Are the rail franchise operators heading for ruin? You could be forgiven for thinking so if you have read the papers this week. The Independent reported that, “Rail passengers face cut in services as recession bites”, while similarly The Guardian reported that, “Railway firms ask Hoon for state aid as years of growth hit the buffers”. But is any of this true?

At the meeting with the Transport Secretary, this week, the top five transport operators (Stagecoach, National Express, Go-Ahead, Arriva and FirstGroup) on the rail network apparently asked for a “bailout”. The Guardian raised the spectre of shorter trains and subsidy payments for an extra 1,000 staff, while The Independent, waded in with claims of shorter trains and higher prices. However, according to the Association of Train Operating Companies, “The specific ideas reported (in the Guardian) were not raised with the Department, but train companies underlined both their commitment to deliver quality services to passengers and their willingness to contribute actively to the economic recovery of the UK.”

What is needed in these times is an elastic market that can react efficiently to demand. What we have of course is the exact opposite. A market, riddled with contractual obligations for the good times but little room for manoeuvre during a “downturn” (if you can call 5% passanger growth a downturn). Rail operators need flexibility to operate efficiently, the repeated need to ask Geoff Hoon if they can and can’t do something has meant that since 1997 the railways have come no further than than they were in 1939. Rail franchise operators should start operating how they want, and ignore the consequences that the government tries to heap on them. It is a shame that Dagny Taggart isn’t in charge of any of these rail operators.