Heritage Railways in 2023, K&ESR in 2024:
Navigating the Challenges, Grasping the Opportunities
As we reflect on the 2023 season and the broader landscape of heritage railways, it's important to place the current position of the K&ESR within the sector's own current position. This overview amalgamates insights from various sources, including my own reflections, the HRA November Conference outputs, and in particular the presentation of Paul Lewin, General Manager of the Ffestiniog and Welsh Highland Railway to the December APPGHR (All Party Parliamentary Group Heritage Rail), on a snapshot of the challenges and opportunities facing heritage railways. The APPGHR visited us in September 2023.
Challenges: A Glimpse into the Turbulent Landscape
- Operational Struggles: Many heritage railways find themselves in precarious positions, with some either unaware or immobilised by the need for change. On a positive note, others are proactively acknowledging challenges and actively addressing them.
- Impact of Legislation: The unintended consequences of new legislation and regulations are amplifying costs across the board. Minimum wage legislation, in particular, has led to a doubling of associated staff costs, including sick pay, pensions, and National Insurance.
- Escalating Materials Costs: Beyond normal inflation rates, materials costs continue to surge, posing an additional financial burden.
- Soaring Fuel and Energy Costs: The loss of tax relief on red diesel and the substantial increase in energy costs, coupled with the challenges of the hospitality industry, are creating a perfect storm of financial pressure.
- Financial Strain: Ticket sales, a traditional revenue source, are struggling to cover operating expenses. Some railways grapple with debt or substantial costs associated with delayed infrastructure renewals.
- Personnel Changes: Heritage railways have witnessed several senior personnel changes, with former General Managers departing the sector during 2023.
- Insurance Challenges: The cost and availability of suitable insurance are emerging as growing threats, posing additional financial complexities.
Looking Ahead: Navigating Uncharted Territories
As we step into 2024, the challenges show no signs of diminishing. Larger railways have begun staff reductions, and an election year, while offering opportunities, can potentially stall progress temporarily.
In response, my understanding is the Heritage Railway Association (HRA) aims to:
- Unify the Sector: Efforts will continue to bring the sector together, providing a platform for knowledge sharing and experience.
- Guidance and Support: The HRA will intensify efforts to offer guidance and business support, presenting an unfiltered view of the sector.
- Advocacy for Heritage Rail: Emphasising the significance of heritage rail to local economies and cultural heritage remains a crucial part of HRA's mission.
- Addressing Funding Challenges and Governance: A Call for Change Funding, whether through fares or philanthropy, requires a renewed focus and innovative thinking. Achieving this necessitates stronger governance and the infusion of fresh perspectives at board, CEO/GM, and senior management levels.
Contrary to the belief that heritage railways are immune to closure, the changing landscape of funding criteria demands a commitment to strong governance, diversity, and environmental sustainability.
An Urgent Call for Action
While the challenges paint a realistic picture, opportunities abound. The sector needs robust governance, strategic thinking, and a willingness to embrace change. The potential for railways to cease operations or merge prompts a crucial question for heritage railway leadership:
What is our approach at the K&ESR toward these challenges?
The question of our approach toward these challenges, especially in our 50th year, is a crucial one that demands careful consideration by all of us. As the heritage railway community faces various challenges, it's essential for the K&ESR to define its stance and strategy.
As we enter our 50th anniversary, it's an opportune time for us to reflect on our journey, acknowledge our achievements, and prepare for the future. The heritage railway sector is evolving, and we, at K&ESR, are not immune to the challenges faced by our peers.
As we celebrate our 50th year, we can leverage this milestone to not only reflect on our rich history, but also to strategically plan for the future, engage stakeholders, including volunteers, in discussions about the challenges and opportunities ahead and emphasise the importance of collective efforts in navigating uncertainties and ensuring the continued success of the K&ESR.
Ultimately, the attitude toward the possibility of operational changes should align with the broader mission, values, and aspirations of the K&ESR. It's an opportunity for strategic reflection, innovation, and a commitment to preserving the heritage for generations to come.
Strategic Vision:
Our commitment to preserving the heritage of the Light Railway remains unwavering. Our 50th year is not just a celebration of the past but a declaration of our dedication to the future. We will continue to serve as a living testament to the history and experiences of the Rother Valley.
