by Phil Marsh

German owned operator Grand Central awarded 10-year contract extension

Published: 12th August 2014

East Coast Open Access franchise headache for the Department for Transport?

Open Access Operator, Grand Central Rail (GCR) has announced that its application to extend its Track Access Agreement with Network Rail ((NR) for 10 years has been duly authorised by the Office of Rail Regulation (ORR). This follows negotiations and a statutory consultation period last year.

This is the longest contract that GCR has achieved and will enable them to continue to offer services linking King’s Cross, Sunderland and Bradford until 2026. The contact length also brings a real opportunity to GCR to make significant investment in its rolling stock and in passenger facilities at the stations it serves. The existing track access contract expired in 2016 and so the award removes any uncertainty.

GCR operates a fast direct train service from the North East and Yorkshire to London King’s Cross offering journeys not available by other operators. They, along with other open access operators consistently appear at the top of passenger satisfaction tables by offering passengers excellent customer service, as well as comfortable seats, free Wi-Fi and extra luggage space. Grand Central says that it ‘goes that extra mile and aims to recreate the best of the railway tradition of quality and attention to detail’.

This was demonstrated by the results of the latest National Rail Passenger Survey when they were named one of the best rated long distance train operator scoring 94% customer satisfaction. Open Access operators it could be argued have a lower cost base so they can offer cheaper fares but they also are not protected by any franchise subsidy arrangement. The company says that its passengers are 23% more satisfied with their ticket prices compared to other long distance operators.

The irony of competition…

The award means that the headache for the Department for Transport (DfT) of open access operators continues with the refranchising programme for East Coast Trains. The winner of this competition will be announced in the next few months and they will have had to factor in this 10 year agreement in the financial part of their bids. It is an ironic fact that rail privatisation was grandly announced by the then Government would bring competition to the UK rail system.

The ironic truth is that the early franchise winners were protected by a Moderation of Competition clause in the contractual rail industry contractual maze. So this 10-year deal means that the franchise receipts for the DfT could be reduced as franchise bidders become more cautious over revenue. The eventual winners of the franchise (to be announced soon) will have to work hard not to lose business to GCR. But now that companies such as GCR and First Hull Trains compete for east coast main line passengers, the east coast franchise winner will have to keep high standards to retain business. So maybe the promised competition has arrived albeit in a different form than envisaged!

German owners

GCR is part of the Arriva Group which is a fully owned subsidiary of Deutsche Bahn, the German Government owned train company who gained ownership in November 2011. Their trains are a mixture of refurbished British Rail built high speed trains and Alstom Class 180 trains, both of which can travel at 125mph.

They operate trains in two service groups linking the West Riding to Kings Cross serving Bradford Interchange, Halifax, Brighouse, Mirfield, Pontefract Monkhill, Wakefield Kirkgate, Doncaster and the northeast serving Sunderland, Hartlepool, Eaglescliffe, Northallerton, Thirsk, York and Kings Cross.

They said:

Richard McClean, Managing Director of Grand Central, said:

“As an Open Access Operator, the 10 year extension to our rail access is excellent news for our passengers and employees and highly significant for the wider rail industry.

Not only does this mean we can continue to operate services connecting Sunderland and Bradford to London King’s Cross, but we are also in a position to proceed with significant investments to improve our services and encourage future economic growth. For many of the towns on our routes we operate the only direct service to London, so this extension is a big coup for those communities and local businesses as well, who can continue to make connections to the capital.

“Our new access rights give us the opportunity to make significant investment in the rolling stock to improve reliability. We'll also work with stations along our route to improve facilities like car parks.

“We pride ourselves on our customer service, as recently demonstrated in the latest National Rail Passenger Survey results, and we are looking forward to a further 10 years of linking with these communities and making continued enhancements to our service for our passengers.”

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