Online ticketing platform Trainline shares gained 24% to 245p on Thursday afternoon after the company announced amendments to its third-party retail licence agreement.
Trainline and Rail Delivery Group (RDG) have reached an agreement on a memorandum of understanding (MOU) to alter its third-party retail licence as a result of RDG’s examination into rail retailing in the UK.
Trainline and other third-party sellers will now work with the RDG on new contractual licensing agreements in a cooperative manner. If new contractual terms cannot be mutually agreed upon, RDG has the power to establish a legally binding minimum set of business terms under the rules of the MOU.
Trainline’s commission rate would be reduced by 0.25%, according to the company, starting April 1, 2025, followed by basic terms which would apply to Trainline.
The base B2C online sales commission rate has been reduced by 0.5%, from 5% to 4.5% and the elimination of central industrial costs as a counterbalance which is estimated to be around 0.25% by Trainline.
AJ Bell investments director Russ Mould said, “There will be a sigh of relief in Trainline’s camp regarding the proposed changes to its commission rates. The rail industry is undergoing a lot of changes, and this includes reviewing the cut that third party ticket sellers get when they put bums on seats.”
“The rail sector has been through very difficult times during Covid, and it would have been easy to slash commission rates to the bone, leaving Trainline in a pickle.”
“Fortunately, the business should be able to cope with a half a percentage point decrease in the rate. Even better for its finances is the removal of central industry costs worth 0.25%. That explains why its share price has shot up more than 20% on the news.”