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Welcome to the Rail Technology Magazine Podcast. Keeping you up-to-date with the most current rail industry news, giving you an all-access pass to the key insights and innovations helmed by the decision makers in our industry
Episode 55.mp3
Transcript
00:00:00 Speaker 1
We need the different parts of the system to play their own part to make this happen, and we're able to then construct kind of a three-year outline framework if this is where we should be focusing on, you know, people get it when they try it, you know they can use that travel time for whatever they want.
00:00:17 Speaker 2
This is the rail Technology Magazine podcast bringing you views, insight and conversation from leaders across the rail industry. Presented by Richard Wilcock.
00:00:26 Speaker 3
Welcome to today's episode of the Rail Technology Magazine podcast. I'm here with Suzanne Donnelly, who is the revenue director for Great British Rail transition team. Hi, Suzanne.
00:00:36 Speaker 1
Hi, Richard.
00:00:37 Speaker 3
I just wanted to to start with a little bit more about exactly your role at GB RTT and where you want.
00:00:43 Speaker 3
It to go in the future.
00:00:44 Speaker 1
So my role at BRT is passenger revenue director. So that is really all about helping to support the industry to grow passenger numbers and revenue. That's both now.
00:00:57 Speaker 1
Where we are here and now and into the future under GBR eventually.
00:01:01 Speaker 3
I wanted to talk a little.
00:01:02 Speaker 3
Bit more about the ticketing revenue structures that.
00:01:04 Speaker 3
Are currently in place and how?
00:01:06 Speaker 3
Now that is going to change. I know that the centralised ticketing system isn't necessarily going to happen now what can you bring to the table that fundamentally changes the way that that ticketing and revenue is done in the?
00:01:20 Speaker 1
Future. Yeah, well, it's a great question and it's a really important and pertinent question because if you take a step back.
00:01:27 Speaker 1
Pretty much any piece of customer research and insight that's been done over recent times has highlighted that ticketing complexity is the thing that's really putting people off choosing real. One of the things that's putting people off choosing real and it's frustrating our current customers cause it is complicated and it's unnecessarily so.
00:01:46 Speaker 1
And certainly complicated versus other walks of life, you know, by the flight to hotel.
00:01:52 Speaker 1
On your whatever online and Amazon, etcetera. So. So we're very much focused on how can we make it simpler, how can we make it better for everyone in Britain. So to really help with this, we've created under the GBR transition team. What's a programme called FTR which sounds for fairs, ticketing and retail programme.
00:02:13 Speaker 1
And this is something that we work very closely in collaboration with the Department for Transport on and this is effectively trying to bring together one plan, one vision, one road map to help address that very problem and make things simpler. So maybe if I give you a bit of a flavour.
00:02:32 Speaker 1
So what's in the programme? Because, of course, these things don't happen overnight, do they? They, you know, we've got a very fragmented structure in the real ways. We've got lots of different issues at play. But ultimately what this programme is about delivering is firstly about rationalising the fare structure, existing fare structure so.
00:02:36 Speaker 3
Of course, no.
00:02:52 Speaker 1
An important part of that is in urban areas where it's pretty complicated. Simplifying it back to peak off.
00:03:00 Speaker 1
Single leg fares such that that can then support pay as you go. Tap in, tap out ticketing so the exactly the same as you have in London. You know we're in the process of extending that around the South East, but importantly bringing that model to other urban areas in the.
00:03:16 Speaker 1
Country and the two areas that we're focused on initially are Greater Manchester and West Midlands because they are the two sort of trail blazer, large urban areas with devolution deals so, so that's where we're going to kind of roll out some pilot schemes of of pay as you go ticketing with that simpler structure.
00:03:24 Speaker 3
Large urban areas, yeah.
00:03:36 Speaker 1
In terms of the longer distance routes, the York to Londons and and the routes, I'm very familiar with, that's more. The focus is more about simplifying the structure. So simple choices for customers. So they're not baffled and confused by, you know, 100 different choices. A very small set of clear choices.
00:03:55 Speaker 1
And very much a focus on revenue managing and yield managing those fares as well. So you know when it's busy, you pay more when it's less busy, you pay less effectively. So there's lots of trials and activity going on in that space that's already started under LER and will be expanded across the network in, in coming.
