Article links on the meeting between Geoff Hoon and the transport company CEO's.
http://www.guardian.co.uk/uk/2009/jan/21/rail-firms-call-for-state-aidhttp://www.independent.co.uk/news/uk/home-news/rail-passengers-face-cut-in-services-as-recession-bites-1452284.htmlhttp://www.telegraph.co.uk/travel/travelnews/4291216/Rail-cuts-threat-because-of-recession.htmlhttp://www.bloomberg.com/apps/news?pid=20601102&sid=acBZMJhfjkvs&refer=ukhttp://www.eadt.co.uk/content/eadt/news/story.aspx?brand=EADOnline&category=News&tBrand=EADOnline&tCategory=news&itemid=IPED20%20Jan%202009%2010%3A36%3A59%3A650http://www.christianwolmar.co.uk/2009/01/its-a-tough-ask-for-the-rail-companies-to-sell-more-tickets-while-hiking-fares/According to a briefing document seen by the Guardian, the industry expects passenger volumes to fall over the next two years, bringing years of growth to a sudden halt. An industry source said some franchises had seen falls in season ticket renewals of up to 10% in January.
"The more pessimistic forecasts will result in significant impacts on all train companies," reads the briefing document.
"At the most pessimistic end of the range, the severity of the downturn would be completely unprecedented and have potentially devastating effects on the finances of some train companies. Given that forecasts seem to be continually worsening, this must be a material risk."
According to the document, the rail executives want the Department for Transport (DfT» ) to fund 1,000 extra "customer-facing" staff for the railways, in the same month that the industry has announced plans to shed 1,500 people.
The most critical section of the document lays out "contingency plans" for a "very challenging environment", which include: shortening off-peak trains by removing carriages; easing borrowing rules so train operators can offset poor ticket sales; demanding that the government shoulders a larger share of losses on contracts; and requiring that Network Rail cuts some of the costly expansion programmes.
Several companies have already shed jobs and instituted wide-ranging internal restructuring to cut costs, but a slump in passenger numbers has led to a real fear of cuts to services.
One industry insider said: "There is historic evidence to suggest a retraction in demand in certain areas is on the cards this year. If that happens, companies will have to go back to the Government to discuss a change to their franchise agreements."
A DfT spokesman said: "This was one of a regular series of pre-planned meetings the Secretary of State holds with train operating companies. A range of issues was discussed, including the fact that passengers and operating companies are facing uncertain economic times. The companies said passenger numbers were still growing but they would monitor the situation closely. The train operating companies did not propose any cuts in services."
The Association of Train Operating Companies conceded that some operators may consider reducing train sizes, but said that the industry was fundamentally in good shape.
"If a major retailer announced growth of just under 5 per cent at a time like this, I think they would be pretty pleased," said a spokesman. "There is still growth in the industry."
"If passenger numbers fall far below what we are expecting, we will have to do something about it," said Keith Ludeman, chief executive of the Go Ahead Group, which runs about 30 per cent of the country's trains.
Options would include shorter trains and reviewing its timetable. "In extremis we would have to have a discussion with the Department for Transport about what is provided in our contract".
Mr Ludeman said passenger forecasts had been encouraging with the company expecting continued growth.
"However every business is now looking at the same forecast and every business is focused on cost reduction."
According to one well-placed industry source, the most recent franchise agreements negotiated by the Department for Transport did not even factor in the prospect of a downturn.
"The DfT was inviting bids which did not even entertain the idea of a recession, this was dreamland," he said.
"Already there are straws in the wind. Jobs are being lost, fares are being forced up and the announcement on the next generation of inter city train has been delayed."
