West Coast line: Branson to bid again in two years
Sir Richard Branson has told the BBC that he will bid again for the West Coast Main Line contract, despite the botched franchise process in 2012.
Two years ago Virgin challenged a decision to award the rail franchise to First Group, saying it was mishandled.
The government has now awarded Virgin a contract to continue operating the route from London to Glasgow.
"In two years' time when this temporary contract comes to an end, we will be in there bidding," the Virgin boss said.
Virgin will invest a further £35m to update trains and provide an extra 5,500 standard-class seats each day.
It will also invest more than £20m to modernise stations and improve waiting rooms, seats and shelters.
Sir Richard said: "[Customers] will see some extra services, they will see a lot of extra seats. From the taxpayer point of view, they will get a lot of extra money."
The train operator will now also "start work to secure new direct services between Shrewsbury, Blackpool and London from December," the Department of Transport (DfT) said.
At the start of the year, Virgin scrapped a plan to provide direct services to Shrewsbury from London.
Virgin had planned to start the service in May, but said proposed time slots were not "economically viable".
In order to provide the additional standard-class seats, Virgin is converting 21 first-class carriages to standard class,
Free wi-fi will be offered at stations and improved coverage provided across the entire fleet.
Virgin will also invest £2.5m to improve the interiors of its Pendolino trains and £2.75m on improving catering facilities.
The train operator will pay more than £430m to run the franchise.
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.
"The West Coast provides a vital artery between London and Scotland and it is crucial we do everything we can to improve services on this much-used route."
The franchise award comes two years after Virgin launched a legal challenge to the decision by the DfT to award a 13-year franchise for the West Coast Main Line to First Group.
The government eventually scrapped the award claiming there were "significant technical flaws" in the bidding process because of mistakes by DfT staff. Three civil servants were suspended.
Transport correspondent Richard Westcott writes:
This deal is part of a much bigger process to avoid a repeat of the West Coast franchise catastrophe in 2012.
That deal collapsed because a swamped Department for Transport got its figures wrong and didn't follow the rules.
The timetable for handing out other deals looked like it might overrun the government and they can't afford another mess.
So they're using short-term deals and extensions to stagger the whole process out.
When I spoke to Richard Branson a couple of years ago, just after he thought he'd lost the West Coast deal, he told me he was so disillusioned he might leave the railway business for good.
Now, his company will be running that same line until at least the spring of 2017.
Virgin has operated trains services on the West Coast Main Line since 1997.
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."