In article ,
Recliner wrote:
"Roy Badami" wrote in message

Why would this be necessary? By allowing higher fare increases, the
government would have to provide less subsidy under cap and collar
arrangements. As many TOCs are currently getting collar support, this
would automatically fall if TOC revenues rise by more than the rate of
inflation.

If you do it that way the TOCs get to keep a proportion of the fare rise.

Also, it's likely to push them out of collar support, which increases
their commercial risk, as Colin points out.

-roy

In article , (Roy
Badami) wrote:

In article ,
wrote:
In article ,
(Roy Badami) wrote:

In article ,
wrote:
In article ,
(Roy Badami) wrote:
Er, it's not quite that simple. Cap and collar isn't cost-free to TOCs
and higher fares could drive passengers away, worsening their results.
Therefore they might not accept the change without some compensation.

Oh, I see. Yes, presumably there would have to be an agreed estimate
of demand elasticity to allow calculation of how many passengers would
be lost. You could then scale the revenue levels that cap and collar
are based on appropriately, and also calculate the change in subsidy
or premium.

Presumably the process won't be entirely cost free, but I'm not sure
I'd expect it to be hugely expensive either.

I'm assume that if the Government wants something badly the TOCs will
press to get a better deal. Who's buying and who's selling here?

--
Colin Rosenstiel