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| RAIL PROFESSIONAL INTERVIEW
Interview
James Bain and Adrian Hepworth Sam Sherwood-Hale spoke to Worldline UK & I CEO, James Bain and Chief Architect UK & I Adrian Hepworth James Bain
Adrian Hepworth
What are the dangers of over-reliance on ORCATS? ORCATS sets the factors used for the allocation of revenue from the sale of rail tickets. The system (along with LENNON) governs the revenue earned from each rail service an operator runs, and each ticket purchased that could potentially have used that service. The principles of revenue allocation have not changed in decades. There is very little consideration of the customer in that equation, and indeed operators strongly debate over the weekday and weekend days chosen to be representative of their services for the next six months of operation, yet are happy that the presumed distribution of passengers over the 24 hours of the day are the same in 2021 as they were over 20 years ago. This leads to a degree of revenue stability for operators, but creates some perverse outcomes for the passenger: • In particular, the fixed timetable selection means there is minimal incentive for an operator to change or improve the schedule to meet intra-week needs (such as a different Monday or Friday timetable). • Due to the survey profiles from the 1990s, an operator is incentivised to run services at peak hours, and with a very blunt peak/ off-peak pricing regime there is almost no ability to perform yield management and offer differentiated fares. • Worse still an operator makes more revenue from running small but frequent services stopping at multiple calling points, than they would from fewer, faster, high-capacity services calling at major interchanges. This leads to both platform, and carriage overcrowding, but perhaps more importantly increases the strain on the physical rail network and increases energy demands. • The passenger is offered ‘operator only’ tickets in order to maximise the income to the operator, but this removes the flexibility for the passenger. • If the passenger ‘splits’ their tickets to benefit from price reductions, the railway thinks it is carrying two or three times the number of passengers and the revenue to operators is significantly distorted. Rail Professional
• The concept of the ‘digital railway’ that responds reactively to passenger needs remains stubbornly distant while ever ORCATS controls the revenue and innovation in services or retail will be slow to emerge. What are some solutions to those problems? The modern passenger acts differently to the passenger from decades ago. Our meetings are organised at short notice, we ‘pop’ to our major cities for a night out. We have electronic devices that can be used to buy travel beforehand without a ticket office or travel agent, and we often decide to turn up and use services without booking. We can be incentivised to buy cheaper tickets, or equally try to game the system by ‘splitting’ our tickets to obtain this benefit all of the time. The solution is not therefore to persist with the outdated methods for revenue allocation based upon pre-purchase of tickets, but to embrace a future where the revenue to an operator comes from the carriage of the passenger, and that revenue is proportional to the value perceived by the passenger or the benefit to the wider society. The first step is to improve the accuracy of the information available from a ‘ticket’ to
include when the passenger travelled, and which services they adopted. This can be done using modern digital platforms that associate data from a barrier gate, revenue protection officer, or mobile application with the ticket itself. Modern computing platforms can then make greater sense of when and where passengers are wanting to travel, and allocate revenue from pre-purchased tickets or ‘tap to use’ events according to the operator actually servicing that passenger journey. This will very quickly identify services that are not economic, places where there is an unserved need, and where capacity or subsidy is needed. Any such platform can then be used to both inform timetable planning decisions, and respond immediately to those changes when they occur. This is desperately needed as the country inevitably goes through a period of rapid change as we recover from the effects of a global pandemic. The second step is to use this information to inform fare setting and pricing models going forwards. The antiquated system for setting of fares both at a national and local level is long overdue a shake-up. A simpler, more transparent method of calculation would enable operators to incentivise the passenger at a more granular level, and remove the loopholes that have resulted in ‘split ticketing’.
