Rail fares are heading skywards next year. Atoc has confirmed an average increase of 6.2% for 2011, starting in January.

Why such a bike hike this time around? Because the Tory / Lib Den coalition has changed the way that fare increases are calculated. Previously it was pegged at 1% above the Retail Prices Index as measured in the previous summer. Now it’s 3%.

What does this mean in real terms? According to Atoc the average single ticket across the whole rail network currently costs £4.89, but from January it will be £5.19.

Season tickets are going up by slightly less as they are regulated fares, but will still see an increase of around 5.8%. A season ticket from Chelmsford to London, including the tube, will be hiked by £220, from £3,800 to £4020.

Atoc is spinning this as a good think for tax payers. Chief Executive Michael Roberts said:

We know times are tough for many people but next year’s fare increases will ensure that Britain can continue investing in its railways.

Even with these fare increases, the money passengers spend on fares covers only half the cost of running the railways – taxpayers make up the difference. The government is sticking with the previous administration’s policy to cut the taxpayers’ contribution to the overall cost of running the railways.

More and more people are travelling by train and demand is expected to double in the coming decades so it is more important than ever that money is spent on providing better stations, more trains and faster services. Money invested through fares has helped to bring about the record levels of customer satisfaction and punctuality on the railways today.

But, in the longer term we need reform which drives down the cost of the railways by relying more heavily on the innovation and resources of the private sector to give passengers a better service and taxpayers better value for money. (Source: Atoc)

According to Atoc’s figures, train fares will provide around £6bn of funding for the railway next year, covering half of the required £12bn it costs to run the services.

The train companies receive only 3p in every pound as profit, as can be seen on the chart below.