Virgin 'derailed' in West Coast rail franchise renewal

Virgin train Virgin has been beaten by FirstGroup's franchise bid for the West Coast mainline

It's arguably Britain's most important rail corridor, linking London with Birmingham, Manchester and Glasgow.

And for the past 15 years Sir Richard Branson's Virgin Group, in partnership with Stagecoach, has held the franchise to operate express services between these principal cities.

So it has come as a shock to many railway industry analysts that the rival FirstGroup, Britain's biggest train operator, has beaten Virgin to the new franchise on the line, beginning in just over three months' time.

Initially passengers will notice little more than cosmetic changes, such as the disappearance of Virgin's logos from the distinctive tilting Pendolino trains.

But gradually over the next four years, First Group promise improvements including:

  • eleven new trains with 12,000 extra seats on the overcrowded Intercity routes;
  • the resumption of direct trains between Shrewsbury and London;
  • extra stops at Nuneaton.

All this, they say, while introducing some lower fares and better catering.

Highest bidder
Richard Branson Sir Richard Branson has criticised the government's decision to award the franchise to the highest bidder

The RMT union certainly thinks the glossy vision is unachievable and warns of job cuts and higher fares to meet the extra cost of First's franchise: they outdid Virgin's £4.7 billion bid by a further £750 million.

But while we are crunching the mega-numbers, it's worth remembering that every 1% increase in growth in the business is worth £700 million.

Sir Richard Branson has angrily attacked the government's decision to award the franchise to the highest bidder.

Ministers say FirstGroup won not just because their bid was higher but also because of their promises on services and fares.

But the Treasury has undoubtedly been putting the Department for Transport under pressure to maximise its earnings from rail franchises.

What next?

Much will depend on whether or not FirstGroup can meet its ambitious growth forecasts on the West Coast which Virgin doubts.

This matters, not just because of the impact on services for millions of rail passengers but also because of its bearing on the even bigger debate over High Speed Rail.

Opponents of HS2 say its business case rests on unrealistic passenger forecasts.

First Group employees FirstGroup will be trying to win over as many new passengers as possible

In selecting this bid the government has commissioned, by accident or design, a concerted corporate effort to grow the market on exactly the same rail corridor to the n'th degree.

FirstGroup will be straining with might and mane, to win over as many new passengers as it can.

Its success or failure will go a long way towards proving or disproving the market case underpinning the £36 billion high speed project linking the same major cities.

In a BBC interview, the former Director General of the Association of Train Operating Companies George Muir described FirstGroup's West Coast franchise as "the prologue to high-speed rail travel".

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  • rate this

    Comment number 19.

    I agree, no-one is immune, but unlike the reporter, we are not paid small fortunes to get it right!

  • rate this

    Comment number 18.

    WrekinAir you omitted the horrendous FCC (Thameslink), one of the worst run services I have ever used. I have gone back to driving into London since 3 terrible experiences with FCC and absolutely zero customer service. No fan of Virgin but this looks like Black day for West Coast.

  • rate this

    Comment number 17.

    new passengers should come from the thousands put off by Virgin's high fares and lack of seats in economy. Its hard to believe that there's any possibility of increasing fares without losing passengers. They should know this so I'm optimistic they'll add economy carriages. If they don't they'll fail and we'll have to nationalise it.

  • rate this

    Comment number 16.

    It beggars belief anyone with the passengers' best interests in mind could have awarded the contract to a firm which has walked away from the Great Western contract early and is getting serious criticisms over its Trans-Pennine, South-West and especially Scottish operations.

    This sounds more like a Treasury decision - well, they'll regret it when First default and they lose the 'promised' cash

  • rate this

    Comment number 15.

    More expense on the franchise and fares running 3%+ above inflation.
    Where are all these customers going to materialise from?

  • rate this

    Comment number 14.

    Here we have the DfT not able to understand that just because they get more money the new train service will work. Do we come back in two years time to see that WCML has gone bust. They know as much about this situation as they do HS2. NOTHING. & they hid the truth. Where are the passager figures people have been asking for & they refuse to give?

