The free market, and the competition between firms it induces, has long been purported to increase productivity and drive efficiencies. In this post I'm going to explore the degree to which that applies in rail. The franchised system, set out under John Major's Railways Act 1993, has resulted in duplication of roles, resourcing inefficiencies, expensive fares, and a needlessly complex user experience. Under this system, the consumer lacked choice. Or rather, a lack of choice between trains. By my calculations, only 0.15% of possible journeys between main line railway stations in the UK offer a choice of operator. For example, London King's Cross to Newcastle or Edinburgh where you can choose between LNER or Lumo.

Continuing with the East Coast Main Line (ECML), the earliest opportunity for competition under privatisation was in 2000 when Hull Trains was launched, providing three trains per day (now seven) between London King's Cross and Hull. As true today as it was 26 years ago, the incumbent ECML operator only operates one train each way to/from Hull Paragon. This was a clear gap in the market, capacity was available, demand was there, and Hull Trains has done well as a result. This is just one of the three Open Access Operators (OAO) present on the ECML.

Half a Billion Pounds from the Public Purse.

Lumo is the newest face at the table, having launched their London King's Cross to Edinburgh Waverley service in 2021. First Group, who own the Lumo brand, claimed that the budget alternative to LNER would stimulate modal-shift from the airlines already competing between the Anglo-Scottish capitals, and it would not abstract revenue from LNER; unsurprisingly this was not the case. As reported in the Jacobs report in 2025, Open Access Operators have abstracted £562 million in revenue from LNER, and therefore the tax payer, in the period 2006 to 2025. In that same period the total OAO revenue was £628 million. This is both shocking, yet unsurprising. If OAO customers were not able to complete their journey by their chosen means, what would they do instead? In the majority of cases, they would have simply taken an LNER train, paying back into the public purse. There is of course a small percentage of journeys that would have been completed by coach, or plane, but the figures clearly show this is not the case 89% of the time.

Where does competition benefit the tax payer and passenger?

So what does this mean? Competition doesn't work in rail? But why do I keep hearing so much about Italo, Iryo, and Trenitalia France? Lets investigate the distinction in these cases.

France, Italy, and Spain have invested in and built dedicated High Speed Lines (HSL). This means that the capacity of their respective rail networks has increased massively. Both by the addition of a potential ~15 train paths per hour on the HSL, as well as releasing capacity on the existing line. Remembering that by mixing fast paths with stopping paths, you place a bottle neck on the theoretical capacity of a line whereby the fast trains 'catch up' to the stopping trains. When Long-Distance High-Speed (LDHS) services are moved over to a dedicated HSL, the number of released LDHS paths can be augmented with a greater number of regional, local, or freight paths on the classic line.

When capacity increases to facilitate a greater train service level than is offered, there is room for other operators to fill in the gaps and compete with the incumbent. When this is the case, the resulting effects are more akin to what you might see in the private sector. When Trenitalia France launched its domestic Paris to Lyon and now Paris to Marseille services, SNCF had to drop it's prices to compete with Trenitalia, as well as offer greater flexibility to change your booked service, something that Trenitalia offered from the outset.

Another interesting change brought about by the onset of competition on the Paris to Lyon and Marseille axis is the advent of Executive class onboard the Frecciarossa trains. Large, comfy, 1+1 seating, high quality complimentary food and drink, and even an on board meeting room. In order to attract business customers back to the TGV, SNCF had to introduce their own similar 'Optimum' class, albeit without the on board executive suite!

Competition in rail only delivers its promised benefits when the infrastructure allows it to. In the UK, limited capacity means Open Access Operators simply siphon revenue away from the DfT, and massively reduces the subsidy payable to local and regional operators such as Northern Rail. At the end of the day, it is these unglamorous local services that provide the backbone of our local communities, and not the InterCity services that are associated with leisure and business travel. I look forward to a shake-up in the world of Open-Access in the UK over the next decade, and hope competition will deliver a more attractive offering for international services using HS1; which is currently at 50% passenger capacity.

The author is employed by LNER but is writing in an independent capacity.