In a surprise move, the Government last night pulled the plug on the competition to run the West Coast Main Line franchise from December 2012. As you no doubt read elsewhere, the winning bidders were FirstGroup, who offered to pay £5.5 billion over the 14 year life of the franchise, £700 million more than incumbent Virgin. How did we get here and what happens now?
Despite the PR campaign from Virgin – admittedly very successful in getting public opinion onside – it seems that the legal challenge brought against the DfT is fairly technical and does not question the content of the bid. In summary, as Zelo Street reports, it’s not the content of the bid itself, rather how much money FirstGroup should stump up as a bond in case they hand the keys back early. Virgin claims that the bond should be three times more than the £190 million FirstGroup were providing, which the DfT looks to have conceded as problematic: that mistakes were made in the way in which inflation and passenger numbers were taken into account in calculating this amount.
And it’s probably right that the contents of the bid are not at fault here: both operators were planning on offering much the same thing. Both operators would be using essentially the same trains and the same frontline staff – surprising how many people still think that Virgin own the trains when in fact they only pay the rental costs. Both bids were looking to introduce direct trains to Blackpool and Bolton, which is surely a quick win due to the existing plans to electrify those routes. Both bidders would have built on the existing smartcard trial at Piccadilly and (we presume) introduce ticket gates at Piccadilly, Stockport, Wigan North Western and other west coast stations – though such a potentially controversial scheme hasn’t been highlighted much. Yes, there’d be a few new trains running around the periphery of the network, but as far as Greater Manchester is concerned there wasn’t much more to get excited about.
There was always a risk that after the flashy theatrics of Virgin, FirstGroup would be a bit of a damp squib: take a look at how the Cross Country franchise (proprietor: Arriva/Deutsche Bahn) is faring post-Virgin, with tacky advertisements all over the place and the doing away of the onboard shop. It would have been more of a “steady as she goes” franchise, designed to make a return on all the investment that was put into place under the last franchise holder. What will happen come 10th December 2012, the first day of the new franchise? Two options appear to be possible:
- Grant Virgin an extension: it’s what they wanted, and what they’ve offered to do on a not-for-profit basis, but would only be until such a time that a new bidding process can take place. This is probably the safest option as it keeps Richard Branson happy, but assumes that refranchising will go ahead.
- Let the franchise lapse and get DOR to take over: Directly Operated Railways is a government-owned train operating company of last resort that has operated the East Coast franchise after National Express threw the towel in early after over-bidding. Could be precursor to unlikely renationalisation in all but name.
More should become clear over the next few weeks – but to little noticeable effect on the ground.
[Image credit: “Class 185 and 390 @ Manchester Piccadilly” by Jeffrey Wong on Flickr, Creative Commons]