Britain’s biggest train company is facing an investigation into claims that it is abusing its monopoly on key routes by imposing the highest fare increases since privatisation.

South West Trains (SWT) is raising morning off-peak fares by 20 per cent from May 20 on services into Waterloo. The increase will affect thousands of people who work flexible hours and wait until after the peak to take advantage of cheaper tickets.

The company claims that the increases are necessary to reduce overcrowding on trains arriving in London before noon. But passenger groups believe the real reason for the rises is that the company wants to raise its profits from passengers who would find it difficult to travel later.

Passenger Focus, the rail watchdog, complained to the Rail Regulator after it found that the rises were only implemented at stations where SWT had a monopoly, such as Woking, Winchester, Guildford, Salisbury, Southampton and Bournemouth. The company is freezing fares at Reading and raising them by only 1 per cent at Basingstoke because it competes at these stations with First Great Western.

This month’s increases affect off-peak trains arriving in London as late as 12.49pm. A so-called “cheap day return” from Southampton to London will rise from £27.20 to £32.60 and from Bournemouth to London from £36.40 to £43.70.

Anthony Smith, chief executive of Passenger Focus, said: “The scale of these price increases is breathtaking and completely unacceptable. We have written to the regulator asking him to investigate. The affordable, ‘turn-up and go’ railway has been further eroded and SWT is exploiting a monopoly market. Families making day trips to London will be hard hit by these changes.”

Mr Smith said that if SWT was concerned about overcrowding, it would cut fares on the last two trains of the morning peak, which were often half empty. “We are very suspicious about their claims that these increases are needed to deal with overcrowding because they haven’t tried any other measure, such as dropping the price at the end of the peak.”

An SWT spokeswoman admitted that one of the reasons for not increasing fares at Reading and Basingstoke was that the company was concerned it could lose passengers to a rival train operator. She added: “We are trying to spread the demand a bit across the day. We also have to raise money to invest in the railway, though there would be no point in pricing people off the railway and losing our off-peak market.”

SWT signed a new franchise last year under which it agreed to pay the Department for Transport £1.2 billion over ten years. It cannot increase its revenue from season ticket holders because their fares are set by the Government. But its contract allows it to increase off-peak fares as often as it likes.

This month’s increases will be the second in five months for SWT’s off-peak passengers.

The company is also the subject of another complaint to the Rail Regulator from Ed Davey, the Lib Dem MP for Surbiton. He said that SWT was breaching the new Gender Equality Duty, in force since last month, because previous rises fell heaviest on part-time workers, who are disproportionately female. People who work two or three days a week have to buy day-return tickets, which are set by SWT. It raised day-return tickets between Surbiton and Waterloo by up to 36 per cent in January.

Mr Davey said: “These unfair fares have to stop and we have written to the Office of Rail Regulation requesting an investigation. This will be a long campaign to bust open these anticompetitive practices that hit local commuters.”

In its letter to the rail regulator, Passenger Focus said: “We are very concerned at the scale of the increase on the cheap day fare. We feel that this move is against the wider passenger interest.”

SWT has already angered passengers by removing seats and lavatories on several of its busiest routes to create more standing room.

Going north

20% the fare rise for services to London from stations with an SWT monopoly

£43.70 the new price of a “cheap day return” from Bournemouth

16m passengers a year will pay 20 per cent more

440,000 people a day use SWT’s services

£770m the worth of Brian Souter, chief of Stagecoach, which owns SWT, and his sister Ann Gloag

Source: Passenger Focus, The Sunday Times Rich List