Government payments to the owner of Southern Rail have been slashed due to the network's under-performance in the wake of its ongoing battle with unions over the role of guards on its trains.
Govia Thameslink passenger revenue fell three per cent in the three months to the end of September and the number of passenger journeys fell by 0.5 per cent. Govia Thameslink was the only division of parent company Go-Ahead where revenues fell, the company said.
"Govia Thameslink's passenger revenue and journeys have been adversely affected by strike action during the period. As previously reported, the additional resources being invested in Govia Thameslink to support service delivery continue to impact margins in the short term," the company reported in its first quarter statement.
Performance on Southern Rail's network is at eye-wateringly low levels as a result of months of disruption over a dispute with the Rail, Maritime and Transport union. Southern Rail wants to take the responsibility for operating train doors away from guards so that they can focus on a customer service role.
Unlike most other training operating companies in the UK, Govia Thameslink – which incorporates Southern Rail, Thameslink and Great Northern – operates under management contract pricing structure rather than a franchise agreement.
The management contract structure means that fare income on Govia Thameslink's lines is paid to the government with the rail company receiving a management fee from the department of transport in return. The fee received is calculated on a complex structure of fixed and variable fees as well as penalties and fines, and is variable on the rail company's performance.
Representatives from Govia Thameslink and Go-Ahead explained to City A.M. that if the rail company does not meet operational targets set by the government "we suffer significant financial penalties".
"The potential scale of these penalties is far higher than for the equivalent measures for any other rail franchise given the size and complexity of our business," a spokesperson for Govia Thameslink said.