Train Paths under the hammer as the First Grand Auction looms in Network Rail Auction

Published 10th May 2012

A significant policy change was signalled by the Transport Select Committee in Parliament.

LONDON - Parliament’s Transport Select Committee was the stage for Network Rail (NR) and the Rail Regulator (ORR) to announce their plans for auctioning train paths from next April.

Train Regulation difficulties admitted

NR’s Chief Executive Sir David Higgins revealed that front line staff had difficulty with irregular trains which then caused delays to everybody else triggering penalty payments to train operators.

He proposed that the way to reduce the penalties would be to auction off slots to the train companies concerned to raise extra income for NR. The Regulators’ next five year Control Period funding for NR starts in April 2013 and the scheme could be in place then replacing a fixed price for a regular Open Access train paths.

Who is affected?

Who uses these paths? Non-franchise passenger operators Grand Central and Hull Trains stand to be affected as would have been Wrexham and Shropshire Railways had they not ceased operations. The Rail Regulator’s (ORR) Chairman Anna Walker and Chief Executive Richard Price also spoken at the Hearing and said that this was all part of their ‘The Potential for Increased on-Rail Competition’ consultation.

ORR’s System development

Network Rail said that the proposal is being developed by ORR and that it would only apply to regular services which was not the impression given at the TSC debate. ORR and NR intimated all open access trains, including charters and freight services would fall under the revised arrangements.

How the pricing model will work in calculating the cost of the operations concerned and any congestion caused plus the likely effects on network performance for the whole journey is anyone’s guess at the moment.

This system was looked at by Railtrack in 1998 for charter trains but was consigned into ‘the too difficult box’ after it proved to be an unworkable process.

Subsidy or Bust?

Open Access operators do not receive a subsidy but do not pay the high fixed costs for track access as Franchised train companies do. They receive subsidies from the Government, hidden in various ways, paid as a direct grant to NR for example via the Department for Transport (DfT).

Grand Central and Hull Trains could face higher costs leading to higher fares. The similar business model that Wrexham & Shropshire used proved too expensive despite them being consistently rated as excellent, even with the current beneficial financial model in place.

Rail privatisation was billed as bringing competition to the railways, but perhaps the real competition is road transport.

They said:

Richard McClean, Managing Director at Grand Central (GC) told rail.co.uk that they looked forward to ORR’s Conclusions and would meet whatever challenges that might emerge. He also said that the more trains that used the network the better as this is economically beneficial for the rail industry given the high percentage of fixed costs.

NR has confirmed that there are no plans for charter or freight trains to be included in this system despite the impression given at Westminster.

The ORR and NR will need to find workable solutions to things like:

1. How far in advance will the paths be opened for bidding, and how long will the bidding process run for?

2. If the bids are similar, what will the decision criteria to establish the winner?

3. Who will manage the process and how much extra income will the system generate?

4. How will the proposed system deal with late notice disruptive engineering work arranged after the auction has closed?

5. What happens to the auction winner if they cancel the trains having bid merely to block another Operator?

6. Are the train slots transferable to another Operator by the winner?

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