News

Virgin Trains loses West Coast franchise

15 Aug 2012 by BusinessTraveller

It’s all change on the West Coast main line from December 9. That is when the current incumbent Virgin Trains hands over the franchise keys to First Group.

Virgin Trains has held the franchise covering the busy lines linking London Euston with Birmingham, Manchester and Glasgow for the past 15 years.

During that time it has invested huge sums of money in upgrading what used to be a Cinderella service in the days of British Rail to what is now one of Europe’s most modern railway networks.

First Group was awarded the franchise partly because it outbid Virgin Trains (industry sources suggest First Group bid £6.5 to £7 billion over 14 years as against Virgin’s offer of £5.5 to £6 billion) and partly because of its promise to improve services.

First Group has promised to:

  • Provide an additional 40,000 seats a day by 2016 by using the existing rolling stock (which Virgin currently leases from Angel Trains) and by introducing a new fleet of trains on the Birmingham-Glasgow route.
  • Introduce from day one [of the franchise] an improved compensation scheme for passengers who experience disruption.
  • Launch a Euston to Blackpool route next year with new through services from Euston to destinations in the West Midlands and Northwest to be added in the following years.
  • Speed up Euston-Glasgow trains by 15 mins.
  • Reduce the cost of flexible ‘walk-up’ fares by 15 per cent over the next two years.
  • Launch ‘smart ticketing’ across the network
  • Upgrade onboard wifi following train refurbishment.
  • Increase the offer of ‘at seat’ catering [currently offered by Virgin to first class passengers]

But questions are being asked as to how First Group will be able to afford such high franchise payments which equate to around £500 million a year. At present Virgin Trains is paying the government just £160 million a year.

It means that First Group is banking on substantial passenger growth to raise the extra cash. This is a risky strategy in these difficult economic times when you remember what happened to GNER and National Express when they overbid for the East Coast franchise.

Sir Richard Branson, founder of the Virgin Group, has branded the government’s decision as “insanity.”  In a statement issued today he says “We won the franchise in 1997 with an agenda to change radically the way people viewed and used the train. At the time the track was run down, staff demoralised, the service riddled with delays and reliant on heavy subsidies. We dramatically speeded up journey times, increased service frequency, improved the onboard experience, doubled passenger numbers and returned the line to profit.”

But in truth not all Virgin Trains’ promises have been fulfilled. Readers with long memories will recall that Virgin promised it would serve on-board sushi, provide limousine rides to the station, offer 140 mph travel (trains are currently restricted to 125 mph) and provide seat-back TVs.

Another claim made by Sir Richard “I’m going to empty the M6” has, of course, not been realised at all.

And Virgin’s fares structure, with its very high charges for flexible business tickets, has come in for criticism.

Writing in The Times, Stephen Joseph, chief executive of the Campaign for Better Transport, says “There have been issues with very high walk-up fares and very low advance fares on journeys between London and Manchester.”

All in all, First Group has a difficult act to follow when you realise how much Virgin Trains has achieved over the past 15 years.

Let’s wish them luck.

For more information visit virgintrains.co.uk, firstgroup.com.

Report by Alex McWhirter

What do you think about the decision to award First Group the West Coast franchise? Take part in the discussion on our forum.

Loading comments...
Share with your friends










Submit
Be up-to-date
Magazine Subscription

To see our latest subscription offers for Business Traveller editions worldwide, click on the Subscribe & Save link below

Polls