9 February 2012
Prepared by:
For: Wiltshire Council
Allan Creedy, Head of Service, Sustainable Transport
Sustainable Transport Group
Neighbourhood and Planning Department
Wiltshire Council
County Hall
Trowbridge
Wiltshire BA14 8JD

Project Title
Report Title
Revision
Status
Control Date
Wiltshire Council LSTF Bid
Thread 1 & 2 – stage 1 Demand Forecasting & Market Analysis
V8
Final
9 February 2012
Record of Issue
Issue Status Author
V1 Draft Nigel Harris
Date
V2
V3
V4
Draft
Draft
Draft
NGH/AN
AN
NGH
23.12.11
24.01.12
30.01.12
Check
V5
V8
Final AN
Final AN
30.01.12
09.02.12
Distribution
Organisation
Railway Consultancy
Wiltshire Council
Mouchel
Contact
Nigel Harris
Rob Murphy, David Phillips
Ben Hardy, David Wildman
Date Authorised Date
Copies
1
1
1
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Document Control Sheet ............................................................................................ 1
Contents ...................................................................................................................... 2
1 Introduction ........................................................................................................ 4
1.1
Report summary ................................................................................................... 4
1.2
Project client ........................................................................................................ 4
1.3
History of the project ............................................................................................ 4
1.4
Overview of rail services ...................................................................................... 5
1.5
Description of the proposed works ....................................................................... 6
1.6
Status of the proposal .......................................................................................... 6
2 Workstream Thread 1 (stage 1) Rail Options ................................................... 7
2.1
Thread 1 objectives .............................................................................................. 7
2.2
Operational Planning ............................................................................................ 7
2.2.1
Constraints to be Overcome
2.2.2
Alternative Options
2.2.3
Operational Planning Conclusions 8
3 Workstream Thread 2 (stage 1) Demand Forecasting ..................................... 9
7
8
3.1
Introduction .......................................................................................................... 9
3.2
Base Demand Level Problems ............................................................................. 9
3.3
Demand Forecasting Problems .......................................................................... 10
3.4
Earlier Reports on Potential Demand ................................................................. 11
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3.5
MVA Report ....................................................................................................... 14
3.6
Likely Demand and Revenue ............................................................................. 15
3.7
Likely Time Savings ........................................................................................... 16
3.8
Demand Conclusions ......................................................................................... 17
Appendix 1 - Detailed Critique of the MVA Demand Forecasting Study................ 19
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1.1
1.2
1.3
Report summary
This report records a review of the demand forecasting and market analysis undertaken by Mouchel in close conjunction with Wiltshire Council in support of their application for an enhanced rail service between Swindon and Westbury/Salisbury.
Project client
Wiltshire is a predominantly rural county with a rich and unique landscape and heritage. About three quarters of the land in the county is protected and Salisbury
Plain, the largest remaining expanse of chalk grassland in England, divides the county from North to South.
With a population of 456,100, Wiltshire is the fifth largest authority in the South west and is characterised by a scattering of market towns, interspersed with villages and hamlets. The largest concentrations of population are found in Salisbury, Trowbridge and Chippenham. Wiltshire also has important relationships with the surrounding large urban centres of Bath, Bristol, Swindon and Southampton.
The North of the county benefits from its proximity to the M4 corridor and the A303 and A36 provide strategic routes from London to the South West and from Bristol to
Hampshire respectively. A number of other primary roads provide North/South road linkages, including the A350 linking Chippenham, Melksham, Trowbridge, Westbury and Warminster. The county also benefits from a number of railway lines including the Berks & Hants line, Great Western mainline, Heart of Wessex line, Waterloo-
Exeter line and Wessex mainline.
Wiltshire Council was formed in April 2009 from the existing Wiltshire County Council and the former four district councils. There are 18 board areas.
History of the project
The Council submitted an expression of interest bid to the DfT LSTF in June 2011.
The overall aim of the bid is to improve Wiltshire’s rail offer through a package of complementary measures that improve rail services between Salisbury/Westbury to
Swindon and enhance sustainable access to Wiltshire’s rail stations.
Mouchel were commissioned by Wiltshire Council in November 2011 to help develop and support a robust and realistic bid submission to the DfT by 24 February 2012.
The works will be undertaken in three threads (workstreams) and in two stages.
