Do Trainline take money out of the industry?

[island]

Trainline doesn't charge fees for walk up tickets purchased on the day of travel through their app.

That's correct, and was acknowledged by AlbertBeale in the use of the qualifier "often". Trainline also takes money out of the industry in the form of seller's commission, and there are very few cases where it is better to use them than an alternative sales channel.

 

[Watershed]

Trainline also takes money out of the industry in the form of seller's commission

The same could be said of all third party retailers, if you want to look at it that way. But even if you just restrict the analysis to the TOCs - none of them have their own, in-house retailing systems. They all contract out the provision of a TIS to external firms... who just so happen (in the main) to also be third party retailers. Surely you would accept that if Trainline didn't offer B2C sales, they would have to charge TOCs more to offset their development costs?

Moreover, TIS providers are paid based on a variety of different formulae depending on the agreed contractual terms. Some of these include keeping some (or all) of the ticket selling commission. Would you therefore suggest that Trainline are taking money out of the industry in their contracts with TOCs?

There are a lot of things wrong with the rail industry but I don't think this is anywhere near the top of the list. As we've seen, having third party retailers had led to genuine innovation; for example, there's no way that split ticketing would otherwise be as mainstream as it now is.

 

[LNW-GW Joint]

That's correct, and was acknowledged by AlbertBeale in the use of the qualifier "often". Trainline also takes money out of the industry in the form of seller's commission, and there are very few cases where it is better to use them than an alternative sales channel.

Trainline are part of the industry.

 

[yorkie]

That's correct, and was acknowledged by AlbertBeale in the use of the qualifier "often". Trainline also takes money out of the industry in the form of seller's commission...

How much money goes out of the industry? I'd imagine most of the commission goes towards paying the development and ongoing costs. Any money that goes towards things like paying developers is arguably retained within the industry.

I believe Trainline have a profit margin of no greater than 1%; do you think this on the high side, and if so, what do you think an appropriate profit margin might be?

... and there are very few cases where it is better to use them than an alternative sales channel.

That's true!

The forum's site usually beats Trainline by some margin; we find better splits for a start, and we don't charge more than what train companies would charge for the same journey.

 

[SteveM70]

I believe Trainline have a profit margin of no greater than 1%; do you think this on the high side

I suppose it depends how you look at it

Some accountants look at return on sales (net margin); some like to talk about return on capital employed. One of those would be a much better number than the other

 

[Haywain]

Trainline are part of the industry.

This - in exactly the same way that open access train operators are part of the industry.

 

[jamiearmley]

Both train line and open access leach money out of an industry that requires massive subsidy.

There are arguably benefits to their existence, but they only exist to make profit.

 

[Haywain]

but they only exist to make profit.

The same can be said of many suppliers to the industry.

 

[Adam Williams]

The same can be said of many suppliers to the industry.

Indeed, isn't that what a company is required to do, per section 172 of the Companies Act 2006? Directors must act in a way most likely to benefit the interests of their shareholders and promote the success of the company. This doesn't necessarily always imply "making the maximum profit" and the act stipulates other considerations too (such as environmental ones - I would suggest that enticing people to travel by train instead of their ICE car is a laudable goal!), but a director's duty to promote the company's success often involves making profitable decisions.

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I would suggest reading the IRR's publication which sets out the work that Independent Rail Retailers do to drive revenue growth in an industry that yes, desperately does need to become less reliant on subsidy and reduce costs. Where do people think genuine innovations which reduce costs like E-Tickets (thank you Assertis and Trainline) and automated split ticketing (thank you Raileay and FastJP) originated from? What about automated self-service refunds? Why is Trainline's UX considered by a majority to be best-in-class, and now adopted by a wide variety of train operators?

It goes beyond retail too. The best resource I use for checking train times is independent and maintained by someone who thought the existing offerings were poor, and worked to do something better. Do the ads on Realtime Trains also "leach money" out of the industry?

 

[laseandre]

I think I'm mainly put off by their misleading marketing around savings - the savings are the same as you'd make on *any* retailer's site by buying advances, and in fact most if not all TOCs' sites will be cheaper because of the lack of booking fee.

 

[Watershed]

Both train line and open access leach money out of an industry that requires massive subsidy.

There are arguably benefits to their existence, but they only exist to make profit.

Would you say the same of the rolling stock manufacturers? Signalling equipment manufacturers? Cleaning contractors? How far do you go?

It's clear there will always be a degree of private sector involvement in the railways. Even in BR this was "a thing", just to a slightly lesser extent than today.

