Virgin Trains passengers will now receive money directly on to their payment cards within three days if their journey is delayed by at least half an hour.
The scheme is available to passengers who have bought themselves advance tickets through the operator’s website or mobile app.
The Government has welcomed the introduction of the system and called for it be rolled out nationwide by other rail service companies.
Virgin estimates that it will pay out an extra £2.8 million under the new scheme.
This is because many people currently do not use the existing online claim form after experiencing delays on their journey.
Some five per cent of the train services run by the operator were either cancelled, were late by more than 30 minutes or failed to make a scheduled stop in the 12 months to September 19, according to Network Rail figures.
On that basis it was the joint second worst performing rail operator in England and Wales.
The worst was Govia Thameslink Railway, according to Network Rail figures. Virgin’s new system will mean that around 3.5 million journeys on the West Coast Main Line will fall under the terms of the Automatic Delay Repay system each year and be eligible for compensation if delayed.
The Government’s transport secretary Patrick McLoughlin described the development as “fantastic news”.
He said: “Virgin Trains are making the most of modern technology to improve the service customers get.
“Our plan is to make sure passengers across the country benefit from schemes like this and we are encouraging other operators to roll out similar schemes nationwide.”
Mike Hewitson, head of policy at independent watchdog Transport Focus also gave the scheme his backing.
He said: “This is a great step forward and we would like to see this system introduced across all operators and ticket types.”
Phil Whittingham, the managing director of Virgin Trains, said: “We’re proud of our record of customer service at Virgin Trains and are always looking for new ways to innovate for the benefit of customers.”
The Automatic Delay Repa only applies for advance tickets when a specific train has been booked.
A seat reservation is not enough and journeys with multiple connections across different operators will also not be eligible for an automatic refund.
However passengers who experience delays on journeys not which are not entitled to refunds through Automatic Delay Repay can still claim compensation in the for in the normal way. The levels of compensation on Virgin Trains are as follows:
: Delays of 30-59 minutes - 50 per cent of the cost of a single ticket or the relevant portion of a return ticket.
:: Delays of 60-119 minutes - 100% of the cost of a single ticket or the relevant portion of a return ticket
:: Delays of 120 minutes or longer - 100% of the cost of a single or both portions of a return ticket
Virgin policy states that it does not normally accept claims in cases where trains are delayed if the passenger was notified of the delay before they bought the ticket.