We expect ScotRail to deliver increased sales of intermodal tickets to pre-pandemic levels in 2024.

We will monitor and evaluate the ScotRail Peak Fares Removal Pilot which has been extended until June 2024, to inform medium to longer term rail fares reform.

We expect ScotRail and CalMac to develop a partnership agreement that will deliver a number of benefits for passengers including joint timetable development, and explore a future digital solution for 'Rail & Sail' tickets and improved collaborative working especially during disruption.

Rail fare structures are inevitably complex, reflecting the scale and complexity of the passenger network and the different nature of travel patterns and tickets appropriate for those. The ability to change this is further hampered because the structure of rail fares is reserved to the UK Government under current railway legislation. We will continue to press for full devolution of responsibility for rail, including fares, to facilitate changes focused on the requirements of Scottish passengers. Transport Scotland, working with partners, will develop proposals for a new fare offering aimed to encourage continued increase in rail market share, reflecting changing travel patterns and the needs of different markets for rail including commuting, business, leisure and tourism. This will inform considerations for a wider roll out of integrated ticketing, national/regional fare structures across all modes in Scotland.

For much of the population, the bus network provides better general connectivity than rail, especially for shorter journeys. The NCTS scheme and reimbursement rate for operators is based on the current deregulated bus system (with a large number of private operators). Extending the scheme to other modes (at scale) would distort the existing system (reducing the impact in terms of overall efficiency and impacting potentially negatively on existing measures).

Where rail is a clear alternative to bus, extension of the NCTS to rail will impact negatively on the bus network with negative consequences for those who rely on it.

Estimated cost to include rail travel in existing NCTS is £65-135m per annum and is not considered financially sustainable in current Scottish Government fiscal environment so was also rejected on affordability grounds.

Supporting Paper 1: Public Transport System Analysis

Challenges

Public Transport capacity will require a step-change if a 20% reduction in car kilometres shifts to bus, active travel, and rail. If there is no reduction in overall travel, then the fall in car use will result in almost a tripling of other modes.

Opportunities

There is some evidence of changing travel demand / patterns post pandemic which could reduce pressure on busiest sections of public transport at peak times arguably delaying the need to invest in capacity expansion.

The combination of high inflation and a relatively weak economy has impacted dramatically on the economic wellbeing of the people of Scotland and the budget position of the Scottish Government, tied to decisions made in Westminster, has deteriorated significantly particularly in terms of the funds available for capital investment.

[...] transport has a key role in tackling the climate emergency. We have an ambitious target to reduce private car use by 20% by 2030 - essential to the meeting of our climate change goals - and public transport availability and price will play a critical role in moving towards this goal.

Supporting Paper 2: Case for Change

Covid-19 : Public Transport Patronage Recovery and Transition

Impacts on Government

Any retrenchment of the public transport network in response to falling passenger numbers / government subsidy will impact upon the ability to meet wider policy commitments e.g. the 20% reduction in car kms by 2030 requires an increase in public transport capacity by 222%.

Opportunity

As peak time demand for travel has not recovered to the same extent as off peak leisure travel there is an opportunity to test new fares structures which provide simplified fares that are valid and remain the same at any time.

Impacts on Operators

As any reduction in fares is likely to increase demand during the peak time there will be challenges for operators in ensuring there is sufficient capacity in order to meet this increased demand.

There may be an abstraction of passengers from bus to rail as rail becomes more price competitive with bus. Similarly, should the capacity considerations not be addressed, some rail passengers may switch from rail to car should services be overcrowded to an extent that impacts on the overall passenger experience.

Costs of using Public Transport relative to costs of using private car

Problem

The cost of public transport fares, UK-wide, rose in real terms between 2010 and 2020 - rail fares by 6% and bus fares by 26% above general inflation. Over the same time period, the cost of motoring fell by 9% in real terms. This has consequent impacts on the attractiveness of public transport compared to car travel not only for individual journeys, but also for longer term decisions related to owning and operating a car.

If the costs to use public transport are not financially attractive to passengers / potential passengers relative to the costs to use a private car then there will be adverse implications for public transport's modal share and the attainment of the target to reduce car kms by 20% by 2030.

Impacts on Government

There may need to be an upscaling of public transport provision in some parts of the country in order to provide a viable alternative to the car ahead of any demand management schemes being implemented.

Unintended consequences of existing fares structures on public transport landscape

Rail fares are extremely complex with a range of products (sometimes as many as ten fare types for one journey depending on where and when the journey is being made). To illustrate the complexity, in the fares system there are in excess of 150,000 origin/destination pairings, each with several ticket types that are priced by ScotRail as Lead Operator.

In addition to this, the fares structure is complex and there is no standardisation in the fares offered, the restrictions, the relationships between fares, or the fares themselves (in terms of a pence per mile measurement).

Passenger research has shown that confusion over buying the right ticket type is acting as a barrier to encouraging modal shift from car to rail.

Supporting Paper 4: International Benchmarking

Germany - 49 Euro Monthly Public Transport Deutschlandticket

The subscription only ticket provides unlimited travel on all local public and regional public transport including bus, tram, metro train and S-bahn. The ticket is not valid on InterCity Express, InterCity, EuroCity (international) or FlixTrain (private operator) services.

Research undertaken by McKinsey on the 9 Euro precursor indicates:

• More than 40 per cent of German respondents purchased the ticket in the first month following the scheme's introduction
• A further 20 per cent indicated that they intended to purchase the ticket in July
• 71% of people surveyed in the United Kingdom would be interested in purchasing flat rate public transport tickets similar to Germany's offering

However, it has to be said that the ticket's undoubted success is by no means unqualified. It is claimed that the figure of around ten million people using the €49 subscription may sound like a lot at first, but actually means only one in eight Germans are using the ticket. In addition, more than half of the customers already had another, more expensive, season ticket and are therefore not new local public transport users, but now simply travelling more cheaply.

It is also claimed that the price of €49 is too high. The ticket mainly relieves the burden on commuters but for young people and also many families it remains too expensive. It makes a big difference whether a family is spending multiples of €49 rather than €9 per person for a weekend trip, for example.

However, the answers to the problems which the ticket has revealed would appear to be relatively straightforward.

For the scheme to continue to expand there has to be an increase in transport capacity. The Federal Government of Germany and Deutsche Bahn (DB) have in fact unveiled the largest and most comprehensive infrastructure program for the railway network and stations since the railway reform of 1994. In rural areas, public transport both in terms of buses and trains needs to be expanded to compete in terms of cost and reliability, and plans to re-open closed lines are in the pipeline.

The problem of the expense barriers to families could be overcome by a standardised nationwide ticket for less well-off people as well as an affordable offer for children and young people to give those on low incomes access to mobility and thus the social inclusion that they had with the 9-Euro-Ticket. Reducing the cost of the ticket would also increase fairness and take-up, with research showing that €29 a month would be a price at which the highest sales could be expected.

The incentive to switch from car to public transport needs to be greater. Providing a good scheme whilst continuing to support schemes having the opposite effect makes little sense. In order to have a noticeable effect on the climate, the benefits afforded to car use need to be removed. In Germany more than three times the cost of the Deutschlandticket is spent on environmentally damaging private motor vehicles in the form of a tax rebate on company cars, a commuter allowance, and a diesel subsidy. There is also a strong case for making public transport more attractive through improved reliability, punctuality and frequency of service.