{ "docId": "019dd923-5de0-76bd-a165-578b9862173f", "docSlug": "091122f6e046fa86", "documentTitle": "Rail industry cost and revenue sharing (2011)", "authorId": "misc", "authorName": "L.E.K.", "documentKindSlug": "consulting-deck", "documentKindLabel": "Consulting deck", "sourceTypeSlug": "strategy_consulting", "sourceTypeLabel": "Strategy consulting", "presentationDate": null, "orientation": "landscape", "aspectRatio": 1.414, "pageNumber": 99, "pageCount": 170, "prevPage": 98, "nextPage": 100, "slideType": "strategic_options", "function": "compare_options", "density": "overcrowded", "nDataPoints": 0, "notes": "The slide outlines a specific strategic option for industry cost/revenue sharing, highlighting the trade-off between revenue exposure and fixed cost reduction.", "elementsJson": [ "headline_text", "bullet_list", "paragraph" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-5de0-76bd-a165-578b9862173f/99", "deckHref": "/decks/019dd923-5de0-76bd-a165-578b9862173f", "deckJsonHref": "/decks/019dd923-5de0-76bd-a165-578b9862173f.json", "deckAnchorHref": "/decks/019dd923-5de0-76bd-a165-578b9862173f#slide-99", "components": [ { "bbox": { "h": 0.02, "w": 0.3, "x": 0.1, "y": 0.93 }, "kind": "disclaimer", "text": "ORR/ATOC/Network Rail. Rail industry cost and revenue sharing.", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "8f516af5-0065-470e-ad12-68abb5ec65b3", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.8, "x": 0.1, "y": 0.58 }, "kind": "list", "text": "It should be noted that the reduction in FTAC is simply a mechanism to compensate TOCs for the value of revenue shared with NR. This financial offset does not need to be implemented through FTAC – NR could simply make a separate fixed payment to train operators instead", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "1fa65d30-c64c-4a7c-ac47-c1e5a64e8846", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.8, "x": 0.1, "y": 0.72 }, "kind": "list", "text": "L.E.K. has not investigated whether there would be legal issues associated with this approach, for example through NR having a financial interest in railway undertakings or through the possibility that it would be incentivised to prioritise some train operators over others. It is difficult to see how open access passenger train operators could be included in this type of scheme", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "2040eb7a-d143-41fa-a3cc-ad37952fa125", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.8, "x": 0.1, "y": 0.35 }, "kind": "list", "text": "It would be relatively simple to administrate because a fixed percentage would be applied to all TOC revenue – i.e. it would operate as a revenue toll or tax. There would be no need to try to unpick the sources of revenue growth. However, there would be a need to set a baseline at various points in order to calculate the magnitude of the fixed FTAC rebate", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "320b4083-d198-4e08-a8da-0425afe77d00", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.77, "x": 0.13, "y": 0.66 }, "kind": "list", "text": "however, this fixed offset would still not be appropriate for open access passenger and freight operators otherwise they might choose not to operate any services and simply collect the offset payment", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "964abb3f-57b2-482f-ac6d-82beaf26e78e", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.8, "x": 0.1, "y": 0.25 }, "kind": "list", "text": "A proposal put forward by TOC stakeholders was for NR to take a share of TOC revenue in exchange for a reduction in FTAC. This would increase NR’s exposure to end user market demand and incentivise NR to help TOCs to grow their revenue", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "d2b5313a-8c4f-4375-a950-c7fcb7f26a34", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.8, "x": 0.1, "y": 0.48 }, "kind": "list", "text": "A further benefit of this mechanism is that it would reduce TOCs’ exposure to fluctuations in revenue, thereby helping them to cope with recessions and other unexpected exogenous events. However, NR’s exposure to exogenous events would increase accordingly", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "eb4a6d79-12dd-451f-ad37-e5ef99d65de0", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.8, "x": 0.1, "y": 0.15 }, "kind": "title", "text": "Stakeholders at one of L.E.K.’s workshops suggested that NR could take a share of TOC revenue in exchange for a reduction in FTAC", "attrs": null, "subkind": "action-title", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "dd12c175-b4e9-4255-a171-c0d6f6646d68", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.25, "x": 0.66, "y": 0.08 }, "kind": "title", "text": "Option 3: NR shares TOC revenue", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "3b284f04-4c8f-4f06-8bbf-ac1d0f879524", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }