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The Adam Smith Institute Blog

Trains need a new conductor: the market

Railways usage is up, but fares and schedules don't meet the demand of passengers.

By Nigel HawkinsGuest blogger / February 3, 2011

A China Railway High-speed (CRH) train runs in Shanghai, China, on Jan. 31. Railroad travel is the highest it's been in decades, but fares and schedules don't match passengers' demand.

Eugene Hoshiko / AP

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In terms of passenger use, the railways are enjoying a ‘golden age’. Figures earlier in the week showed that 1.32 billion passenger journeys were made last year. Not only was this figure well up on 2009 but it was also the highest railway use since the mid-1920s (if the 1939-45 war period is excluded).

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Inevitably, this scenario begs the question as to how future rail demand levels can be met. In the long-term, the Government plans to modernise the network, with the c£34 billion High Speed 2 project being key. Initially, the latter is scheduled to run between London and Birmingham – and eventually to Manchester and Leeds. Since High Speed 2 is unlikely to be operational before 2026, other solutions should be explored.

Like many markets, the UK rail network suffers both from excess demand – packed carriages to London during commuting hours – and from inadequate demand – near empty carriages in some rural areas. The market should be allowed to make its own adjustments. This philosophy should be embraced – at least in part - by the planned franchise amendments. Longer franchises and more scope for the franchise holders to adjust to consumer demand are anticipated.

Much of the capacity concern focuses on both the West Coast and East Coast Main Lines, where trains are often very crowded. Why can’t these standard services run regularly throughout the night, with very cheap tickets being on offer which would be highly attractive to students?

By adopting a Ryanair booking policy, the 1am London Kings Cross to Edinburgh fare, for example, could be minimal – just like its fare to an obscure Polish city on a Tuesday in deep winter. At peak hours, market demand would ramp up fares. After all, many people currently fly during the night as well as visit 24-hour Tesco shops. Will 24-hour rail travel eventually become the norm?

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