It’s a bit of a catch 22. Rail is widely tipped to play a critical role as Britain’s domestic business travel recovers but first corporate travellers need the confidence to get back on trains at a time when, inevitably, carriages will be getting busier. 

Passenger usage of the rail network slumped to between 10% and 20% of pre-pandemic levels during the last lockdown, with commuter operators the worst affected. Empty station car parks clearly demonstrated the impact. The cost of subsidising train operators since Covid hit is enormous, put at £10 billion even before the latest lockdown began.  

So, are cutbacks and higher fare increases inevitable further down the line? 

Rail revamp

Hopefully not, but for now the focus has shifted to the long-awaited revamp of Britain’s railways as announced by the Government on May 19, with a White Paper imminent. An independent review commissioned by the Government and produced by former British Airways boss Keith Williams had reported in autumn 2019, but this was never made public. It has now been updated to take into account the pandemic and published as the Williams-Shapps Plan for Rail by Transport Secretary Grant Shapps.

As widely trailed this formally ends the franchising system for train operators, which in effect ended in the spring of 2020 when the Government took over the finances of the industry by underwriting the cost of running services when patronage had fallen to as little as 4% of normal levels. On most routes the private train operators continue to run trains, but are now paid a fixed fee for doing so with incentives to increase passenger numbers and run trains on time. They can no longer make big money – or big losses – from running trains, and whether this remains worthwhile to FirstGroup, Aviva and the other major transport operators involved remains to be seen.

Has the Government effectively re-nationalised the railways, 25 years after the Conservatives privatised British Rail? Effectively yes, with an admission that “years of fragmentation, confusion and over-complication” – which the rail industry warned about back then – were being brought to an end. Infrastructure operator Network Rail is already a public body, and as some franchises had failed even before the pandemic, LNER (taking over main inter-city routes from London King’s Cross from Virgin Trains East Coast) and Northern were already in public hands. Transport for Wales has taken direct control of its railways and the Scottish government will soon do the same.

The impression that our railways are nationalised in all but name is heightened by the launch, without a hint of irony, of Great British Rail, the new body that will operate the infrastructure, oversee train operators, set fares and determine timetables. It will launch a bookable website and app, expected to become the booking system used by most leisure travellers, and continue the introduction of electronic ticketing. Some commentators predicted a massive hit for third party retailers such as Thetrainline.com, whose share price took a battering on the day of the announcement. But third party retailers have built in many value-added features that should protect them, especially Evolvi and Thetrainline.com in the business market.

“Rail should be at the heart of business travel in the UK and has the opportunity to play a central role in the post-pandemic recovery”

Apart from Great British Rail, the other most significant announcement is the introduction of flexible season tickets, to take account of the permanent changes to working practices that many companies are introducing following the pandemic. As with all of the Williams-Shapps Plan for Rail, the detail is awaited in the White Paper. But the Department for Transport reckons that the new tickets – giving eight days of travel within a 28-day time frame and available from June 21 for use from June 28 – will offer significant savings. A commuter travelling two days a week from Woking to London, for example, would save £250 a year compared to buying a ticket each day they travel.

One step ahead

The business travel industry has been working on its own response to changing times well before the review was finally published.

At the end of last year American Express GBT produced a report called Let’s Go by Train. Designed to help understand how to put rail at the heart of business travel, the report identifies areas where rail is not meeting customer expectations and calls for more dialogue and data sharing across the industry. Key points include bringing business travel into the rail industry conversation; setting up a single authority to oversee rail and monitor data sharing; investing to improve reliability; extending connectivity and boosting regional growth; and giving commuters a fairer deal in the age of hybrid working.  

Jason Geall, GBT Senior Vice President and General Manager EMEA, says: “Our customers have been engaging with the Let’s Go by Train report, with one financial services company deciding to integrate rail into their RFP process while another asked us to review their HR policy and use of season ticket loans and purchase options. 

“Our report opened a conversation with customers and key industry stakeholders, but we want to build on the momentum and take the campaign to the next level.  “Over the next months, we want to bring together key stakeholders across rail – retailers, infrastructure, and technology providers – to better understand the needs of our corporate clients and travellers.” 

Geall welcomes the Safer Travel Pledge introduced by Rail Delivery Group, which brings together train operators and Network Rail, and also the recently-published Williams-Shapps Plan for Rail. 

“The plan includes a vision for greater accountability and industry collaboration to drive innovation for the right reasons, plus flexibility, a renewed focus on customer experience, punctuality, efficiency and clearer compensation guidelines. We hope it brings this vital form of transport in the UK into the digital era and ensures a more consistent rail experience for customers,” he said.

