Virgin’s Chris Green has accused CHRISTIAN WOLMAR of being churlish in his reaction to launch of the new West Coast timetable. Our columnist is contrite about some of the details his article but stands by what he said.
Woe-mar is born. I have been rebuked by Virgin, which accuses me of being a Cassandra for not joining in its celebrations for the new West Coast service.
Consequently Chris Green of Virgin dubbed me ‘Woe-mar’ (RAIL 498). OK, I admit, I may have been a bit churlish. Of course it is great to have a lot of highperformance red trains charging up and down the West Coast line and that is indeed worth celebrating. And I should not have mentioned Richard Branson’s crumpled sweater. And I promise not to do so again. Ever. And I should not have suggested that passengers were deserting Virgin when there has been some modest growth, but I meant to say that in comparison with other former InterCity operators, Virgin has fared badly.
But Virgin is shooting the messenger rather than addressing the key point I was making – that the operator is not going to attract the massive increase in numbers that it has forecast unless it changes its policies. It is interesting that Virgin did not challenge the point I made about fares and having to pay £97 return to go to Birmingham on an earlyevening train for a football match. Branson has argued repeatedly that the Pendolino will get people off the motorways and on to his trains. But not at that price.
The mystery, of course, is why is it profitable for Chiltern to charge £25.60 return any time of the day for northward journeys between London and Birmingham (and £15 at really quiet times in the middle of the day and post-1930) whereas Virgin feels it has to extract four times that much off its punters in order to make it worthwhile to sell a seat.
Moreover, Virgin gets hundreds of millions in subsidy annually, while Chiltern receives a few million. To put it another way, each Chiltern passenger gets £1.50 in support, while every Virgin one receives a staggering £11.59, according to FCP’s bulletin. Now before Chris Green feels the need to put pen to paper again, let me make it clear that not all of the inconsistency is Virgin’s fault, and nor am I suggesting the high fares are a straightforward result of pure greed.
Part of the reason is the crazy world of railway economics. Track access and other costs were allocated arbitrarily by British Rail and jigged around a couple of years ago by the regulator, but in no way do they reflect the particular cost of any section of railway. But that raises some interesting issues. Should the regulator make adjustments to even out the competition, forcing Chiltern to charge higher fares? That is not an entirely serious suggestion, but I make it merely to underline the fundamental point that the words ‘profit’ and ‘loss’ have little meaning in a subsidised railway where the economics do not reflect reality.
Virgin ignores little Chiltern with the hope that no-one really knows about it, but there are going to be two trains hourly from December and Chiltern could become a thorn in the side of Virgin. Chiltern’s marketing manager, Mike Bagshaw, insists that the company makes a profit on the tickets. Part of the reason is because the length of the trains can be adjusted to meet demand which makes for flexibility and, of course, Chiltern’s Clubman may not be the all-singing all-dancing Pendolinos, but they are new and comfortable.
Of course you can get cheaper tickets on Virgin if you book in advance. But most people are not able to do that. We live in a world where lives are increasingly unpredictable and unplanned. For example, there are now nearly a couple of million self-employed people, whose work patterns are more unpredictable. And since they only get back the tax on their expenses – 40% – at most they are more price-sensitive than Virgin may think. The market is far more complex and flexible than it was. It can no longer be divided simply into those who can afford to pay outlandish fares, whether unbooked in standard class or first class generally, and the others whose businesses are paying and are therefore price-insensitive.
Therefore Virgin’s high-fare policy will have to change if it is to attract significant numbers off the motorways. And there is a strong moral case for it doing so, given that the company receives loads of taxpayers’ money for a service that many of them can’t afford. Indeed, on average, every taxpayer (about one in two of the population) is paying around £200 per year towards the railways.
All this is not only, of course, a matter for Virgin. The question of railcards for regular rail users was, for a time, one of the things that seemed to be considered for the rail review, but there has not been a word about it since. The other way that Virgin can attempt to attract sufficient numbers, then, is to improve the service. Look over the way at GNER which is now fitting its trains with wi-fi equipment, allowing people to be online through their laptops for the whole journey. This is the type of innovation that is essential for the 21st century if rail is going to compete, which the aviation industry has understood for some time.
At Virgin, though, the idea is only still at the discussion stage and there is a pessimistic mood over there because, effectively, the franchises are being run by the government under management contracts, and any investment on such additional features would require permission from the SRA’s master, the Treasury, which would not be forthcoming while franchise spending is still rising.
However, wi-fi is still a minority sport, but mobile telephones are not. Some passengers may not like their neighbours talking on their mobiles, but they are a vital part of business and social life so they should be available on long-distance trains throughout the journey. Indeed, in 1992, InterCity was discussing the possibility of putting in leaky feeders to enable continuous mobile signals even in tunnels but then along came that great innovative force, privatisation. Later, Marconi and Railtrack did a deal to look at the issue, but that turned out to be a contract between a ghost and a corpse. Indeed, neither GNER nor Virgin seems particularly interested in tackling this issue.
GNER acknowledges it is an issue but shows no sign of taking the lead – unlike with wi-fi – and Virgin, which bemoans the fact that mobile phone masts are aimed at motorways rather than rails, says bluntly: “It is up to the SRA, which would have to sanction any investment, and the mobile phone companies. There’s nothing we can do.” Now, sorry, but that doesn’t sound like the company that proclaims it is leading the rail industry.
Moreover, Virgin has made the matter worse by putting a sunshield film on its windows – because of concerns that the air-conditioning is not strong enough – which blocks mobile phone signals where they are weak. There have been several complaints and some train staff have even advised passengers to stand in the lobby to make calls. So we have 21st-century trains which cannot cope with basic 21stcentury technology. Virgin says it is looking into the matter but, all in all, the company’s attitude towards what should be a basic amenity for train passengers is a pretty disappointing response. And given that there is a sister outfit called Virgin mobile, you’d think a bit of joined-up thinking wouldn’t go amiss.
Even those who book in advance find that Virgin seems to behave more like an old state enterprise than the thrusting dynamic capitalist organisation it is trying to convince me it is. A friend of mine, John Carr, made a mistake while booking a ticket online by putting single instead of return. But he had pushed the button for his £35 tickets. Although he rang up straightaway to correct the error, there was nothing he could except cancel the whole operation and start again, being charged £10.
In addition, he was told he had to go to Euston to pick up the tickets, which were then worth only £25. He was given a booking reference number but that was not the same as his transaction number and the poor bloke – who has several degrees and a big brain – was thoroughly bemused: “Why,” he asked, “do they penalise you for making such a mistake and why couldn’t I just cancel the transaction and start again since I realised the mistake straightaway? It all seemed to be designed to maximise their revenue rather than making it easy for people to get tickets.”
Now, I am not so cynical. I am sure there is a jolly good reason why cancelling a ticket should cost £10 and take twice as long as actually booking it the first place. Unlike me, however, the public generally don’t care what that reason is. And although Virgin has got the basics right – new trains, faster journeys – the ‘Red Revolution’ needs to look at ways of attracting people on to its trains beyond the simple promise of a faster journey.
So congratulations on your success so far – I am genuinely pleased to see that the West Coast has been upgraded and that new trains are running on it. Now, with that major achievement in the bag, fixing the rest – making mobile phones work, ticketing transparent and cheap (even if we passengers accidentally click the wrong button), and generally making the journey a truly 21st-century experience – should be relatively easy. See, I am optimistic about Virgin and the rail industry. Just don’t let me down…