Allowing train operators to run competing services on the same line could bring a range of benefits, including lower fares and growth in passenger numbers, a new report has argued.
The report from the Competition and Markets Authority (CMA) also suggests replacing franchising with a system of multiple licensed operators, particularly on the three main intercity routes.
CMA chief executive Alex Chisholm said: ‘We’ve found that there is strong evidence, both here and abroad, of the benefits that the introduction of competition on mainline intercity routes can bring. 'Where competing operators have been given the opportunity, the need to attract passengers who have a choice can mean lower fares, new routes and destinations, more innovations and flexible ticketing.
'Not only does this offer a better deal for existing travellers but it can increase overall passenger numbers by attracting new customers to the railways.’
The CMA says franchising on intercity lines could go
The CMA has sent the final report of a project it began in January last year to transport secretary Patrick McLoughlin.
It says the current franchise system, under which operators compete ‘for’ the market, has delivered positive results but an increase in 'on-rail' competition - operators running separate services on the same line - could bring benefits ‘for passengers and taxpayers’.
The CMA cites the limited examples of on-rail competition in Britain, such as on the East Coast main line where ‘open access’ operators have run competing services, as well as examples from other European countries and in other transport markets such as freight, air transport and airports.
It says increasing open access services, or splitting franchises, offers the most immediate benefits but adds that ‘a move towards a system of multiple licensed operators replacing franchises could also be worth consideration in the future’.
The report says the potential for such competition exists predominantly on the three main intercity routes – the East Coast and West Coast main lines and the Great Western route.
It proposes that to help cover any fall in premiums paid to government, competing operators should pay higher track access charges and pay a Public Service Obligation (PSO) levy to help fund unprofitable services, such as those in rural areas.
While the CMA’s proposals would not affect current franchises and imminent franchise awards, it says action is needed now because of the steps required to implement them.
The Office of Rail and Road, which was one of a number of organisations that contributed to the CMA’s work, welcomed the report. Its chief executive Joanna Whittington said: ‘We have been working closely with CMA on this project, and our analysis fully supports their view that more competition could realise even greater benefits for rail passengers.’
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