Trainline shares derailed as UK govt unveils plans for rival app

Trainline shares plunged by almost a third on Thursday after the UK government unveiled plans to set up a rival ticketing app.

Under the new proposals, commuters will be able to buy tickets via a website run by a new state-owned body called Great British Railways (GBR). It will also provide passengers an easier way to access refunds for disrupted journeys.

Trainline shares plunged more than a third in early trade on the news. The firm listed in London two years ago and has become popular with commuters who can buy and store tickets on their phones in seconds for a small fee.

Reports said it could take around nine months to get the new Great British Railways site up and running. Britain's 26 rail operators will migrate on to the platform as their contracts with so-called aggregators such as Trainline expire.

State-owned website National Rail Enquiries only allows customers to find train times with users directed to the relevant train operator for ticket purchases.

The shakeup is one of many since the controversial privatisation of the network in the 1990s by the Conservative government which has led to Britons paying some of the highest rail fares in Europe per kilometre of travel. It was prompted after the chaotic introduction of new timetables in May 2018 which led to former British Airways chief executive Keith Williams being commissioned to carry out a wide-ranging review of the railways.

Under the plans GBR will award contracts to private firms to run trains, with incentives based on performance and passenger numbers.

Infrastructure company Network Rail will also be absorbed by GBR, resulting in the operation of train and track being brought under one entity.

BLEAK PROSPECTS

Hargreaves Lansdown analyst Susannah Streeter said the government's plan had "seriously pulled the brakes" on Trainline's prospects for recovery after Covid pandemic lockdowns.

Streeter said 70% of all digital fares are currently sold by Trainline, "and despite the pandemic disruption which saw it pushed into a £100m operating loss, Trainline kept investing in new personalised and go-location technology to win market share amongst customers".

"If National Rail Enquiries starts issuing ticket it is likely to gobble up a significant share of the market currently enjoyed by Trainline, due to the strength of its nationally recognised brand, which could seriously impact the company’s sales volumes and revenue.

The RMT rail union slammed the proposals, accusing the government of leaving "the same private companies in place under this arrangement to extract management fees that could be invested in to building a truly integrated national rail network. The taxpayer carries all the risk while the train companies carry out bags of cash".

“If the government were serious about recognising ‎the impact of failed rail policy down nearly three decades they would cut out the middleman, strip away the dead weight of the private companies and work with their staff on building a transport system fit for the future where investment in the workforce and infrastructure comes first."