Intercity Passenger Rail Transport in the UK Industry Market Research Report Now Updated by IBISWorld

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The outlook for the Intercity Passenger Rail Transport industry is positive, with revenue expected to increase over the next five years through 2018-19 supported by higher passenger numbers, steady population growth and a return to growth in international tourism. For these reasons, industry research firm IBISWorld has updated its report on the Intercity Passenger Rail Transport industry.

IBISWorld industry market research
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Revenue in the Intercity Passenger Rail Transport industry is expected to total £9.6 billion in 2013-14 as growth is estimated to hit a compound annual rate of 6.1% over the five years through 2013-14. Revenue growth has been supported by a range of factors including growth in passenger journeys, increased capacity and population growth. According to IBISWorld industry analyst Andrew Johnson, “costs of alternative transport have increased more than rail fares, maintaining the railway's competitive advantage and leading to passengers choosing trains over cars”. The total number of passenger journeys on railways increased by 18.5% between 2008-09 and 2012-13. In 2013-14 industry revenue is forecast to increase by 2.5% as growth in passenger journeys continues.

The industry is largely made up of transport companies that successfully bid for the right to operate passenger rail franchises on behalf of the government. Profit margins and subsidisation arrangements vary across the industry according to franchise terms. These were set based on operator assumptions about passenger growth and cost reductions. Current profit margins across operators reflect how well the timing of these projections matched franchise commitments.

There has been a renewed political focus on rail in recent years, with reports on the cost effectiveness of the current system, the structure of franchises and fare structures. The stated policy trend is toward a more complete privatisation, with the government seeking to shift rail funding from taxpayers to passengers through fare increases. In the coming two years, a number of franchises are scheduled to be re-tendered. The way the industry operates and its profit performance will be strongly influenced by the outcomes of this process. The fallout from the West Coast mainline process is expected to further complicate retendering of franchises in the coming five years, with only three potentially being renewed before the next election. Johnson adds, “the picture is clear on the demand side, as higher passenger numbers, steady population growth and a return to growth in international tourism are likely to support revenue growth”. The outlook for the industry is positive, with revenue expected to increase over the next five years through 2018-19.

The Intercity Passenger Rail Transport industry has a high concentration in terms of revenue, with the top four companies expected to generate about 77.6% of revenue in 2013-14. The top four companies – First Group, Go-Ahead Group, Stagecoach Group and Arriva – all operate several rail franchises, as the average size of each railway is small. The Thameslink franchise is set to become the largest franchise in the United Kingdom at around £1.0 billion, following the incorporation of Southern in July 2015. It is important to note that the industry has an extremely high geographic concentration, with train operators enjoying in many cases a natural monopoly on the provision of rail services. Alternate modes of transport are effectively the only sources of competition in many areas.

For more information on the Intercity Passenger Rail Transport industry, including latest industry trends, statistics, analysis and market share information, purchase the full report from IBISWorld, the nation’s largest publisher of industry research.

IBISWorld industry Report Key Topics

The Intercity Passenger Rail Transport industry operates railways for passenger travel in urban and inter-urban areas. The industry also provides some support and auxiliary services to passenger railways and transports small amounts of freight and post. The industry excludes the operation of railways primarily for the transport of freight and the operation of light rail networks.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
International Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld
Recognised as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on many UK industries. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in London, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.co.uk or call (020) 7222 9898.

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Paul Duffy
IBISWorld
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