Financial Sustainability:
Financial sustainability is paramount. We've meticulously reviewed our financial standing, and while challenges persist, our proactive financial management has kept us stable. We're exploring innovative revenue streams to bolster our position.
Impact on Legacy:
Any decision we make will be grounded in our mission to preserve the KESR story for future generations. Our legacy is not just a testament to the past but a living narrative that will continue to evolve with strategic, thoughtful decisions.
Community Engagement:
Our connection with the community is a cornerstone of our existence. We'll continue fostering these relationships, listening to concerns, and involving the community in our decision-making process.
Diversity and Innovation:
Diversity and innovation are not just buzzwords for us; they're essential principles. We're exploring new ways to diversify our offerings, attract a broader audience, and ensure the KESR remains relevant in an ever-changing landscape.
Governance and Leadership:
The strength of our governance and leadership is crucial. We're committed to ensuring our leadership team reflects the diversity of thought necessary for the challenges ahead. Strengthening governance will be a continuous focus.
Partnerships and Collaborations:
Collaboration is key to our success. We're actively seeking partnerships within and beyond the heritage railway sector. Together, we can share resources, insights, and navigate the challenges more effectively.
Communication Strategy:
Communication is at the heart of our organisation. As we face uncertainties, we'll keep you informed every step of the way. Transparent communication fosters trust, and we value your trust immensely.
I accept that to many members these are just words and grand intentions, but I would argue without them we would be directionless and as we have in the past lurch from one crisis to the next. And before we can spend time on the big issues, I can assure everyone the current single most important objective is to get through our lean period between December and April when we are running few trains and have significant costs to pay out. If we do not correctly navigate this period, then it places our future at risk. For that reason, I would like to share insights from our recent Finance Review Group (FRG) meeting to provide a clear understanding of our financial situation as we step into 2024 and outline the necessary steps we are taking.
The crucial information is that by spending carefully, focusing only on essential items and addressing safety issues, our cash remains positive during the lean trading period. This is a normal occurrence as we generate little income from running trains during this time, but our spending on salaries, materials, and overheads continues.
This shows that the railway is financially stable and not in jeopardy, provided we manage our cash very tightly. We have analysed a 12-month cash flow forecast, and once we emerge from April, we will be earning income again and refilling our coffers. Barring unforeseen circumstances, we predict a more secure financial position in October 2024 than in October 2023 (the end of the financial year). Therefore, you will understand why in the interim we have introduced an approval and monitoring system for any spending during the lean period.
In conclusion, our 50th year is not just a milestone but a launchpad for the future. Challenges are real, but so are the opportunities. Let's embrace them collectively, with the same passion and dedication that have defined the K&ESR for half a century and to finish on a positive note. Leading the programme are not one but two Galas, including the K&ESR’s first Diesel Gala in 14 years. This will take place in on 12th, 13th and 14th April. The second key calendar date is a Anniversary Gala to be held on 1st and 2nd June. This will also include special guest locos and other attractions. We will also be adding exciting new events and expanding existing ones as we look to grow the railway’s appeal and connect with more potential visitors on a variety of levels. A specially commissioned 50th birthday logo, as seen at the head of this e-newsletter, has also been created & will be used in all communications and advertising throughout this year. Sunday 3rd February marks the actual anniversary of when passenger services restarted, beginning at Tenterden and finishing one mile the other side of Rolvenden – the first section of line to be reopened at that stage. The official reopening ceremony was conducted at Tenterden Town Station on 1st June by the Rt Hon William Deedes, the then MP for Ashford who subsequently became Lord Deedes.
The train which pulled the first passenger service that day in 1974, GWR Diesel Railcar W20, is currently in the final stages of its major restoration. The full 2024 programme of events will include regular K&ESR favourites such as the popular 1940s weekend and the CAMRA Real Ale & Cider festival, Mothers’ Day and Fathers’ Day treats plus family fun events during school holidays, not to mention the award-winning Santa Specials – one of the longest continuously running visitor events on heritage rail. The K&ESR will also be holding its second Steam Punk event – bringing to life the Victorian science fiction world of Jules Verne, Mary Shelley and HG Wells - on 29th and 30th June, following the success of last year’s inaugural event. These events encapsulate the essence of K&ESR's journey — Past, Present, and Future.
Robin Coombes
General Manager