Department for Transport to allow rail fare hike flexibility

Caption, photo: Virgin TrainsThe Department for Transport has confirmed that it will allow the train operating companies 5% “flexibility” in the January 2011 fare increases which are capped at 5.8%.

The DfT has now confirmed that this January’s rise is to be an average with a flexibility of 5% which means that in practice some fares could rise by as much as 10.8% so long as the overall average increase is at or under the 5.8% cap.

The previous Government had scrapped the 5% flexibility which meant that there was no average figure and that all regulated fare rises were the same.

The DfT said: “The decision to remove the 5% flexibility for 2010 was made by the previous Government. It was only removed for the fare year starting January 2010 to address the particular circumstances at the time.

“This loss of flexibility is unsustainable in both operational and affordability terms in the medium to long term.”

ATOC, the Association of Train Operating Companies, responded to the announcement by saying: “The RPI flex has existed since privatisation. It was waived last year by the Government but, as expected, it has now been reinstated by the Department for Transport.

“The flex has two primary purposes, which are the removal of anomalies and giving train companies some freedom to respond to different competitive conditions.

“The average increase allowed in January is RPI+1%. Any fare increased by more than this must be balanced by another fare reducing by the same amount. The use of flex means that some fares will go up by less than 1%. Importantly, the average is weighted so that operators cannot increase fares on routes with lots of passengers, and likewise reduce them on routes with fewer passengers.

“It is not in train companies’ interests to price people off the railways. They are looking to attract ever greater numbers of passengers, which is why they offer a range of fares to suit every pocket, including hundreds of thousands of cheap Advance tickets every week.”

Last week the Coalition Government announced that the train operating companies would be allowed to raise fares by up to 3% more than inflation from January 2012.

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