London Overground fares could be cut by as much as 5 per cent if the service were brought into public ownership, according to new research by the Rail, Maritime and Transport Workers (RMT) union.
Although often portrayed as a public railway with Transport for London (TfL) branding similar to that of the Underground, the service is run as a private franchise.
Arriva has just begun a seven-and-a-half-year, £1.5billion contract to run the service, taking over the franchise from London Overground Rail Operations Ltd. (LOROL), a joint venture between Arriva and Hong-Kong owned comapny MTR.
LOROL paid out £31million in dividends to shareholders over the last five years, 5 per cent of the money they received from the concession and passenger income.
RMT General Secretary Mick Cash said: “This research clearly shows that if London Overground was publicly operated there would be scope to slash fares by 5% a year, not just for this latest contract but across any other London Rail services that may come under the control of the Mayor in the future.”
Cash said that, as Arriva is a subsidiary of the state-owned German rail operator Deutsche-Bahn, the London Overground service is effectively being used to subsidise their rail fares “at the expense of UK passengers”.
The RMT’s spokesperson added: “Transport for London should be standing up for London Passengers and exploring all options for running these services in public ownership, including any legislative powers it needs.”
Responding to the report, TfL said that under the new concession customers on some routes would benefit from extended operating hours and that Arriva would be supporting TfL in delivering improvements including modernised stations and more frequent services.
They also said new financial incentives have been added to the contract, including tightening punctuality requirements to within three minutes of the scheduled arrival time.
Arriva’s spokesperson said: “Arriva has never paid a dividend to Deutsche Bahn (DB). Arriva is supported by the strong resources of DB, but operates as a separate company.”
“Through TfL’s infrastructure investment, the Overground is developing and has become London’s fastest growing transport network. We are working closely with Transport for London to deliver world-class performance and customer service levels.”
The Mayor of London has not responded to requests for comment.
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