A high profile class-action lawsuit, the Boundary Fares claim, has been dismissed by the court. The class representative alleged that Southeastern, Govia Thameslink Railway (GTR, trading as Southern, Thameslink, Gatwick Express and Great Northern) and SWR had an abuse of dominance position by failing to make Boundary Fares sufficiently available and/or to take reasonable steps to make customers purchasing tickets aware of Boundary Fares. The case was decided against the claimant’s favour, but it highlighted a few key points for the complexity of ticket retailing process. The full judgement can be viewed here.

Train tickets are available through three main channels: ticket offices, ticket machines, and online (including train companies themselves and third party retailers). During the claim period, ticket offices had the largest share by revenue of all ticket sales, but after the pandemic, the share for online sales had grown fast and superceded the revenue from ticket offices.

Boundary Fares are always available from ticket offices (although the availability of ticket offices is a problem – this is not discussed in the case) but are not always available from ticket machines or online. The case discussed the unavailability of Boundary Zone tickets from these two channels.

Ticket machines

At the end of the claim period, Boundary Fares could already be sold at ticket machines at SWR and GTR stations. However, they could not be bought from Southeastern machines. The reason was that Southeastern made a deliberate decision not to allow anywhere-to-anywhere ticket sales from their machines due to fraud concerns – they had a large number of driver-only-operated trains and ungated stations, and these tickets could be used for short ticketing (ticket not covering the whole journey).

123. The situation regarding LSER is rather different. It has a higher number of ungated stations than the other two Defendants and operated a higher number of driver-only trains. LSER took a deliberate decision not to sell any form of ‘anywhere-to-anywhere’ tickets from its TVMs because of the risk of fraud, so its TVMs could not sell tickets originating at a station other than where the TVM was located. Mr Backway explained the two kinds of fraud that were practised, known as “short-ticketing” and “dumbbell fraud”. “Short-ticketing” involves buying a ticket which covers only a part of the journey, boarding or exiting at a station which is not gated and so avoiding the need to show a ticket at that
station. In “dumbbell fraud” the passenger buys two tickets which cover only the start and end of their journey, and then uses the first to pass through the barriers at the start and the second to exit through the barriers at the end. LSER considered that the revenue risk from fraud outweighed the benefit to its
customers of being able to buy anywhere-to-anywhere tickets from its TVMs. Indeed, when it made an exception to that approach in the claim period and allowed customers to purchase via a TVM an Oystercard which originated in another zone (e.g. to purchase a Zone 1-2 Travelcard in a Zone 6 station), it found that the resulting revenue loss was some £2-4 million per year and so in July 2020 it discontinued the sale of Oyster Travelcards with remote origins from its TVMs.

The key takeaway here is that, some train companies deliberately underinvest in their revenue protection scheme (by having a large number of ungated stations) and choose to to mitigate the revenue loss by make it hard for passengers to buy their tickets (which are mainly used by fraudsters but also have legitimate use for a niche group of customers) instead. Such effect can clearly be seen at Abbey Wood, which was historically managed by Southeastern but transferred to TfL as part of the Elizabeth line. TfL invested in the station by installing gatelines and first-to-last staffing, and the revenue number boosted immediately even before the Crossrail Central Operating Section opened.

After the franchise was stripped due to fraud by the operator (how ironic), Southeastern has now enabled the ability to buy anywhere-to-anywhere tickets, including Boundary Fares.

Online

The situation online is rather different. None of the three operators can sell Boundary Fares online, but some other operators (e.g. Avanti and c2c) can. The reason is that, Boundary Fares are a niche product and there isn’t a requirement to sell them online, and these operators don’t think that it is worth the effort to make them available.

130. Like any business, the Defendants necessarily had to prioritise their capital expenditure, including on software development. As Mr Ludlow of SWR explained in his evidence:
“I am not suggesting that it is not a good idea to introduce boundary zone fares on the web and app. … But my point is that that was an area that was not – it was not a matter that presented itself as having urgency to address. We were not receiving large volumes of feedback or complaints about that lack of functionality. We were, however, receiving quite a lot of feedback about other things, and therefore we prioritised our team’s efforts and available budget and supplier bandwidth on those things.”
And Mr Phayer of GTR said that the non-availability of Boundary Fares online was never raised as an issue of concern, either by customers or the DfT. Mr Walt said that SWR’s priorities as regards changes to its online booking functionality were, first, fixing pervasive bugs which developed within the existing functionality and then any functionality development which was required pursuant to the commitments to DfT. Mr Phayer said that the focus of GTR was on improving customers’ “overall end-to-end experience”, e.g. by making technical improvements to the ticket purchasing process and making
flexible season tickets available online.

Therefore, the availability of Boundary Fares online is a commercial decision because they are allowed, but not required, to sell them. In particular, the dominant third-party retailer, Trainline, which sells the vast majority among all tickets sold online, does not sell it.

Nonetheless, SWR’s website now shows a button at the home page which will redirect customers to Avanti in order to buy Boundary Fares.

Conclusion

Although the claim was dismissed (as the train companies did generally make Boundary Fares sufficiently available through their ticket offices and ticket machines), it has showed that the ticketing in the National Rail network is so complicated that no sales channels can be relied on for finding the best value fares involving the use of a niche product. This deters people travelling by train when they can’t find a good value fare for their journeys which require the use of niche products such as triangular journeys from London (a main use case of Boundary Fares).