ORR’s Retail Market Review industry workshop Discussion on ORR’s emerging findings, and wider rail retail developments Monday 7 th September 2015
Welcome John Larkinson ORR
3 Welcome ■ Welcome ■ House-keeping ■ Purpose and approach to today‟s workshop ■ Agenda ■ Next steps
4 Time Agenda item 10.00-10.30 Registration 10.30-10.35 Welcome, John Larkinson (ORR) 10.35-10.50 Introduction, Siobhán Carty (ORR) Discussion on nearer-term recommendations 10.50-11.05 Overview of the nearer-term recommendations, John Larkinson (ORR) „Response‟ to the nearer -term recommendations i.e. those listed on p12/13 of our consultation document 11.05-11.45 - Jeremy Hotchkiss, DfT - Nick Bamford, ATOC - James Bain, Worldline 11.45-12.30 Group discussion on appropriateness of the nearer-term recommendations (6 mixed groups) 12.30-13.00 LUNCH 13.00 – 13.10 Summary of group discussion and next steps on nearer-term recommendations, ORR Discussion on longer-term options 13.10-13.30 Overview of the longer-term recommendations, John Larkinson (ORR) i.e. an outline of the options relating to - allowing price of fares to vary by sales channel; - net pricing (wholesale price for fares); and - relaxing the obligations on TOCs to create inter-available fares from anywhere to anywhere 13.30-14.00 Views of stakeholders regarding the longer-term options - David Mapp, ATOC - Mike Hewitson, Transport Focus 14.00-14.20 Open discussion 14.20-14.30 Wrap-up and close
Introduction to the Retail Review Siobhán Carty ORR
6 Today’s workshop ■ Background to the Review – Focuses on who sells tickets, what tickets are sold, where tickets are sold, and the ticket format – Analysis of the rules, regulations and industry practices for tickets buying to ensure they are working for passengers, taxpayers and industry. ■ Approach – Stakeholder engagement – Comparative sector analysis (CEPA) – Primary research into passengers‟ experiences (BDRC Continental) – Call for Evidence in February 2014; Issues consultation in September 2014; and Emerging Findings / Recommendations in June 2015.
7 Context for the Retail Review ■ The Review is part of a wider package of work to improve passengers‟ experience in ticketing and fares Govt‟s fares simplification (e.g. single leg Govt‟s pricing) SEFT… and improvements NEFT via franchises ORR / TOCs‟ m - retailers‟ Code ticketing trial of Practice ORR‟s Improving monitoring of TOCs trial for passengers‟ TOCs‟ season tickets obligations sold by TPRs experience (e.g. DPPP)
8 June 2015 Emerging Findings ■ While the market is working well in many respects, there is room for improvement in many areas. • Some passenger • Scope for Who and • Product demand for more Ticket Not kept pace with improvement in flexible tickets e.g. no other sectors, where to having a wider range format part-time Seasons, particularly on shared range of retailer and only 1 TOC selling flows or fares buy ticket sales channels APOD How to • (broadly) Same • Pace of technological Price across all channels, innovation is slow, buy the not reflecting different particularly with differentials costs of sale respect to TVMs ticket
9 June 2015 Emerging Findings TOCs compete with each in providing information to passengers, in the range of fares and products they offer and in the ‘ticket buying experience’ Competition among All retailers must work Third party retailers also retailers together to bring about play an important role in an integrated, national putting competitive network (e.g. impartial pressure on TOCs and, retailing and inter- and Collaboration more widely, in expanding through tickets) among the market. retailers ■ We consider that there are features of the regime that slow the pace of innovation and competition to the detriment of passengers, taxpayers and industry ■ We have identified some nearer-term and longer-term recommendations to address these issues, which we are seeking your views on.
Overview of the nearer-term recommendations John Larkinson, ORR
11 Nearer-term recommendations to improve competitive role of third party retailers Issue Our recommendations • Do you agree independent oversight 1 Gov’ts should introduce TOCs set entry requirements, is required? independent oversight of the • giving rise to (real or perceived) What kind of oversight should there third party retailer conflicts of interest be (e.g. monitoring, appeal body)? arrangements • Who is best placed to do it? • Do TOCs need to be more 2 transparent over third party retailer TOCs should improve the Costs and commission are arrangements? transparency of the third party • (somewhat) unpredictable Do you agree with our suggestions for retailer arrangements how TOCs could be more transparent? 3 • Should expanding ticket selling to the TOCs should (continue to) Smaller and/or physical non-TOC likes of newsagents be considered? explore ways to encourage retailers aren‟t active in the market • What is stopping this from smaller retailers to sell tickets happening? 4 Passengers can‟t buy all products • from all retailers. Over longer- TOCs should consider making What are the pros and cons of term, lack of access to products all products available to other making all products and/or all may encourage third party retailers retailers discounted fares available? to exit the market
12 Nearer-term recommendations to improve competition among TOCs Issue Our recommendations 1 Gov’ts should encourage TOCs TOCs lack incentives to introduce • Is this necessary? new products within their to introduce products within their • How could it be done? franchise period franchise (e.g. single leg trial) 2 Gov’ts and TOCs should • improve the TSA process to make Is this necessary? • TOCs can use industry processes it quicker and more streamlined What are your views on our to stop (or slow the introduction for a TOC to introduce a new suggestion to improve the of) new products product. A change in TOC voting processes for introducing new rights and quicker use of pilots products? should also be considered. 3 • Design of IT systems may Are retailers constrained by TOCs should ensure that central constrain TOCs‟ ability to central IT systems? IT systems enable retailers to • differentiate ticket buying If so, how could this be differentiate their retail experience experience addressed?
13 Nearer-term recommendations to improve collaboration among all retailers 1 • Do you recognise there is a Gov’ts should (continue) to government-led strategy for develop a strategy for future TOCs lack sufficient incentives to ticketing? ticketing, involving all parts of collaborate to develop shared • To what extent can a strategy industry systems and ticket formats improve collaboration? 2 • Do you agree that innovation Innovation funding bodies funding would improve should note the importance of integrated ticketing? supporting integrated ticketing, • How could the current especially in local conurbations processes be improved upon? 3 • How would involving more non- There is a risk that central TOCs should involve others in TOC parties improve retailing? systems develop in line with the development of central • How should this be done, and needs of TOCs only, and not third systems, including through what role could working groups parties working groups play?
14 Together, these recommendations could deliver some improvements, such as… For passengers May not go far enough in improving More choice in where to buy tickets retailing for passengers (and possibly what products/fares) Doesn‟t address passengers‟ views Improved „ticket buying experience‟ on fares For taxpayers Reduced burden if greater May be revenue abstractive, if efficiencies from selling through greater commission owed to third newsagents (versus ticket offices, party retailers outweighs new, for example) additional revenue Some cost in implementing For industry changes (e.g. to the TSA, Enables some scope for more establishing working groups) Only formalising some of what‟s competition done, rather than providing anything new ■ Do you agree?
‘Response’ to ORR’s nearer -term recommendations Stakeholders’ views
Jeremy Hotchkiss Deputy Director, Rail Funding & Fares Department for Transport
Nick Bamford Head of Third Party Retailing, ATOC
Nearer term recommendations 1. Incentivising TOCs to introduce new products 2. Improving Competitive Role of Third Party Retailers 3. Addressing Barriers for Smaller Retailers 4. Making All Fares / Products Available to All Retailers Confidential 18
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