Season ticket travellers on West Midlands Trains (WMT) will not have national fare rises passed on to them in recognition of the network's "drop in performance".
National fares will rise by 2.8% from 2 January but WMT and London Northwestern Railway will cut 2020 season ticket prices by 3% to offset this.
West Midlands mayor Andy Street said it was a "positive step."
Network Rail said one fifth of WMT trains had failed to arrive on time.
WMT said the price reduction would affect passengers using weekly, monthly and annual season tickets.
Jan Chaudhry-van der Velde, managing director of WMT, which operates WMR and the London Northwestern Railway, said: "We have said for some time now that performance and timekeeping since the May 2019 timetable has not been good enough.
"Some changes were made in the December 2019 timetable change to remove the complexity, and to add capacity, but the most significant changes to reintroduce simplicity will be implemented in the May 2020 timetable.
"I apologise again to customers for the poor performance and cancellations since May."
The firm said its compensation packages were in addition to the £2.5m it paid in "Delay Repay" claims since May.
Mr Street said season ticket holders would see a reduction in their fares "as opposed to the unfathomable increase they were originally facing."
"This is a positive first step towards repairing WMT's relationship with passengers and I am sure this will be welcomed by regular commuters," he said.
"However, what passengers really want is a train service that they can rely on seven days a week. That is currently not the case under WMT, whose performance is, quite simply, unacceptable."
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