Gerard Whelan, Director of Corporate Finance in KPMG’s Transport business, discusses GBRTT’s programme of fares, ticketing and retail initiatives – and the impact they could have on the rail sector’s financial sustainability.
While passenger numbers continue to improve in the wake of the COVID-19 pandemic, it’s no secret that the rail industry faces a significant funding gap, created by revenue shortfalls, and exacerbated by inflationary pressures.
There is now a clear consensus that, if it is to become more financially sustainable, the industry must do things differently – in part, by simplifying and improving its operational processes.
As part of its work to bring track and train together and deliver these improvements, the Great British Railways Transition Team (GBRTT) is reviewing every aspect of the current system – including fares, ticketing, and retail (FTR). The financial impact of reform in these key areas could be threefold; it would improve customer experience and bring people back to the railways, increase the revenue generated from those already travelling by train, and reduce the overall cost of sales.
GBRTT is working on an ambitious FTR programme, with the twin aims of improving the customer retail experience and making retailing itself simpler and more cost-effective. Train Operating Companies (TOCs), third-party retailers, and local authorities will be involved in the delivery of this far-reaching programme. And, with a focus on digital innovation, GBRTT is developing a range of exciting initiatives, set to benefit both customers and the industry.
Simplifying urban journeys with ‘pay-as-you-go’
The first of these initiatives focuses on simplifying fares for short urban journeys. GBRTT is exploring how London-style ‘pay-as-you-go’ (PAYG) systems (with single-leg pricing) could be employed in other urban centres, making rail travel simpler and more cost-effective.
The organisation recognises that implementing ‘tap in, tap out’ infrastructure can prove costly. With this in mind, it is looking into more affordable mobile solutions – which, if successfully deployed, would enable more towns and cities across the country to introduce PAYG ticketing.
PAYG has clear benefits for passengers, allowing them to travel easily and flexibly and ensuring that they only pay for the journey they make. But it could also benefit operators; in 2019, it was reported that London’s ‘tap in, tap out’ infrastructure had helped TfL to reduce operating costs, improve customer satisfaction, and even increase revenue by five per cent.
Digital innovation to improve online retailing
And what about longer journeys? When purchasing tickets online, customers can go either directly to an operator’s website, or to one of many third-party retailers. The quality of experience varies from platform to platform. GBRTT aims to improve the digital experience, enabling a range of retailers to sell rail simply and effectively. This will include the creation of an online channel, which will sit alongside third-party platforms.
The organisation also wants to see rail on more online ‘shelves’, with retailers able to sell train tickets to a customer who has booked a festival trip or weekend away, just as they would a hotel room or hire car. It’s about enabling a range of players to promote rail travel.
Finally, GBRTT is keen to streamline the ‘delay repay’ process, making it easier for passengers to claim compensation if something goes wrong. These digital improvements won’t just benefit customers, they also make the process easier for retailers – leading, in turn, to cost savings and revenue increases.
Data to personalise the customer experience
And the retailing process must be supported by accurate data, which will ensure that rail users receive a truly personalised service.
GBRTT believes that each retailer should be able to communicate directly with customers via the channel they used to purchase their tickets, providing timely updates if a problem arises. What options do these customers have, and how can they change their travel plans to accommodate disruption? It’s about improving customer satisfaction, ensuring that travellers continue to use the railways – and, ultimately, reducing the cost of retailing.
Digital innovation to modernise in-station retailing
Digital innovation will also drive improvements offline, enabling the industry to streamline and reduce the cost of in-station retailing. GBRTT is exploring ways to make for a better, more personal in station customer experience – handheld devices for staff could be one way to support this approach.
Consumers now shop, order food and even manage their finances online – and, if the rail industry is to increase its revenue and cut costs, it must ensure that purchasing tickets digitally is as convenient as possible. Digital innovation could even combat low-level fraud, which leads to significant revenue loss. Perpetrators currently take advantage of fragmented systems, making false ‘delay repay’ claims, misusing rail cards, and even spoofing documents. Bringing data and systems together will enable the industry to regain control and reduce these losses.
