by Phil Marsh

Virgin awarded another extension to West Coast Main Line franchise as Essex Thameside award is further delayed

Published: 22nd June 2014

Great North Western Railways to run in competition to Virgin?

The Department for Transport (DfT) has awarded Virgin Trains another West Coast Main Line (WCML) franchise extension, this time for nearly three years to March 2017 with an option to extend operations to 2018. This means the next properly conducted franchise competition award for Europe’s busiest main line will be made up to six tears after the flawed award to First Group was announced.

Virgin ran the franchise for nearly two years after their successful legal challenge to the DfT reversed the proposed award to First Group just under two years ago.

The extension announcement was made promising passenger and taxpayer benefits but many of these had been already proposed by bidders two years ago, so it is debatable as to how much is actually new.

For example, the extremely limited what are called new services from Shrewsbury and Blackpool to London used to operate when the franchising system was set up. They were withdrawn as part of the renegotiations following the WCML upgrade collapse under the original 140mph plans.

Either way, just one or two through headline services are promised so long as Network Rail (NR) can find the paths in the ever busier timetable. These new services will, subject to Rail Regulator Approval, may commence in December this year.

Free wi-fi for all

What will undoubtedly benefit all passengers is the planned free 4g wi-fi service on all Virgin trains and stations but again, this is a must-have requirement for today’s passengers. This super-fast wi-fi will be delivered by Network Rail installing track-side infrastructure, said to be the first major intercity train deployment of 4G technology in the UK.

Wi-fi provision at stations forms part of over £20million to be spent on modernising stations with improved waiting rooms, extra ticket machines, more Passenger Information help points together with a better website and more staff working on concourses and platforms. This again will help raise punctuality statistics as more staff will be able to direct passengers to ensure station dwell-time is minimised.

More seats

The first class Coach G on 21 Pendolinos will be converted to standard class in the next 15 months providing 5500 additional standard class seats per day repeating what has been done on First Great Western in that franchise extension. This investment is part of the reason that Virgin will retain a higher percentage of revenue than under the initial extension until June 21.

The parties to the deal say that Virgin will pay the treasury £433million to run the trains while they retain 3% of revenue, three times the amount under the first extension agreement. The new West Coast contract came into force on 22 June.

Political argument

Labour meanwhile suggest that the WCML fiasco has wasted over £50million in refunding bidders costs from two years ago. They also claim it has resulted in higher fares which is impossible to prove either way. They also suggest that the DfT has lost millions of pounds extending other franchises, which is somewhere nearer the truth.

All franchisees are very commercially operated companies and an incumbent franchisee is better placed to renegotiate a franchise deal than the DfT. The train company holds the safety certification and commercial agreements with Network Rail, train leasing and other parts of the supply chain and do not have to start from scratch with new deals.

If a new company was brought in via the DFT’s Directly Operated Railways, the Government’s train operator of last resort, this would take the railways into uncharted territory and the uncertainty would affect performance and uncertain financial and political implications.

Spanner in the WCML Works?

The German Railways owned open access train company Great North Western Railways (GNWR), has announced that it hopes to be running trains in three years time to coincide with the next planned WCML franchise competition.

GNWR is looking to operate new train services on the WCML linking Euston with stations in West Yorkshire, Carlisle via the Cumbrian Coast route and Blackpool.

Services could start after completion of electrification of lines in the north using new trains and negotiating their way through the myriad of agreements needed for such a service that makes up the UK’s rail industry today. GNWR say that they recognises the importance that passengers place on direct services, value for money, reliability, quality and comfort, and will ensure its proposals are fully developed in association with future passengers and stakeholders.

GNWR also sees an opportunity to serve many important towns and cities currently without direct London services and looks to rectify this and to create new journey opportunities.

Given that London Midland has just claimed that it has suffered revenue loss because of more Virgin trains operating, a third player on the WCML will create a financial headache for franchise bidders and the DfT.

London Midland have experienced some financial difficulties prompting 150 redundancies but despite this and a history of previous poor performance, were still awarded a franchise extension recently.

Further delay to Essex Thameside franchise award

The DfT has also announced that the Essex Tameside franchise award has been delayed by a couple of months for financial checking in the respective bids. This was always reckoned to be one of the easier awards to make as many of the trains run on a bespoke network to Southend from Fenchurch Street. This all adds to the extra franchising costs following the collapse of the system nearly two years ago.

Who is in control?

The DfT will be taking control of Network Rail in September when it becomes a Government Department so will find itself running the rail infrastructure as well as trains via the DfT franchise extension management contracts. A bit like British Rail but in a far more expensive way!

They said:

Transport Secretary Patrick McLoughlin said: This deal will provide thousands more seats and better journeys for the tens of thousands of passengers who use these services every day.

This is further proof of our commitment to get the best deal for passengers and taxpayers with Virgin set to pay more than £430 million to run the franchise. It’s all part of our long-term economic plan to drive forward our economy and provide better services now and great services with HS2.

Patrick McCall, Virgin Trains Executive Co-Chairman, said: “We’re delighted to have reached a deal after some tough negotiations with the DfT. It puts the problems of 2012 firmly behind us, and shows the clear benefits of a well-run franchise system.

“This deal is great news for passengers and taxpayers, with significant benefits for our customers as well as a big increase in the money we pay to government. Together with thousands of extra seats and plans for new services, this deal will mean big improvements for millions of Virgin Trains passengers.”

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