00:04:15 Speaker 1
You know, months and years, the other area we're looking at is retailing. So this is a buy effectively making fares and ticketing more accessible for people to.
00:04:24 Speaker 1
Sale. So you've got the big retailers today clearly, but it's very difficult for other retailers to get into the.
00:04:30 Speaker 1
Market quite, yeah.
00:04:31 Speaker 1
It's a long process. It's expensive, it's complicated.
00:04:35 Speaker 1
What we're interested in doing is how do we simplify the systems behind the scenes and create a set of common services that you know anybody can come and plug into and effectively sell a railway ticket?
00:04:46 Speaker 1
You know, let's get real on your shelves, make it available to more people. Let's drive up those journeys and and the revenue levels. So, you know, and liberalise that market.
00:04:56 Speaker 3
So what would you call a common service then?
00:04:58 Speaker 1
So a common service could be anything from fares to reservations to delay repay services. So those kind of back end sort of fundamental services associated with buying a rail.
00:05:10 Speaker 1
The cat.
00:05:11 Speaker 1
But offer them in a way that's much easier to plug into.
00:05:15 Speaker 3
OK, so I just wanted to touch a little bit more on the technology that's going to need to be implemented to make this happen. So we'll talk about tap in and tap out. Yeah, how far do you think that is before it's a sort of a national endeavour as such?
00:05:30 Speaker 1
I don't think we're in a position today to kind of pin to exact dates.
00:05:35 Speaker 1
No, but what I.
00:05:36 Speaker 1
Think we're in a really good position to understand the steps that we need to go through to get from where we are today.
00:05:42 Speaker 1
Two trials, 2 ultimately national rollout, you know, the first step is business cases and securing approvals, particularly in the stereo approvals and then you know seeking that investment through to the complexities of ruling it out. So you know, as I say, it won't be overnight and that's you know, but I would hope in the next couple of years you'll.
00:06:01 Speaker 1
See quite a lot of.
00:06:03 Speaker 1
Progress in this area and that's not just the physical tapping tap out in those areas. We're also looking at mobile pay as you go, which is effectively the on the customers doing self check-in, self checkout as well, which again doesn't require that heavy investment of, you know readers at stations and so on.
00:06:22 Speaker 3
So how much of AA balancing act do you have to do with sort of the commercial companies, the the train lines of this world and and the other sort of operators we talk about an awful lot and G BRT talks an awful lot about joined up thinking and joined up sort of ideas within the industry. How hard is that?
00:06:42 Speaker 3
To get everyone on board and and and sort of move forward with this kind of model.
00:06:46 Speaker 1
We're on a journey.
00:06:48 Speaker 1
We're on a journey, definitely, but.
00:06:51 Speaker 1
The having the sort of the the programme, the Fr programme like, say, with the single version, a clear set of objectives, what's made that possible is that that's not been something that's been done behind the scenes just by GBT or by DfT. That's been built very much in collaboration with the rest of the system. So train operators.
00:07:10 Speaker 1
Supply chain retailers, you know, everyone has been part of that process to, you know to to different degrees and and that and that's really important because you know we we need the different parts of the system to play their own part to make this happen.
00:07:29 Speaker 1
But we're also very conscious that the different parts have their own incentives. They've got, you know, there's lots of political force as a player, et cetera. So really our role is to create that whole system single plan that we can all work against and within. So like I say, it's on a journey. We have understood a lot of the complexity, not only in.
00:07:49 Speaker 1
Securing investment but. But you know what is the right solution at the end of the day for customers and and how do we create an environment that's also ready to?
00:07:59 Speaker 1
We expand on in the future like how do we bring in these pay as you go solutions, but in a way in which they can be expanded to have more integrated ticketing with other modes in the future.
00:08:10 Speaker 1
You know, let's not restrict ourselves to real because people just don't travel on rail. So, you know, we've been diligently going through that process, but it's been very much in collaboration with those partners.
00:08:19 Speaker 3
We talk an awful lot about in rail that.
00:08:22 Speaker 3
It's often seen as a value cost. The industry itself has driven an awful lot by the cost of something rather than revenue in itself and generating revenue. How do you see that changing with with GBR's introduction once it actually, you know, comes to fruition?
00:08:39 Speaker 1
Well, the first thing to say is that it's got to change before.
