Reply To: Virgin Trains first class decline…Back to Forum
ScottWilson is correct about the subsidy issue. It’s not generally realised that, unlike some other train firms such as First Great Western or East Midlands, Virgin Rail makes no franchise payments to the government. It actually gets a subsidy
This is because Virgin Rail agreed to take on a run down rail service and was prepared to spend billions on introducing faster, more frequent and more modern trains.
Hefty franchise payments on the East Coast route brought down two train firms, namely GNER and NXEC, because they couldn’t keep up with their payments. They also had to compete with two “open access” operators: Hull Trains and Grand Central.
Open access operators do think they can compete with Virgin Rail because of the latter’s subsidy. Rather it’s because a “no competition” clause was written into Virgin Rail’s franchise agreement.
Chiltern and London Midland who compete in a sort of way between London and Birmingham are not considered as open access operators.
Virgin Rail’s franchise expires in two years’ time. It will be interesting to see whether the government grants a further extension or whether it will give another train firm the opportunity to take it over.