•
Stage 1, Thread 1 – assessment of rail service options
•
Stage 1, Thread 2 – demand forecasting
•
Stage 1, Thread 3 – Bus interchange, bus service and complementary measures
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1.4
•
Stage 2 – single option development of above
This report specifically covers Stage 1, Thread 1 and 2.
Overview of rail services
The proposal is for enhanced rail services to link Wiltshire’s larger settlements and a number of market towns along the important A36/A350 corridors.
Currently there are no direct rail services between Swindon and Salisbury across the county although these can be undertaken with a single interchange at Bath. As the
Swindon – Bath and Bath – Westbury services are typically both half-hourly, this provides reasonable journey times (around 1 hour 45 minutes), although for trips to/from Salisbury the hourly service beyond Westbury reduces the utility of the service. As the map shows, Bath is well west of a straight line between Swindon and
Salisbury, so that the rail journey time between the latter pair of places is currently typically 15 minutes longer than the road journey time, even before any allowance for waiting for trains.
Relative to the car, use of the shorter route via Melksham does not save much time, partly because of its relatively low line speed and that it does not actually cut off much of a corner. Moreover, for longer trips, the (negative) impact of the interchange at Bath is proportionately smaller. However, for shorter trips (and obviously those involving Melksham itself, whose train service is currently limited to two services per day in each direction), the frequency increase associated with this new service would
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1.5 provide a huge improvement in the rail offer. This would therefore generate very large proportionate increases in demand, albeit from a low base. Such large increases are, by their nature, difficult to forecast accurately by any method.
Description of the proposed works
The works for this element will include robust proposals to deliver a sustainable rail service on the Wiltshire Arc that meets the current and future demand forecast requirements.
The service will be operated against a timetable, the foundation for which was established by Network Rail and First Great Western.
The service will be delivered through either a franchise rail operator or an open access operator both of whom have been consulted during this exercise. The scheme has also been presented and discussed with the DfT from the perspective of current GW franchise activity and the LSTF application.
1.6 Status of the proposal
At present, submissions have been received from a number of companies in response to an expression of interest by Mouchel acting on behalf of Wiltshire
Council in December 2011. These bids have been evaluated (covered in another report) and results incorporated within the LSTF application. As part of that exercise, we have been working to understand the key operating constraints associated with the line, and the likely level of demand for services on it.
Early in the process we identified that the whilst there is clear demand for a rail service on this corridor, the level of demand is not sufficient to provide enough revenue to cover the marginal rail operating costs and a subsidy will be needed during and following the LSTF window for the 3 rd
year. This will be built into our commercial proposals in the LSTF application based on discussions with the DfT, the possible service operator and Wiltshire Council.
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2.1 Thread 1 objectives
This workstream covers assessment of the rail service options – feasibility, critical inputs and costs.
2.2 Operational Planning
2.2.1 Constraints to be Overcome
Key elements to consider in respect of the development of a new rail service such as this include:
• line capacity (especially on single-line sections such as through
Melksham); capacity at junctions e.g. Thingley Jc (West of Chippenham);
•
•
• capacity of reversing points (e.g. Salisbury); the level of utilisation of resource such as rolling stock and traincrew.
Proposals for service improvements between Swindon and Salisbury suffers from slight (but not insuperable) difficulties under all the above headings, which all tend to reduce the number of timetable path options and any flexibility associated with them.
Although the lines between Swindon and Chippenham, and Trowbridge and
Salisbury, both carry several train services, capacity is not an undue issue. However, there are problems associated with the single line through Melksham. Although not at present heavily-used, this line does carry freight traffic, especially from the quarries at Merehead and Whatley. The real problem with this single line is that it has no intermediate signals at all, so that it literally can only handle one train at once.
The line cannot accept a train from either end if there is any other train on it – even
10 miles away, trying to leave the other end.
Because the running time between Chippenham and Trowbridge is around 20 minutes, operation of an hourly passenger service would leave insufficient room for freight traffic to operate reliably (in the other 20 minutes within the hour). Network
Rail has therefore made it clear that, whilst 2-hourly services can be fitted in without undue problem, any proposal to run hourly passenger services would necessitate the installation of an additional signal mid-way along the single-line (probably at
Melksham itself), in order to enable freight to continue to operate effectively. Given the costs and timescales of such works, that is unlikely to be achievable within the tight timescales required by the LSTF process, whose funding period ends in 2015.
