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The UK government has announced that it is introducing emergency measures to support and sustain necessary rail services as train operators face significant drops in their income. The action comes in order to provide stability and certainty on key services and to rail staff during the coronavirus (COVID-19) outbreak.
The Department for Transport (DfT) will temporarily suspend normal franchise agreements and transfer all revenue and cost risk to the government for an initial period of six months. All train operators will be presented with the opportunity to temporarily transition onto Emergency Measures Agreements, enabling greater flexibility and transferring revenue and cost risk to the government, and will continue to run services day-to-day for a small predetermined management fee.
The emergency measures will allow for trains that are necessary to transport key workers and enable essential travel to continue to operate. It has been recommended that no other passengers should travel, and services will be reduced from 23 March 2020.
In addition, passengers in possession of an Advance ticket will be able to apply for a refund, free of charge. All season ticket holders are also able to claim a refund for time unused on their tickets, which will be free of administrative charges.
Grant Shapps, the UK’s Transport Secretary, said: “We are taking this action to protect the key workers who depend on our railways to carry on their vital roles, the hardworking commuters who have radically altered their lives to combat the spread of coronavirus, and the frontline rail staff who are keeping the country moving. People deserve certainty that the services they need will run or that their job is not at risk in these unprecedented times. We are also helping passengers get refunds on Advance tickets to ensure no-one is unfairly out of pocket for doing the right thing. These offers will give operators the confidence and certainty so they can play their part in the national interest.”
Since the COVID-19 crisis has begun to severely impact the UK, railways have seen up to a 70 per cent drop in passenger numbers. Rail fares revenue has also reduced, as people have increasingly begun to work from home and adopt social distancing practices, with total ticket sales down by two-thirds from the equivalent date in 2019.
As a result, the government has implemented the new measures to minimise the subsequent disruption to the rail sector, which is vital to the wider UK economy, through these difficult times. Allowing operators to enter insolvency would cause significantly more disruption to passengers and higher costs to the taxpayer. The management fee will allow operators to act in the national interest in tackling COVID-19.
Fees are to be set at a maximum of two per cent of the cost base of the franchise before the COVID-19 pandemic began, intended to incentivise operators to meet reliability, punctuality and other targets. The maximum fee attainable will be far less than recent profits earned by train operators. In the event that an operator does not wish to accept an Emergency Measures Agreement, the government’s Operator of Last Resort is ready to step in.
Chief Executive of the Rail Delivery Group (RDG), Paul Plummer, said: “The rail industry is working together so that people and goods can keep making essential journeys during this unprecedented national challenge, getting key workers to hospitals, food to shops and fuel to power stations. The industry strongly welcomes the DfT’s offer of temporary support and while we need to finalise the details, this will ensure that train companies can focus all their efforts on delivering a vital service at a time of national need. We would like to thank our people, who continue to do an incredible job in difficult circumstances.”
This article first appeared on www.globalrailwayreview.com
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