Many rail passengers, namely season ticket holders, have been left several hundred pounds worse off under the Delay Repay passenger compensation regime, according to our recent research. Some train operators might also be financially better off under Delay Repay than under the old Passenger’s Charter regime. 

This Insight explains the difference between Delay Repay
and its predecessor, the Passenger’s Charter scheme, and looks at how much compensation
passengers get depending on the type of ticket they own.

What is the Delay Repay compensation scheme?

The Delay Repay compensation scheme was introduced in 2007.
Under this scheme, a passenger is entitled to 50% of the cost of a single fare
if a train is delayed by more than 30 minutes, irrespective of the cause of the
delay.

This is more generous for single and return passengers than
what was offered under the Passenger’s Charter scheme. The Passenger’s Charter only
offered compensation for delays of more than 60 minutes, and at a less generous
rate. Passengers may not have been offered compensation if the reason for the
delay was outside the industry’s control.

‘Delay Repay 15’, the latest scheme introduced, now means eligible
passengers can claim 25% of the cost of a single fare for delays between 15 and
29 minutes.

Almost all train operators now use a version of Delay Repay, after Great Western and Arriva Train Wales transferred across from the Charter earlier this year. Chiltern Railways is the only operator not to.

What does it mean for season ticket holders?

Under the Passenger’s Charter scheme, if punctuality and/or cancellation performance targets were not met then season ticket holders were compensated with an annual discount when they renewed their ticket. This was typically a 5% or 10% discount on the season ticket. This is no longer the case under Delay Repay, as they are refunded on the same basis as single and return fare passengers.

Many season ticket holders have been left worse off as a result, in some cases by up to several hundreds of pounds.

For example, under the Charter scheme a £3000 season
ticket holder would be entitled to £300 compensation if the train company
failed to meet both the punctuality and cancellation targets.

To be eligible for an equivalent amount of compensation under the standard Delay Repay scheme, a train would have to be late by more than 30 minutes 93 times during the year. Or on Delay Repay 15, a passenger’s train would need to be between 15 and 30 minutes late 186 times during the year. This is very unlikely to happen. In fact, using ORR data, on average only 0.3% of trains on the national network are delayed by more than 30 minutes in a given year and 1% by between 15 and 30 minutes. In this situation, a £3000 season ticket holder would be entitled to £4.50 or £12 in compensation for the year, under the ordinary and enhanced Delay Repay schemes respectively.

The results, of course, vary between train operators. However, using ORR data shows that either or both punctuality and cancellation targets would have been missed on several franchises, if they were applied based on thresholds of 90% and 2% respectively. This has been calculated using the average of the remaining two Charter scheme targets that are in place on the Chiltern and Great Western Railway franchises.

In fact, an
average season ticket holder would likely be entitled to more generous compensation
on at least 13 franchised operators on the network if they were renewing their
ticket at the end of the last rail year.

Govia Thameslink Railway (GTR) season ticket holders have been
particularly affected under the new regime. Since the franchise started in
September 2014, GTR has missed both the punctuality and cancellation targets
every year that existed under the old Passenger’s Charter.

In effect, GTR season ticket holders have been left several hundred pounds worse off since the start of the franchise.

What does this mean for train operator revenues?

There is evidence to suggest that the shift from the
Passenger’s Charter to Delay Repay has had a positive impact on some train
operator revenues. This is because one year of poor performance and the
subsequent pay outs to season ticket holders under the Charter scheme is enough
to eclipse several years’ worth of pay outs under Delay Repay.

This is best illustrated by comparing the compensation paid out by South West Trains (under the Passenger’s Charter until August 2017) compared to Southeastern (under Delay Repay since July 2011) in the years leading up to 2017/18. The figure below compares the total amount of compensation paid out up to 2017/18 for South West Trains and Southeastern, based on the latest compensation data (PDF 40 KB) published by the Department for Transport.

Cumulative compensation paid out by Southeastern (Delay Repay) and South West Trains (Passenger’s Charter).

Only three years’ data has been published for South West
Trains, but it shows that in those three years the compensation paid out (£26.8
million) is more than double that of Southeastern in the preceding seven years
(£13.1 million).

Given the two franchises had relatively similar
punctuality over that period, this cannot be solely down to a disparity in
performance and is likely explained by the more generous pay outs to season
ticket holders.

It is not clear what this means for the wider franchising system, but it does raise important questions: Have operators collectively profited from under this new compensation regime? And have season ticket holders cross-subsidised the enhanced compensation for single and return passengers?

Further reading

About the author: Andrew Haylen is a Senior Library Clerk at the House of Commons Library, specialising in business and transport.

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