The UK Department for Transport (DfT) has announced that following a bidding competition, First West Coast, and not Virgin Rail Group, will be operating the new Intercity West Coast franchise which starts on 9th December.
Tony Collins, Chief Executive of Virgin Rail Group, said today: “Naturally, we are all very disappointed by today’s announcement. We had submitted a strong, deliverable bid with emphasis on customer service which would have produced strong growth over the life of the franchise resulting in significant benefits for the taxpayer through generous premium payments to Government.
Our efforts for the remaining four months of the current franchise will be to continue to offer a high quality service to our customers, who we would like to thank for their loyalty over the past 15 years, and hand over a healthy and efficient franchise to the new operator on 9 December.”
Virgin Rail Group took over the West Coast franchise in March 1997 and during the last 15 years has revolutionised rail travel on Britain’s flagship route.
It has achieved 91% customer satisfaction - consistently the best mark of all the long distance franchise operators, and more than doubled the number of customers from 13 million to 31 million. It has grown rail share of the Manchester-London rail-air market from 30% to 88% and introduced over 70 new tilting trains, at a cost of £1.5 billion.
In my humble opinion a very unfortunate choice. First Group is not known for their customer service. Further I find it at best questionable that they would be able to generate an extra £1 billion (!) for the UK treasury over the life of the franchise.
Here is what Richard Branson had to say about losing the franchise:
"The Government decision to award the West Coast Main Line Franchise to FirstGroup is extremely disappointing for Virgin and for our staff that have worked so hard to transform this railway over the last 15 years.
"We submitted a strong and deliverable bid based on improving customers' experience, increased investment and sustained innovation.
"To have bid more would have involved dramatic cuts to customer quality and considerable fare rises which we were unwilling to entertain.
"We also did not want to risk letting everybody down with almost certain bankruptcy at some time during the franchise as happened to GNER and National Express who overbid on the East Coast mainline.
"Sadly the Government has chosen to take that risk with First Group and we only hope they will continue to drive dramatic improvements on this line for years to come without letting everybody down.
"We won the franchise in 1997 with an agenda to change radically the way people viewed and used the train.
"At the time the track was run-down, staff demoralised, the service riddled with delays and reliant on heavy subsidies.
"We set hugely challenging targets to dramatically speed up journey times with modern tilting trains, increase the frequency of the service, improve the on-board experience; as well as double passenger numbers and return the line to profit.
"We were told it was 'Mission Impossible' and our plans were laughed at by critics.
"However, 15 years later, despite continued problems with the track, we have achieved our targets.
"Passenger numbers have more than doubled to over 30 million, the fastest growth in the UK and world leading.
"We have the highest customer satisfaction of any long distance franchise operator and dominate the air/rail market between London and Manchester.
"It has been a remarkable achievement by an outstanding team who have successfully delivered on our promises.
"I am immensely proud of our staff for turning the West Coast line from a heavily loss-making operation into one that will return the taxpayer billions in the years to come.
"Last year we paid a net premium of £160 million to the taxpayer and have created a franchise worth more than £6 billion which is hugely valuable to the country.
"These achievements have counted for little - as this is the fourth time that we have been out-bid in a rail tender.
"On the past three occasions, the winning operator has come nowhere close to delivering their promised plans and revenue, and has let the public and country down dramatically.
"In the case of the East Coast Main line, both winners - GNER and National Express - over promised in order to win the franchise and spectacularly ran into financial difficulties in trying to deliver their plans.
"The East Coast is still in Government ownership and its service is outdated and underinvested, costing passengers and the country dearly as a result.
"Insanity is doing the same thing over and over again and expecting different results.
"When will the Department for Transport learn?
"Interestingly before Virgin took over the West Coast there were more passengers using the East Coast than the West Coast. Now there are 12 million fewer.
"Under our stewardship, the West Coast Mainline has been transformed from a public liability into a valuable asset for the UK, worth many billions of pounds.
"The service is a British success story and one to put up against rail companies around the world.
"It is a great shame that such a strong track record has been discounted in the evaluation process for one of the UK's most important infrastructure assets.
"The country's passengers, taxpayers and the West Coast employees deserve better.
"Based on the current flawed system, it is extremely unlikely that we would bid again for a franchise.
"The process is too costly and uncertain, with our latest bid costing £14 million.
"We have made realistic offers for the East Coast twice before which were rejected by the Department for Transport for completely unrealistic ones and therefore will have to think hard before embarking on another bid.
"Our amazing staff have been the driving force behind the West Coast Main Line's transformation and I am sure that for the last months of the contract they will all continue to run the high quality service that has helped win us many awards and attract millions more customers to rail."
I can not but agree. First Great Western already walked away from one franchise because of financial implications, i.e. the company saw that it could not pay future franchise fees. The whole UK rail franchising system is fundamentaly flawed. It does not produce any competition on rail routes whatsoever. And it certainly does not lower any rail fares.
Photo by Railway Gazette