Rethinking the future of rail

As a passionate supporter of public transport, it feels like heresy to say this – but could the fall in peak ridership be the best thing that has happened to the railways in generations?

The COVID-19 pandemic has caused a fundamental, long-term shift in how we work, with large numbers of employees working from home, at least part time. This has resulted in fewer people commuting in countries across the world. Here, I’m going to explore what this change means for the railways and those who fund and run them.

Our starting point is that many people expected rail passenger numbers to bounce back quickly as the pandemic-related restrictions eased. However, the recovery has been both weaker and slower than anticipated – and we believe this could be a permanent change. Examples from around the world illustrate this shift, particularly on mature transit systems.

In the UK, there were 448 million passenger journeys between July and September 2019. Over the same period in 2020 (mid-pandemic), this number plummeted to 133 million. By the period from July to September 2021, when workplaces were fully open, it was back up to 248 million, which is just 55% of pre-pandemic numbers. In the latest quarter (October–December 2021), passenger numbers had only reached 285 million, or 61.8% of pre-pandemic levels.

Could the fall in peak ridership be the best thing that has happened to the railways in generations?

In November 2021, Canada’s Toronto Transit Commission (TTC) said that it expected to start 2022 with 54% of its pre-pandemic ridership (given that there were still significant restrictions in place). Even by the end of this year, it anticipates that the figure will only be 81% of pre-pandemic travel. The TTC has also expressed uncertainty over the timeline for full recovery.

However, lower overall numbers are only half the story. The other half is when people are travelling. In the UK, between July and September 2019 and July and September 2021, season ticket journeys (a good proxy for peak-time journeys) fell by more than 50%.

If even 25% of previously full-time commuters continue to work just two days a week at home, that will represent a permanent fall of 10% in commuter journeys. The fall in peak demand could be even more pronounced if some staff take advantage of flexible working in order to travel outside peak hours. This is a key point, because commuter rail is designed around rush hour peaks.

I believe this will have a number of implications for governments and rail operators.

The first concerns capital expenditure (capex). If we look at British Railways, investment has historically been targeted at coping with the 7:30 a.m.–8:30 a.m. morning peak. Pre-pandemic, UK government figures show many commuter trains were at over 200% of capacity.

Over 1.1 million journeys were made into central London on a typical autumn day in 2019. Of these, 55% were made in the morning peak. Conversely, the level of redundancy in the network outside these hours was often very high.

With less pressure from rush hour demand, rail operators and governments can now rethink where they allocate capex.

Elsewhere in the world, this pattern is much the same. In 2012, Singapore introduced a rewards plan called Travel Smart, which encourages travel outside peak hours to manage commuter demand and, in 2018, Tokyo launched its Jisa Biz office time-shifting programme, which was partly aimed at reducing the city’s legendary rush-hour crowding on trains.

Even with projects aimed at connecting cities, such as the UK’s High Speed 2, economic and societal benefits have come from freeing up commuter lines in order to improve peak flow as much as allowing intercity passengers to travel faster. HS2’s website explains, for example, that the line “could provide London Euston with 11,300 peak-hour commuter seats from the opening of Phase One, compared with 6,400 seats in 2017 – a 76% increase.”

With less pressure from rush hour demand, rail operators and governments can now rethink where they allocate capex. In the UK, they are already focusing on investing to help deliver the Government’s Levelling Up agenda to benefit the regions – in particular, the North and the Midlands – rather than London commuters. Increasing investment in improving regional rail will help stimulate economic growth in those areas, as well as reducing reliance on cars, thus reducing road congestion, improving air quality and reducing carbon emissions.

Rethinking operating expenditure (opex) is the second opportunity. With reduced peak commuter volumes, commuter trains could run slightly further apart. In busy rail corridors, such as those in Sydney, New York and London, train paths are so close together that there is little resilience in the system, meaning delays cascade and take many hours to rectify. Creating more space between trains would alleviate these knock-on impacts – counterintuitively, slightly fewer trains could mean a more reliable, robust service.

In the past decisions were driven by a single very overcrowded hour.

Further, releasing capacity on railways could bring an opportunity to shift freight off the roads, reducing both congestion and CO2 emissions.

Third, fares are ripe for a shake-up – and this is already happening. Traditional season tickets no longer make sense for employees who work two or more days a week from home, so rail operators are introducing flexible season tickets, based on travelling a number of days per month.

Finally, while commuter travel has fallen, leisure travel has been notably resilient, with growing numbers of travellers shunning cars and planes for environmental reasons. This is a trend that could be encouraged with more investment in regional networks, better integration with onward transport modes and more favourable ticketing options. Thus, there may be the opportunity to completely rethink a ticketing model which is based largely on 20th century working patterns.

It is natural for policymakers and the rail industry to see lower commuter numbers and worry – after all, revenues will fall as a result. In addition, when car journeys replace the ‘missing’ rail journeys, this will have congestion and pollution impacts that we must avoid.?But looking at the situation more optimistically, in the past many decisions were driven by a single very overcrowded hour. This is now less of an issue and, as a result, there are significant opportunities to run a more reliable peak rail service, reallocate investment, rethink ticketing and focus on neglected regions. Is it a chance to rethink the railways for benefit of everyone?

The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.