Do season ticket holders get a fair deal under Delay Repay?
Andrew Haylen from the House of Commons Library reports
Many rail passengers, namely season ticket holders, have been left several hundred pounds worse off under the Delay Repay passenger compensation regime, according to our recent research. Some train operators might also be financially better off under Delay Repay than under the old Passenger’s Charter regime.
But what is the difference between Delay Repay and its predecessor, the Passenger’s Charter scheme? How much does the type of ticket passengers own affect the amount of compensation they can get?
What is the Delay Repay compensation scheme?
The Delay Repay compensation scheme was introduced in 2007. Under this scheme, a passenger is entitled to 50% of the cost of a single fare if a train is delayed by more than 30 minutes, irrespective of the cause of the delay.
This is more generous for single and return passengers than what was offered under the Passenger’s Charter scheme. The Passenger’s Charter only offered compensation for delays of more than 60 minutes, and at a less generous rate. Passengers may not have been offered compensation if the reason for the delay was outside the industry’s control.
‘Delay Repay 15’, the latest scheme introduced, now means eligible passengers can claim 25% of the cost of a single fare for delays between 15 and 29 minutes.
Almost all train operators now use a version of Delay Repay, after Great Western and Arriva Train Wales transferred across from the Charter earlier this year. Chiltern Railways is the only operator not to.
What does it mean for season ticket holders?
Under the Passenger’s Charter scheme, if punctuality and/or cancellation performance targets were not met then season ticket holders were compensated with an annual discount when they renewed their ticket. This was typically a 5% or 10% discount on the season ticket. This is no longer the case under Delay Repay, as they are refunded on the same basis as single and return fare passengers.
Many season ticket holders have been left worse off as a result, in some cases by up to several hundreds of pounds.
For example, under the Charter scheme a £3000 season ticket holder would be entitled to £300 compensation if the train company failed to meet both the punctuality and cancellation targets.
To be eligible for an equivalent amount of compensation under the standard Delay Repay scheme, a train would have to be late by more than 30 minutes 93 times during the year. On Delay Repay 15, a passenger’s train would need to be between 15 and 30 minutes late 186 times during the year. This is very unlikely to happen. In fact, using ORR data, on average only 0.3% of trains on the national network are delayed by more than 30 minutes in a given year and 1% by between 15 and 30 minutes. In this situation, a £3000 season ticket holder would be entitled to £4.50 or £12 in compensation for the year under the ordinary and enhanced Delay Repay schemes respectively.
The results, of course, vary between train operators. However, ORR data shows that both punctuality and cancellation targets would have been missed on several franchises if they were applied based on thresholds of 90% and 2% respectively. This has been calculated using the average of the remaining two Charter scheme targets that are in place on the Chiltern and Great Western Railway franchises.
In fact, an average season ticket holder would likely be entitled to more generous compensation on at least 13 franchised operators on the network if they were renewing their ticket at the end of the last rail year.
Govia Thameslink Railway (GTR) season ticket holders have been particularly affected under the new regime. Since the franchise started in September 2014, GTR has missed both the punctuality and cancellation targets every year that existed under the old Passenger’s Charter.
In effect, GTR season ticket holders have been left several hundred pounds worse off since the start of the franchise.
What does this mean for train operator revenues?
There is evidence to suggest that the shift from the Passenger’s Charter to Delay Repay has had a positive impact on some train operator’s revenues. One year of poor performance and the subsequent pay outs to season ticket holders under the Charter scheme is enough to eclipse several years’ worth of pay outs under Delay Repay.
One year of poor performance under the Charter scheme is enough to eclipse several years' worth of pay outs under Delay Repay
This is best illustrated by comparing the compensation paid out by South West Trains (who have been under the Passenger’s Charter until August 2017) compared to Southeastern (under Delay Repay since July 2011), in the years leading up to 2017/18. Only three years’ data has been published for South West Trains, but it shows that between 2015 and 2018 the compensation paid out by South West under the Passenger’s Charter was £26.8 million – more than double what Southeastern paid under Delay Repay for the preceding seven (£13.1 million).
Given the two franchises had relatively similar punctuality over that period, this cannot be solely down to a disparity in performance and is likely explained by the more generous pay outs to season ticket holders.
It is not clear what this means for the wider franchising system, but it does raise important questions: have operators collectively profited under this new compensation regime? And have season ticket holders cross-subsidised the enhanced compensation for single and return passengers?
Andrew Haylen is a Senior Library Clerk at the House of Commons Library, specialising in business and transport