Where does money from my fare go?
Money from rail fares helps to run and improve the network, making the trains better for everyone. The overall level of fares is heavily influenced by governments, which have to decide how much they want passengers to pay towards the railway and how much they want taxpayers to pay.
Between 2004-2013 governments of all colours decided to increase fares above inflation so that passengers pay a bigger share now than they used to, and taxpayers a smaller share. Now, fares rise in line with RPI inflation - the measure trades unions use as the basis for pay negotiations.
While different rail companies have different costs, below is a depiction of how money from your fare is invested back into the railway.
How are ticket prices set?
Season tickets, off-peak returns and many single fares around major cities – roughly 45% of fares - are regulated by governments. Generally, the contracts governments let to train operators are predicated on these fares increasing by the RPI measure of inflation each year.
Other fares are set by train operators at a level that ensures they can meet financial commitments to governments that are written into franchise contracts.
Why do fare prices change every year?
Fares change each year to reflect the increasing cost of running the railway. Just like any other business, inflation means running costs increase. For example, staff get pay rises and the cost of buying electricity to run trains increases. If fares did not change, these additional costs would eat into money available to make the trains better.
Why are fares based on RPI, not CPI?
Ultimately, this is a decision for the governments which regulate the fares. But, with unions using RPI as the basis for their pay negotiations, increasing fares by the lower CPI instead would create a financial black hole that would get bigger every year and mean less money for things like new trains, better stations and more frequent services.