Evaluating the Impacts of a National Railcard



Evaluating the Impacts of a National Railcard

Authors

P Le Masurier, J Segal, MVA Ltd., UK; D Medrisch, Strategic Rail Authority, UK

Description

This Research Paper examines the viability of a National Railcard offering substantial discounts to all travellers on all or selected off peak rail travel.

Abstract

There are a number of existing railcards for specific UK market segments. These were introduced by British Rail as marketing tools with the objective of maximising profits (although the social inclusion card may have been played, it was not the primary objective). Research on the Senior, Young Persons and Family Railcards has shown them all to be profitable. The segments permitted to buy railcards were designed to minimise their use for business travel, where it was considered they would simply reduce revenue.
However, a recent research study suggested that a National Railcard available to all (ie one that people aged 26-59 years would then be eligible for) ?would be good for everyone - the passenger, the industry and the Government? by generating revenue for the industry and contributing positively to the Government?s 10-Year Plan. The SRA consider that the evidence on which these conclusions have been drawn is not sufficiently robust. Therefore, as part of an overall review of its fares policy, the SRA wished to commission a thorough study of the potential for a National Railcard, building on the previous work. A model will be developed to estimate the full economic impact of alternative national railcards (varying in price, discount and restrictions).
The forms of National Railcards to be explored within the research project are:
· a range of discounts: from 10% to 35%;
· a range of upfront prices: from £10 to more than £100;
· a range of validity restrictions: ie discounts valid for certain ticket types, certain times of day, certain geographic areas or group sizes only.
The study has involved a unique modelling approach with customised primary input data that provides both the raw trip on which the model is based and data from which price elasticities of demand have been estimated. Our Paper will describe the data collection and modelling rationales, and the methods for estimating the demand elasticities.
The Paper to be presented will therefore cover:
· the policy objectives of a National Railcard in the context of the existing rail pricing in Britain;
· the research methodology including the two-stage survey approach for collecting passenger trip data, and the reconstructive interviewing technique for establishing the likely generated travel under different fares discounts and the likely take-up of railcards offering such discounts at different prices;
· current rail travel patterns indicating the market for a National Railcard;
· the structure and principles of the economic model, including the implications for crowding;
· the theory and application behind the customisation of different railcard scenarios for different customers; and
· conclusions and recommendations on the introduction of different National Railcards.
Our report, to be finalised in February, will provide forecasts of: the number of railcards purchased, the revenue from purchased railcards, the revenue from (all) travel, and the number of trips generated.

Publisher

Association for European Transport