 

[yorkie]

Both train line and open access leach money out of an industry that requires massive subsidy.

Trainline appears to have a profit margin of under 1%; what sort of profit margin would you consider acceptable?

As for open access, they drive down prices for passengers and have encouraged franchised TOCs to not only up their game but also serve some of the destinations they previously refused to. I don't think anyone could argue they haven't grown the market.

There are arguably benefits to their existence, but they only exist to make profit.

By that logic, you'd need to abolish almost all companies in the rail industry.

I think I'm mainly put off by their misleading marketing around savings - the savings are the same as you'd make on *any* retailer's site by buying advances

Yes; as with TOCs, they do say things that are a bit misleading. But they're no worse than the likes of LNER in this respect.

and in fact most if not all TOCs' sites will be cheaper because of the lack of booking fee.

And our site is typically cheaper still; we won't be undercut by TOCs (except for occasional instances where TOCs engage in anticompetitive pricing e.g. some special offer sale fares etc) and, for anything other than short distance journeys, we often charge less for the same journey and/or provide cheaper/slower options that TOCs don't divulge.

 

[Tazi Hupefi]

Both train line and open access leach money out of an industry that requires massive subsidy.

There are arguably benefits to their existence, but they only exist to make profit.

This is a total myth, mainly perpetuated by uninformed staff who have no idea beyond their own front line duties.

A significant number of passengers would simply not travel by train if the Trainline did not exist. Thinking that these customers would simply switch to a TOC owned app is for the birds. Trainline makes rail easily accessible with a fantastic mobile experience for 99% of the people who just want fairly simple tickets, although limited split ticketing is supported, but at such a level that it is also fairly easy to comprehend. Their app is constantly one of, if not the, highest rated on the various app stores in it's category.

Trainline is essentially a huge advertising organisation - they spend most of their money on advertising and search engine optimisation - they're making wafer thin margins from the ticket sales, so it's all about boosting volume, and genuinely encouraging new people to rail.

I would bet the house that Trainline's total spend on advertising eclipses the advertising budgets of all of the TOCs combined each year - all to attract and retain customers - the operators do extremely well on the back of this. You have a travel agent essentially bringing all of this custom to your network for a tiny fee.

Then consider how much digital infrastructure Trainline provides - most TOC apps are powered by Trainline. Most business travel software is provided by Trainline. This can be surprisingly cost effective for TOCs, as Trainline has already built most of the functionality for their own website. It makes me chuckle when staff complain that customers booked through Trainline, when booking through most TOC apps would be using exactly the same booking engine, and the same support team behind the scenes.

Then consider all the fraud/revenue protection work undertaken - TOCs are getting far more than just a booking engine.

 

[LNW-GW Joint]

Both train line and open access leach money out of an industry that requires massive subsidy.
There are arguably benefits to their existence, but they only exist to make profit.

Do you think Trainline (and others) developed their web site(s) for free?
They are entitled to earn a return on their IPR and investment.
At the latest count the 3rd party retailers earned the railway something like a third of its revenue.

And do you think an "internal" equivalent would be "free"?
Somebody has to pay for the software development and maintenance, like any retail e-commerce system.

There's a whole private sector sub-industry in ticketing systems, gates, ATMs and back-end processing to banks and service providers.
Maybe you think they are all leaching money out of "the railway".

 

[Wallsendmag]

As long as they play by the same accreditation rules as everyone else has to I don’t have a problem.

 

[Deafdoggie]

If you find buying tickets on apps too confusing, then you can just buy your ticket at the station - they can sell you anythng that an app can, and often cheaper (in the case of 3rd party ticketing companies like Trainline, who often charge you a mark-up - as well as creaming off some of the ticket cost before paying the railway).

They don't charge a mark-up, but in some cases they charge a booking fee. Same as the forums site sometimes charges a share of savings fee. Both, however, can be avoided. And both sites can be cheaper than booking with a TOC.
They also don't "cream off" any money. They get, as every retailer, a commission for selling a ticket, same as the forums ticket site, and every ticket retailer.

 

[yorkie]

And do you think an "internal" equivalent would be "free"?
Somebody has to pay for the software development and maintenance, like any retail e-commerce system.

Quite. Not a single TOC has its own in-house booking site.

In some cases, I do think they could get a better deal from another provider (e.g. the forum's site is great at identifying slower Northern Only tickets for some journeys I make, where the default option would be TPE; if Northern switched to the provider of that system, they could grow their revenue) but the idea that if TOCs did this in-house they'd be saving money is certainly a fallacy.

