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Worldwide Business Information and Market Reports
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ISBN 1-85765-695-4
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In 1998, the UK market for rail travel was worth
an estimated £3.81bn. £2.85bn of this was contributed by the 25
train operating companies (TOCs), with a further £899m accounted for by
London Underground. The remainder of the market comprises small, municipal
mass-transit systems, including the Docklands Light Railway and Manchester
Metrolink.
Over the last few years, rail passenger numbers have risen
significantly, with total passenger kilometres having increased by 25.7 percent
between 1994 and 1998. Moreover, with many fares having risen in real terms,
revenue growth has been even stronger at 32.7 percent between 1993/1994 and 1997/1998.
The privatisation of passenger rail services, which was completed in early
1997, represented a fundamental change in the nature of the rail transport
market. In addition to the transfer of service provision into private hands,
privatisation saw the rail network being divided into a series of separate
franchises. This approach attracted considerable criticism at the time, not
least because many believed that the fragmented structure of the franchises was
counterproductive, in terms of the overall development of the market. To a
certain extent, this scepticism has proved well-founded. As has been widely
publicised, passenger complaints have risen dramatically, brought about by
worsening punctuality, cancellations and poorly maintained rolling stock.
While much of the blame can justifiably be placed with the TOCs, it should be
acknowledged that they have had to cope with a backlog of underinvestment from
when British Rail (BR) was in the public sector. Successive governments starved
BR of funds, or left it a victim of short-term budgetary decisions. Moreover,
rail's success in attracting new passengers -- despite all the problems and
complaints -- has added to the difficulties.
Although the performance of
the TOCs has, to date, been generally poor, there are a number of reasons to
believe that passenger rail transport will undergo a resurgence in the next few
years. Firstly, as demonstrated by the recent rail summit, it is apparent that
the current Government is committed to public transport. Secondly, the new
private sector operators are starting to make significant investment in new
rolling stock, which will allow them to improve the quality of the service they
offer. Furthermore, Railtrack has announced a £27bn investment programme
aimed at reducing delays, as well as expanding the network. Finally, as road
congestion worsens and service levels start to improve, the public perception
of rail travel as an alternative to the private motor vehicle will change. As a
result, rail's share of the overall passenger market will start to increase.
As privatisation has progressed, it has become clear that some operators
are more suited to running passenger rail franchises than others. In future, it
is likely that those companies which have performed well will begin to take
over poorly performing operators. Evidence of this has already been provided by
Stagecoach's recent acquisition of 49 percent of Virgin Rail, believed by some
analysts to be a prelude to a full takeover. Ironically, this process of
consolidation will lead to the rail network increasingly resembling the late,
and largely unlamented, British Rail.
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