Fares Surprise

The fares goss at the moment is all about Stagecoach coming out tops in the recent TAS published information on fares—especially the cost of weekly commuting by Stagecoach. Stagecoach is rightly trumpeting this fact.

But the real issue is the fact that, actually, the whole industry should congratulate itself in being able to peg its fares under inflation. It’s a remarkable feat. TAS’ recent survey builds on work it undertook in 2009 and it has concluded that a “typical” three-mile journey average fare has been put up from £1.74 in 2009 to £1.91 in 2011. That’s a 9.8 per cent increase whereas, over the same period, RPI comes in at 10.1 per cent. OK, so the difference is just -0.3 per cent but it’s on the right side.

And this ignores the inflationary way in which fares increases tend, through necessity, to be calculated: they are usually rounded up to the nearest whole 10p, to avoid change issues in dealing in coppers or five pence pieces. Rounding can mean an increase of more than inflation. So, I really think most of us can take a pat on the back for this news.

I doubt very much, however, that passengers will believe this good fares information. I doubt they will see their fares as increasing below inflation, whether they live in an area (or with an operator) prone to larger increases or not. Passengers will see things differently. Perhaps that’s because historically fares *have* increased ahead of general inflation and for some considerable time.

In order to keep pace with costs during a period of long-term passenger decline it’s inevitable that fares will increase higher than inflation. Most operators, most of the time, prefer increasing fares than reducing mileage (though there comes a point where they have to do both).

Indeed, industry costs have tended to increase faster than the RPI. To keep pace, since the mid-1960s, the trend in fares increases has therefore been faster in real terms faster than inflation. Factor in the impact in declining numbers—exacerbated but not initially caused by fares increases—and the cocktail’s a dangerous one. Passengers don’t know this background. They wouldn’t necessarily understand it. Why should they? Pricing is a complex business that will also reflect the level of competition, if any. But passengers do feel a little ripped off, especially as the relative cost of motoring has gone in completely the opposite direction.

It’s just as well that on average about 40 per cent of passenger travel free of charge. At a stroke, this removes the barrier that is fares. But this causes its own problems. And that’s another story. And don’t mention BSOG reductions in April—and the inflationary affect this will have. The next TAS fares survey might be very different.