Welcome to FCP’s regular e-newsletter, issued to our clients, partners and colleagues in the international transport sector.

This week, we would like to extend our very best wishes to everyone receiving this email as we all deal with local quarantine and isolation requirements; we hope you and all your family and friends are riding out the COVID-19 challenge well and are fit and healthy.

UK Government Takes Emergency Measures for Railways

30 March 2020 – Having already switched most of its ongoing rail franchise agreements into “Emergency Measures Agreements” (EMAs), the UK’s Department for Transport (DfT) has now agreed extensions (“ direct awards”) for the Southeastern and Great Western franchises in England.

Under EMAs, Passenger rail Owning Groups have now been given the option to receive a variable and capped management fee for their oversight of those passenger rail services which remain in place; instead, perhaps, of handing over the whole operation to an Operator of Last Resort (OLR). Some may still be forced to choose the latter – whether now or at the end of an EMA.

What remains unclear is what Owning Groups must do to receive the full management fee (2% of pre-COVID-19 costs) and what Owning Groups expect to happen to both ridership and revenue support arrangements when the EMAs are terminated and commercial terms revert to those in their ongoing franchise agreements.

Overall, the long term appetite for transport authorities across the UK to take on both revenue and cost risk (as is happening under each EMA and may need to continue) will be a key consideration for franchisees and their parent companies. Many will also push for sight of what will finally emerge from the Williams Review and the reform programme that is likely to follow hard on its heels.

In all cases, however, the rail sector – both in the UK and internationally – faces the significant challenge of improving our predictions of both travel and work patterns and of regional variations in the impact of economic change on farebox income.

For more information on FCP’s work and expertise in this area, please contact Geoff Smith geoff.smith@fcpworld.net

COVID-19 & Travel Behaviours – Will social distancing invalidate lessons from past events?

 27 March 2020– With much of society working from home, there are growing questions about future travel patterns and what the new “normal” will be, once the world emerges from the Coronavirus pandemic.

The chart below shows UK rail passenger growth from 1998-2019. It demonstrates the limited impact in terms of long-term growth that recessions, accidents and terrorist acts have had on ridership. Previous incidents have been followed by travel behaviour relatively quickly returning to its old norm after each event. In addition, rail has benefited from recent employment growth acting as a counterbalance to changes in travel patterns, especially a fall in season ticket purchases.

Source(s): LENNON ticketing and revenue database, Train Operating Companies (TOCs), Office of Rail and Road (ORR) and Department for Transport (DfT)

For the current pandemic, there are impacts which could be permanent.

Social distancing is a key example. As we get used to lining up 2 metres apart to enter shops, walking on the road to avoid someone on the pavement and not shaking hands, it is possible that this “proximity behaviour” could have a material effect on long term public transport demand, unless the rail sector responds.

The UK’s Passenger Demand Forecasting Handbook (PDFH) for rail passenger forecasting uses changes in Generalised Journey Time (GJT) to forecast the change in demand. The formula uses in-vehicle time, service interval and interchange (and a number of other factors) to produce forecasts.

However, for a vast majority of cases, especially medium and long distance journeys, in-vehicle time is the most important factor. The in-vehicle time in GJT is a weighted penalty reflecting the seating and standing passenger load ratio. In simple terms, PDFH modellers have learned that ridership forecasts need to reflect the impact of individual reactions to crowding and the need to stand rather sit. For example, on Intercity routes PDFH applies a 7% penalty as loading – and therefore passenger proximity – increases.

So, forecasters already find they have to place a penalty on physical proximity and the long- term impact of social distancing may well be that this has to increase. Ridership growth – or at least forecast ridership growth – could be materially impacted in the long term, as well as being suppressed in the short term.

This proximity consideration in rail travel is a real part of individual decision-making. Some readers may remember Ben Elton’s “Got to get a double seat” sketch, or, more recently, David Webb’s portrayal of Shakespeare complaining about crowding on the London to Stratford- upon-Avon coach. Our previous acceptance of sitting or standing next to strangers may turn out to have been fundamentally changed by COVID-19.

Forecasters could well find they need to devise new approaches to their modelling of in-vehicle time to explain more enduring reductions in rail patronage growth; reductions which transit authorities, business case sponsors, environmentalists, investors, politicians and others will be keen to validate, understand and counteract. Rolling stock designers together with capacity and service planners will be right behind them.

For more information on FCP’s work in this area, please contact Irvine Piczenik, FCP’s Head of Transport Economics Irvine.piczenik@fcpworld.net

Freight in a time of lockdown – a new impetus for rail freight?

27 March 2020 – This week the Norwegian railways moved to give freight trains priority over passenger trains as part of the nation’s response to COVID-19. In the UK, over 25% of Anglo-Scottish container movements are already by rail. These are primarily for the large grocers and many readers will be familiar with the ‘Tesco train’.

Each of these trains has a much higher journey time reliability than road movements and each train driver delivers as much material as 70 HGV/truck drivers. So COVID-19 and our response to it may give further impetus to calls for a comprehensive re-think of national supply chain arrangements in order to increase rail usage as a means of improving service resilience in times of crisis as well as enabling further progress in achieving carbon reduction targets.

Complexity remains a challenge in such reviews of rail freight usage. In the UK, key supply chains are managed by private supply networks and they operate on a national rail network which prioritises passengers. Meanwhile, the UK’s Secretary of State for Transport is considering road pricing which could have significant effects on road haulage if HGVs are priced off roads.

As an alternative, trials are already under way of high speed freight deliveries to logistics and retail customers in city centres. Some Governmental support through, for instance, a reduction in track access charges for high speed inner-city freight could really kick start this. Such support should also factor in new working patterns – both those already under way pre-COVID-19 (e.g. Monday and Friday becoming part of a weekend ‘shoulder’ of lower passenger use) and the possible week-long increases in home working post- COVID-19.

For more information on FCP’s work in the rail freight sector, please contact Ralph Goldney  ralph.goldney@fcpworld.net

International comparisons – the view from Steve Hoskins, FCP’s Engagement Director in France

27 March 2020 – France has been in ‘lock-down’ for a week now, with significant restrictions on unnecessary movement. The severity of these measures has just been increased with a corresponding uplift in fines for repeated transgressions to €1500.

Despite some well reported non-compliances people are largely supportive and respectful of the Government’s directives and coping reasonably well with the impact on their daily lives.

It does mean, however, that public transport including metros, regional and intercity rail services have been reduced to a minimum.

Preparations had been underway to open some intercity routes and regional corridors to competition. Expressions of interest have been invited to operate the Nantes – Lyon and Nantes – Bordeaux Intercity routes and two of the Régions; Provence-Alpes-Côtes d’Azur and Grand Est are well advanced in their plans to invite proposals to take over existing network operations and reinstate dis-used lines. It remains to be seen whether and to what extent these plans may be delayed. The Régions concerned are at the forefront of French moves to comply with the requirements of European Fourth Railway Package and are keen to attract international operators, train and other systems providers wishing to establish a presence in this exciting, and potentially large, new European market.

For more information on FCP’s work and expertise in France, please contact Steve Hoskins steve.hoskins@fcpworld.net

FCP In Transit is edited by our CEO Ian Horseman Sewell. Please contact Ian on ian.horsemansewell@fcpworld.net or +44 780 295 9877 if you have any queries about this newsletter or about FCP more generally.