Letter: No real concessions

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The Independent Online
Sir: Your report 'Minister ready for BR discounts climbdown' and leading article 'A concession to speed BR's sale' (both on 25 May) on rail privatisation refer to a 'climbdown over concessionary fares'. Unfortunately, railcards for pensions and others do not really constitute concessions at all and so, it could be argued, nor does the Government's 'climbdown'.

Concessionary fares are generally understood to be fares discounted below the level that could be justified commercially, leading to a loss of revenue to operators, which is normally reimbursed by local authorities. An example is the half fare on British Rail in Greater London available to any holder of a London Borough Travel Permit issued free of charge to a million pensioners and disabled people - an arrangement for which London boroughs are paying BR about pounds 1.2m this year.

Pensioners' Railcards, on the other hand, are a classic form of price discrimination: British Rail charges a group of particularly price-sensitive people (on average) a two-part tariff - an initial fee which entitles them to a lower fare per journey to encourage them to make more journeys. Some heavy users of BR do, of course, benefit greatly, but BR expects to get more revenue from this arrangement, not less.

If it makes commercial sense for BR, something very similar will make commercial sense for franchisees. The only problem would be resolving arguments about the allocation of the revenue from the sales of the railcards between franchisees. This may require some arm-twisting by government, but no loss to the public purse as your leader suggests.

This is not to say that all is rosy in rail privatisation; just that opponents who settle for this concession would have achieved little of substance.

Yours sincerely,

JON LANSMAN

Brickendon,

Hertford

25 May

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