Back in the day, when some were genuinely, commercially profitable, the most successful had a heavy goods (and particularly mineral) traffic. It helped to have a near monopoly in an area (e.g. the old North Eastern Railway). Passenger traffic was the butter on the bread, or the jam on the butter. Sometimes it was provided chiefly as a public service. (Yes, gasp, before 1914 statutory railway companies often did stuff for the public good, sometimes being compelled to do by Parliament because of their near-monopoly of transport.)
It is very questionable whether, even in the glory days, railways made a significant profit purely on passenger traffic. Possibly quasi tramways like the London, Brighton and South Coast did, but one would need to examine the figures.
The Victorian politicians were very keen on allowing competition. Even ruinous and pointless competition, because the railways had such a monopoly of traffic. If you wanted to send a load of sheep from (say) Exeter to Hawick, it was almost impossible to do it other than by rail. Hence, Parliament both encouraged competition and controlled traffic rates. (It was never a true free market even when there were well over 120 railway companies in this sceptred isle.)
Around 1900, railway companies began to realise a lot of their spiteful competition was wasteful, and even fierce rivals began to cooperate. Little things at first, like putting adjoining stations under one stationmaster, or agreeing that one company's engine would do all the shunting, or whatever. In short, even railway companies themselves recognised that much of their competition was a Bad Thing.
The truth is railways are a natural monopoly, and it is very (even ruinously) expensive to build two or three competing lines everywhere, which is what true competition requires. You end up having two or three lines losing money instead of one breaking even.
Passenger traffic is rarely if ever profitable. Hence it needs to be subsidised. The real question is by how much. The indirect benefits to the economy are huge, but the obvious one is the reduction in the cost of road building and consequent traffic congestion and pollution. And, in case anyone wonders, railways are not generally suitable for conversion to roads (too narrow and too little headroom) and if you do it, you massively reduce the potential capacity of a given stretch of right-of-way.
Since railways are a) a natural monopoly, and b) in need of subsidy, there are huge advantages to having them in the public sector and regarding them as a pure public service. Otherwise, you merely pour subsidies into private pockets (to maintain a reasonable commercial rate of return on capital) and we do way too much of that already
That is true, and the focus on "customer" rather than "organisation" has been important. I don't know who's in charge now, but the folk who kick-started CR into life were all ex-BR, given much more freedom than they had hitherto experienced. One must note though that its success has largely been built on the Southeast's prosperity - such a model might not have worked elsewhere. Let's hope the "new" Ashington and Leven lines do well, as have Okehampton and Tweedbank, also Henbury when it opens.
Chiltern's approach to safety in general and driver management in particular has been less than impressive, but they have avoided serious consequences by the skin of their teeth:
Hmm ... interesting, especially a couple of sentences in the second report: "RAIB found that Chiltern Railways’ processes for training and testing a driver’s knowledge ... were not effective. A probable underlying factor was that Chiltern Railways’ driver management processes did not effectively manage safety-related risk associated with the driver involved in the incident." High driver turnover (for whatever reason) is also mentioned as a contributory factor.
Labour have said that they will gradually buy back franchises as they come up.
There were successes. Virgin was great. It is no longer running the West Coast line because its partner would not follow the at the time new pension system for rail workers. Avanti who took over have been mixed
ROSCOs probably exist as an attempt to keep the Public Sector Borrowing Requirement down. Or to enable companies with relatively little capital to operate a franchise. Traditionally, railway companies owned all or most of their rolling stock - the hiring of coal wagons was usually as far as it went, unless the company was close to receivership.
Once all railway services are back in public hands, the only argument for ROSCOs will be to keep the PSBR down. (The chief purpose of the now derided PFI hospitals and schools, etc.)
ROSCOs probably exist as an attempt to keep the Public Sector Borrowing Requirement down.
ROSCOS exist to enable effective transitions between franchise holders. If franchise holding companies owned their own trains, they could refuse to allow them to be used by any other company in the event that they lose their franchise. With separate companies to own the stock, the leasing arrangements can simply be transferred to the new franchise holder at the moment they take over.
