Competition

1
Competition Integration in Public Transport

• Michael Schabas, Director
• GB Railways Group Plc

2
Background on GB Railways

• Formed 1995 by rail and non-rail managers
• Bid for several franchises 1995-7
• Awarded Anglia franchise December 1996
• New trains Anglia 1999
• Launched CrossLink service spring 2000
• Launched Hull Trains Co 2000
• Launching GB Railfreight 2001
• Launching East West Rail Limited

3
General Principles

• Competition drives innovation and efficiency
• Competition can be extended to monopoly
  industries
• Customers usually benefit
• Stakeholders often prefer monopoly (status quo)

4
Rail Specific Principles

• Rail is often a natural monopoly
• Between mode competition is weak
• Some competition is inevitable even in public
  control
• Benefits often spread beyond the actual contested
  flows

5
UK Rail Privatisation

• Serendipitous competition on many flows
• Mechanisms to moderate competition as much to
  protect from it as to encourage it
• Interavailable fares requirement on lead operator
• London Fares scheme
• Break of Journey rule
• Contracted access rights
• New rights only post 1999, not primarily
  abstractive
• Ability to nominate rights to limit exposure
• Prohibition on exclusionary, predatory behaviour

6
Franchise Competition

• Between parallel routes (e.g. Thames and
  Chiltern, GE and LTS, WAGN and Thameslink)
• Overlapping routes (Thameslink and Connex)
• With the Underground (e.g. Wimbledon, Barking)
• On longer distance London commuter routes between
  Network Southeast and InterCity operators (e.g.
  MK London, Ipswich London)

7
Forms of Competition

• Service frequency, speed and timings
• Quality of service (seats, air conditioning,
  catering)
• Fares
• Interchanges
• Stations and car parking
• Interavailable fares to be apportioned based on
  actual passenger flows (ORCATS by default)

8
How does Anglia Railways Compete?
Norwich

• Doubled service frequency London Norwich to
  half hourly, with new trains
• InterCity standard of seats, catering etc
• Captured larger share of Ipswich and Colchester
• Norwich benefits even though no direct
  competition
• GE retaliated with second hourly service to
  Ipswich (diverted from Clacton primarily
  abstractive)
• Now 4 trains per hour Ipswich, Colchester -
  London
• Competing with walk-up and commuter fares
• New car park issues (Ipswich, Beaulieu,
  Colchester)
• 50 growth 1996-2000

abcd
Stowmarket
Ipswich
Colchester
Chelmsford
Gt Eastern
Liverpool Street
9
Waterloo - Southampton
To Chelmsford
Highbury

• GB bid for hourly paths Southampton Waterloo
• Secured options for ex- Gatwick stock
• InterCity standard, discounted fares
• Negotiated package of investments with Hampshire
  CC
• Blocked by SWT/Railtrack
• Awarded Crosslink (Chelmsford Basingstoke) RPP

W. Hampstead
Feltham
Waterloo
Woking
Basingstoke
Winchester
Southampton Waterfront
10

• GNER competes for traffic in W Midlands/
  Yorkshire but has ignored communities east of
  ECML
• Hull Trains formed with John Nelson and Mike
  Jones
• Competed with WAGN and GNER for last paths on
  ECML
• Won support from SRA and ORR
• Now operating 3 trips per day
• Negotiating hourly, 125 mph paths

11
Conclusions

• Competition shapes behaviour even where apparent
  monopoly
• Operators will always seek to act as monopolists
  if possible, competing if necessary
• Competition supports innovation, investment,
  integration and enhancement
• Key roles for the Regulators to sustain fair
  competition in face of monopoly tendencies