3.10 Most passengers can expect to pay higher regulated and unregulated fares in the future. Nearly all fares regulated by the Department for Transport, which account for 43 per cent of revenues, increase on average at the rate of one percentage point above the retail price index (RPI). This rate is applied to a basket of fares on a weighted average basis so that individual fares within the basket can increase by up to five per cent more or less than the average. In the case of Southeastern's franchise, however, regulated fares will increase annually by three percentage points above RPI for five years to reflect investment in the network.
3.11 Train operators are free to set unregulated fares which relate to about 40 per cent of passenger journeys. Figure 13 overleaf shows unaudited figures for the average unregulated (and regulated) fare increases in January 2008, as published by the Association of Train Operating Companies (ATOC) for the eight franchises. Not all unregulated fares have increased: some train operators make low priced fares available for advance purchase on special terms.
3.12 Greater use by train operators of yield management techniques has resulted in some significant restrictions on use and price variations within travelling categories under these new franchises. For example, to manage peak demand, First Capital Connect in June 2006 imposed restrictions on the ticket categories allowed to return during the early evening peak and, in May 2007, Stagecoach South West Trains increased by 20 per cent the fares paid by passengers travelling to London after the morning peak but arriving before 11am. 8 Such measures seek to incentivise travel outside the peak and increasingly crowded shoulder peak periods and thereby spread demand over a wider travel period. Some passengers, however, may elect to move, following the price rise, from the shoulder peak into the peak period. The Government has also worked with the Association of Train Operating Companies to introduce a simplified fares structure - Anytime, Off-Peak, Super Off-Peak and Advance - to replace the former complex ticket offer. In urban areas simplification will take the form of zonal pricing.
___________________________________________________________________________________________
8 Examples of increases, which were first announced in March, include a cheap day return from Alton, in Hampshire, to London rising from £15.80 to £19 - a 20 per cent increase. A Bournemouth to London cheap day return will go up from £36.40 to £43.70 - a 20 per cent rise.