00:08:42 Speaker 1
This introduction, but you production will will definitely accelerate that big picture wise. You know the government has set rail five major strategic priorities. One of those is to make the whole railway system more financially sustainable. Now clearly there's two ways to do that. You've got the.
00:08:59 Speaker 1
Cost you've got.
00:09:00 Speaker 1
And you and I would say yes. Couple of years ago the focus was very, very much so and the cost side of the balance sheet.
00:09:07 Speaker 1
And of course, we've got to find efficiencies. Of course, we've got to be more cost effective and there are plenty of people working right across the country on that very point. What we're starting to see now and what we're actively trying to kind of underpin is that there needs to be a real focus on the revenue generation side of the balance sheet. And you know, ultimately you can't cost.
00:09:27 Speaker 1
Got your way of gross.
00:09:29 Speaker 1
So you know we we feel this is really important and we also feel it's super important because will this changed enormously. It's you know it's it's very much a discretionary product now compared to many years ago. People have a huge amount of choice at what they do behaviours of change. You know we've seen all of that. So you know how do we make sure that we can drive.
00:09:51 Speaker 1
Comma and customer values is as hard as Poss.
00:09:54 Speaker 1
People. So I would say that what what we've seen is over the last particularly the last, I would say 12 to 18 months, we've seen a real focus on the net position. So rather than just cost just revenue on the net position, which is absolutely right, that's what any good business would do.
00:10:11 Speaker 1
And that's despite the fact that, you know, structurally Department for Transport only cost risk and treasury and the revenue risk. So Despite that I think there is a general coming together and focus on the net position and and more growing I would say growing recognition of the important.
00:10:29 Speaker 1
Of revenue growth, you know, we and I are absolutely, totally confident that there is growth to go for out there and that's not an anecdote that is based on data and evidence. And we did a a very large scale piece of research last year and we looked at all trips across Britain.
00:10:49 Speaker 1
And So what? What mode of travel you take in real, you know, car, bus, plane, etcetera. And that helped us to really understand, OK, there's a whole bunch of people that are considering real, ultimately rejecting it. So we were able to put a value on.
00:11:05 Speaker 1
That we were able to understand the blockers, what's putting them off and we're able to then construct a kind of a a three-year.
00:11:14 Speaker 1
Outline framework if this is where we should be focusing on as an industry to drive revenue growth and you know these are not rocket science areas. You know this is about getting the reliability right. It's about simplifying fares and ticketing and so on. But but that's really where where we need to focus on to really unleash that extra growth. I guess in answer to your original question about GBR.
00:11:34 Speaker 1
GPR will come at some point in the future. It's currently uncertain because of political time scales and and legislation etcetera. However, we mustn't we can't wait for that.
00:11:45 Speaker 1
So we are getting on with, well, carefully what can we do and when I say we are doing the Broadway because it's all the industry, the most of the levers sit, revenue levers, sit with the operators and with Network Rail. So you know a large amount of this is you know our operators really kind of exploiting the revenue potential in their local areas.
00:12:07 Speaker 1
Are we, you know, ensuring performance is is as good as it could be, etcetera.
00:12:12 Speaker 1
But, but specifically at BRT, we are accountable for some things. And one of those things is OK, so how can we drive national revenue growth? And I'll give you a couple of.
00:12:23 Speaker 1
Examples. So one is we ran a great British Rail sale last year that's cross country and it you know it generated.
00:12:32 Speaker 1
A great return in terms of additional journeys that wouldn't have otherwise been made. It generated lots of good interest and incremental revenue and we're planning another.
00:12:42 Speaker 1
One very soon.
00:12:43 Speaker 1
And we also have for the last couple of years LED a national marketing strategy. So we've ran a series of, you know, nationwide TV based marketing campaigns to encourage people to.
00:12:59 Speaker 1
Promote the railway.
00:13:00 Speaker 1
And encourage people to choose rail again, that's been really successful at driving incremental revenue.
00:13:06 Speaker 1
There's lots of things that we can do now, both like in terms of like the initiatives that I mentioned or the framework that I mentioned about how do we work with operators and Network Rail and retailers, et cetera, to to focus on the big stuff that really matters.
