Trainline hits out at tube strikes and fare freeze as growth stalls

Trainline, a train ticketing platform, has expressed concerns over tube strikes, fare freezes by the government, and other factors that have led to a slowdown in its sales growth. The FTSE 250 firm reported flat ticket sales of £2.1 billion in the six months leading up to August. Trainline attributes this stagnation to the impact of the regulated fare freeze, additional disturbances caused by hot weather and Transport for London (TfL) strikes, and ongoing challenges in the industry.

The government has imposed a freeze on standard rail fares across England until March, aiming to save passengers £600 million. However, Trainline criticizes this move, stating that it has negatively affected refund transactions and reduced underlying UK revenue by five percent to £102 million. The company argues that the tightened refund rules have made it harder for passengers to claim refunds and thus, Trainline misses out on potential refund fees.

The decline in Trainline's international ticket sales to £579 million can be attributed to one-off factors such as a tragic rail disaster in Spain in January, which discouraged consumers from traveling by train. Additionally, record heat, train strikes across Europe, and the Iran war have contributed to a "softness in foreign travel demand."

Trainline's CEO, Jody Ford, who will resign later this month, acknowledged the company's performance as robust, citing resilient underlying demand for UK rail travel. Ford believes Trainline is well-positioned to navigate the industry's period of change, with significant scale in the UK and Europe, deep customer loyalty, and over three million customers holding digital railcards in its app.

Ford announced a £100 million share buyback following the conclusion of Trainline's previous £150 million scheme. Analyst Duncan Ferris from Freetrade noted that while Trainline's latest figures may not indicate robust growth, the newly announced 12-month share buyback programme could provide reassurance to investors. Ferris emphasized that steady performance and unaltered guidance may offer shareholders confidence in the company's continued progress despite regulatory challenges.

Moreover, the UK's consumer watchdog has launched an investigation into Trainline and Virgin Atlantic regarding their "drip pricing" practices, which involve adding hidden fees that are not evident in the original ticket price.