Published: 24th January 2014
The Department for Transport (DfT) has announced the shortlist for the East Coast franchise which is due to exit the public sector in 12 months’ time. The franchise has been operated by the DfT’s wholly owned subsidiary East Coast Trains for the last five years after the previous two franchisees both failed.
Three potential operators have been announced after passing the ‘Pre-qualification evaluation’ stage in the process and they will now be commencing the detailed work on their respective bids will be underway.
East Coast Trains Ltd (First Group plc)
Keolis/Eurostar East Coast Limited (Keolis (UK) Limited and Eurostar International Limited)
Inter City Railways Limited (Stagecoach Transport Holdings Limited and Virgin Holdings Limited)
Stagecoach and Virgin have formed a new entity, Inter City Railways Limited ("ICRL"), to bid for the franchise. Stagecoach has a 90% shareholding in ICRL, with Virgin Group holding 10%
Eurostar are used to operating along the ECML when their Regional Eurostar trains ran for many years as part of the GNER franchise between Kings Cross and York. Keolis operate regional train services in partnership with Serco.
First Group are well known train operators in the UK operating across the whole of the UK between Penzance and Thurso and Liverpool to Scarborough and London to West Wales.
The bidders will be using the currently under construction Inter City Express Trains, being built near Shildon by Agility Trains owned by Hitachi. The DfT says that bidders will have to explain how they will make best use of the £240 million investment in infrastructure projects over the next 5 years improving capacity and reducing journey times.
Rail Minister Stephen Hammond said:
Giving passengers more will be at the heart of the new East Coast franchise. That means new services and journeys that are faster, more punctual and more comfortable. When these companies are developing their proposals they should be looking at ways to innovate and grow the service.
While the East Coast franchise has been under government ownership since 2009, the route now needs a long term private sector operator to plan for the future and meet the increasing demands for more trains serving even more destinations.
Bidders will need to comply with a base timetable plan specified by the DfT and in addition, offer innovations to build on the core train service requirement as well as identifying further investment opportunities on the route, particularly at stations.
Following the West Coast Main Lined franchise fiasco 18 months ago, all the bidders were asked to demonstrate that they have the financial strength, legal, operational and safety experience to run the franchise.
The East Coast Main Line (ECML) is one of two 125mph London to Scotland railways and is electrified between Kings Cross, Leeds, Skipton, Newcastle and Edinburgh. High speed 125mph diesel services run to Inverness and Aberdeen UK and the line has many long distance commuters from as far away as Newcastle to London.
The InterCity East Coast franchise is expected last for eight or nine years and may also include a two year extension clause to be invoked by mutual agreement. The DfT is expected to announce the preferred bidder around October 2014.
The partnership between the Virgin Group and Stagecoach plc welcomed the DfT's decision to invite the partnership to bid for the InterCity East Coast rail franchise.
Patrick McCall, Senior Partner, Virgin Group, said: "Innovation and customer service are key in all Virgin's activities. We're excited by the opportunity to use Virgin Trains' expertise in bidding for InterCity East Coast with our partners at Stagecoach.
"With Stagecoach we have transformed the experience of travelling by train on InterCity West Coast. We have delivered fast and frequent services on state-of-the-art trains, combined with excellent customer service.
"Independent research shows that rail travellers rate customer service on the West Coast ahead of all other long-distance franchises. People are voting with their feet for the West Coast - we've doubled passenger numbers to 30m over the last eight years. We'll be working hard over the coming months to put together a bid which will deliver a flair for innovation, excellent customer service, encourage more people to choose rail and increase the value of the network to the country."
Stagecoach Group Chief Executive Martin Griffiths said: "Stagecoach and our partners Virgin have played a leading role in transforming rail travel in Britain over the past two decades. We have a strong record of introducing new trains, maximising the benefit of infrastructure improvements and attracting growing numbers of passengers to the railway.
"Customers and innovation are at the heart of our rail services. Giving business and leisure customers excellent service on our existing inter-city services on the West Coast has delivered the highest levels of passenger satisfaction of any long distance franchise operator in the country.
"InterCity East Coast is a key part of the UK's rail network and we have already started consulting with stakeholders along the route to understand their aspirations for the franchise. We believe our private sector expertise can deliver a better service to customers and an attractive deal for the taxpayer. We look forward to submitting an innovative and competitive bid in due course."
Virgin and Stagecoach already operate the WCML franchise and want to increase train speeds to 135mph to allow regular timetabled four hour services between Euston and Glasgow.
The December timetable change saw Virgin extend many services from London to Edinburgh or Glasgow hoping to lure long distance passengers to their services away from the ECML despite taking around an hour longer as the trains are routed via Birmingham