“Rail should be at the heart of business travel in the UK and has the opportunity to play a central role in the post-pandemic recovery. Our Let’s Go by Train report generated huge interest from clients and stakeholders across the travel ecosystem who want to know how rail can be more compelling for business travellers. We stand ready to work with Government and industry partners as the voice of managed travel to help make rail better for business travellers and get more of these travellers onto trains.” 

Josh Collier, Head of Proposition Rail and Ground Transportation at Capita Travel and Events, said the removal of Off-Peak cliff-edge pricing and the addition of flexible season tickets are huge steps forward. 

“As we now begin to re-open society once more, rail has an integral role to play in getting the country back moving, and it’s fantastic to see the commitment to key infrastructure projects to make our railways greener and to reduce journey times, which will help the railways prosper. 

“We hope by having one single organisation responsible across all areas in Great British Railways, it will help remove some of the challenges that are in place today. Plus, it’s important that Great British Railways put the necessary structures in place to achieve a simpler experience for travellers, train operators and retailers alike.” 

Business Travel Association (BTA) CEO Clive Wratten also approves of the Government’s plans. 

“This is exactly the kickstart business needs to get travelling safely once more and should give passengers more confidence in the timeliness and cleanliness of the UK’s trains. Rail reform has been overdue for many years. Great British Railways will only truly succeed if it’s created with a robust and responsive structure that interfaces efficiently with train operators to deliver better rail services,” he says.

Wratten welcomes an increased focus on customer experience and says he doesn’t feel that train operators will be any less innovative even though they are no longer facing the same financial risk. 

“Our members need access to more ticket types as rail will play a huge part in corporate travel recovery. It will grow for reasons of safety, sustainability and a shift from commuter to longer distance travel.” 

Wratten feels the rail industry has done “a pretty good job” with enhanced cleaning of trains and stations but believes more comprehensive and common guidelines across all operators would be welcome.  

Scott Davies, CEO of the ITM, adds: “It will be important for rail operators to over-provide on capacity as travel begins to build again. Perceptions will be important to optimise traveller confidence and so minimising experiences of overcrowding will certainly help.” 

Covid measures

To help manage social distancing onboard, rail operators have reduced seating capacity and are strongly recommending that customers book their tickets in advance and reserve a seat on their preferred service to guarantee they will be able to travel. 

“Reservations help us to monitor demand, and once a train reaches its allocated seat capacity in line with social distancing we then remove it from our booking platforms so no more advance tickets can be sold for that train,” says Avanti West Coast. 

“We’re also recommending that people buy tickets through our website or app before travelling and choose a contactless, digital ticket. Passengers can book a minimum of five minutes before their scheduled departure time.” 

Those booking on LNER’s website can see when trains are likely to be quieter by looking out for green seats. Other operators, such as Southern Rail, are adding alerts to services in Journey Planners where it expects trains to be busy.  

Supplying capacity over and above demand, of course, presents challenges and one of the biggest worries is what it means for pricing. “Buyers are concerned that if fares increase as a result, the medium-term effect will be to suppress a sustained recovery,” says ITM’s Davies. 

“Perceptions will be important to optimise traveller confidence and so minimising experiences of overcrowding will certainly help”

David Sykes, Corporate Product Manager of FCM/Flight Centre, says mandatory seat reservations, spacing out of seat allocations, mask wearing and continued additional cleaning will all help boost confidence. 

He adds: “Whilst there will, eventually, have to be an acceptance of being in closer confines with other members of the public than we’ve become used to, measures like these should be feasible to continue with as volumes increase and will certainly ease people’s concerns at the start.” 

The indications are that the Government will not step back from funding major rail infrastructure developments, despite the overall financial outlook, the negative media coverage of HS2 construction works and continuing delays to opening Crossrail through central London, regarded by some as a white elephant in a post-Covid age. 

It has released £760 million to open the first phase of East West Rail between Oxford and Milton Keynes by 2025 and created a fund to support feasibility studies into reopening closed lines. Northern Powerhouse Rail continues to plan better services across the North, while even the idea of a rail tunnel between Scotland and Northern Ireland has been floated. 

The Government may ‘talk big’ but if rail usage does not return significantly in the next 12 months some serious questions will need to be asked. Corporate travel can be a major contributor but only if business travellers feel confident to take that all-important first step and get back on board. 

Related: Five of the latest rail trends from Raj Sachdave