by Phil Marsh

Controversial East Coast rail franchise goes to Stagecoach and Virgin rail operator

Published: 28th November 2014

Department for Transport squares up to open access operators Grand Central and First Hull Trains wit

The Department for Transport (DfT) has announced that the highly political East Coast rail franchise will be awarded to Inter City Railways (ICR), a company 90% owned by Stagecoach and 10% by Virgin. Why is it political? Many consider that the decision to run this franchise competition with a start date just weeks before the General Election in May is blatant politicking.

Rights to bid?

Many say that the current operators, East Coast Trains (ECT) should have had the right to bid having run the services for five years in the public sector. ECT is a fully owned Government subsidiary and were barred from bidding for the contract. Politicians have said that as a Government owned company, ECT would not have access to financial backing required to mount a bid or so far as franchise investments were concerned.

Others said that ECT did not have the skills to run a real franchise which many passengers and the trade unions think is a spurious argument as ECT has scored highly in satisfaction ratings over the last five years.

The DfT announcement says that ICR will invest £140million to deliver an improved service and more personalised travel with £25million committed to improve stations and car parking. Car parking of course is an unregulated area of our railways and so any investment is quickly paid back.

The announcement about the use of a new fleet of Hitachi Class 800 and 801 trains combined with faster and more frequent services is slightly disingenuous as whoever won the contract would be operating the trains which were procured by the DfT and specified in the franchise tender documents.

New technology and better wi-fi at stations will be used to improve the customer experience on-board and at stations but again, it can be assumed that all the bidders would make use of better technology.

They said:

Martin Griffiths Chief Executive of Stagecoach Group, said they welcomed the announcement and that passengers can look forward to new services, faster and more frequent journeys whilst taxpayers will benefit from significant increases in premium payments to Government over the course of the eight year franchise.

ICR says it “will transform the customer experience for around 20 million journeys a year on one of the UK’s major inter-city rail routes, blending the experience, culture and service-focus of both Stagecoach and Virgin.

The Transport Secretary Patrick Mcloughlin said that the winning bid will see services we haven’t seen since the 1960s serving new routes such as Huddersfield to London.

Mr Griffiths added that their bid measured well in terms of quality and finance compared to ECT’s performance and that they had supported their bid with £230 million capital. Despite Virgin’s minor stake of the business, the trains will be branded Virgin East Coast.

Stagecoach also operate the Midland Main Line (MML) and so will run all three routes northwards from London. When asked about competition with the WCML (shared with Virgin since 1998) and the MML, Mr Griffiths said that the key competitor was the car and plane for long distance, and not between rail companies. He also said that Saver fares will be reduced by 10% from day 1 from Stevenage and Kings Cross but how many will be offered.

Key dates and numbers

ICR goes live on 1st March 2015 and will run trains for eight years but there is a one year extension option at the DfT’s discretion. The deal promises to pay a total of £2.3billion in premium payments (at today’s prices) to the Government over the eight year contract, more than is paid now says the DfT.

Faster journey times are promised with between 10 and 15 minutes knocked off some journeys between London, Leeds and Edinburgh bringing regular services to Leeds in two hours and Edinburgh in four hours. British Rail also ran to Edinburgh in four hours 25 years ago but it must be remembered that there were far less trains running then so the chances of a delay were less.

The new Hitachi Class 800 and 801 65 strong train fleet will operate from 2018 with a £13.4million train refresh programme for existing fleet which is about 25 years old. They were also refreshed a decade ago under project Mallard.

The trains will have a deep clean, refurbished toilets, new carpets and seat covers, new and clearer on-train signage. Faster and more reliable on-board WiFi and better mobile phone connections will be provided as will ‘Luggage Hubs’ providing an airline style approach with a secure storage area on long distance train services where customers can leave their bags during their journey.

Better connections linking London with new destinations and more services at weekends are also promised by ICR. The extra trains will operate as a result of the new Hitachi fleet the DfT says, which will give a 50% increase in capacity by 2020 with total fleet capacity increased by 12,200 seats.

From 2018, Inter City Railways will take delivery of the new Intercity Express trains, to be assembled at Hitachi’s factory near Darlington and by 2020 all of the 65 modern high-speed electric trains will be in service and will replace the 39 existing trains.

A planned investment of over £25m in stations and car parks will be made offering new open plan customer zones introduced for combined ticket purchase and information as well as improved accessibility and community engagement. Importantly, ICR will offer apprenticeships for young people, graduate and ex-offenders programmes.

They said:

Martin Griffiths said: “Passengers using the East Coast mainline will benefit from hundreds of millions of pounds of infrastructure investment and service improvements over the next decade. Together with Virgin, our innovative plans will give customers new services, faster and more frequent trains, and easier, more personalised journeys.

"We will be investing in the committed East Coast people who will be joining our team, as well as delivering major programmes to help young people, communities and small businesses along one of Britain's most important routes. We will match world-class customer service by giving a big boost to taxpayers with increased payments to Government."

Patrick McCall, Senior Partner, Virgin Group, said, "We’re delighted to have been chosen to run the East Coast franchise. Our long term partnership with Stagecoach has seen a revolution in customer service standards, great product innovation, reduced journey times and improved timetables on the West Coast mainline. We plan to deliver similar success on the East Coast and are looking forward to working with the team there to build on their achievements.

"Our partnership will concentrate on areas for which Virgin is famous, such as looking after our customers and our people. We have a great opportunity to blend the successes of the East Coast and the West Coast lines to create a great experience for all. Together with these new ideas and initiatives, passengers will begin to see those Virgin touches on each and every journey."

Better journeys, extra services and improved punctuality

ICR will run additional and new direct services to London from Sunderland and Stirling within first year of new franchise from December 2015 and six months later, services between Edinburgh and London will be half-hourly for most of the day.

From 2019 new direct weekday services will run between Middlesbrough and London plus a two-hourly direct service between Bradford, Harrogate, Lincoln and London. This is a direct challenge to Grand Central who has just signed a new suite of Agreements to run their trains for another five years. They are not subsidised as they are an open access operator who often top the satisfactuion surveys.

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