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Virgin loses West Coast franchise to FirstGroup
by Katie Silvester
FirstGroup is to take over the West
Coast franchise from December 2012,
having pipped Virgin Trains to the post in a
franchise competition.
First will pay £5.5bn in premiums over
the lifetime of the contract, which will last
for up to 15 years, relying on ticket revenues
rising by 10 per cent annually in order to
fund the payments.
The deal will see First introduce new
electric trains, in addition to the 106 new
Pendolino cars already on order, and cut
the cost of its Standard Anytime fares by an
average of 15 per cent.
Rail minister Theresa Villiers said: ‘This
new franchise will deliver big improvements
for passengers, with more seats and plans for
more services. Targets to meet on passenger
satisfaction will be introduced for the first
time in an InterCity rail franchise and
passengers will also benefit from smart
ticketing and from investment in stations.
‘The West Coast is the first of the new
longer franchises to be let by the coalition,
which has helped us secure real benefits for
passengers by encouraging First West Coast
Limited to invest in the future of the service.’
But Virgin Trains – a joint venture
between Stagecoach and the Virgin Group –
was unhappy about the failure of its ‘strong
and deliverable bid’, which now sees it with
no franchises at all.
Sir Richard Branson, founder of Virgin
Group, believes that First has overbid for
the franchise and may not be able to deliver
its £5.5bn of premiums. He thinks its
projections of 10 per cent growth annually
are not realistic.
‘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,’ he said.
‘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 FirstGroup and we only
hope they will continue to
drive dramatic improvements
on this line for years to come
without letting everybody
down.’
Branson, who said that
Virgin was unlikely to bid for
UK rail franchises again, called
the practice of giving franchises
to the highest bidder, whether
or not the premiums promised were
deliverable, ‘insanity’.
The RMT union said that FirstGroup
had based its bid on ‘the same kind of overgeared
financial projections that lead to the
collapse of the GNER and National Express
contracts on the East Coast – forcing the
government to renationalise the service’.
The franchise contract includes
substantial financial penalties that First
would incur if it was unable to meet its
premium payments. The transport group has
had to put up £10m of shareholder capital,
a £45m performance bond agreement and a
subordinated loan of £190m.
On top of that, it has had to provide
a season ticket bond of £5m and a £15m
parent company guarantee to ensure that its
contractual station facilities maintenance
obligations are met.
The company that First has formed to
run the operation is called First West Coast
Ltd, but it is expected that a new brand
name will be introduced when the franchise
begins. • See comment, page 4
COMPLY SERVE
PARTNERS WITH
FORGETRACK
Forgetrack, a project
management training
provider for the rail industry, has
signed a partnership agreement
with Comply Serve to sell its
flagship e-collaborative, Cloudbased
project compliance software,
ComplyPro. Chris Loxley-Ford,
director of Forgetrack, said: ‘We
were actively looking for open,
standards-based, value-added
solutions that enhanced our
current offerings, and ComplyPro
is an ideal fit.’
Railway Children appeals for volunteers
AJP/Shutterstock.com
The charity Railway Children is
recruiting volunteers to assist at events
and opportunities related to the railways.
The Railway Children Rail Network aims to
raise vital funds and awareness for the charity.
Railway Children fights for children living
alone and at risk on the streets, so volunteers
are crucial in helping them to support many
vulnerable children and young people in the
UK, India and East Africa.
Former Manchester councillor Keith
Whitmore has recently been elected as
honorary alderman of Manchester City
Council for long service and is responsible
for co-ordinating volunteers on behalf of the
network. He is a keen railway enthusiast.
Whitmore said: ‘I am very much looking
forward to taking on this important role. It
combines my interest both in railways and
in making life more tolerable for vulnerable
youngsters who need help. I will be looking for
more volunteers – especially from the heritage
railway movement – to support this important
work, attending events to fundraise for this
special railway charity.’
If you are interested in joining the group
and volunteering your time, please email Keith
Whitmore at: k.whitmore@railwaychildren.
org.uk For more information on Railway
Children visit: www.railwaychildren.org.uk
SEPTEMBER 2012 Page 7