Virgin loses West Coast rail franchise: Q&A

The company operating trains on the West Coast railway line is changing from Virgin, which has run the franchise since 1997, to FirstGroup, who will take over from 9 December 2012.

Here's what you need to know about the news.

Richard Branson and a Virgin TrainPA Wire

What is the West Coast franchise?

The main route from London Euston to destinations including Birmingham, Manchester, Liverpool, Holyhead, Preston, Carlisle, Edinburgh and Glasgow.

How long will FirstGroup run the franchise?

It will operate for a minimum of 13 years and four months, with an option to be extended for up to 15 years.

Do FirstGroup run other franchises?

Yes. They are the UK's biggest train operator, and currently run:
- First Hull Trains
- First Capital Connect
- First Great Western
- First TransPennine Express
- First Scotrail

What does this mean for trains on the West Coast line?

They will now be operated by First West Coast Limited instead of Virgin Rail.

Will the timetables change?

Not immediately. To begin with FirstGroup will operate the timetable it will inherit from Virgin. But in the long term FirstGroup says it intends to introduce new services, including a London to Blackpool service from 2013 and London to Telford, Shrewsbury and Bolton on 2016.

Will there be more trains?

A total of 11 new six-car trains will be added to the line from December 2016, which will add around another 12,000 extra seats a day.

Will there be any improvements to stations on the West Coast line?

Most of the stations are owned by Network Rail, not the rail operator. However FirstGroup has said it will take over responsibility for maintenance at 17 of the stations, and has pledged to spend at least £22m on investment.

And what about the fares?

Fares are going up across the country, regardless of which company operates the trains. A planned rise of around 6.2% is due to take effect in England in January 2013, although some price rises will be higher. But First West Coast Limited has said it is committed to cut the cost of its "Standard Anytime" fares by an average of 15% within the first two years of operating the West Coast line.

Who else bid to run the line?

Three other bids were received by the government:

- Virgin Trains
- Keolis/SNCF, the French state rail operator
- Abellio, the Dutch state rail operator

Why did Virgin lose the franchise?

They didn't bid as much as FirstGroup.

A First Great Western trainChris Ison, PA Wire

How much did FirstGroup bid?

A total of £5.5bn - £0.7bn more than Virgin. This means FirstGroup will have to find around £390m in premiums to pay to the government each year, compared with £150m from Virgin.

Can the company afford such a bid?

This is already the subject of controversy. As part of its contract, First West Coast would have to pay £265m in penalties if it failed to make scheduled payments to the government. But there are concerns that the £5.5bn it has bid to win the franchise will prove too much.

The BBC reports Stephen Glaister, Professor of Transport and Infrastructure at Imperial College London as saying:

"There have been many examples... where there have been very aggressive bids which the government has awarded and then quite soon afterwards, the people have handed back the keys and walked away from the contract without any real penalty. That's a very unsatisfactory situation from a public interest point of view."

What has FirstGroup said about the decision?

Tim O'Toole, chief executive of FirstGroup, said: "We are delighted to be selected by government to operate this unique railway which connects communities across the country and plays a vital role in the UK's economic growth. Our winning bid is a deliverable proposition that is compelling for all who want to see a greater use of our rail networks.

"We will be making significant improvements including reduced journey times and introducing new direct services. We will improve marketing and deliver a smart ticketing system, refreshed and improved train interiors, station upgrades and even better catering."

And what has Richard Branson, chairman of Virgin, said?

He is furious. He has branded the outcome "extremely disappointing for Virgin... To have bid more [than we did] would have involved dramatic cuts to customer quality and considerable fare rises which we were unwilling to entertain."

He has threatened to walk away from the rail industry. "Based on the current flawed system, it is extremely unlikely that we would bid again for a franchise."

"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?"

What other reaction has there been?

The rail minister, Theresa Villiers, has 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 trade unions have said they will resist any attempts to reducing running costs by cutting pay or working conditions.

RMT general secretary Bob Crow said: "They should be left in no doubt that we will mount a massive industrial, political and public campaign to stop any attacks on our members' jobs and the services that they provide to the travelling public."

And what about passengers?

David Sidebottom, passenger director at Passenger Focus, admits: "For the passengers making their way from London to Manchester or Glasgow, the important thing is not the name on the side of the train, but the experience of the journey, the availability of staff when you need them and of course, the value for money.

"We welcomed the suggestion that passenger satisfaction targets could be included in the franchise, which would help us and passengers to hold the franchisee to account. We will now be reviewing the details to see exactly what passengers on this line can expect.

"With another above-inflation fare rise on the horizon, now more than ever, passengers will be looking for value, especially in terms of getting a seat and being on time."