A business case for investing in rail
A Railtrack case study

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Page 1: Introduction

Railtrack 4 Image 1Today, there is growing concern about the number of cars and lorries on the UK’s roads, the amount of time wasted in traffic jams, and the dangers of traffic-related pollution to people’s health and the environment. Britain’s railways provide the opportunity to solve some of the transport and distribution problems individuals and organisations currently face. This case study is designed to encourage students to think about and then set out a good business case for investing in the railway service.

The 1993 Railways Act paved the way for the process of rail privatisation which has rapidly reformed Britain’s railways. The overriding aim of this privatisation was to improve the quality and efficiency of rail services by introducing private sector investment and management. Privatisation was designed to deliver new and improved benefits for passengers and to create opportunities for business.

Privatisation in the railway industry involved the creation of nearly 100 different business units, the most significant of which was Railtrack. Railtrack was released from the public sector when it was floated on the Stock Exchange in May 1996 to become Railtrack Group Plc - a privately owned company.

Railtrack 4 Diagram 1Railtrack owns almost all of Britain’s railway infrastructure, including tracks, signalling, bridges, tunnels, stations and depots. Railtrack plays a pivotal role in the provision of rail services. It is a purchaser of services such as maintenance and track renewal and a seller of access to the UK's rail infrastructure. Railtrack's main customers are train operating companies and freight operating companies - not the general public and rail travellers.

Stations are a vital part of the Railtrack network. They should be pleasant, secure and well-lit places with excellent amenities to enhance the start and end of every journey. A £1 billion station regeneration programme was launched in 1997. Work at over 400 of Railtrack’s 2,500 stations has been completed and the programme is on schedule to complete before 2001.

The upgrading of Railtrack’s stations can involve anything from redecorating a platform and canopy, to reroofing or completely rebuilding entire station areas, whilst meeting the heritage challenges. Disability access, passenger security and heritage are top priorities. Good examples of improvements include:

  • Euston Station roof - here and throughout the country, over 250,000 panes of glass will be replaced, covering more than 60 acres.
  • Birmingham Station platform resurfacing - more than 1,000 platforms throughout the country will be resurfaced or repaired.
  • Conservation work at York Station - many stations have heritage value and consultations are made with English Heritage, the Victorian Society and the Royal Arts Commission before work commences.

Creating a business case

In setting out a business case for investing in a new railway or improving an existing railway service, there are a number of questions that need to be considered. These include:

  1. Who are the key stakeholders in the new railway investment? How can the needs of the stakeholders best be taken into consideration?
  2. How will other modes of transport work in conjunction with railway?
  3. What is the market? For example: Is it freight? Is it short distance commuting? Is it long distance?
  4. How, if at all, will the proposed service fit within the current network?
  5. What could be done to encourage new customers to use the service? E.g. train operating companies and freight companies.
  6. How could the railway service be marketed to the widest audience?
  7. What are the key environmental issues that need to be considered?
  8. What are the key safety issues to be considered?
  9. How should the new or improved service be marketed? What is the main point of difference?

Railtrack | A business case for investing in rail