So that's £6million in approx (old figure, probably more this year) in £882 million income. That's equivalent to 0.62% of revenue!!! Tiny, rather than small
If profit is 6% of revenue, then 0.62% is 10% of profit - hardly tiny.
All the arguments as to whether or not it is fair though completely miss the point. The point is that First and other bidders knew the scheme (and had a good idea of the likely compensation amounts payable) when they bid for the franchise and will have factored it in. The only fairness issue is whether the franchise is operating under the rules both parties entered into or not. To change the rules halfway would be unfair.
When the franchise terms are drawn up the relevant question isn't whether the rules are fair (because bidding for a franchise isn't compulsory they are agreements voluntarily entered into), but whether they provide the correct incentives to the correct parties to delivery what the government wants delivered. This is why things like void day for compensation payments to passengers annoy me. Superficially, it feels "fair" that First shouldn't have to pay out for a delay caused by bad weather (because First didn't cause the bad weather) but fairness is not a relevant issue here. The point is that if we want a network that is more weather resilient then you need to incentivise First and
NR» to make it resilient, and the way to do that is to make it more expensive to have a non-resilient system than a resilient system and the way to do that is to hit First and NR with penalties when there is weather-related disruption.
Of course there are ways to have a better network that doesn't reply to market pricing and a money-go-round. There are, I think, good (political) arguments in favour of alternatives. But given that we have a market driven network and a system for incentivising actors via compensation payments, then lets use it properly.
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