UK: The Office of Rail & Road has written to seven online ticket retailers expressing concerns about ‘drip pricing’, when customers are shown an initial price with additional fees revealed later in the sales process.
There are more than 40 retailers selling rail tickets online, split between train operators and third-party ticket retailers. An ORR review of the websites and apps of 19 third-party retailers found that 12 charged booking fees, and seven did not include these in the upfront price. Booking fees ranged from £0·45 per ticket to £6·45 per transaction, and finder’s fees for split ticketing were 10% to 15% of the saving made.
ORR also looked at 21 train companies, who are not permitted to charge booking fees although they can charge certain fees such as postage costs.
Following the review, ORR has called on retailers to ensure:
- booking or finder’s fees are included within the upfront price;
- a clear breakdown of the fee and ticket price is provided at every stage and with appropriate prominence;
- consumers have access to readily available, transparent and accurate information about fees that they can read in advance of starting the booking process.
The regulator found that seven retailers did not incorporate their fees in the upfront price. It has written to them highlighting its concerns and to ask for details on how they will address its findings. ORR plans to publish their responses on its website and will ‘consider any next steps accordingly’.
‘Some online retailers are not as transparent as they need to be when it comes to how they display or provide information on additional fees’, said ORR Director of Strategy, Policy & Reform Stephanie Tobyn on December 11. ‘We want to ensure consumers are provided with timely and relevant information when making purchase decisions and that drip pricing does not undermine consumer confidence when purchasing rail tickets online.’
Responses
Commenting on the ORR report, Alex Robertson, CEO of passenger watchdog Transport Focus, said ‘passengers should not be left in the dark about the cost of their ticket. Online retailers must provide passengers with clear, accurate information upfront so they can make an informed choice.’
The Independent Rail Retailers group which represents almost all the retailers who are licensed to sell tickets for the National Rail network said it was ‘surprised’ by ORR’s conclusions.
IRR said ’customers have a choice of over 20 independent retailers, each of which sells the same tickets and therefore relies on delivering a better user experience to build customer loyalty.
’Whilst we agree that price transparency is important, the inference that a 3-4% booking fee is comparable with the drip pricing approach among some low-cost airlines, where a headline fare can double or even treble in price, seems somewhat absurd. We also note that only a handful of retailers are to be contacted by the ORR, which is at odds with the sentiment of the report, which suggests a much broader problem.
’Booking fees themselves highlight the lack of a level playing field for independent retailers compared with train operators, as low commission rates (set to reduce further in 2025) make the charging of booking fees a necessity for some retailers. Train operators who are subsidised by government do not face this pressure when selling online.
IRR said independent retailers also offer split tickets, which train operators ‘neither offer nor promote’, and ‘we find it strange that the report focuses on the finder’s fee as an example of drip pricing, but ignores the far bigger issue that train operators do not highlight the significant savings that customers can make by booking with an independent retailer.’
A spokesperson for Trainline told Rail Business UK that ‘we clearly and transparently display any fees on both our website and app to our customers before purchase. We will engage with this review from ORR to understand their recommendations and ensure that customers have clear information.’
Rail Europe said it was ‘committed to providing the best service to our customers and are always keen on working towards more transparency’. It would provide information to ORR, and work closely with the regulator ‘in order to better inform our customers if needs be.’
Trainsplit director Mike Richardson said ’we look at what our customers have paid as a whole across a month and compare that with what they would have paid if they had bought their tickets on a TOC site and the saving is usually in the region of 23%’.
He said Trainsplit is ‘totally transparent to customers from the outset so there is no so-called drip pricing’, and is ’fully compliant with what ORR is asking for’.
Mark Plowright, Director at Virgin Trains Ticketing, said ‘being transparent about pricing is crucial to building passenger trust and increasing rail ridership in the UK. That’s why Virgin Trains Ticketing doesn’t charge booking fees, it’s why it doesn’t use drip-pricing and has instead focused on saving passengers money by introducing split ticketing and enabling passengers to use Virgin Points towards their travel.’
He said ’the commission rate for independent retailers is small and is due to decrease further in 2025 and this makes it challenging for independent retailers, but drip-pricing isn’t the answer for train fares or rail passengers’.
