Q71 Mr Mitchell: I wonder if the Department will have to change their attitude because things have worked okay up to now, largely because business has increased and demand has increased and you have been able to increase the fares, but the fares are now at an exorbitant level. This is business travel, businessmen's travel not people travel, and when I found over Christmas that I could go to Iceland and back-and I was paying my own fares so I took particular account of this-more cheaply than I could go from London to Leeds I thought things have gone too far. The future must lie in more people using rail and in cheaper rail fares to encourage them to transfer from road. You are never going to get that with this system of pricing.
Dr Mitchell: Some of the train companies, for example Stagecoach, have introduced the megatrain where they do an extremely cheap fare, and we obviously welcome that kind of initiative. In terms of the assumptions underlying the growth figures that we have predicted we are assuming, obviously, that some will come from fare increases but that the rest will come from volume increases. In addition to that, of course, there is a continued high level of subsidy from the Government and from the taxpayer of the service.
Q72 Mr Mitchell: The signals lie towards an increase in fare. I see there is talk now of "airline pricing". Do not for heaven's sake give the companies that abuse because the greedy companies are going to use that extort more from customers. I see that Stagecoach, which you have just mentioned, actually increased the near peak service prices by 20%. If we are going to get airline pricing that is going to happen on an enormous scale, is it not?
Dr Mitchell: I think what is meant by airline pricing is the ability to price to-
Q73 Mr Mitchell: Airline pricing is where the demand is heaviest you charge more.
Dr Mitchell: Conversely when demand is lightest you charge far less. Airline operators like Ryanair and Easyjet have been spectacularly successful at pricing to fill the planes. I have never been, for example, on an Easyjet plane that was not full; that is the kind of concept that the train companies are moving towards so that they can discount and sell seats at the off peak which are otherwise unused.
Q74 Mr Mitchell: Would that be by time in the day or time of the season because if I am taking a large family of eight grandchildren on summer holidays and you are going to start charging excessive prices because it is the summer holidays, that is going to be murderous.
Dr Mitchell: We welcome the fact that the train companies, in particular some of the more progressive train companies, are looking at innovative ways in which they can improve the passenger offer. I have mentioned Virgin West Coast, for example, which has got some very attractive offers to the North, and National Express East Coast has similarly, as you will be aware. Stagecoach South Western also run the megatrain, and that offers seats from as little as £1.
Q75 Mr Mitchell: I just want to push a local barrow for a minute because I see one of the recommendations is more consultation with local authorities, particularly Passenger Transport Executives who I think should be consulted more closely right up to the decision, but I am talking now about local authorities more generally. You have provided for the East Coast Line to introduce a spur to Lincoln.
Dr Mitchell: Yes.
Q76 Mr Mitchell: It seems daft to take a spur to Lincoln when we have no direct service to Grimsby, and that Lincoln service could easily be extended to a centre of civilisation and large population and meet heavy educational demand by extending that service to Grimsby. Why such a truncated little thing just to Lincoln?
Dr Mitchell: The estimate was made that that was where the demand was for a service, to Lincoln.
Q77 Mr Mitchell: Who made the estimate?
Dr Mitchell: We would be happy to look at whether there was a case for extending that to Grimsby.
Q78 Mr Mitchell: Okay, if you are going to look at it I will not take it further. Thank you very much.
Chairman: Mr Mitchell, you would like a note on that.3 As it extends to Grimsby it goes through Market Rasen. Richard Bacon.
Q79 Mr Bacon: Dr Mitchell, I cannot help reflecting that the last time you came before this Committee you ended up on the front page of the Evening Standard.
Dr Mitchell: Yes, exactly.
Q80 Mr Bacon: I was going to ask you what question you thought the answer to which you gave would lead you to repeat your performance, but you have already done that in answer to the earlier question from the Chairman about the traffic lights, and it remains to be seen whether that is correct. I would like to ask you about figure 2 on page 6. This sets out the impact of the revenues over a period of years on the franchise contracts; I understand these in that list in figure 2 are those for which the Department itself is responsible for letting the franchise.
Dr Mitchell: Yes.
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