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Last Updated: Friday, 9 May, 2003, 16:05 GMT 17:05 UK
Q & A: Rail fares
Q & A
BBC Transport Correspondent Simon Montague explains why more than half a million rail commuters could face substantial fare increases for the first time in almost a decade.

Why were the fares capped in the first place?

Under the old British Rail - before privatisation - season ticket prices in south east England used to rise at 2-3% above inflation every year.

Because London commuters are a captive market, and because the Conservatives need to make an unpopular privatisation more attractive, a variable cap was introduced.

It was designed to prevent the new private train operators from exploiting their monopoly position and to encourage them to improve performance.

Why the proposal to lift fare capping?

The cap hasn't worked. It is applied retrospectively, which in practice means fares are sometimes held down on lines where service has recently improved, and are allowed to rise on lines where service has got worse.

In addition, the average regulated fare in south east England has risen by only 13% since 1995, against inflation of 22%.

This means the train operators see their fares income continue to fall, while the costs of improving the rail system continue to rise. Even passenger watchdogs accept that the cap of 1% below the Retail Price Index (RPI) has got to go.

How much would fares rise on average and which passengers would it affect?

That's the big question. The Strategic Rail Authority says it will publish its new fares policy for consultation before the end of June and, at the moment, no decisions have been taken.

The assumption is that the new cap will be set at least at the level of RPI, and very likely at above the RPI.

The fares regulated by the new cap will include London season tickets. Some others which are currently regulated, such as the Saver ticket on long distance services, may no longer be subject to price control.

Would different train companies offer different fares?

Government rail chiefs at the Strategic Rail Authority are not particularly bothered about encouraging competition between train operators. They would much rather have more co-ordination of services.

It's true there is some price competition on routes with more than one operator, such as between London and Birmingham, where the high speed service is typically more expensive than a slower journey on a commuter train.

But the real competition is with the road and air alternatives to rail, and this is where train companies most want the freedom to compete effectively

How can the government guarantee there won't be a fare price explosion?

The rail companies know that if they push unregulated fares up too far, they will simply price people off trains.

Having said that, long-distance train operators are likely to continue raising peak-time fares as much as they can, because there is strong demand and they use higher fares to maximise revenue and prevent overcrowding

Wouldn't this cut across efforts to ease road congestion?

The government wants to see a further huge increase in rail use and a huge improvement in performance to provide a high quality alternative to road travel.

Train companies know that passengers are very responsive to price and they need to fill their trains, particularly at off-peak times.

They want more freedom to set fares accordingly, while accepting that there will continue to be some price control over fares used by passengers such as London commuters, who have no realistic alternative.

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