Trainline has set aside £3.7 million to cover possible costs related to a Competition and Markets Authority (CMA) investigation into “drip-pricing” allegations, contributing to a 17% drop in half-year pre-tax profits to £55.2 million for the six months to August 31.
CMA investigation into pricing tactics
The provision follows the CMA's announcement in August that it was investigating Trainline, as well as Virgin Atlantic and Red Driving School, over concerns that customers were not shown full prices upfront.
The Trainline investigation focuses on whether all mandatory fees were displayed upfront to travellers buying train and coach tickets in advance on its app and website. The CMA said it observed transactions with additional fees ranging from 50p to £2.79, with a £1.50 booking fee for coach journeys.
Wider clampdown on pricing practices
The probes are part of a wider crackdown by the regulator over misleading pricing practices, including drip pricing, where mandatory charges are separated from the headline price or added later in the buying process.
Consumers affected could get compensation if it is found that the companies broke the law. The CMA will update on the case in January.
Impact on profits and shares
The provision sent Trainline shares down as much as 8% at one stage on Wednesday morning before they settled around 2% down.
Trainline said: “We continue to engage proactively with the CMA and other relevant regulators, looking for a swift resolution that ensures customers have clear and transparent information, and maintains a straightforward booking experience.”
It added that the final financial impact to the group could vary considerably, given that the “ultimate outcome of the investigation remains highly uncertain and is very difficult to predict with precision”.
Earnings were also impacted by the wider clampdown on rail refunds, which cut fee revenues for the platform, which charges people to refund their tickets. From April, rules changed so people can only request a refund before 11.59pm on the day before travel.