00:13:19 Speaker 1
And just how do we collaborate? Better, because that's what we've got to do in this in this intervening period between now and GBR, the focus is really about how do we collaborate across the system to do the best for the whole railway, despite the structure that we've currently got. And I think that's really where the focus of our efforts are going to be.
00:13:41 Speaker 3
So I just wanted to touch a little bit more on you mentioned earlier about.
00:13:47 Speaker 3
About the changing face of of the the rail user and I know you did your snapshot a few a few months ago, should they now?
00:13:54 Speaker 1
That's right.
00:13:55 Speaker 3
And it showed that business was was creeping up, but leisure was was certainly the the biggest driver at the moment in terms of of the the typical rail user. Do you see post COVID landscape? Do you see that staying the way it is or do you think that is going to change and we're going to see the natural balance of?
00:14:13 Speaker 3
Order of things coming back to normal.
00:14:15 Speaker 1
We're of course, from my three years.
00:14:18 Speaker 1
Post comfort. We've got a a large amount of data and evidence and insights to give us, I think.
00:14:26 Speaker 1
The the basis for an assertion that we are not going to go back pre covered you know as I said earlier, behaviours have fundamentally changed. Choices have fundamentally changed for people across the country and we've got to recognise that and and shape and change and transform with that. And you're absolutely right.
00:14:45 Speaker 1
You know, we've seen leisure absolutely leading the way in terms of recovery and and growth commuting travel has recovered somewhat and business purpose travel has been the kind of slowest one, but but is on a is on an uphill track.
00:14:59 Speaker 1
Right. But we kind of don't even really now talk about comparisons to pre covered. We're we're really focused on what to do in year in year, what's it doing versus forecast, what do we anticipate the future to be and you know thankfully we're at the minute, year in year, we're still growing, they're growing by about 15% overall revenue.
00:15:19 Speaker 1
Terms and we're seeing, you know, small uplift in in all of those categories.
00:15:26 Speaker 1
You know, I I think you know, as I said, we've seen a fundamental structural change. So we need to as a railway as a whole system need to be thinking about how do we best use our capacity, where do we best have our capacity, how do we make it simpler for those leisure customers who particularly travel very infrequently and importantly.
00:15:45 Speaker 1
When we attract people who aren't choosing there at the minute, you know, I do make real and attractive option that they'd like to try.
00:15:52 Speaker 3
And I guess when we talk about attracting new people or attracting people back to using rail, and do you think it's a vote of confidence that people are choosing that it's leisure users that are really driving it because the typical business user, the commuter going into work in the morning has to use the train because that's the best way of them getting to?
00:16:12 Speaker 3
Work as such.
00:16:13 Speaker 3
But do you think it's a vote of confidence that leisure is now sort of seen as as the the biggest driver of growth for?
00:16:19 Speaker 1
Revenue it I I think it is, I think it is a, it's a vote of confidence because it reinforces the fact.
00:16:26 Speaker 1
That when people try.
00:16:27 Speaker 1
Yeah, they like it, you know, I know we have. We absolutely got our problems and our pockets of performance issues and all of that. But on the whole, you know people get it when they try it. You know they can use that travel time for whatever they want, whether it's sat on their family, whether it's working, whether it's, you know, staring out the window and relaxing whatever it is. So they like it and they'll come back.
00:16:47 Speaker 1
That that is a vote of confidence and we've actually seen as well within the leisure segment the international traffic. So traffic from abroad has also been a hugely growing area. So as people are returning to to you know, to to tourism and travel, we're benefiting from that as well. And the sort of.
00:17:05 Speaker 1
Commuting side I I would maybe challenge the assertion that people have no choice because I guess what they do have is the choice of when to travel. They have the choice of what days they travel now, not not for everyone, but for certain parts of of the market, they've certainly got choice about whether they stay at home and work, whether they come into the office.
00:17:25 Speaker 1
Or or their workplace. So again, that's why we've been trialling, you know, stuff like the flexi season ticket which was introduced a couple of years ago to help people.
00:17:34 Speaker 1
Who are doing that very much coming in two or three times a week, and that's worked well on quite a few routes. And and we're starting to try in the SE we have been for for a number of months now, you know a slightly different version of that to see if we can further encourage or enhance that commuting base back to rail. So I think there's.
00:17:55 Speaker 1
There's opportunities. There are opportunities there.
