Trainline, the UK's largest train ticketing business, reported a slowdown in sales in the first half of the year after battling a government freeze on rail fares, strikes and the summer heatwave.
The company said ticket sales in the UK were flat at £2.1billion in the six months to August, while underlying revenue fell 5 per cent to £102million.
Trainline said sales ground to a halt largely because of the freeze on all standard fares across England, which is due to last until March. The Government has said the freeze will save passengers £600million. Trainline also pointed to "additional disruptions from hot weather and TfL strikes" as factors behind the weaker performance.
Trainline, which makes its money by charging a fee on bookings, is facing a wider threat to its business model as train operators such as London North Eastern Railway begin to prioritise sales through their own websites rather than third-party platforms.
The company also highlighted the expansion of London's tap-in, tap-out payment zone through Project Oval, and, looking further ahead, the planned launch of the Government's Great British Railways app, which would let customers book tickets without paying a fee.
Refund rule change and falling shares
A tightening of rules requiring customers to request refunds by the end of the day helped offset some of the disruption, Trainline said, though it added that the change had slowed transactions and dragged down refund fee revenue.
Trainline shares have fallen by a third over the past 12 months.
International ticket sales fell 4 per cent year-on-year to £579million. The company said consumer sentiment in Spain had taken a hit following rail accidents earlier this year.
Chief executive to step down
Trainline's chief executive, Jody Ford, who is due to step down later this month, said the company had delivered a robust first half, with customers choosing and returning to Trainline for the value and features it offers against a backdrop of resilient underlying demand for UK rail travel.
Ford said the industry was moving through an important period of change and that Trainline was well positioned, with real scale in the UK and across Europe.
Competition watchdog investigation
Last month, the Competition and Markets Authority opened an investigation into Trainline over concerns it had not displayed fees upfront. The Competition and Markets Authority is the UK's main regulator for competition and consumer protection issues.
Trainline told investors it was "proactively engaged" with the regulator and was "seeking to meet both the DMCCA requirements and the sector-specific requirements of rail retailing".
Trainline shares rose 3.2 per cent after the firm launched a £100million share buyback.
Analyst reaction
Duncan Ferris, an analyst at Freetrade, said that given Trainline's share price had been derailed last month by the regulatory blow from the Competition and Markets Authority and had not recovered since, it would have helped shareholder confidence if the business had delivered standout results.
He said the numbers were maybe not impressive enough to distract from the regulator's ongoing investigation into possible drip pricing.
Ferris added that the newly announced 12-month share buyback programme, covering as much as £100million, might offer investors some cheer. He said that coupled with steady, if unspectacular, performance and unaltered guidance, this may offer shareholders reassurance that the business is still chugging along despite regulatory issues.