  • rate this

    Comment number 13.

    Yes de rail virgin the whole lot then collapses then its a big holler for the hs2 to be brought forward virgin rail a very good rail service has been thrown to the wolves. This government is rotten to its core it has agendas we havent even thought about yet take a peek at the school playing fields just the start of much worse to come

  • rate this

    Comment number 12.

    at 7. Pentangelis
    16TH AUGUST 2012 - 18:18
    "Might and MANE" !
    Its high time the man learned some basic English. It is might and MAIN.


    It could be a typo, something to which you yourself are not immune. It's more gracious not to be too rude about these things.

  • rate this

    Comment number 11.

    *Surely* there's a homeopathic cure for all of those radio allergy sufferers out there? Maybe a really weak Bluetooth signal could be diluted, successed and potentized to immunise the sufferers?

  • rate this

    Comment number 10.

    Presumably Agnes and "hte" don't dare walk along any High Street, vet which shops & businesses they go into & stop neighbours having WiFi? WiFi's been around for >10yrs; the frequency's been used for >50yrs; radio itself has been around for over 100yrs, & radio has been merrily passing through our bodies since we first climbed out of the primordial soup. Where's this epidemic?

  • rate this

    Comment number 9.

    You're deluded. Your "hundreds" of studies are a few circularly referenced blog posts, authored by a tiny minority of psychosomatic hypochondriacs who don't need evidence or double-blinded studies, because they just "know".

    The Health Protection Agency has stated that, "typical exposures from WiFi are around 20 millionths of the international guideline levels of exposure to radiation"

  • rate this

    Comment number 8.

    To: nsefan
    No-one mentioned removing "what is considered a basic service" from all of the carriges, all that was mentioned was "Will there be provided a carriage for those Allergic to the Microwave Radiation from the Wi-Fi.
    After all, 10% is ca. 6.5 million people in the UK who are seriously afected by the Mobile "Technology" Microvave Radiation,
    A Lot Of Potential Seats!

  • rate this

    Comment number 7.

    "Might and MANE" !
    Its high time the man learned some basic English. It is might and MAIN.

  • rate this

    Comment number 6.

    Main line struggle?

    I was surprised to read that FirstGroup will be straining "with might and mane". After all, Sir Richard has very prominent hair and it didn't stop him losing the franchise...

  • rate this

    Comment number 5.

    Look at the Board members of First Group (available on their website in their annual reports).

    Without going into specifics, as well as sitting on First Group's Board, they have connections with companies dealing with a range of utilities; water, power, gas, energy - even BSkyB...

    This is what privatisation has led to; a small cabal of highly paid men (invariably) running near monopolies.

  • rate this

    Comment number 4.

    @nsefan (3):
    You obviously haven't looked for any evidence because even a cursory investigation would turn up hundreds of studies on the harmful effects of pulsed microwave radiation, like that transmitted from Wi-Fi.
    The strongest evidence af harm from Wifi shows negative impact on cognitive performance (especially in youngsters) and damage to male fertility (DNA damage).

  • rate this

    Comment number 3.

    There is no evidence to seriously suggest that people are being harmed by wifi and gsm. A lot of it is actually a placebo, where just seeing a mast or router makes the victim feel ill, even if it isn't turned on!

    Whoever builds/owns the trains isn't going to remove what is considered a basic service just because some people claim without evidence that it will make them ill.

  • rate this

    Comment number 2.

    Dear Sir.
    About 10% of the population are by now estimated to be "Allergic" to the Microwave Radiation the Wi-Fi and Mobile Phone´s emit.
    In the new train contract with First, Are there included any plans to provide a NON Wi-Fi, Non Mobile Phone carriage for these people?
    After all, out of a population of 65 million people 10% presents a potential customer base of 65000 people.
    Please clarify.

  • rate this

    Comment number 1.

    The thing that REALLY worries me is that Richard Parry from the First Group has just said on the news that it's Government policy for the fares to go up? Surely some mistake. surely our governement is working hard to reduce all our billls, such as gas, electricity, water, transport etc....?



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