Summary

As part of the latest TfL Settlement with Central Government to provide additional funding, TfL had included withdrawing from the Travelcard agreement during 2023 as part of its efforts to balance its books (the relevant text is shown as a screen shot in the Notes below). This will affect both Travelcards within London (which are typically not value for money) and Travelcard Add-ons to National Rail fares from stations outside Greater London. This article concentrates on the National Rail Travelcard Add-on, but the non-cost elements mentioned below apply equally to a London only Travelcard.

Railfuture is unconvinced that abolition of the London Travelcard Add-on from National Rail stations will lead to the expected revenue increase. Rather, the Travelcard Add-on is frequently about convenience and certainty – abolition will mean some passengers will lose convenience and trust - and thus not travel – and the research others do will mean they realise they can now pay less. Thus, we believe that the Travelcard add-on should be retained – and improved.

We agree that for a portion of stations the cost of the Travelcard add-on is too low (for some or all ticket types) and believe that, instead, there could be a smaller range of add-on costs for Peak and Off-Peak Travelcards, similar to, but slightly less than, the in-London PAYG Cap to represent the time spent on National Rail services (and thus not on TfL services).

Note: We’ve prepared this article now, in advance of the formal public consultation, as it gives us additional time to formulate our thoughts on the matter.

Our core hypothesis

Railfuture believes that in practice the National Rail Travelcard Add-on fare is primarily about convenience for most travellers – by paying in advance, a set supplementary fare is paid, and thus costs are known. The product has been in place for many decades and is now a highly trusted product, in good part because of its simplicity “For £X I can go to London and back and travel on the tube, buses, trains etc at no additional cost”.

We further believe that this loss of convenience and certainty will discourage a portion of travellers from traveling at all, thus both reducing revenue (to National Rail and TfL) and with knock on effects to London’s economy such as loss of theatre and restaurant bookings with consequential adverse economic impacts. At a time when train services are often being cut back, bringing in a more complex substitute product (PAYG), even if it is theoretically better, is, we believe, the wrong thing to do. Removal may have other unwanted impacts include more car travel as intending travellers are daunted by a more complex product choice (and price increases). It is generally not in everyone’s interest for visitors to London to travel to the edge of London by car and only then switch to public transport - that is a modal shift change we do not want (that also makes all the green targets we have harder to achieve).

The general comment is often that the Travelcard is too much of a bargain; we think that for most Travelcard users this isn’t true and for most it is a broadly cost neutral purchase where the benefits are achieving certainty, the comfort of using an understood and trusted product and locking in costs at the start of the trip; we recognise, however, that for some it is a bargain; however even for these, in some cases we urge caution.

In looking at the future of the Travelcard add-on, we believe there are three broad themes to be considered; these are set out below together with some detailing / exampling:
Equality, reassurance, trust Actually, it’s broadly price neutral for many But for some it’s “A bargain”
For those who travel less regularly For those who travel just in Zones 1 & 2 For anyone who travels to TfL zones 3 to 6
For those less comfortable with technology (eg some of the more elderly) For Adult Groups using GroupSave *For families taking advantage of “Kids for £2” and “Kids for a Quid”
For those without bank accounts, insufficient credit et al For travellers from some stations ~ with some types of ticket.

Equality, reassurance, trust & convenience

This aspect needs to be considered thematically – fairness & equality and separately as the commercial aspect of revenue loss.

We are concerned that the planned Equalities assessment will focus on aspects such as physical disability. We believe this to be inappropriate; the assessment needs to also look at wider aspects including by age (both older and younger), by financial state (eg having a bank account – with sufficient funds) and by neural diversity. Whilst not an equalities matter for others, the same factors are also likely to act as a disincentive to intending travellers due to their uncertainty of how to pay for travel, how much that travel might cost and the hassle of organising themselves to pay the lowest cost. Consider a family outing: 
  • Now
    • Buy national railcard
    • Buy rail tickets
    • Travel
  • Could be
    • Buy national railcard
    • Buy rail tickets
    • Obtain Oyster Cards
    • Register National Railcards on Oyster Cards
    • Register children for 11-15 Oyster, receive cards
    • Put funds on all Oyster Cards
    • Work out Zones of intended destinations and consider alternatives
    • Travel
    • Check account for amount charged
As mentioned above, for some this additional complexity is an Equalities issue – for others, it is just a strong disincentive to travel to London. For regular travellers, much of the above delivers value across multiple trips and can be justified, but for the occasional user it becomes a very noticeable disincentive.

