A blog from GBRTT

27 February 2024

This January saw the return of the Great British Rail Sale, with up to 50% off more than a million Advance and Off-Peak train tickets.

It was great news for customers, who were able to take advantage of the discounted fares, and it was great news for the industry. Against a difficult backdrop, it’s a shining example of rail pulling together to do the right thing – encouraging more people across the country to choose to travel by train, more often.

A collaboration between 16 different operators across England and Wales, Rail Delivery Group (RDG), Great British Railways Transition Team (GBRTT), and the Department for Transport (DfT), it was an example of the demonstrable benefits of pooling local and national expertise and effort.

With so many different perspectives, the challenge was to find a consistent and simple national proposition for customers that also considered the different business needs and individual commercial interests of the various train operators.

In this blog, we take you behind the scenes of this unique, cross-industry project.

What was the idea behind the Great British Rail Sale?

Today’s rail industry remains fragmented, with misaligned incentives that result in good people, with good intentions, naturally pulling in different directions. Train operators are working hard to get more people travelling by train, but they are doing this in silos. These can be difficult to join up, but is not impossible.

Everyone knows the pandemic hit the rail industry hard. Back in 2021, rail journeys and revenue were less than half of pre-pandemic levels and passenger rail was effectively being underwritten by the taxpayer. So the Government tasked GBRTT with leading the industry’s recovery from the pandemic, alongside delivering much-needed reform to create a simpler, better railway for everyone in Britain.

It was vital the rail industry pulled together for the first Great British Rail Sale, in Spring 2022, to be able to deliver a national, consistent offering. It was the first national price promotion on rail in a decade giving people an extra incentive to travel by train, particularly for leisure. One great thing about it was the opportunity to be able to demonstrate in a tangible way how rail reform initiatives can provide benefits for passengers, taxpayers and the industry.

So, in acting as a whole-system thinker for the rail industry, GBRTT set to work alongside the DfT, RDG and train operators with an aligned objective to get more people travelling by train, recognising that value for money is always in the top two priorities for customers, alongside performance (punctuality and reliability).

Passenger revenue still hasn’t fully recovered and while there are reasons to be optimistic in the long-term, in the here-and-now, rail journeys are at about 80%, and revenue is at about 75% of pre-pandemic levels* and passenger rail remains heavily subsidised by government. So, GBRTT’s remit to help recover revenue continues, to make the industry financially sustainable.
*In real terms adjusted for the introduction of the Elizabeth line and inflation.

How did partners set about negotiating an offer that works for everyone?

Train operators serve different markets, with different products and buying behaviour.

For example, customers making longer distance trips are more likely to plan and book well in advance, while customers making shorter journeys are more likely to plan at short notice and often buy their tickets on the day. Similarly, long distance operators provide seat reservations and are better able to control the number of tickets they offer by specific train, while other operators don’t have reservations so aren’t able to control availability in the same way.

This meant we had to identify an offer that was relevant and commercially viable for all operators, whilst also being a simple national proposition for customers. Even the timing of the sale was a negotiation, with varying seasonal demand patterns across different operators and different commercial points of view on when the best time would be to run the offer.

GBRTT worked with RDG to coordinate with train operators, and together we worked as the interface with the DfT. Following initial discussions, a working group was set up with marketing and fares and revenue experts from train operators to find a consistent proposition, building on the lessons of the first sale, which everyone could support, and which could be made widely available – including through third party retailers.

What did we learn from the first Great British Rail Sale?

The second sale started with a thorough evaluation of the first one, which took place in spring 2022. Did the offer work? More than one million tickets were sold, amounting to £11.2 million in discounted ticket sales and passengers saved around £7 million – but did it increase overall journeys and revenue for the railway? Did it help raise awareness and consideration of rail?

Asking these questions helped partners to understand the impact and identify improvements for future promotions.

Our analysis found that, while many customers saved on journeys they would already have made, overall, both rail journeys and revenue were boosted. The sale prompted around 70,000 adults who hadn’t used a train since the pandemic to take a trip. The sale accounted for £18.7 million in total revenue and generated approximately £3.3 million in net incremental revenue to the industry.

What are the benefits of a joined-up approach in this context?

The industry has been good at developing innovative ways to meet different customer needs, but today buying a train ticket is often far too complicated, and it’s putting people off travelling by rail. With over 1,000 different types of ticket, the vast majority (84%) of rail customers think that fares need reform.

We are working with partners to simplify the experience customers have when they go to buy a ticket. Things like clearer pricing, modern methods of payment and straightforward compensation will help us to restore trust and encourage more people to use rail.

So, it’s no secret that we need to sell rail better, using customer insight and bringing the industry together to pool our collective expertise and resources. For example, in the medium term, with GBRTT as a whole-system thinker, we can work together to make rail easier and more convenient to use – including simplifying fares. Longer term, we need to build back confidence in the railway and make travelling by train the smart and easy choice as part of integrated transport systems.

