By Samuel Indyk
Investing.com – Shares in Trainline fell by over 25% on Thursday after the government announced new plans to revamp the rail network.
Part of the plan includes the introduction of a new ticketing website and application called Great British Railways (GBR), a product that would directly compete with Trainline (LON:TRNT) in the UK.
GBR plans to simplify the current mass of confusing tickets with a rollout of more convenient Pay As You Go, contactless and digital tickets on smartphones.
The application and website would offer services similar to Trainline, which provides a “one-stop-shop” for train travel tickets within the UK.
The FTSE 250 company makes around 90% of its revenue from the UK market but its dominant position in the country will be eroded as commuters and leisure travellers have another option to buy their tickets.
The new application is also set to make it easier for passengers to claim compensation or refunds if journeys are delayed or cancelled.
“Great British Railways marks a new era in the history of our railways,” said UK Transport Secretary Grant Shapps. “It will become a single familiar brand with a bold new vision for passengers – of punctual services, simpler tickets and a modern and green railway that meets the needs of the nation.”
Although shares in the company have taken a hit this morning, Hargreaves Lansdown (LON:HRGV)'s senior investment and markets analysts Susannah Streeter notes that Trainline's current commission rates are guaranteed until April 2024. It is how the company fits in to the new plans that will worry shareholders.
"Trainline’s current commission rates are guaranteed until April 2024 under an agreement with the Rail Delivery Group," Streeter said. "But after that how the company will slot into the new rail world is far from clear, without further detail about how the new system will operate."
At 09:08BST, shares in Trainline were trading lower by 28% at 309 pence per share.