provide accredited ticketing services rather than retail services. Every player has had a different opinion relevant to where they sit in the ecosystem – so for example Ticketing Issuing Systems such as Evolvi and Trainline will have a very different opinion to a business travel agency, but we are all classified as third-party retailers. Currently, there is a confusing ecosystem of organisations who can provide ticketing services to other retailers, B2C retail platforms, B2B retail platforms, or a combination of all of these under the same licences.

Specifically, there needs to be an understanding of retailers’ broad roles in managing the end-to-end customer relationship. The pandemic in particular has meant that our Partners no longer just ‘sell and forget’ tickets, but feel they have a broader responsibility to support their customer throughout their journey and beyond. This dramatically increases the number of customer touch points and, of course, raises customer expectation. We believe the rail industry should recognise and support this broader role.

The second stage of the consultation has also now been completed and Focus Travel Partnership organised for six of our TMC Partners to attend a dedicated bilateral session with the Rail Delivery Group to provide further feedback from a TMC’s business and operational perspective on changes needed on remuneration, licencing, access to product as well as the

need for there to be a differentiation of third-party providers between us and the Ticket Issuing Systems. In addition, Focus Travel Partnership CEO Abby Penston and I also met with two of Department of Transport’s appointed external consultants who are overseeing Topic Areas the transformation project to again ensure the voice of the mid-market/SME travel management company is well understood. The Rail Delivery Group has acknowledged the input that the Focus Travel Partnership has provided in this assessment and feedback process, including the provision of a good base of evidence to understand our views on the current retail and licencing arrangements and we have shared with them the opportunity and appetite for change to the commercial framework for the future. Going forward, the collaboration is set to continue beyond the completion of the formal consultation stage and this quarter we will find out how the RDG has assessed its findings. They will complete economic modelling and will collaborate with us and the Business Travel Association to continue to get our views on the recommendations for change and how those changes can be implemented effectively and efficiently. By March they are aiming to have more clarity of opportunities for change which we look forward to working with them on. I am optimistic that this review will be a turning point, the consultation is being handled well, but I am also a realist. The rail industry is a very slow beast in comparison to many other travel sectors. But rail is key to the future of sustainable travel, and third-party retailers, who have grown even closer to their clients during the pandemic, understand their appetite for cheaper, more efficient and easier access to rail travel. Third-party retailers can boost recovery and grow the market, the rail industry now needs to show that it has listened to their valuable partners with a new business model for Great British Railways.

Licence Fee Retail Control

Commission Rates

Licence Terms & Conditions Retailers

Products Service Charges (Costs)