Why do people travel?
There are more than twice as many leisure trips as commuting trips (across all modes of transport), but rail has historically been very focused on commuting. This is now changing with as many rail leisure trips being made as commuter trips, but rail leisure trips are longer. The annual distance travelled for leisure by rail is 50% longer than commuting by rail.
Understanding individual behaviour
The railway has a very transactional relationship with its customers, selling individual tickets for journeys. While the industry has a good idea how the population as a whole flows from place to place, it has a poorer understanding of individuals. This makes it more difficult to provide personally targeted promotions and offers to up-sell existing customers. The frequency of rail use by England’s population is:
- 10% use rail once a week or more
- 40% basically don’t use rail at all
- 50% between once a year and once a week.
The relatively small number of people that travel once a week or more dominate the total tickets sold, but are a saturated market - the growth potential is the 50% of the population that are existing rail users – but don’t use rail very often. These are more likely to be leisure travellers.
Discounting and railcard eligibility
Only 30% of rail tickets sold are ‘full price’ tickets, but their headline price can induce a huge ‘sticker price shock’ in infrequent passengers. The large fixed railcard discount means that we are giving semi-frequent users a high discount, but infrequent users not enough discount to motivate them to travel more.
Over 70% of the population are eligible for a railcard or child fares, but only 7 million people (11%) have one (+18% children), because of travel time and ticket restrictions and the uncertainty of making enough trips to recover the up-front cost.
Putting this all together, there is a huge potential market for rail leisure travel, but current railcards fail to maximise the growth and understanding of this market.
Season tickets
Season tickets typically offer 25-40% discount on peak time fares but no longer fit the split of home and office and flexible hours working model that many passengers want. The average rail commuter now travels 2.3 days a week, not 5, but there is no price / discount motivation to go up from 2 to 3 days in the office.
Proposed new railcard
- Everyone is eligible for the railcard
- The Railcard is free, transforming it into a life-long relationship with the individual customer so we can understand their behaviour and target offers.
- Initial discount just enough to encourage customers to sign up, say 3%
- Existing railcard users initially get a higher discount to encourage the transition.
- Discount increases and decreases depending on usage – ‘flash sales’ can be used at quiet times
- Higher ‘permanent’ discount for the disabled and other categories chosen by the government
- Maximum discount 50%, very rarely achieved
- No time of day or geographic restrictions
- Replaces season tickets
- Over time could replace existing railcards for many current users, retaining the Railcard name for brand recognition – existing users and people travelling together should see it as a better choice
- Like Tesco Clubcard, travel earns points with bonuses for travelling more, with options on using points
- Exists as an integral part of the forthcoming GBR ticketing app, with options for those without smartphones
- Can be revoked for anti-social behaviour
Conclusion
This radical railcard proposal is a pragmatic way to re-shape how rail discounts are offered, reflecting the changing way that passengers are travelling post covid, with less regular commuting and increased leisure use.
We are not suggesting an increase in the overall levels of discount, but reshaping how discounts are structured in a way that will initially be revenue-neutral.
By incentivising incremental increases in rail travel by individuals it can be revenue and patronage positive over time.
Detailed proposal