In terms of junctions, the key issue arises at Thingley Junction, about 3 miles West of Chippenham, where the Melksham single line joins the main line from London to
Bristol. Unfortunately, the design of this junction is such that eastbound trains from
Melksham have to run on the westbound line (i.e. from London) for 1 km before being able to cross over; this unnecessarily uses up line capacity on the mainline.
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The track layout at Salisbury station is not ideal for services arriving from, and then wishing to depart to, the West. Platforms are not reversibly-signalled to allow this, and the old West-facing bay is not usable. Trains would have to proceed through the station, and reverse in sidings to the East of the station.
The length of the expected journey time between Swindon and Salisbury (about 75 minutes) is less helpful when trying to run a service every two hours. This is because, in order to make a round trip, trains would typically have to wait 45 minutes before coming back, leading to a vehicle utilisation of only 75/120 or 62%. This is less than ideal, although offers more than sufficient room for recovery from incident.
However, such reversing allowances do enable staff to take their statutory breaks, therefore the efficiency of traincrew diagrams is not as poor as of the trainsets.
At present, there is no appropriate rolling stock available to operate this service, but this is understood from FGW to become available in May 2013 through a rolling stock cascade. A fallback option remains the use of the GOCO ‘open access’ option with new trains, starting one year later. The FGW solution forms the basis of our
LSTF application.
2.2.2 Alternative Options
There are a number of other locations which might prove sensible destinations. The most obvious additional one is Frome, a town of 40,000 just over the border into
Somerset, and (being not on the main Bristol – Westbury corridor) with not such a good train service (2-hourly plus various extras). Whilst this might be a sensible destination in the longer-term, it could need a further trainset to maintain the 2-hourly timetable, whilst reversing arrangements on the single line through the station need further investigation. This is especially the case now that the station sidings are out of use, and might need non-trivial capital expenditure to reinstate.
Previous Work
Two separate exercises have been undertaken to find paths on this corridor. One was undertaken by the Railway Consultancy for GoCo’s proposed open-access train service, whilst the other was undertaken by Network Rail specifically for the
TransWilts service. Given the constraints (see section 2.2.1) on the route, it is not a coincidence that the two exercises found very similar train paths; whilst there are various pathing alternatives, there are relatively few ways of matching up paths effectively on the different line sections.
2.2.3 Operational Planning Conclusions
In conclusion, all the above constraints on this corridor to some measure can be overcome however not within the time constraints, deliverability, affordability or sustainability defined by the LSTF process. Most of these constraints only become an issue at train frequencies from 1 train per hour or more which do not appear to be appropriate based on the likely level of demand. We therefore note that whilst detailed planning will be necessary, there do not appear to be any ‘show-stoppers’ which may prevent the operation of an additional two hour service between Swindon and Salisbury.
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3.1
3.2
Introduction
The previous section of this report demonstrated that it was possible to provide a two-hourly service in each direction between Swindon and Salisbury via Westbury, without requiring railway infrastructure improvements. However, the operational inefficiencies of operating as far as Salisbury, and the lower benefits expected from that route section, have led Wiltshire Council to conclude that running South of
Westbury would not provide Value for Money. This section of the report therefore sets out the demand and forecasting work that supports the recommended service proposal contained in the LSTF application, which is based on a two-hourly service in each direction between Swindon and Westbury only.
Base Demand Level Problems
Any historical analysis of demand at Melksham area community must take account of the fact that, despite it currently having a population of 27,835 but only 1-2 trains per day (tpd) each way, it enjoyed 5tpd between 2002 and 2006. However, as Table
3.1 shows, the patronage data does not seem to reflect the train service.
Year
2003-2004
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009
Weekday train service (tpd)
5
5
5
5
2
2
Annual Patronage
19143
27446
24426
22001
38081
27656
Daily Patronage
61
88
78
71
122
89
2009-2010 2 10028 32
Table 3.1. Historical Patronage Data for Melksham Station
(Source: ORR station counts)
N.B. Patronage figures are the sum of boarders and alighters. Daily figures have been derived by dividing annual figures by 312, to take account of the lower patronage typical at weekends
Although the historic data indicates around 25,000 ppa may be seen as typical of patronage with a 5tpd service, the values for 2007-8 and 2008-9 seem too high. It has been suggested that this is the result of a ticketing system error, in which
Melksham – Bath fares (valid via Trowbridge) were cheaper than direct fares from
Trowbridge to Bath, so that many passengers between Trowbridge and Bath actually purchased tickets to/from Melksham. Unfortunately, it has not been possible to check this hypothesis. We note though that the 25,000 ppa trips in earlier years may not
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3.3 accurately represent the potential for a 5tpd service, since the services were not evenly-spread and they were particularly unreliable (Wiltshire, 2009)
1
.