00:17:58 Speaker 3
What's the different version in Southeastern?
00:18:00 Speaker 1
It's a slightly different pricing mechanism for the for the flexi yeah ticket in that area.
00:18:07 Speaker 3
OK, so just I'm actually on pricing a little bit. The biggest story that you always see in in rail is obviously the the prices of tickets going up and up in terms of percentage. And I know that that is quite often.
00:18:20 Speaker 3
Driven back to just typical installation and typical cost of running the train, can you see a point in the future though? When GB RTT becomes full GPR that.
00:18:33 Speaker 3
Ticketing and pricing structure is at a level and it's fair and it's equitable for everybody and and operators aren't necessarily having to raise those prices. Do you see that as a role for GB RT to to be able to control pricing? Or do you think it's something which is out of control when it's privatisation? It's.
00:18:52 Speaker 1
I guess the starting point again, go back to my point about we need to be more financially sustainable. We're we're not at the moment. We need to be more financially sustainable because we're currently hitting the taxpayer.
00:19:02 Speaker 1
And we should.
00:19:03 Speaker 1
With that in mind, you know what we need ideally to find is a method of pricing the real way in a way that's fair and equitable to customers absolutely and gives good value for money. It is also fair and equal for the taxpayer because that that's also the other source of funding for the railway. So how do we make sure that?
00:19:26 Speaker 1
We find the right balance so that we've got positive outcomes.
00:19:29 Speaker 1
Both and you know there's different models to deliver that in terms of who controls or manages all of pricing. And I'm sure you know over the next couple of years, we'll see that lay out in terms of what the final GBR position is.
00:19:43 Speaker 1
But I think the important thing is that, you know, we recognise again going back to my point, you know it's a discretionary marketplace. It's not in our interest overcharge or supercharge.
00:19:54 Speaker 1
Which, because we just simply won't get the trade and we certainly won't get new customers. So how do we find the right balance? And clearly when trains.
00:20:02 Speaker 1
Are busy and.
00:20:02 Speaker 1
You've got areas of high demand you would expect higher prices, but on the whole, how do we make sure that the pricing is fair and in fact one of the areas the FTR team are are working on is drawing.
00:20:14 Speaker 1
Together, lots of different data sets already exist, so you know prices, availability levels, loadings and trains, and competitor pricing on airlines etcetera and and kind of putting that all in the mix to really be able to.
00:20:30 Speaker 1
Say, well, are we have we got enough low fares out there? Are we selling far enough in advance? Have we got a good product? Is it competitive with the car? Is it competitive with flights and relative routes, etc. So it's a huge area of focus, huge.
00:20:46 Speaker 3
And I guess obviously data and analytics plays a huge part now in anyone's business and certainly with GBR T, can you just tell us a little bit more about how you do your your modelling in terms of look?
00:20:58 Speaker 3
Yeah, you know the future of rail and how far away you look ahead in terms of users and commuters and and passengers on on, on the rail, how far do you look ahead when you're looking at?
00:21:08 Speaker 3
Data and analytics.
00:21:09 Speaker 1
One of the rules is is to provide a whole system here on how the railway is doing. So. To do that, we've built a series of revenue models.
00:21:18 Speaker 1
And that typically we're looking ahead about five years in advance, yes, in terms of forecasting where we believe revenue will land and to underpin that, we base that on levels of revenue analysis today.
00:21:24 Speaker 3
That long? Wow.
00:21:35 Speaker 1
So you know the industry for a very long time is obviously, you know, measured revenue and journeys and a ticket type. And I'm for an operator and so on and what you would expect. But we've kind of moved that on to to kind of dig below and say, right, OK, well why are people travelling this ticket type isn't an indication.
00:21:54 Speaker 1
People travelling or or it doesn't give you much insight anymore. So so that's why we've we use live customer data on a rolling basis from wavelength customer survey.
00:22:04 Speaker 1
These, you know, our customers say themselves. I am travelling on leisure or I am travelling on business. We map that back against the revenue data so that we can get really good sense of how light you're doing, how business travel, how commuting travels, doing and then we can start to kind of look at that and extrapolate it and assess where we believe it will land.
00:22:24 Speaker 1
There is also as part of the BRT team, a team of people who look much further in advance and much more in that strategic long term planning space, which would extend into ten 20-30 years.
