2.7 During the franchise letting process, bids must first demonstrate that they are deliverable (see Appendix 4). Thereafter, the key differentiator between bids is the lowest subsidy or highest premium. Prospective bidders therefore are incentivised to put forward proposals for maximising revenue from factors that they control (termed endogenous factors). Such factors include: ticket sales & marketing; changes in ticket prices; prevention of ticketless travel; train performance and timetable reliability; and refurbishment of rolling stock.
2.8 Train operating companies also encourage travellers to spread their usage of available train capacity (see paragraph 3.12). One immediate impact has been sizeable unregulated fare increases in some franchises. For example, there was no forewarning to passengers of 20 per cent increases on some fares in the South Western franchise when it was awarded. These increases applied to passengers travelling just after the peak fare period, in the period now known as the "shoulder peak", partly offset by very low pre-booked fares at the least popular train times. But transparency for passengers has improved with subsequent announcements of franchise awards.