However, 10,000 ppa may be appropriate as an assumption of base demand for a
2tpd service, whilst data from earlier periods also provides something of a crosscheck for any future service enhancements.
Other data available includes counts undertaken by the Railway Consultancy in
August 2011. Although this is accepted as a quiet month, the timings of trains do not make the service attractive to children/students, so the variation in patronage throughout the year may be less than elsewhere on the railway network. On 10 th
August, the (late-running) 1911 Southbound service had 3 boarders and 7 alighters, whilst two passengers had already arrived for the 1947 Northbound service; the following morning, the 0719 had 10 boarders. These figures are in line with counts twice per year by Wiltshire Council at all its stations.
Wiltshire Council also counted passengers on a Sunday service they sponsored between Swindon and Weymouth for a few weeks in high summer (July/August)
2011, aimed at the ‘day out’ market. Data for the morning trains showed that they carried, on average, a further 56 passengers from Melksham.
The total demand directly observed recently (of 22 passengers across an incompletely-counted 3 of 4 trains, at a quiet time of year), is therefore not inconsistent with the 32 ppd average calculated above, taking into account other days of the week.
Wiltshire Council estimate that 70 return rail trips per day are made by Melksham residents using Chippenham as a railhead. This equates to around 20,000 ppa, and therefore could be double the level of patronage actually using Melksham station itself. Any of these passengers transferring to Melksham in the future may benefit from time savings, but revenues will only increase marginally, as ticket prices from
Melksham are unlikely to be substantially more than via the current railheads.
Demand Forecasting Problems
Rail demand is affected by a range of factors, both those external to the railway (e.g.
GDP, car ownership, road congestion (“exogenous” factors)) and those within its control (e.g. service frequencies, fares). Background factors (especially petrol prices) have generally been favourable to the railway in recent years, so that demand has grown across the network by 4% or so cumulatively (ORR, 2011); data for Wiltshire stations (Wiltshire Council, 2009)
2
also reflects frequency increases at
1
Wiltshire Council: Swindon – Westbury service appraisal presentation, pages 12-13.
2
ORR: National Rail Trends 2010-11, Table 1.1a; Wiltshire Council: Swindon – Westbury service appraisal presentation, p.3
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3.4
Westbury, Trowbridge and Bradford-on-Avon. Rail fares have priced off some demand at the margin, but the recent reduction in proposed fares increases from an
RPI+3% to an RPI+1% formula will minimise future losses. Rail services will therefore, in general, be easier to support in future if general trends continue. Whilst simply extrapolating earlier demand is not behaviourally sound, it does provide a reasonable background trend against which the impact of other factors can be examined.
The proposed Swindon – Westbury service, however, is effectively an entirely new service being overlaid on existing service patterns. It will reduce waiting times, and provide new direct connections, reducing the need for passengers to interchange. Its impacts will vary depending upon the specific changes relative to particular origins and destinations.
The most significant change to train services is proposed for the town of Melksham.
This currently has only 1-2 trains each way per day but these trains are not at the most helpful times; there are no weekday services between the 0719 Northbound and the 1911 Southbound. Any future service with a 2-hourly service throughout the whole day would be so different that demand would not change marginally, but by an order of magnitude. Demand forecasting is always an inexact subject, but when changes to inputs are so large, it is not possible to provide a single specific demand forecast, but only a range. However, sensitivity testing is an appropriate way to understand the impact of different demand outcomes.
Earlier Reports on Potential Demand
A number of studies have already examined the potential demand for a rail service between Swindon and Salisbury.
As part of the franchise evaluation for the Greater Western Franchise, forecasts were undertaken (it is believed using the rail industry MOIRA model based on ticket sales data) of the possibility of increasing the 2tpd service to 6tpd (Wiltshire, 2009)
3
.
However, this resulted in a forecast revenue increase of only £43,000 p.a., of which
¼ was Melksham-Swindon – but £11,000 p.a. is only equivalent to 5 return trips per day, which seemed implausibly low. The use of MOIRA, an elasticity-based model assuming only marginal changes to existing demand, is a likely reason for the low forecasts, which totalled only about 5000 extra trips p.a.
