It was announced today that FirstGroup would be allowed to run an open access operation from London to Edinburgh calling additionally at Stevenage, Newcastle and Morpeth. This service has been said to be a budget service with average fares under £25. There will be no first class service on this train.
Surely this must be good for passengers, but that's not necessarily so. I imagine in reality there will be a small saving for those who choose these services but the difference will not be as big as they're currently giving the impression, as an open access operator none of their fares are regulated so there's nothing keeping them to the promise that the average fare will be under £25. Those who desire flexiblity or need to book a train at short notice will be paying a lot more. Just like with the other open access franchises they'll sell you a flexible ticket for lower cost than the main operator but the flexible ticket will only be valid on their five trains a day rather than the half hourly service that you can get with VTEC on this route.
With budget airlines a lot of their additional revenue is through additional charges such as luggage, seat selection, catering, priority boarding and booking fees. There's fewer oportunties like this with rail travel, price conscious rail travellers often bring their own food as it's a lot easier to do than it is when flying where you're limited to what you can take through security.
I think making the service a single class service is also a mistake. First's other open access operator, Hull Trains, has a first class section and Kings Cross to Hull is a much shorter journey than Kings Cross to Edinburgh. First's premier franchise, Great Western (GWR), offers a Pullman restaurant service on their busiest long distance trains. I'm sure there's a market for both a high value standard class offering and a first class that can go beyond what is currently offered on Virgin Trains East Coast. A lot of people miss the restaurants on the East Coast mainline and GWR has shown on their services that an on-board restaurant can still be popular, although VTEC's complimentary offering is good as far as complimentary offers go being able to enjoy a full three course meal is a great way to help the time go by on a trip to Edinburgh.
We also have to think about the current East Coast franchisee (VTEC). As the franchise bid was done on the basis that they're the sole direct operator on the Kings Cross to Edinburgh route that's what their financial forecasts were based on. Unless the government is going to allow renegotiation of the franchise terms from 2021 to take into account reduced revenues on this route it will result in increased probability that the franchise may not meet its financial targets. This could result in VTEC cutting corners like National Express did, lowering the quality offered to all customers and also raising fares on the routes they still do have a monopoly on in order to cover the shortfall. This could be very bad news for those in places such a Berwick, Durham, Leeds and Darlington all of them not served by open access operators, not to mention those starting further north such as Peterborugh/Grantham/Doncaster/York and heading to Newcastle/Edinburgh could all be targeted for fare rises.
If VTEC ended up handing the franchise back like National Express did there's no guarantee that the process will be as smooth as the take over by East Coast and so it's a lot of uncertainty for those who rely on the route if VTEC does run into financial difficulties.
Competition can be good, but the franchising system needs to be changed so that competition can be incorporated without risking the collapse of the existing franchise. It's also very disappointing they chose to compete soley on price and not on quality. Having both first and standard class accommodation would allow them to compete for both customers that are solely price conscious as well as those who want some extra comfort when on a train for nearly four hours.
If First is successful in getting many people to switch to their services then VTEC still need to make their contracted payments to the government, this could mean fare rises on routes where there still isn't any competition to make up the shortfall.
It also shows what a crazy idea it was for VTEC to scrap rewards and go with Nectar, the loyalty scheme also used by all of First's rail operations. It means that they can't even use Rewards as a way to keep passengers loyal. Use our calculator to see how much worse off you are with Nectar.