I once had an annuity in a top 10 insurance company. I trusted its ethics. Come to find out, some of the funds of that annuity product were being invested in private prisons. When I found out about that, I moved the annuity to a mutual fund that was socially responsible. I know exactly where the money is now being invested. I feel better knowing what is in the portfolio.
Rail franchising ceased at the start of the COVID pandemic. Train Operating Companies are now working on fixed-term management contracts, which will return to the government as and when they expire- there is nothing to buy back, and the passenger railway is effectively nationalised already. Open Access operators may continue at their own risk, with their own rolling stock contracts, but the government is not doing anything to encourage new operators to start up.
Comments
Back in the day, when some were genuinely, commercially profitable, the most successful had a heavy goods (and particularly mineral) traffic. It helped to have a near monopoly in an area (e.g. the old North Eastern Railway). Passenger traffic was the butter on the bread, or the jam on the butter. Sometimes it was provided chiefly as a public service. (Yes, gasp, before 1914 statutory railway companies often did stuff for the public good, sometimes being compelled to do by Parliament because of their near-monopoly of transport.)
It is very questionable whether, even in the glory days, railways made a significant profit purely on passenger traffic. Possibly quasi tramways like the London, Brighton and South Coast did, but one would need to examine the figures.
The Victorian politicians were very keen on allowing competition. Even ruinous and pointless competition, because the railways had such a monopoly of traffic. If you wanted to send a load of sheep from (say) Exeter to Hawick, it was almost impossible to do it other than by rail. Hence, Parliament both encouraged competition and controlled traffic rates. (It was never a true free market even when there were well over 120 railway companies in this sceptred isle.)
Around 1900, railway companies began to realise a lot of their spiteful competition was wasteful, and even fierce rivals began to cooperate. Little things at first, like putting adjoining stations under one stationmaster, or agreeing that one company's engine would do all the shunting, or whatever. In short, even railway companies themselves recognised that much of their competition was a Bad Thing.
The truth is railways are a natural monopoly, and it is very (even ruinously) expensive to build two or three competing lines everywhere, which is what true competition requires. You end up having two or three lines losing money instead of one breaking even.
Passenger traffic is rarely if ever profitable. Hence it needs to be subsidised. The real question is by how much. The indirect benefits to the economy are huge, but the obvious one is the reduction in the cost of road building and consequent traffic congestion and pollution. And, in case anyone wonders, railways are not generally suitable for conversion to roads (too narrow and too little headroom) and if you do it, you massively reduce the potential capacity of a given stretch of right-of-way.
Since railways are a) a natural monopoly, and b) in need of subsidy, there are huge advantages to having them in the public sector and regarding them as a pure public service. Otherwise, you merely pour subsidies into private pockets (to maintain a reasonable commercial rate of return on capital) and we do way too much of that already
https://gov.uk/raib-reports/unauthorised-entry-of-a-train-onto-a-single-line-at-greenford
https://gov.uk/raib-reports/report-04-slash-2021-signal-passed-at-danger-and-subsequent-near-miss-chalfont-and-latimer-station
I'm not saying that a public operator would necessarily have done better, but there has been a down side to Chiltern's go-getting endeavours.
There were successes. Virgin was great. It is no longer running the West Coast line because its partner would not follow the at the time new pension system for rail workers. Avanti who took over have been mixed
Right, but there is the question of the rolling stock operating companies (ROSCOs so called)
Yes and the fact that most companies rent rolling stock and don’t actually own it.
Once all railway services are back in public hands, the only argument for ROSCOs will be to keep the PSBR down. (The chief purpose of the now derided PFI hospitals and schools, etc.)
ROSCOS exist to enable effective transitions between franchise holders. If franchise holding companies owned their own trains, they could refuse to allow them to be used by any other company in the event that they lose their franchise. With separate companies to own the stock, the leasing arrangements can simply be transferred to the new franchise holder at the moment they take over.