Will Virgin Trains lose the West Coast franchise?Back to Forum
Anonymous3 Aug 2012
Virgin Trains’ long-running contract to operate the lucrative and voluminous West Coast rail services out of Euston will expire next December.
The routes in question include major business destinations from London such as Birmingham, Manchester, Liverpool and Glasgow. Annual passenger numbers are almost 30 million and most travel long distance.
Media reports this week suggest that Virgin might lose out to rival First Group who have offered to pay £1 billion more (than Virgin) in franchise payments to the UK government over the 14 year (franchise) period.
First Group has offered £7 billion ; Virgin Trains has offered £6 billion.
At the moment, according to The Guardian, Virgin Trains pays the government an annual franchise fee of £140 million. If it were to win the franchise contest, Virgin’s annual fee would rise to around £500 million says The Guardian.
According to The Times, Sir Richard Branson has written to the Prime Minister claiming that the only way First Group could make its bid work would be to “drastically cut the quality of services.”
In these difficult economic times it might seem logical that the government would take the money being offered by First Group. On the other hand, history shows that the highest offer may not be the right one when you see what happened to the failed franchises taken on by GNER, National Express (East Coast) and Great Western.
But franchise payments of £6 billion and £7 billion are huge sums of money. Whichever TOC wins the franchise might it lead to cost-cutting, higher fares or the ending of free meals in first class ?3 Aug 2012
Whoever wins, we all know the story.
All the time things go well it’s fine. Then things get tighter and all sorts of sharp practice comes into play (customers being hammered for using the wrong train).
Then again if your numbers are that far out you just follow the Sea Containers/National Express East Coast model. You simply say ‘up yours’ and leave the tax payer to pick up the pieces!
Of course everything is in a ring fenced subsidiary to protect the operator from any serious risk.3 Aug 2012
Nationalisation gets my vote, surely the government will make more than £500 million p/a if it ran west coast itself. And only with that can we obtain a simple price per mile system across the UK that is desperately needed.3 Aug 2012
Virgin have done a great job. 3rd group have not. East Coast mainline is nationalised because the Govt took the highest offer, ignoring commercial reality. Simple decision; let Beardy continue.4 Aug 2012
First have not done a bad job on Great Western and if they can provide that on West Coast then that would good. Cramped leg room would continue irrespective of who wins, there is unlikely to be a refurishment in the short term to what are essentially newish trains.
As for handing the keys back if it goes wrong, it is unlikely to be the option that NExp and GNER had.4 Aug 2012
Both outfits are dreadful and the premium bidding war will result in an even more dreadful service for the consumer. SimonSI is absolutely right.
The rail franchise system is fundamentally flawed.4 Aug 2012
“Virgin have done a great job” as Tim2sms notes when you consider what this TOC inherited from British Rail in the 1990s.
Virgin acquired the West Coast franchise at a cheap price because at that time it was a ‘cinderella’ network.
Now after being extensively upgraded and modernised the government views West Coast as a flagship network and is charging franchise premiums to reflect this fact.4 Aug 2012
Correct. Virgin have done a standard Virgin (mediocre) job.
Network Rail (aka the UK taxpayer) funded the enormous infrastructure upgrades, which the old British Rail (proprietor: the UK taxpayer) would have had to have funded if it was still around.4 Aug 2012
Whilst I would tend to agree with you Bill, it is unlikely that had it still been the old BR the upgrade would have been done when it was. In other words it is more likely that it would have been delayed or the project cut back.
Considering the frequency of service between London, Birmingham and Manchester which exists now there is little chance that kind of frequency would have been implimented by BR.4 Aug 2012
Yes, NTarrant. After its ill-fated APT I doubt if BR would have invested in costly Pendolinos so rolling stock would have been more conventional.
Pity that the Pendolino’s 140 mph is not being realised because of cost constraints so a lack of signalling upgrades means they must run slightly slower.4 Aug 2012
Personally I quite like Virgin Trains for the frequancy and speed on the London to Birmingham / manchester routes. The 11 car pendolinos are a huge improvment with 2 extra standard class carages. Relativley easy to get cheap first class tickets on Virgin off peak in advance.5 Aug 2012
Virgin are excellent at extracting money from the taxpayer, and the current franchise has onerous competition clauses. Well, I say competition, I mean “blocking competition”. That puts me off them.
The brilliant Wrexham and Shropshire Rail Company was not allowed to collect/discharge passengers at Birmingham (as Virgin stopped there) but Virgin were allowed to start a service from Wrexham. Virgin Trains tried to block Southern from operating Milton Keynes – Croydon under moderation of competition rules. But Virgin don’t operate that route. It’s this kind of things that puts me off them. And their trains often smell of toilet.
I hope the government has learned it’s lesson from the East Coast fiasco. But somehow I think they won’t.
I don’t mind FIrst Group – the current management at Great Western has turned that operation around and it’s really rather good.
If National Express get it you can say goodbye to most catering.5 Aug 2012