I like the idea.

One problem occurs to me: How do you identify all those people currently benefiting from the controlled fare, and how many shares each person should receive?

A possible answer is to announce the new policy, say, a year in advance. Everyone who travels by train should hold on to their tickets. When the company is set up, everyone submits the tickets they bought between 1st January and 31st December 2005. Every pound you spent on rail travel entitles you to one share of the fare control company.

Another thought occurs to me.

The only reason that the shares in the fare control company will have any value is because they might be bought up by a rail company that wants to raise fares, or that a rail company might pay the company to raise the maximum fare.

This begs the question: How should the fare control company decide the fares?

If it's by a majority vote amongst shareholders, it raises the possibility that the rail company buys up 51% of the shares (or whatever the necessary majority is) and abolishes the limit on fares, leaving the 49% who didn't manage to sell their shares uncompensated. Furthermore, since shares in the company will be worthless when a rail company owns 51% of them, once it becomes apparent that it will own 51%, the share price will crash to almost zero as shareholders rush to offload their shares before the rail company achieves its target. This would leave some of those who managed to sell their shares undercompensated.

Furthermore, the rail company could be quite open about its strategy - it's even in its interest to be. It simply announces "We now own 5% of the shares in the fare control company. We are buying more shares whenever the price falls below £1/share. We anticipate owning 51% in 6 months time."

A shareholder would then realise that his shares are likely to be worthless in 6 months. I predict that the crash would happen almost immediately, and the rail company would buy the remaining 46% of the shares it requires for next to nothing within a week.

Alternatively, if the fares are decided by unanimous vote amongst shareholders, everyone would be compensated, but you would then have a hold-out problem (and I bet you Bob Crow would be one of the hold-outs).

Hmmm. This is one of those things that should work in theory, but in practice human fallibility would mean it would go off half cocked - a bit like rail privatisation.....

Andy Wood - fortunately, company law has been designed to prevent the situation you describe: if someone wishes to acquire a majority holding in a company, they need to make a takeover bid for all the shares (precisely to stop minority shareholders being stiffed by unscrupulous big businesses).

Your ticket exchange idea is an excellent one, incidentally (although it could run into problems under the current rules, since you're technically supposed - in an only-enforced-by-automatic-machines kind of way - to surrender your ticket at the end of your journey).

Andy Wakeford - you might be right, although since this issue wouldn't directly affect technical operations it might be more successful (marketing and yield management are ways in which the new railway is clearly better than BR...)

...if someone wishes to acquire a majority holding in a company, they need to make a takeover bid for all the shares...

That solves that problem then, but how does it prevent a takeover being thwarted by a single holdout? Or does that happen all the time and it's only the minority of successful or nearly successful bids that make it to the news.

you're technically supposed ... to surrender your ticket at the end of your journey.

Alternatively, a coupon is issued with each ticket. You surrender your ticket at the end of your journey and submit your coupons in exchange for shares.

Simplifiedly, it's done on a majority vote of the shareholders other than the bidder (or his mates, who are called 'concert parties').

This is a very boring document explaining exactly how things work out. Another important point I'd forgotten is on page 93, which says that a bidder must offer shareholders (as a minimum) the highest price that the bidder has paid for shares in the company in the last year.

By "long term", you mean by the time some generations have died out and people have forgotten how it was when most of them could afford to take the train?