00:22:35 Speaker 1
Actually. And obviously the further out becomes much more uncertain. But but but you know that's an that's an important part of you know the new GBR model, you know having a strategic long term plan but one that we can still operate within you know today but it's very clear for supply chain it's very clear.
00:22:56 Speaker 1
For the players in the industry, but back to your point, we've put a lot of effort into revenue analytic.
00:23:02 Speaker 1
And we share that information. We've got a range of from very simple to very detailed quite visual and we share that with about over 1000 people every week. And that ranges from Treasury Department for Transport colleagues, top colleagues, Network Rail colleagues, the list goes on. So I feel what we've one of our roles.
00:23:22 Speaker 1
This helped to shine a light on what's happening across the system.
00:23:26 Speaker 1
Because of course, every individual operator knows exactly what's going on in their patch, but you need the bigger picture. You need that strategic picture, and that's one of the areas that we were focusing on and that's on the revenue side. And then more recently, what we've done is built on that said, OK, well, we, we need to look at the whole right. We need to look at track and train and revenue and cost and bring all of that.
00:23:47 Speaker 1
Together and the finance team have built this incredible model that does exactly that. And you know, that's something that that really hasn't had in over a generation.
00:23:55 Speaker 3
It's. I assume you're talking about industry financial models. Yeah, I did note.
00:23:58 Speaker 1
Model. That's right.
00:24:00 Speaker 3
Rufus was talking about that a couple of weeks ago on one of his blogs on the website, and I was quite intrigued by that. I was quite actually quite astonished that that it's 5/10/15 years ahead. I was kind of assuming you were gonna. It's around about six months to a year, so I guess.
00:24:17 Speaker 3
It's shining a light on that that must be useful for the operators. Then that is something which they've never had before, and it is. Is that something which is used for GB RTT or is that something which has happened before outside of it before you you guys?
00:24:32 Speaker 1
Together that, no, that was something that we built within GRT. You know it's complementing the stuff that's already exists in the industry, but it's really kind of adding something that just simply wasn't there before. You know, there were like, say there just wasn't that really good.
00:24:49 Speaker 1
Deep understanding of what's going on at all national.
00:24:52 Speaker 1
Basis and ultimately that's what the key decision makers need.
00:24:56 Speaker 1
Yeah. So that's what we're helping hopefully to provide. So like I said, between the revenue reporting and our revenue forecast model and the new industry financial model, we've got a portfolio.
00:25:08 Speaker 1
It's a whole system tools.
00:25:10 Speaker 3
Yeah. And lastly, I just wanted to touch touch a little bit more on marketing. Commercial strategies will GRT or or at the moment it's we we discussed earlier about the Great British Rail sale and and and and other initiatives that you've been pulling together and will you be doing that?
00:25:31 Speaker 3
Or are you going to be leaving that back up to the operators once you're established?
00:25:36 Speaker 3
Such. I mean, what, what, how?
00:25:39 Speaker 3
Are you going to promote rail in the future essentially?
00:25:41 Speaker 1
In the future, well, we our plan is to very much continue to promote real nationally and again that's is complementary to the talk marketing and advertising. So that you know both both are anticipated to continue. So so very much. So the tactical things like the seat sale will continue.
00:26:01 Speaker 1
And we are also working very closely with the Rail Delivery group, RDG, in terms of initiatives to help support, for example, the business market, which we talked about earlier, is isn't quite coming back as fast as as as other areas and. And so for example, they they've been leading on this initiative called Green Travel Pledge.
00:26:22 Speaker 1
Which is all about using data and information to supply accurate.
00:26:26 Speaker 1
Carbon credentials to the business travel market when they're looking and and you know that that's that's going to be a really important piece going forward I think so you know building on that and working with the industry partners. So we work very closely with train operators and our DG.
00:26:46 Speaker 1
I have.
00:26:47 Speaker 1
So it'll be a combination of activity between us all.
00:26:51 Speaker 3
Suzanne, thank you very much for your time. It's.
00:26:54 Speaker 3
Been it's been a.
00:26:54 Speaker 3
Pleasure. Thank you.
00:26:55 Speaker 2
Very much. You've been listening to the latest podcast from Rail Technology magazine. Don't forget to like and subscribe to make sure you receive everything new edition.