'THE GOVERNMENT'S ABSOLUTELY AWARE ... - Rail Professional

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FRANCHISING GNER EASTERN PHILOSOPHY Breakfast is served onboard a GNER Mallard. With just a few months to go until the winner of the ECML franchise is announced,Alan Whitehouse takes a closer look at the bidders and what they might be able to offer The one thing you can say about the East Coast Main Line is that since privatisation, it has never failed to generate news of one sort or another. It was one of the first sections of the railway system to be privatised and it quickly drew attention with a radical commitment to put some of the romance and elegance back into everyday travel. More recently, the rail industry was agog when the size of the franchise premium offered by GNER became known; and last, but not least, it has become the first franchise that the Government has stood back and allowed to fail as a lesson to the others. Now it is shaping up to be one of the more interesting franchise battles. In around three months’ time we will have a new franchisee chosen from the short-list of four. In some ways this is pretty predictable line-up: Virgin, whose long-held ambition to run the East Coast Main Line is well-known; National Express, smarting from the loss of Scotrail and anxious to expand its 18 RAIL PROFESSIONAL : APRIL 2007
FRANCHISING rail portfolio; First, trying to contain its little local difficulties on Greater Western; and Arriva, currently the holder of just one franchise, for Wales. The unknown quantity comes from GNER itself. Instead of laying down and dying as per the re-franchising script, the management team is alive, kicking and insisting it will do all it can to preserve the levels of service and customer care which made the company the rail travellers’ darling. But which of the four will they team up with? Those in the know say there is so little common ground between GNER and First – which is, after all, taking buffet cars out of its trains – that no deal would be possible. Those same knowledgeable sources reckon that approaches to National Express and Virgin were made, but rebuffed. That leaves Arriva. And Arriva and GNER could be a better fit than they might at first look. Arriva has so far had a hard time with rail franchising in this country. Brought in as a white knight to save the transport department from the follies of MTL, it became the incumbent in what has eventually amounted to three franchises and it managed to lose the lot – Merseyrail , Trans-Pennine (which became TransPennine Express and went to First) and Regional <strong>Rail</strong>ways North East, which cut and shut with RR North West and is now Northern <strong>Rail</strong>. That leaves Wales and more experiences of running local and commuter services. What Arriva lacks is any experience in operating UK long distance express trains. This is a box that GNER’s management team can tick better than most. But, if you are sifting through the franchise bids, do you throw Arriva/GNER into your waste bin anyway, on the grounds that these are the guys – at GNER – who got it so badly wrong in the first place? That ought not to happen. If the £1.3bn franchise premium offered by GNER is set aside, then the franchise is basically a sound business. With the premium burden removed, it is nicely profitable. It has innovated in the past and continues to do so: £45m on refurbishing the HST fleet is one demonstration of that. Bringing the half-hourly Leeds service to fruition is another. When you glance back to what the ECML looked like at privatisation, and compare it with today, the record is not a bad one. Thirty years ago, when those high speed trains first came to the route, there were 26 trains between Leeds and London. By 1996 it was 37. Today it is 53. The halfhourly service will take it to 65. These extra services form part of the core on which all four bidders will base their offers, so it is difficult to see this as anything other than solid achievement. In addition, passenger numbers – the setback of 7 July now receding into the distance – continue to grow. Selling tickets will be the last problem the new franchisee will face. What of the competition? First is off to a bad start. For the first time in a franchising contest, the DfT is making it plain that the bottom line will not be the only deciding factor. Sitting alongside franchise premia will be each bidder’s track record – another important box that the GNER team could tick on Arriva’s behalf. First has a problem here. The Greater Western franchise has got off to a poor start and having the MPs of the Thames Valley queuing at the DfT’s door to complain and demand that First are stripped of the franchise – even though it will not happen – must see them marked down. National Express has established itself as a safe pair of hands. Midland Mainline is the best long-distance franchise on the PPM by a country mile. Its passengers are by and large a satisfied lot. The only cloud on the horizon could be the competition issue: would it really be wise to The unknown quantity comes from GNER itself. Instead of laying down and dying as per the re-franchising script, the management team is alive, kicking and insisting it will do all it can to preserve the levels of service and customer care. But which of the four will they team up with? have two of the three main lines to the north and the dominant motorway coach service owned by one company? Assuming, that is, that National Express retains MML as part of the new East Midlands franchise. Virgin, like the rest, is saying little about what its actual plans for the route are. Virgin simply says it is intending to operate a fast and safe service and will look at cutting journey times – but this will not be achieved by attempting to run at speeds over 125 mph as the West Coast franchise is currently trying to do. The DfT has a real juggling act here. The £1.3bn promised under the old franchise was a key part of the department’s plans to turn around railway finances. The premia offered during the new contest will be important and discreet pressure will be applied by the Treasury to ensure that cash is king. But – and this is GNER’s true legacy – in a climate where the fate of the GNER restaurant car can take centre stage in a Lords debate on the future of the ECML, the DfT will find it difficult to justify appointing any franchisee who promises to take an axe to the restaurant service and thin out the rest of the customer-care staff – both on the trains and on the platform. Which would leave Arriva/GNER with just one problem: what colour to paint the trains. Alan Whitehouse is transport correspondent for BBC North. APRIL 2007 : RAIL PROFESSIONAL 19
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