Trip rates provide another, if simple, method of understanding what the level of potential demand might be. Even after merely making some simple assumptions about the proportion of passengers recorded as entering various local stations who are genuinely originating (as opposed to commencing return trips), it is clear that trip rates at Melksham are far below those of other stations locally (see Table 3.2).
Although not directly on the Swindon – Salisbury corridor, Frome probably provides
3
Wiltshire Council: Swindon – Westbury service appraisal presentation, pages 17-20
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the best comparator; it is also effectively not on a main line and, despite having broadly 50% greater population than Melksham, generates 10 times more rail passengers from 10 times more rail service. This approach would suggest that a 2hourly service at Melksham (8 trains per day each way) might generate somewhere in the region of 30,000 entries p.a. – about 50,000 extra trips p.a. in total just from
Melksham. However, trip rate methods may not capture the longer-term changes people may make in terms of house and job location, car ownership etc., as these alter the fundamental balance between the origins and destinations of typical trips.
Towns with relatively poor transport links might be expected to be more selfsufficient in terms of employment; with its local industry, Melksham could be such a place. In theory, detailed analysis of Census returns could identify this, but the age of the Census at present makes this of doubtful value.
Salisbury catchment entries popn 2009-10 locallyoriginating trip rate trips 0809 per local daily entries source: est
50000 p.a.
ORR p.a.
est
879200 600000 pop p.a.
calc
12.0
calc
1923
Warminster
Westbury
Trowbridge
Melksham
Chippenham
Swindon
25000
10000
30000
25000
155503
189026
326203
5014
120000
150000
200000
4500
30000 758363 600000
200000 1417682 1000000
4.8
15.0
6.7
0.2
20.0
5.0
385
481
641
14
1923
3205
Frome 40000 60618 50000 1.3
160 total trip rate pass/ typical
000 pop/ offpeak day train freq
WCC NR
6
46
56
2
3
6
4
0.2
4
9
Notes major tourist destination army traffic
InterCity railhead county town only 2tpd each way minor commercial centre, on London - Bristol main line major commercial centre & rail interchange
10 1.5
2-hourly service with extras
Table 3.2. Indicative Trip-Rate Based Analysis of Potential Demand on this Corridor
Notes: The national average trip rate per person per year is about 19, although this is heavily weighted towards SE England; the overall result for SW England is about 8. Wiltshire Council data includes an allowance for arriving trips, and Salisbury data relates only to that on the
Westbury – Southampton axis (i.e. excludes the London – Exeter route)
Simple catchment area undertaken by Wiltshire Council (see figure 3.1 below) demonstrates the disparity between Melksham and other local centres in terms of rail trip rates. One might infer from this even greater potential for Melksham - 20 times greater demand (i.e. 100,000 entries, or 200,000 trips p.a.) would bring the town’s station up to rail trip rate levels seen elsewhere in the county. However, the relative accessibility afforded by the centres served directly needs to be taken into account:
Trowbridge, for instance, has direct trains to Cardiff, Bristol, Southampton and
Portsmouth, whilst Salisbury has a half-hourly service to London. These higher levels of demand therefore seem very unlikely, but achieving half of this may be possible. Indeed, in a further analysis using working age populations and trip rates,
Wiltshire Council also took account of destinations available directly, train frequencies and journey purposes, to provide a daily estimate of 240 Melkshambased trips. This is equivalent to around 40,000 entries (or 80,000 trips p.a.).
All of the above implicitly tend to exclude any trips to Melksham, which are unlikely to be zero because of the industrial and commercial characteristics of the town, as well as any incoming trips to visit friends and relatives. In total, these would be expected to be an absolute minimum of 10% of the outgoing trips, and a value nearer 10,000 trips p.a. would seem more likely.
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Lastly, we have undertaken some generalised cost analysis of key flows from
Melksham to Swindon, Chippenham, Trowbridge, Westbury, Bristol, Salisbury and
London (the last three of which are proxies for a range of off-line destinations).
Proportioning the existing 10,000 trips between these destinations in line with the understood trip frequency, our analysis (using parameters consistent with the
Passenger Demand Forecasting Handbook) suggests annual increased demand and revenue levels of about 25,000 trips and £400,000 respectively
4
. However, this effectively excludes the impact of any existing Melksham residents already travelling by rail, but using other stations (e.g. Chippenham, Westbury) as railheads.