I suppose people may come along and say that all the TOCs could club together to develop a sort of "in house" system run by RDG, but RDG contract almost everything out to external suppliers anyway, and the quality often leaves something to be desired (as demonstrated by the number of 'fixes' logged in the Routeing Guide updates thread, for example).

 

[AlterEgo]

The idea that the size of the passenger base in the UK would be the same if there were no third part retailers is a big assumption, and one I don’t feel is correct.

 

[Wallsendmag]

Quite. Not a single TOC has its own in-house booking site.

In some cases, I do think they could get a better deal from another provider (e.g. the forum's site is great at identifying slower Northern Only tickets for some journeys I make, where the default option would be TPE; if Northern switched to the provider of that system, they could grow their revenue) but the idea that if TOCs did this in-house they'd be saving money is certainly a fallacy.

I suppose people may come along and say that all the TOCs could club together to develop a sort of "in house" system run by RDG, but RDG contract almost everything out to external suppliers anyway, and the quality often leaves something to be desired (as demonstrated by the number of 'fixes' logged in the Routeing Guide updates thread, for example).

The cost of an in house development team would be extremely hard to justify. LNER probably come closest working hand in hand with VIX and Softwire

 

[Haywain]

Would you say the same of the rolling stock manufacturers? Signalling equipment manufacturers? Cleaning contractors? How far do you go?

There's a natural extension of the argument which is that staff getting paid takes money out of the industry.

 

[SteveM70]

Trainline is exactly the kind of thing a centralised Great British Railways should have provided, but it’s too late now

 

[LNW-GW Joint]

Trainline is exactly the kind of thing a centralised Great British Railways should have provided, but it’s too late now

Do you mean eliminate Trainline as a service provider?
Or buy them out ("nationalise") them?
What message does that send to a mixed public-private industry?
Labour will have the opportunity to decide which railway elements to "nationalise", but as the rail unions aren't interested in IT I doubt they will take Trainline into GBR.
They might contract them to provide the industry's main retail site, though.

BR never built its own diesel or electric power systems - that was left to specialists like Sulzer and English Electrlc.
I don't think those companies were accused of taking money out of the industry.
Today's equivalent is Stadler and Alstom.

 

[Watershed]

They might contract them to provide the industry's main retail site, though.

Based on all the indications Labour have given, it seems highly unlikely that a centralised GBR ticketing will materialise. Indeed they appear supportive of third party retailers' continued existence; the fact they made a recent rail announcement at Trainline's HQ isn't exactly a coincidence...

 

[Wallsendmag]

The problem with only having one supplier for a centralized TIS is the supplier gets lazy

 

[Adam Williams]

The cost of an in house development team would be extremely hard to justify

I don't think it's as insurmountable as some make out. I suspect Eleanor cost more than Raileasy (or an even smaller retailer, like MyTrainTicket) spent on its engineering team last year.

You need the right sort of organisational culture for it to work, though.

 

[SteveM70]

Do you mean eliminate Trainline as a service provider?
Or buy them out ("nationalise") them?

Neither. As I said, that ship has sailed.

I meant that what Trainline have done - an effectively marketed, non-TOC specific ticket seller, seen by the man in the street as “the place that sells train tickets” - is exactly what a central controlling function should have provided

 

[Paul A N]

That's correct, and was acknowledged by AlbertBeale in the use of the qualifier "often". Trainline also takes money out of the industry in the form of seller's commission, and there are very few cases where it is better to use them than an alternative sales channel.

I favour closure of Trainline as parasitic on railway operators with scarce any added utility compared with operators online provision.

 

[alistairlees]

As long as they play by the same accreditation rules as everyone else has to I don’t have a problem.

I am sure you would want all TOCs to play by the same rules too

There's a natural extension of the argument which is that staff getting paid takes money out of the industry.

An interesting argument...

The problem with only having one supplier for a centralized TIS is the supplier gets lazy

Or very expensive and monopolistic. Look at TfL's revenue collection system, for example... (other examples are available)

I favour closure of Trainline as parasitic on railway operators with scarce any added utility compared with operators online provision.

Actually, third party retailers are cheaper, more innovative, and take all the commercial risk (no sales in Covid? No fees to pay to to third party operators!)

 

[stuartl]

Is it any different to the BR days when travel agents used to sell train tickets ?

 

[alistairlees]

Is it any different to the BR days when travel agents used to sell train tickets ?

Well, the commission rate is less than half of what it was then, and you have to do a lot more!