Well, whadda you expect?

In a highly critical report, the Public Accounts Committee warned that the Government and rail industry would fail to provide the extra seats needed to keep up with soaring demand for rail travel.

OK.

We\’ve a system with huge fixed costs working at close to (and I wouldn\’t be at all surprised to hear, at the actual commuting times, well over) capacity.

It is a fresh blow for commuters who last month were told that the cost of their season tickets rise by 10 per cent more than the retail price index over the next five years.

Seems sensible. If you\’re at or over capacity and don\’t want to spend the billions upon billions to expand capacity (see fixed costs above, this isn\’t a matter of just the marginal costs of running a few more trains) then you should indeed raise prices so as to ensure that what capacity there is is bought by those who value it most.

You know, this wealth creation shtick of moving scarce resources from low value to high value uses.

3 thoughts on “Well, whadda you expect?”

  1. well, if a market fails to provide sufficient capacity such that prices rise, the market theoretically allows new entrants to compete. Except these are monopoly providers and thus there is a case to be made that they are limiting capacity in order to maximise monopoly rents. Given government claims to be pushing more transport onto “green” railways, the commuter is stuffed all ways up; the greenies force up the price of alternate transport such that they are driven into the arms of the monopolists

  2. My experience is that the costs ARE mostly about adding more carriages.

    I would have thought that the major fixed costs in rail were around laying tracks and the associated signalling/communications links. I happen to know that Network Rail (as was) spent £1bn upgrading the signalling/communications links during the boom, so more carriages would be just fine and dandy thanks.

  3. In London and the southeast, the costs are signalling and comms – trains at peak are almost all as long and frequent as the physical infrastructure (ie signalling and civils) allows, and Thameslink – unless they axe it – will get rid of the “almost”.

    In the rest of the country, the costs are mostly carriages.

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