Recent history is littered with supposed tipping points, when a momentous occurrence heralds an optimistic future where things will be different. Most of these have proved to have been false dawns, but no-one now seriously doubts that the changes wrought by the Coronavirus are going to have significant and far-reaching consequences for economies, populations and our way of life.
The transport industry in the UK, like so many others has been hit extremely hard. But, difficult as it is to imagine right now, with businesses around the world struggling to stay afloat and predictions of profound economic damage, there is a real opportunity to deliver change that is long overdue.
The fundamental premise of the Transport business is based on the sale and delivery of the time promise to the customer. Transport sells time, the second most precious asset we have after oxygen.
Even before Coronavirus and COVID-19, only the most blinkered observer would ever argue that the UK rail industry was not uniquely dystopian and dysfunctional.
From the heraldic Stockton to Darlington Locomotion, the Rocket from Liverpool to Manchester launching the future into the explosion of 19th century venture capitalists turning out 122 railway companies by 1921, the railways had seen a century of chaos. 1923; The Grouping, the Big Four, the behemoths that in 1948 became one British Railway under the British Transport Commission - which then proceeded to spend the next half century making every mistake in the playbook. Arrogance in the face of progress, protectionism in the face of progress, blinkeredness in the face of progress. Late to the party of private sector invention and creativity, the new millennium ticked through with little change, the Strategic Rail Authority and RailTrack came and went faster than the promised 140mph on the WCML.
Then, just then, times began to change. The commitment of the private sector, Virgin, Stagecoach and First Group came to the rescue. New trains, new timetables, new fares, new service.... New, new, new. The number of people using trains exploded and so it continues.
If history has taught us anything in relation to the railways it is this: the private sector can stoke the engine and make it move at pace for the good of the country but the regulation must be fair and balanced and not the rusted brake it was under nationalisation, nor the millstone it became in the second decade of this century.
The third decade of the 21st century is the time to check and balance. The Time Promise is still and always will be the single thing being sold. The continual reduction in public subsidy has pushed a private sector to deliver a service whilst burdened with crushingly overbearing public sector control, the industry has been plagued with prescriptive, outdated contractual principles and frameworks. If one was trying to build a regime that purposely stifled innovation and positive change, one would be hard pressed to be come up with something more effective than the UK rail industry. Relentless pressure on price and value for money in franchise bidding competitions has created a climate of fear, where operators are often doing little more than managing contracts as their prime activity. And fear has direct consequences for the entire industry which flow right through the supply chain as well as direct to customers. Fear leads to change resistance and reinforces the view that to minimise risk, the best thing to do is nothing.
The Williams Review held the promise to bring about much-needed change, although rumour has it that once the potential cost of such change became apparent to the Treasury and No. 10, the Review's progress towards publication came to a grinding halt. Many in the industry had a shrewd idea which obvious targets for change Williams was likely to pick on, were he bold enough. For example, the failed franchise model, wrestling with legacy cost structures, made short-termism inevitable – if innovative ideas were unable to guarantee a significant return within three to four years, forget it. No-one was going to invest for the medium or long-term, which most likely would only benefit their successor. This, amongst much else, had to change.
Despite the well-intentioned original aim of the privatisation process, the rail industry has long been a caricature of a private sector competitive market. Of course, there have been some successes, but really... what other truly competitive market would enable a business to make revenue for doing nothing? For turning a move of empty carriages into a passenger service, bereft of a single person paying for such a service? And yet, many franchises have struggled, from day 1 – we have seen two taken into government control through DOHL and others were likely to have followed.
Likely, that is, until fate intervened by bringing about the effective re-nationalisation of the entire industry when revenue went off the edge of a cliff with the imposition of lockdown. Emergency Measures were grabbed with both hands by some TOCs for whom it represented a lifeline – they would have previously bitten the hand off from anyone offering to cover their costs and chip in 2% for their trouble, on top.
So here we are - in an unprecedented situation, that none could have predicted a few months ago. We are massively uncertain as to what the industry will look like once we recover and the 96% plus of passengers who have stopped using the rail network begin to travel again. We have all heard the dire predictions of economic torpor and its effects across society. But instead of seeing threat and difficulty, I would urge that we now have the greatest opportunity to transform this industry since The Grouping nearly 100 years ago – possibly even since the inception of rail travel.
