Train operators continue profit recovery
Britain’s privatised train operators achieved a further boost in their profit levels in 2003/04, according to a new report, Rail Industry Monitor 2005, published by leading transport consultancy TAS.
Operating profits rose almost 20% to reach £301.8m – a margin of 4.7% on turnover, says the report. Total turnover at the companies reached £6.4 billion – of which some £1.7bn was in the form of direct subsidy from the taxpayer. Revenue from passengers was 3.6% up at £3.9bn. The balance is accounted for by other income such as catering, advertising and inter-TOC trading.
Operating costs reached £6,066m – an increase of 7.4%, more than twice the rate of inflation. This was accounted for by the cost of new trains, particularly on the London commuter routes, as well as increased labour costs and other factors (including insurance, electricity and diesel). The cost of each employee in the TOCs rose by over 7% during the year – thanks to increased National Insurance and pension costs, as well as wage increases. Unit labour costs on the passenger railway have risen by 22.7% in real terms since inflation to reach £29,773. The number of staff employed has risen, too: totals are 5.4% up at 46,389 compared with 1996/97.
Despite these increases, TAS estimates that unit costs on the railways are still lower than at privatisation – costs per train kilometre are 14.2% lower in real terms than in 1996/97, whilst costs per passenger kilometre are 14.6% down. Passenger revenue earned per employee has risen by 23.9% in real terms.
As usual, performance varied between the different sectors of the rail market, and between companies. Four train operators made a loss in 2003/04, three of them owned by Britain’s largest train operator, National Express Group – Gatwick Express, ScotRail and Central Trains. The fourth was Connex South Central, which saw its franchise terminated by the SRA in November 2003.
The most profitable train operator during the year was Arriva Trains Merseyside, which earned a margin of 12.3% during its last seven months as operators of the Merseyrail Electrics network. Of the companies still in business, InterCity operator GNER was the most profitable, earning an operating margin of 10.5%.
On the rail freight side, the news is less good – rail freight operators saw profits fall by over 19% in 2003/04, whilst volumes have refused to take off – remaining below levels seen in the late 1990s.
ENDS
- For further information, contact Chris Cheek on 0870 900 1440.
- The full Executive Summary of the report can be viewed by clicking HERE.
- Click HERE to see the second release on RIM 2005, "Authorities warned over trap in Government plans to devolve rail funding."
NOTES TO EDITORS
- TAS Publications & Events is the publishing arm of The TAS Partnership. Founded in 1989, TAS has since grown to become the UK’s leading specialist public transport consultancy. Its recent clients include the Department for Transport, the Scottish Executive, and local authorities and transport operators throughout the country.
- Rail Industry Monitor 2005 is the eighth edition of the report first published in 1993. The full report is available, priced GBP235, from www.tas.uk.net or on our credit card hotline, 0870 900 1440. Individual volumes covering specific topic areas are also available – priced from GBP45.