Moreover, this method (like MOIRA) applies elasticities to existing trip numbers which, for some destinations/purposes may be zero (for instance, returning school traffic to Melksham is likely to be non-existent at present because there are no trains between 1500 and 1900), thereby requiring the result still to be zero. Logically therefore this must be an under estimate of the true answer.
4
Including the revenue benefits to other services of new Melksham passengers, for instance travelling to London
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3.5
Figure 3.1. Catchment Area Analysis of Wiltshire Stations
(source: Wiltshire Council, 2009, p. 32 – thought to be 2006 data. Passenger figure for
Salisbury excludes Waterloo-Exeter axis)
MVA Report
As a consequence of the uncertain picture about future demand on this rail corridor,
MVA was commissioned in March 2011 by the Wessex Chamber of Commerce to undertake a more significant examination of the likely patronage and other benefits of improving services on the Swindon – Salisbury - axis. This set out the potential wider economic benefits of the scheme (for instance, in terms of regeneration and increased tourism) before undertaking a business case assessment. In summary, trip data (for the with and without scenarios) was taken from the MOIRA rail industry model, whilst the Department for Transport’s TEMPRO trip end forecasts were taken to provide some indication of future demand growth. Given the inherent uncertainties in demand forecasting, undertaking some sensitivity tests was also an appropriate approach. Operational costs were then derived and compared to the likely increased demand, and a case then made for development of the scheme, on the basis that the service was forecast to move into profit in its third year.
Generally this is potentially an appropriate method to use with results that are rather high. Although benefits and revenue figures are provided, those for demand are not, but making assumptions about fare rate/mile etc, it is possible to deduce them.
Although the initial figures appear reasonable (a total increase of ≈ 60,000 trips p.a. might mean 40,000-50,000 to/from Melksham), the figures taken forward from a high sensitivity test are four times higher, out of line with the other forecasts for Melksham
(summarised in Table 3.3 below) and seem implausibly high. Indeed, the answer produced is out of line with the operational economics of the rest of the British railway network, in which even the busiest regional services (e.g. Cardiff –
Portsmouth) struggle to make a profit. Despite helpful liaison with the report’s main author, a more detailed investigation of this study highlighted a range of problems, which are set out in Appendix 1.
In summary, however, two assumptions are significant and undermine the results of the MVA report. The first of these (which adds £200k p.a. to costs) is the exclusion of vehicle leasing costs, on the key assumption that the vehicles are already within the
FGW fleet. The second (potentially larger) assumption (perhaps adding £0.5m p.a. to revenues) is that rail trip rates at the smaller towns will increase to reach the rates currently enjoyed by the largest towns. Although it is appropriate to undertake sensitivity tests to see how a project might become profitable, and some adjustment in this direction might be valid, it is not appropriate to assume high-side sensitivity tests as part of a base case. Moreover, the increased rate assumed appears to be beyond a likely value in the context of Table 3.3, which suggests that 60,000 rising over time to 80,000ppa might be appropriate for Melksham.
On a scheme of this size (i.e. with annual costs and revenues both < £1m p.a.), a reduction in net annual income of £0.5m unfortunately completely undermines the
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commercial case for the project. As the value of time savings to existing passengers remain substantial, however, the project could still be worth doing in economic terms, as the total amount of project benefit is still sufficient to provide a Benefit:Cost ratio greater than 1. A subsidy of about £600,000 p.a. would be needed in order to sustain the service under such conditions, unless other arrangements were made.
As a check, it is interesting to note how GOCO considers that it can operate the service between Swindon and Westbury without subsidy. Their service offer and organisation, however, differs in a number of key respects, including:
•
• better vehicle utilisation arising from their longer route; higher demand levels arising from their ability to serve other destinations directly;
• lower operating costs arising from Cooperative-type ownership.
3.6 Likely Demand and Revenue
Forecasting demand for a scheme which involves such a large change in travel conditions is hazardous, since the whole nature of demand may change.
Considering a range of forecasts and the sensitivity of any business case to this range therefore seems appropriate, so we have assembled the various existing forecasts below as Table 3.3. Note that these are net forecasts for Melksham alone.
Source
Current @ 2tpd
GW franchise analysis
Historic actual, 2002-6
@ 5tpd
Melksham annual patronage
10,000
15,000
25,000
Notes
Wiltshire Council/RCL counts
Based on MOIRA
General rail growth since
RCL
MVA
25,000
30,000
Generalised cost analysis - minimised
Estimate from revenue figures given in report, based on MOIRA
Trip rate analysis Wiltshire Council/RCL 60,000
Wiltshire Council
MVA
Wiltshire Council
80,000
120,000
200,000
Catchment area comparisons adjusted for destinations served, service levels etc.