The Great British Rail Sale is a step towards a more joined up railway, with coordinated marketing across the rail network, so customers can enjoy discounted rail travel across the country. However, it is coordinated rather than fully integrated, as tickets are mainly offered on an individual operator basis, not for journeys across operators and, as a result, marketing is largely conducted by individual operators where a more joined approach could be more effective. This network-wide perspective is what GBRTT is encouraging and what Great British Railways will deliver.

While initiatives like this are excellent drivers to boost passenger revenue, GBRTT’s ‘Whole Industry Finance Model’ shows there is still a sizeable gap between the money passenger services are bringing in and their outgoings. A gap which the government is plugging, to the tune of around £4bn a year.

Our research shows travel habits have changed since the pandemic, which means the rail industry needs to adapt and offer better options. The latest revenue figures, from GBRTT’s quarterly Train Travel Snapshot, shows a sustained recovery of railway revenue post-pandemic, revealing a 10% uplift to £2.6 billion in the three months to September 2023 compared to the same quarter in 2022.

Revenue from leisure travel saw the biggest increase vs the same period the previous year:

Rail passenger revenue and journey purpose from 1 July – 30 September 2023

However, rail revenue and journeys are still behind pre-pandemic levels in real terms. When adjusted for inflation and excluding the newly introduced Elizabeth line, the rail sector is still grappling with a significant financial gap.

The below table shows the latest results for Rail Period (RP) 24/11 – 7 January to 3 February 2024, compared RP 20/11 – 5 January to 1 February 2020, in real terms, adjusted for CPI and the introduction of the Elizabeth line:

Between 7 January and 3 February 2024, overall passenger revenue was at 72% of the same period pre-pandemic in real terms, while journeys were at 93%.

However, looking in more detail, we estimate that in this period, business travel revenue was just 27% of the same period pre-pandemic, and journeys were 45%, though it has been as high as 41% of revenue and 55% of journeys.

Commuter revenue in RP 24/11 was only 71% and 62% of journeys compared to the same period pre-pandemic, though it was higher in the previous period December 2023 – January 2024, at 84% of revenue and 78% of journeys versus the same period pre-pandemic.

Leisure travel on the other hand is much stronger now, with revenue in RP 24/11 at 110% and journeys at 143% of the same period pre-pandemic, which is the strongest it has been.

GBRTT is working with the industry to collaboratively address challenges to pursue sustained growth.

So what are GBRTT’s priority areas for boosting revenue growth?

There are a few areas where we’re focused on making collective progress. These include service reliability, optimising how capacity is used across the network in light of new travel trends, making ticketing simpler and better value for money, and improving communications and information to customers. These are areas we know, from our research, will have the biggest impact in encouraging more people to choose the train over other modes of transport, more often.

We need the collective clout of all parts of the industry working together to drive growth. Local rail leaders know their own contexts best. But by bringing decision-makers across the industry together to prioritise investment where it will have the biggest impact on growing revenue, GBRTT is supporting joined-up decision making that works across the whole network.

GBRTT is in a unique position to provide the industry with whole system analysis, being the guardians of a long-term strategic approach for the rail industry, which will help achieve national objectives, such as economic growth and net zero.

While the industry is good at identifying what needs to be done to improve service delivery and efficiency, due to the structure that has existed for years it will have ‘got out of the habit’ of working to more consistent solutions, both in terms of technology and assets, and services/information for passengers. Moving towards frameworks that allow local decisions but greater consistency will support what passengers want and suppliers need to improve efficiency. GBRTT will also develop aspects of whole system strategic options to support nationwide challenges such as decarbonisation, and to drive freight growth.

Delivering a simpler and better railway for everyone, in the here and now

The Great British Rail Sale is a demonstrable example of how rail reform can unlock a more logical structure that allows the different parts of the rail industry to collaborate in producing a consistent and simpler national offering. It’s about the railway pulling together and aligning targets, where possible, to get more people choosing to travel by train more often – providing value for customers and reducing rail’s cost to the taxpayer.

Making smart choices now will help put the railway on a more financially sustainable footing, better able to meet customers’ needs, and support Britain’s wider environmental and economic goals. After all, rail is a great green choice, reduces road congestion, and supports economic growth.

Rooted in recent evidence, we believe that there is a large, credible opportunity to grow passenger volume and revenue across the country, by bringing together the collective clout of the rail industry – that means passenger operators, Network Rail, RDG, third party retailers and transport authorities – to go for growth.

Our in-depth analysis tells us it is possible to deliver a simpler, better railway, today, and for the future, when the industry pulls together as one and puts the customer at the heart of planning.

Keep a look out for our analysis of the 2024 Great British Rail Sale. We will publish the data once it becomes available.