The Association of Train Operating Companies (ATOC) announced that rail fares will change as follows from Wednesday 2 January 2008

Regulated fares (e.g. Season Tickets, Savers and Standard Day Returns) will rise by 4.8% - an average of 0.6% above the current rate of inflation as measured by the Retail Price Index (currently 4.2%).

Unregulated fares (e.g. Cheap Day Returns, long distance Open and Advance Purchase fares) will rise by varying amounts, according to train operator, with average fare rises of 5.4% - 1.2% above the current RPI. These increases are slightly above the current rate of inflation, but increases in rail fares over recent years have fallen behind the cost of travelling by bus and car. Since 1999/2000, rail fares have risen by just 5% in real terms compared to 12% for bus fares, about 20% for car fuel and 26% for the cost of car maintenance.

Rail fare rises compare favourably to utility prices: for instance, electricity and gas prices have risen by 21% and 56% respectively over the same time period in real terms.

The small increase in average rail fares partly reflects the fact that over half of tickets sold are price-regulated by the Government (see note 2) but also because many passengers now choose to use discounted fares such as advance purchase tickets, which offer significant reductions compared to full price tickets. The recent Government White Paper estimated that over 80% of passengers purchased either a regulated or discounted ticket.

The relatively low increase in average rail fares has been a factor in the enormous growth in rail travel seen over the past 10 years, with 42% more passengers using the rail network. Passenger numbers are now higher than at any time since 1946.

Increased revenue is needed to pay for the major new expenditure to further improve the railway. More than £800 million is now being spent on new and refurbished trains on CrossCountry, East Midlands Trains, First Great Western, First ScotRail, First TransPennine Express, GNER (shortly to become National Express East Coast), London Midland, Northern Rail, ‘one’ Railway and South West Trains.

Further investment is being committed to improve stations, including refurbished ticket offices, better waiting rooms, toilets and facilities for disabled people. It also provides for new ticket machines, information systems, closed circuit television and an increased number of car parking spaces.

Fare increases are also needed to fund reduced subsidies to some train operators and premium payments by others to the Department for Transport - an increasing feature of franchise agreements. Around £148 million of premium payments will be paid by train operators in 2008/9 rising to £1.28 billion of premium payments in 2014/15. The Government has recognised in its most recent franchise awards that unregulated fares are expected to rise by up to RPI+3%.

Passenger revenue will help to fund the extensive programme of investment recently announced by the government in its Railways White Paper, including Crossrail, the Thameslink project and the redevelopment of Birmingham New Street and major remodelling of Reading stations.

Revenue from rail fares also pays the costs of running the railway including leasing of train fleets; fuel costs which are rising fast; staffing and staff training; track access charges and other costs such as train maintenance and administration.

George Muir, Director General of ATOC, said: “We need the revenue from fares to pay for investment in the railway for the benefit of passengers. We are providing a higher-performing railway with new, refurbished and more punctual trains and better stations. Nearly 91% of trains ran on time between April and September this year, the highest punctuality level for a decade”.

For further information, please see the ATOC web site at click here