A sideways look at economics
I had some holiday days to use up recently and wanted to plan a little trip to get out of London. Needing a visa to go to most European countries, I decided that somewhere within the UK would work best. Edinburgh stood out, a beautiful city, far away enough from London to make me feel like I’ve actually gone somewhere, while still being within the borders of the UK. When deciding how to get there, I was quite certain that the train would be by far the most economical option, but boy, was I wrong. It being December, the cheapest return journey I could find on a train was around £100, making it more expensive than the base fares on most flights I could find. As an economist, I decided that this warranted further investigation and what follows is a comparison of the various costs that I considered when choosing whether I will take a plane or a train up to Edinburgh.
Let’s consider a trip from the 1st February 2025, a Saturday, returning on the 3rd February 2025, a Monday.
First off, I looked into ticket costs. The cheapest fare for a train to leave at a reasonable time in the morning of the 1st and return in the evening of the 3rd is £117.[1] The base fare on the cheapest similarly timed flight is £37, on Ryanair. Note that these are the prices I recorded when looking on the 9th January.[2]
Of course, the question of luggage always pops up when it comes to budget airlines. Let’s say I’d like to take 10kg of luggage along with a bag pack for this trip, this is included in the cost of a train ticket but would cost me £48 on top of my ticket on Ryanair.[3] So far, £117 on a train and £85 on the flight.
Next, time spent travelling – total round trip travel time is 2 hours and 35 minutes on the flight, compared to a whopping 10 hours on the train. However, train stations usually require a smaller commute and need no security checks, as a result, let’s add up to 1 hour to each end of our flights, taking the total time spent travelling by air to 6 hours and 35 minutes. It’s hard to assign value for these hours as people value them differently, but let’s take the UK’s GDP per capita per hour as an approximation. This works out to around £3.60 an hour. So, we add £36 to the cost of the train and £23.40 to the cost of the plane. Getting to and from a train station is often much cheaper than getting to and from an airport as well. We can add £20 for commuting to and from the train stations, and £50 for commuting to and from the airports. Train £173, and flight £158.40. Although I am not including this cost, we should also bear in mind that a train often gives you a higher ceiling of productivity when it comes to trying to do work.
I was also concerned about how delays and cancellations may affect my trip, in 2024 the average UK long-distance train delayed its passengers by 11.4 minutes[4] (much less than I thought), In comparison, the average delay of a flight taking off or landing in London Stansted or Edinburgh was 14 minutes.[5] Accounting for these delays adds £1.30 to the train ticket, and £1.70 to a flight ticket. Now we’re at £174.30 for the train and £160.10 for the flight.
As a climate economist, the environmental footprint of my travel plays an important part in my decision-making too. Consistent with my previous TFiF, I am using a social cost of carbon of $51 or £41.50.[6] My roundtrip from London to Edinburgh on a flight will emit approximately 0.3 tons of carbon, adding $16 to my flight ticket. The return journey from London to Edinburgh on a train will emit only 0.05 tons of carbon, adding just £2 to my ticket. The cost of train travel would then be £176.3 compared to £172.6 on a flight, flying wins. However, if we use the higher end of estimates for the social cost of carbon at around £155 per ton, as estimated by the US Environmental Protection Agency,[7] then we must add £62 to the price of the flight and £8 to the cost of taking the train. Now, the flight’s cost is £222.10, and the train’s cost is £184.30, train wins. I think this is an important point, when one considers the impact of their journey on the environment, taking the train may end up being the socially optimum option.
Of course, these calculations are very crude and there’s a variety of other things we can consider, but the point I am trying to make is that accounting for the social cost of carbon can make a difference as to which mode of transport is optimal for a journey. How you get the typical consumer to internalise this social cost is an age-old economic question, and there are plenty of options. Pigouvian taxes are taxes that are paid on each unit of a negative externality, in this case it would be on each unit of emitted carbon when using a train or plane. Alternatively, the Coase theorem would suggest that an emission trading scheme (ETS) would work well, here airlines and train operators buy permits that give them ‘the right to pollute’. The UK does have an ETS system in place, but the effective carbon price has been sliding for years, and the scheme needs to be restrengthened. There are other broader issues too, domestic flying is implicitly more subsidised in the UK compared to rail travel, for example, airlines do not have to pay fuel duty and trains pay significant track access fees to Network Rail, the public entity responsible for maintaining the tracks. There are also reports that smaller airports typically in the EU subsidise Ryanair’s flights to their destination, seeing it as a way to attract tourism and stimulate the local economy. Train operators get no such benefit. All this results in a bigger chunk of operating costs being passed on to rail passengers as opposed to air passengers, which effectively incentivises taking a flight on these routes rather than taking a train.
I think it’s time for policymakers to think about the above options and take steps to encourage train travel on these domestic routes. Using a train is just so much better for the environment, and I don’t think we lose out on much by choosing it over a flight for routes like London to Edinburgh.
PS: Make sure you see Edinburgh if you haven’t yet, I firmly believe it has a higher value for good restaurants, cafes and bakeries per square mile compared to London.
[1] Travel options | Trainline
[2] Round trip to Edinburgh | Google Flights
[4] Table 3144 – Average passenger lateness by operator and sector (periodic) | ORR Data Portal
[5] Punctuality statistics 2024 | Civil Aviation Authority
[6] What is the social cost of carbon?
[7] What is the social cost of carbon?
More from TFiF