Rail 828: Crossrail and Heathrow at war

It is remarkable that with the opening of the Crossrail tunnel between Liverpool Street and Paddington now less than 18 months away, there is still no clarity about the operation of the service to Heathrow. Indeed, a dispute between the owners of Heathrow (known as HAL, Heathrow Airport Limited) and the Office of Road and Rail, with Transport for London and the Department for Transport on the sidelines, remains unresolved.

This complex and expensive row has been rumbling along since the mid 2000s costing, literally, millions in legal fees and is very much a cautionary tale about the encouragement of private investment in the rail industry.  A report in the Sunday Times business pages on May 21 even suggested that Transport for London has contingency plans not to use the Crossrail trains into Heathrow if the dispute cannot be resolved, with passengers having to change at Hayes & Harlington on to the existing Heathrow Connect service. This seemed like a bargaining chip rather than a genuine possibility but the notion that one of the main functions of the £15bn Crossrail service – to better serve air passengers – could be stymied demonstrates the ridiculous complexity of our railway network.

The origin of the dispute is simple. Twenty years ago, the airport’s owners paid for the construction of the five mile long tunnels linking the Great Western Main line with the airport and have charged passengers royally for their use ever since. At £25 for a single journey, it is one of the most expensive train fares per mile in the world and given relatively high usage it has repaid a considerable amount of the cost of building the line. However, since HAL does not publish separate accounts for Heathrow Express, it is impossible to ascertain exactly how much of the original cost of the £260m to build the line has been recouped. Moreover, HAL claims that the cost of introducing the service was £1bn but that is because it includes the cost of trains and various bits of other associated investment. HAL has, therefore, being pressing to recoup that money by charging future Crossrail passengers exorbitant amounts to reach Heathrow.

With the advent of Crossrail, HAL faces something of a dilemma. It has announced that it wants to keep running but its business model which relies on premium pricing will be completely wrecked (as I wrote in Rail 787).  Why would anyone get off a Heathrow bound Crossrail train to transfer to a far more expensive Heathrow Express train? And who will struggle to try to get to Paddington when joining Crossrail trains anywhere on the route will be an easier way to get to Heathrow. So in a rational world, Heathrow Express would be a dead duck and become defunct, especially as its track access agreement to get into Paddington ends in 2023. However, HAL is fighting to keep its service going, given its high level of profitability and its past investment.

In the light of this uncertain future, HAL is very keen to make as much money as possible out of its investment and consequently has said it wants to charge passengers at a rate which would repay the cost of building the tunnels. According to HAL, this would amount to £597 per service, plus £107 in track access charges, completely wrecking Transport for London’s plans to greatly reduce the cost of getting to the airport by train.

This dispute has been rumbling on for a decade and recently reached the Administrative court of the High Court. When the Office of Road and Rail considered the issue, it decided a year ago, after consulting widely in the industry, that HAL’s claim was completely unfounded. HAL asked for a Judicial Review in the High Court and in late May it was announced that it had lost the case. HAL is now ‘considering its options’ and it could, in theory, pursue this case all the way up to the Supreme Court. It was noticeable however, even to a non lawyer like myself, that HAL’s case was extremely thin. While there is no space to go into legal technicalities (and anyway no one would continue reading…), suffice to say the key point in the case was whether HAL built the tunnels on the basis that it knew it would be able to recoup the money later from access charges. As ORR put it,  ‘This decision hinges on the interpretation of EU-derived law which says that charges for such construction costs can only be levied on train operators if the project could not have gone ahead without them’. In the papers presented for the case – you can read the background on the ORR website – HAL tried to argue that it would not have built the connection without a guarantee on future access charges but was unable to present a single paper in support of that argument. The thinness of the case was remarkable and it was not helped by the fact that HAL seemed to have lost crucial paper relating to the case preventing them being presented to the hearing. This suggested a high level of administrative chaos within the organisation which did not help its cause and shows that private organisations can be far worse than public ones in efficiently maintain their records.

It is madness that the future operation of a £15bn project is in doubt because of the narrow interests of the airport operator. Of course, in a capitalist system, it is understandable that HAL wants to recoup its investment but, as the court papers reveal, it is unclear whether it has already done so. The wider resonance of this case, however, is over the involvement of private investors in the rail industry. However, there is no reason why they should be guaranteed a rate of return for their money out of public funds.

Politicians are forever seeking to persuade private investors to put their money in the industry but they require two things. First, they need to know that there is a steady stream of income to repay their investment and this for the most part has to be underwritten by the state. Secondly, they need to have certainty and without it they will charge a high rate for the risk they have to take with their money. Look, for example, at the losses which will result from the fact that 150 coaches ordered by Stagecoach from Siemens for South West Trains will now not be used. While in the short term it is the rolling stock company that will lose out, ultimately it is passengers and taxpayers who will have to stump up for the trains. Similarly, this long running dispute over the Crossrail tunnels will act as a warning to private sector investors.

The dispute also demonstrates that the complexity in the industry caused by privatisation and fragmentation is a costly business. One source suggested to me that the cost of this case was running into double figures of millions of pounds. The whole complex panoply of organisations running and overseeing the rail industry have been involved. None of this comes cheap and none of it would be necessary without the damaging fragmentation of the industry. The railways are a public good and the involvement of private companies is bound to create situations such as these.



A better solution for compensation from suicide delays


Taking the last London train from York after attending the National Railway Museum annual dinner, I did not reach Kings Cross till nearly 2am because the East Coast service was delayed. Along with a couple of other guests we watched the information screen desperately hoping that we would not have to stay the night in York as we all had business in London the next day. At last the vague ‘delayed’ turned into an ‘expected’ time which though always seeming to go up by a couple of minutes eventually settled into a 50 minute delay.

We discovered that it had been caused by ‘trespassers’ on the line and thankfully, despite the involvement of the police, there was no one ‘hit by a train’. I will now be receiving the princely sum of £9 75 in compensation but Phil Smart, an Ipswich councillor and Railfuture activist, has come up with a brilliant idea about what could be done with the money paid out for delays caused by suicides.

He suggests the delay-repay website page should offer claimants the option of the money being paid to a charity dealing with mental health issues or, even more specifically, with trying to prevent railway suicides. This would be particularly suitable for people who have not paid for their tickets, such as those travelling on business, and consequently may feel bad about claiming money to which they are not really entitled. It is a fantastic idea and let’s hope that the train operators pick up on it.

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