Balancing Supply and Demand in Rail

In this video Matthew Flynn discusses the issue of balancing supply and demand in the rail industry and what could be done about this.

Balancing supply and demand in rail –transcript

Introduction and overview of the problem

It is encouraging to see that passengers are returning to rail and in March this year statistics from DfT show rail passengers reached 80% of pre pandemic levels

But how well utilised are our services? Pre-covid, average seat utilisation across the day was around 40% Compare this with the airline industry where passenger load factor is a key performance indicator, typically operating at 80% and Ryanair at 95%.

Historically, our timetables have been established to accommodate our work patterns with commuter peaks around 9am and 5pm. This level of capacity, however, is continued throughout the day resulting in significant cost, without the income.

Take Birmingham New Street for Example. Data from the ORR shows arrivals between 7am and 10am average 88% utilisation, peaking at 120%, this then reduces to 35% throughout the day before rising again to 91% between 4pm and 7pm.

Cost impact

The total cost to run the railways each year is around £20bn

On a typical weekday, there are around 12,000 services departing major cities and 380 seats on each service giving a total number of passenger seats of 4.5m.

The average cost for each seat is therefore around £17

We know that the average utilisation across the day is 40% and therefore 2.7m seats run empty every single day and that cost accumulates to £46m across the network.

Options to do things differently

To address this kind of scale of cost we must be looking for step change to better balance supply and demand. There are three options that come to mind, each with their own challenges:

1. Reduce the number of off-peak services. This would immediately yield better utilisation, but the vehicles required to support the peak would still be needed, could these carriages be used for other reasons? Flexible working spaces or freight?

2. More flexible capacity. Could the 12 car GWR from Bristol to London Paddington be reduced to 2×6 car units off peak? Clearly there would be some operational challenges to overcome but a step change could be made

3. Incentivise passengers to spread demand. Covid has introduced a new way of working that will be staying with us. Can ticket pricing incentivise passengers to plan travel more evenly throughout the day?

It is likely that combination of these and more will be needed.