Estimate from MOIRA-based revenue figures given in report (highest sensitivity test, using higher trip rates)
Unadjusted catchment area analysis
Table 3.3. Summary of Demand Forecasts for Melksham
Without access to the detailed information on existing rail trips which is contained in the MOIRA model, it is particularly difficult to provide definitive forecasts. However, our judgment would be that transfer of current trips to rail would lead to an immediate
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total annual rail patronage at Melksham of around 30,000, but that generated demand and changes to personal trip-making behaviour would quickly increase this to 60,000ppa, with 80,000ppa as a long-term upper case sensitivity. Trips to
Melksham (both for commercial purposes and for leisure purposes) would be expected to add at least another 10% - say 10,000ppa in the longer-term. A number of trips would also be expected to transfer from rail-heading at other stations (notably
Chippenham), which we understand could at present be of the same order of magnitude as current demand i.e. yet another 10,000ppa.
These figures are consistent with a train service frequency of several trains per day, since 90,000ppa translates approximately into 18 passenger movements per train stop for an 8tpd service. Rail fares for this type of market are typically in the £6-£7 range
5
, meaning that total Melksham revenues would be expected to start at around
£200,000 p.a., reaching £500,000 p.a. in current prices in due course.
To the figures based on Melksham should be added demand and revenue from other
(non Melksham) flows. However, as noted earlier, the proportionate improvement in the generalised cost of travel for other trips is relatively small, as there are existing rail alternatives, and access times and fares (which average £5.27 in our sample of key flows analysed) would remain generally unchanged. It is not clear that the service increases would add significant demand/revenue (although there would be time savings arising from increased frequencies). For instance, specific analysis of the Swindon – Trowbridge rail journey suggests that demand for that might rise by
20%. Our analysis indicates that demand increase across all flows of 10,000ppa plus a further contribution of up to 10,000 for miscellaneous flows to ‘offline’ destinations
(e.g. Newbury) would be appropriate. This would reasonably give a total increase in demand of 90,000ppa, leading to increased revenues of £500,000 p.a. in the longterm as population grows.
The new train service would of course be carrying not only the existing demand and the new demand generated, but also demand abstracted from existing services
(passengers currently travelling via an interchange at Bath). MOIRA or another network-type model would be the best way of evaluating the level of such traffic.
3.7 Likely Time Savings
Although the reduction in journey times per se are not enormous, the improved service frequency via Melksham saves an interchange for some trips and very significant amounts of waiting time. Even after applying the ‘rule of a half’ because the vast majority of the trips are new to rail, the weighted average time saving calculated from a range of key flows is 32 minutes per trip; this is (largely driven by reductions in waiting times). These large per-trip time savings are the key for the economic justification of this service, although of course overall journey times using
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the rail service are still only competitive for some trips, because of the relatively high waiting times compared to car.
Estimates of the exact level of benefit clearly vary across the various studies undertaken on this route. Benefits consistent with the ‘low’ demand case are around
£280k p.a. (split 40:60 business:non-business) whilst those consistent with the high case are around £1.2m p.a. We have not seen a figure computed relevant to the medium case, but would expect it to be around £700k p.a. Time savings of that level would be likely, when combined with increased revenues, to generate a Benefit:Cost ratio of around 2:1.
3.8 Demand Conclusions
Patronage on the corridor via Melksham has varied historically, reflecting the level of train service provided. However, the scale of the changes proposed makes demand forecasting very difficult. A review of previous forecasts and experience from elsewhere (for instance, in the typical profitability of similar operations) suggests that most likely demand and revenue forecasts are in the range 45,000 – 120,000ppa and £220,000 - £600,000 p.a. respectively, as set out in Table 4 below. Low forecasts represent likely demand in the first two years, with medium levels of demand appropriate in around year 3, and high levels of demand expected in the period years 5-10 (depending upon economic conditions).
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Scenario Melksham origins
Melksham destinations
5
Diversion from other stations
4
Other O:D pairs
Offline Total
Low 30 5 1 45
Medium 60 10 5 10 5 90
High 80 10 10 10 10 120
Table 3.4. Summary of Demand Forecasts for Swindon – Westbury Rail Service
(all figures in ‘000 passengers per annum)
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The scheme analysed by MVA was that produced by Network Rail, based on a twohourly (but not strictly regular) service which included several services extended as far as Southampton (these typically replaced Westbury – Southampton shuttle services already running).