Broadly price neutral – the business case to remove that isn’t

Image Our pricing research suggests that for many common scenarios, purchase of the Travelcard Add-in is about convenience and trust, with pricing differences being small. Scenarios that we have found that this applies for include:
  • Commuters who just go to work and home again in Zone 1 and 2 (a Travelcard add-on is between 80p and £2.30 more expensive, depending on exact circumstances for purchasers of day tickets).
  • Someone coming up to the Theatre, with a meal beforehand nearby (a Travelcard add-on is between 65p cheaper and £1.80 more expensive, depending on exact circumstances).
  • Someone coming up to (eg) the South Kensington Museums, going elsewhere for a meal and then returning home (a Travelcard add-on is between £2.20 and 65p cheaper), depending on exact circumstances).
Given this broad price neutrality, we believe revenue loss from people choosing not to travel as a simple product has disappeared to be replaced by a more complex ones will outweigh any revenue gain, particularly as this has to grow sufficiently to overcome over purchased travel.

A bargain – by product feature

Image Railfuture recognises that the pricing of the Travelcard Add-at a broadly similar rate to the U1/U2 Adult Capped Fare does mean that it can be a “bargain”:
  • Those that travel to the outer London Boroughs beyond Zones 1 & 2. In this context it is important to remember that this can be travel to work for staff with relatively low wages such as hospital support staff.
  • Families taking advantage of “Kids for £2” and “Kids for a Quid” National Rail fares. In the context of “a bargain”, linking back to my earlier comments on use of Travelcards, with a Kids 11-15 Oyster (available nationally for £15), travel in Zones 1 & 2 is capped to £1.60 at off-peak times, so this is not a large source of revenue. Again, in this context, at a time when children have a post Covid catch up to be undertaken, pricing educational and reward activities out of reach of parents and carers seems unwise.

A bargain – from specific stations

Our analysis of the price of the Travelcard Add-on for stations on the Midland Mainline between Radlett (first station outside Z1-Z6) and Leicester shows a cost spread for the add-on:
Image
With the Travelcard Add-on ranging from £3.90 more to £2.80 less. It should be noted that even at £2.80 less, this is equivalent to a 10p saving for someone who just travels to their destination and back.

We accept that there is a case for adjusting ‘edge’ cases – but this should be a both ways adjustment with high cost add-ons being reduced in price as well as lower price ones being increased.

Isn’t PAYG simple?

Yes, it is. But in this context, it cannot be as simple as a single ticket that provides unlimited travel on public transport in TfL Zones 1 to 6 for the day (or duration of a season ticket). A typical Londoner is a very regular user of PAYG and therefore gets to understand it very well. The same applies to many outside London (including the author of this paper). These travellers are comfortable using PAYG and the overhead to them of understanding the product, setting up an account, the need if a National Railcard holder to get an Oyster card and get the card loaded to it et al are all acceptable.

However, for many others this isn’t true. So they’ll chose the option “let’s go elsewhere”, depriving TfL and, possibly National Rail, of fare revenue.

Some practical next steps

Railfuture has created a survey for Travelcard users to complete to help understand typical usage in more detail. We ask you to complete it here.

As regards the Travelcard Add-On product:
  • It is currently available from National Rail in paper and Smartcard form for Weekly and greater periods and for the day product in paper form only.
  • We understand that effort is about to commence to encourage the weekly (and longer) product to be taken on Smartcards, rather than paper. We welcome this. Whilst there is some effort by the traveller to obtain the card, Smartcards are more reliable than paper tickets in use, do not normally require a visit to a TVM or ticket office and also generate detailed usage information which shows how it is used in practice (to, we suspect, demonstrate our hypothesis).
  • We believe there will also be benefits in offering the day product on Smartcards, for the same reasons and believe that this should be implemented. Given it already works for a 7 day (and more) product we believe this would relatively simple.
  • Whilst we would prefer pricing to remain unchanged, we would prefer to see some selected price increases at specific stations (to more align it with the Z1/Z2 cap) to its total removal.
We need to encourage politicians to realise that retention of the Travelcard Add-On is important for their constituents, so please do write to your MP, your Local Councillor and anyone else you feel sensible.

Notes

  • Differential prices in this document are for Harpenden (Hertfordshire). 
Validity Rail Only Travelcard Additional Cost Diff vs Z1/Z2 Cap
Anytime £28.00 £35.20 £7.20 -£0.50
Off-Peak £20.30 £27.30 £7.00 -£0.70
Super Off-Peak £16.50 £23.30 £6.80 -£0.90
Weekend £10.70 £16.00 £5.30 -£2.40

  • Withdrawal plans - Table from Government and DfT settlement.
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