In last Thursday’s blog about the upcoming demise of the Day Travelcard in London I added the caveat to my analysis of how the new regime come January would impact passengers, TfL and Train Operating Companies (TOCs) that I “may have got all my assumptions wrong including what Apportionment Factors are currently in play – the figures I’ve quoted (from the original 1995 Agreement) may be out of date and no longer applicable.”
Thanks to those with inside knowledge of TfL and its involvement in Travelcard getting in touch I can now confirm my assumptions were indeed wrong.
Not only has the 1995 Agreement been updated but I misinterpreted the share out apportionments as well as quoting the wrong figures. I’m told the Apportionment Factors have “traditionally been updated on a quarterly basis” but in practice haven’t varied significantly, so current figures (regretfully still unknown) aren’t likely to be much different from the 1995 Agreement. It’s just that I applied the percentage shares to the wrong definition of “Travelcard”.
So I’m pleased to correct things now which paints a somewhat different picture of how and why the current apportionment of Travelcard revenue is unfair to TfL while the TOCs do rather well out of it.
This updated analysis also shows the TOCs are likely to be worse off come January which means, (politics aside) there must be scope for compromise enabling this popular integrated ticket giving unlimted travel on virtually all London’s public transport and used by millions each year to be retained.
Key to understanding this issue is the definition of what are called In-boundary and Out-boundry Travelcards.
The former refers to a standard London Zones 1-6 Travelcard which can still be purchased from stations (rail and Underground) within Zones 1-6 for £15.20 although most people now use Oyster/Contactless and rely on the daily cap, which at £14.90 potentially saves them 30p. Nevertheless the In-boundary Travelcard is still a thing and importantly is used as the basis for the apportionment of revenue between TfL and the TOCs for Out-boundary Travelcards.
An Out-boundary Travelcard is the ticket I purchased at Guildford and includes return travel by train from (and back to) a station outside of Zones 1-6 into Zones 1-6. A frying pan shape analogy applies.
The share out between TfL and the TOCs has nothing to do with the additional price a passenger pays for their Out-boundary Travelcard compared to the price of a return (rail only) ticket into London which as Geoff and I found varies considerably from different origin stations. The difference from Guildford was £7.40 but we found others range from around £2 to £12.
The share out is also not based on the price of the Out-Boundary Travelcard – I paid £32.20 for my Guildford Travelcard but that price is set by SWR with no involvement of TfL so it would be unfair to base a share out based on that.
What happens is no matter what price the Out-boundary Travelcard costs, £15.20 of it (representing the cost of an In-boundary Travelcard) is allocated to the share out pot between TfL and the TOCs.
So £17 of my £32.20 goes straight to SWR rather than being shared and £15.20 is shared out.
Furthermore, insiders tell me the current Apportionment Factor for that £15.20 for revenue taken by SWR is something like 26.9% to TfL and 73.1% to SWR (the most up to date percentages are not known but are unlikely to be much different – and as explained last time they vary by TOC too).
The TOC gets the lion’s share as shares are based on mileage and it’s reckoned most rail passengers will travel into Waterloo rather than hop off in, say, Surbiton and switch to TfL services from there.
This means I was wrong to assert TfL gets 30.5% of the total £32.20 price I paid for my Guildford Travelcard (ie £9.80) with SWR getting the other 69.5% (ie £22.40).
The share out is in fact 26.9% of £15.20 to TfL (ie £4.10) and 73.1% to SWR (ie £11.10) plus the £17 already explained that is not shared out, giving a total of £28.10 to SWR.
Readers will immediately see under the new regime where passengers will need to purchase a return rail ticket from Guildford to London as Geoff did costing £24.80 (instead of a Travelcard), SWR are going to be worse off by £3.30 (£28.10-£24.80) – a reduction in its income from that ticket of 11.7%.
Obviously SWR may benefit if, once in London, passengers tap with their Oyster/Contactless and travel on its services within Zones 1-6 but it doesn’t need much of a stretch of the imagination to assume most passengers, as Geoff and I did, will mostly use TfL services such as the Underground and bus while in London from which all the revenue will go to TfL.
While SWR almost certainly loses out, TfL, which currently receives just £4.10 per SWR Out-boundary Travelcard, will be better off as soon as a passenger makes more than one Zone 1 Underground and one bus journey with their Oyster/Contactless.
That’s why there’s scope for compromise. I can’t imagine DfT and Treasury officials being enamoured by an 11.7% fall in revenue from these ticket sales (annual sales reportedly 12 million) so it makes good sense to negotiate with TfL as the Mayor invited in his letter of 20th July. And this is quite apart from many passengers being dissuaded from travelling to London at all, not least families with 11 to 15 year olds as explained last time.
Let’s hope a sensible outcome in the interests of passengers can be achieved rather than any political point scoring.
My grateful thanks to the two ‘insiders’ for getting in touch.
Roger French
