Rail fares rise pegged to inflation

Every so often I read an article and start to tot up the number of economic concepts being covered in just a few words. This occurred to me again this morning when reading this BBC news article on train fare rises. Train fares are pegged to July's inflation rate and, as inflation is quite low at the moment, this means that the average rise of 2.2% is also relatively low (although regular train users may still feel aggrieved).Have a read yourself and see how many concepts crop up or give them same exercise to your A2 students. My thoughts are below:

As Ant and Dec would say, in no particular order....

1. Market failure - the lack of genuine competition in the rail networks means that the government has to intervene to prevent the train companies from setting unfair prices
2. Market failure - public transport offers a part solution to the pollution issues surrounding the use of carbon-based fuels so prices have to be pegged to encourage more people to use the railway instead of their cars. Railways are also heavily subsidised to ensure there existence and relative safety
3. Scarcity - trains are used by approximately 5% of the daily commuters in the UK. An argument is presented that most commuters are paying (via taxation) for a transport system that they don't use
4. Inflation and its calculation (the RPI is used here and not CPI) - this article illustrates why the collection on data on price rises is so important. The government are pegging the price rise based upon how real wages are being squeezed by prices. This is particularly important at the moment as nominal wage rises are not matching price rises for many people.
5. Natural monopoly - is there an argument, looking at the amount of government subsidy and the apparent low levels of profit for the firms, that the provision of an effective railway service is not possible in a truly competitive market? Ultimately, the industry can only sustain a few firms.
6. Government failure - George Osborne's introduction of the 'flex rule' allowing train companies to increase some fares by more than 2% may be (and I say 'may') be a move that is more politically or ideologically motivated than economic. Is there an argument, also, that have different price changes in different regions of the UK which are using essentially the same network is politically motivated?

There may be others!