496,000 Go Ahead train passengers face delay or cancelled trains every week - a more significant headline

There are few London commuter's who would seek to defend Southern Rail, reputedly one of the worst performing rail operators, but as a data-specialist with a finance background I read the recent news headlines with some despair. "Southern Rail owners reveal £100m profits after months of cancellations" from The Times, being typical of the coverage last week when Go Ahead announced their annual figures.

So being curious to understand the reality, I dug into the numbers a bit, and wanted to share my findings. Go Ahead is a group, and includes includes not just rail franchises, but also bus operations, across the South East and including 24% of London routes. Bus revenue is 26% of Go Ahead's total revenue, but generates 64% of operating profit. By comparison Rail revenue is 74% of the Group revenue, but only contributes 36% of profit. So immediately the £100m headline grabbing figure is off the mark in relevance to the 'months of cancellations' for rail passengers.

The rail element of Go Ahead's business is a 65% share of Govia, which runs three franchises Govia Thameslink Railway [GTR], Southeastern and London Midland.  GTR itself is an accumulation of Southern, ThamesLink, Gatwick Express and Great Northern. Clearly Go Aheads rail interests are extensive, which made me consider whether the profit from Southern Rail was indeed excessive, in comparison to other franchises.

A useful reference for this is a report published by the Office of Rail and Road [ORR] in March this year : Passenger Rail: trends and comparisons (link below). This provides accumulated data across the UK passenger rail network, of revenues and costs across the franchisees. The report is based on data to 2014 - so is not 100% current, but provides history back to 2001 so trends are pretty clear, and the data is more consistent and complete across operators.

First highlight is the overall level of profit: collectively the franchised operators have revenue of £9.4bn, and costs of £9.2bn - a rather thin margin of £200m or 2%.

The report provides a useful chart that shows total revenue and total costs by franchise. The report doesn't provide underlying data, so an element of judgement was required to convert this into a chart that shows the actual profit per franchise; as a £m figure and % of revenue. I ranked this by the size of profit in £m so it shows those generating most profit on the left, reducing those that were loss making on the right. All data is 2014 figures.

This shows that absolute profit ranged from ~£33m (Northern : NOR) down to a loss of £3m (Greater Anglia: GRA). The percentage profit fluctuates, but is broadly in line with absolute profit [the % trend slopes down from left to right] with a few notable exceptions higher than the average: Mersey Rail: MER (14%), C2C (9%), Transpennine Express : TPE (8%), London Overground: LRL (7%). And Southern Rail? Well it's profits (remember for 2014) are in 2nd place at £30m [SOU], but at a margin of 4%, based on a revenue of ~£746m.

The report goes into considerable detail of the factors behind the components that comprise each operators revenue and costs, and it succinctly highlights the complexity of running the UK railways, and also the difficulties in useful comparative measures.

However this doesn't help the frustrated commuter at Waterloo, so I did one additional piece of analysis. What frustrates most passengers is not profit, but the combination of prices and punctuality. Most commuters feel fare rises have been relentless without measurable service improvement. So I had a look at the current data provided by the ORR for current performance.  Taking the latest data from the ORR (year ended 31 March 2016) I've calculated the average passengers per train, for each operator and the average number of trains cancelled or severely delayed each week. From this I derived the number of passengers impacted, and for reference indicated this as a % travelling.

This data represents the operators in a slightly different way (and reflects the changing landscape of franchise operators) but, irrespective of this, the chart is not good for Go Ahead. Govia Thameslink ranks highest, with approx 332,000 passengers impacted by cancelled or severely delayed trains every week. Highest in number and third highest as a percentage (5.3%). Add in the other Go Ahead franchises: South Eastern and London Midland and the total impact is 496, 000 passengers every week.

I'd been tempted to leave it there, but curiosity got the better of me. What was the trend for GTR on the weekly passenger numbers impacted by cancellations and severe delays? The result is below, and it doesn't require much of an explanation, or headline.

Sources:
Go-Ahead Group 2016 Results: http://www.go-ahead.com/en/investors.html
Office of Rail and Road: Passenger trends report: http://orr.gov.uk/publications/reports/passenger-rail-trends-and-comparisons-for-franchised-operators