Whatever happens, we simply cannot 'do nothing' and hope to return to some vague normality. Normal, as we know it, will not be coming back any time soon – the industry and society will have changed, at least for the foreseeable future. Despite the fact that lockdown will have made a few people yearn for the quiet sanctuary of an office, more of us will work from home, now that employers understand that many businesses can function pretty well without insisting their people sit in large expensive office buildings.
Social distancing may well alter the rail experience for many in the short term perhaps with variable physical distancing on trains based on age and perceived vulnerability and pathways in stations. Some may choose what they perceive as safer private transport, with a return to car travel – despite the massive environmental gains from reduced congestion and car usage. Many people will be torn between a wish to protect themselves and an increased appreciation for the environment which this phase has given. And retail outlets will find their markets and customer bases changing – the switch to online can only have accelerated following lockdown. All of this must be considered and enacted, but the chance we have now is to change the structure of the industry through the back-office processes that power the operational and retailing process across rail.
We have to achieve two inter-linked objectives: to streamline an industry which is screaming out for reform and in so doing, make rail as attractive a mode as possible for people – to build trust and long-term loyalty through a dramatically improved customer experience. We can do this with six actions:
- Revenue. Remove the need for the 40-year-old ORCATS (an ancient legacy system used for allocating ticket revenue to operators, it is based on rules implemented in 1842) and re-engineer the huge LENNON service by using readily available data to identify exact revenue by train. We hear the phrase Digital Railway bandied around, but the truth is that the industry has only really tinkered at the margins, dabbling in passenger information, when the proven technology now exists to transform how the railway service is planned, how it is managed every day and how delivery can be guaranteed to meet the public promise.
- Timetable. Intelligence-led timetabling will transform punctuality and reliability – just at the point where the industry needs to make itself more attractive to its customers. And just at the point where the industry can show clearly how it is going to continue its major contribution to the environmental gains created by curtailed car usage. Once a data-led timetable has been planned and implemented, the key to longer-term success is to align operational, stock and train crew data, and adjust accordingly – not just for one TOC but as a holistic network. It is time to end the siloed approach and work together – we have the tools to change for the better – for the sake of the entire industry and most importantly, for the customers who use it every day.
- Fares Reform. Announced a year ago by RDG was welcome – with 55 million fares in the system, something had to change. But it has to change NOW – not over five years – and it can, if we can overcome endemic fear and risk-aversion.
- Contactless. Introduce contactless EMV ticketing across the entire network. Closed loop smartcards are decades old, and barcodes are even older. In each case, they demand a public, used to increasingly simplicity and ease of use, to transform their own currency into a currency accepted by the operator. Contactless EMV provides a user experience that is in harmony with the rest of the public's retail experience. Furthermore, it is a critical element in the virtuous circle, providing the data insights that in turn will make the railway more efficient for those customers. Contactless EMV is proven, readily deployable, flexibly adaptable and opens up huge new avenues of insights for an industry starved of it. Continued sluggishness in adopting it across the network is not only fearful – it is negligent.
- Price. According to demand. Arguably, it works elsewhere in transport, such as in the airline industry. The success of demand-led pricing hinges on the ability to communicate clearly, quickly and persuasively with customers – this not only delivers choice for those customers but enables operators much more finely to tune the incentives they offer to customers to even out demand.
- Data. As with so much else in life, we must use available data to enhance the customer experience across the board. As an industry, we are scratching the surface with the extent to which data is currently used. Being transparent about how data is stored and used, and giving valuable actionable intelligence to customers who voluntarily give up data about their movements and behaviours, will draw them back into a long-term relationship with their rail provider. This must go beyond the 'we have no buffet on board' or 'there are empty seats in carriage F' messages and encompass end-to-end travel, putting rail at the centre of the Mobility as a Service experience. There have been numerous projects in recent years demonstrating visibility of where customers have travelled from and to, before joining a train service and after leaving it. There is no reason why this should not become standard practice in the industry, enabling a much richer passenger experience.
We have a golden opportunity to remove arcane practices, which are rooted in not only a pre-privatisation world but pre-nationalisation world of two centuries ago. We have a real chance to transform our industry and most likely, save it from terminal decline. We must take it.
James Bain is CEO of Worldline UK&I
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