MVA correctly recognised that MOIRA has historically under-estimated the demand for completely-new services, partly because of its nature (it is based on rail ticket sales data). Low background growth projections have also been highlighted recently in the Network Rail Route Utilisation Strategy (RUS) process; the Great Western
RUS in particular set out a wide range of potential forecasts of exogenous factors such as increased housing, employment and tourism.
Existing demand was factored up both by housing and by employment. It is not entirely clear how this was achieved, but there is a danger of double-counting here: ideally, only originating trips should be factored up by housing and destinating trips by employment. Journeys on reduced-price tickets were factored up by tourism factors too, although they had already been factored up by employment growth, which is counter-intuitive. We are not aware of the source of evidence to support the
0.45% increase in tourism-related traffic.
The Department for Transport’s TEMPRO dataset is designed to give a standard platform on which to base (town) planning-driven exogenous factors. If better information is made available (as was the case from Wiltshire Council data), there can be a case for using that instead, but the MVA study used those (higher) alternative numbers only for the ‘do something’ rail improvement option. If the
Wiltshire figures really do reflect more accurately expected increases in housing etc., then any demand impacts should surely also be applied to the ‘do minimum’ case, meaning that the incremental revenues from the project will have been slightly overstated.
Crowding was stated as not being expected to be an issue, but its effects start when trains are only about 60% full (when passengers may have to sit next to a stranger).
This is already the case with the morning train from Trowbridge, especially after its call at Chippenham. Use of a single-car Class 153 unit would also limit uncrowded demand to around 50 passengers per train.
The operational costs assumed within the appraisal excluded any contribution to overheads (including headquarters administration or customer service) nor any recognition of the requirement for maintenance cover for the two trains allocated to the service. Although one might hope that a train operator bidding for the service would be prepared to swallow these costs, it is not a sensible place to start from in an appraisal.
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Rather more significant, however, is the omission of vehicle leasing costs, on the pre-text that the two units required would come from within the fleet already leased by FGW. This logic is flawed. If extra trains are required to operate the service, there is at least an opportunity cost of using them elsewhere in the franchise; any appraisal of this service must include leasing costs. These would be around
£100,000 p.a. for each of the two Class 153s envisaged.
We were initially unclear how, if the 30-year revenue PV is £3.53m, the PV of revenues for the first five years could be £3.84m. However, MVA clarified that the latter figure assumed higher values from the sensitivities set out in section 4.5.5 of their report. The tourism and trip end sensitivities make relatively little difference, so may be taken as appropriate adjustments.
However, the third sensitivity test increased rail trip rates at the smaller stations to be similar to those at the larger stations in Wiltshire, and this led to a huge increase in the project’s viability (adding £40m to the NPV). Not only should care always be used when incorporating a sensitivity test with such a large impact (see table below), but this adjustment is utterly inappropriate, for a number of reasons:
• rail trip rates typically increase more than in line with the population of urban areas (more particularly at destinations, but even at origins), as road congestion makes rail traffic proportionately more competitive;
•
the larger centres in the region (e.g. Swindon) have levels of train service far in excess of anything the smaller centres might attain with the Trans-Wilts scheme; for instance, Chippenham has a half-hourly service to the major economic centres of Reading and London, and this gives a rail trip rate per train roughly twice that of Trowbridge;
• one of the reasons that the larger centres have higher rail trip rates than the smaller ones is that some passengers from the smaller urban areas railhead to the larger towns. It is estimated that 70 return rail trips per day are made by inhabitants of Melksham via Chippenham alone. Increasing trip rates in the manner described therefore double-counts such passenger journeys.
Trip rate values have already been presented in Table 3.2 above.
It is good practice in a railway appraisal to examine the possibilities of other sources of income, including car-parking. However, car-parking revenues may already be capacity-constrained, except for any relief provided by Melksham residents actually using Melksham station, instead of driving to Chippenham (see above). Although the yields assumed for car-park revenue were not unreasonable, it is not always costeffective to achieve that yield at smaller car-parks, where the (equipment and staff) costs of collection may make charging not commercially worthwhile. So, overall, care must be exercised in assuming that parking revenues rise directly in line with demand.
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