Virgin Rail lost its West Coast main line franchise to rival transport company FirstGroup yesterday following a Government bidding process dubbed “insane” by Virgin boss Sir Richard Branson.
Virgin has run the London to Scotland West Coast, with its high-speed tilting Pendolino trains, since 1997, more than doubling annual passenger numbers.
But yesterday the UK Government announced that a new 13-year franchise for West Coast was being awarded to FirstGroup, which already operates a number of other rail routes.
FirstGroup will pay £5.5 billion back to the Government in premiums over the life of the franchise, with Rail Minister Theresa Villiers saying the new franchise would deliver “big improvements for passengers with more seats and plans for more services”.
FirstGroup chief executive Tim O’Toole said his company would be making “significant improvements, including reduced journey times, and introducing new direct services”.
But Labour, transport unions and Sir Richard fear FirstGroup will be unable to meet its performance promises and financial commitments and that the award of the new franchise could result in service cuts, job losses and big fare rises.
Sir Richard said Virgin, believed to have bid around £4.8 billion for the franchise, could not have bid more without cutting customer quality and raising fares “considerably”. In a strongly worded statement, Sir Richard added that he was “extremely disappointed” with the decision made by the Department for Transport (DfT).
He went on: “Based on the current flawed system, it is extremely unlikely that we would bid again for a franchise.”
Sir Richard said bankruptcy had hit former East Coast main line operators GNER and National Express, who had “overbid” for the East Coast franchise. He went on: “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.”
Sir Richard added that this was the fourth time Virgin had been outbid in a franchise tender process.
He said: “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.
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The East Coast is still in Government ownership and its service is outdated and underinvested, costing passengers and the country dearly as a result.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?”
The DfT said benefits of the new franchise, which will start on December 9, would include around 12,000 extra seats a day when the 11 new six-car electric trains come into service in December 2016.
This is in addition to the 106 extra Pendolino carriages currently being introduced into operation,which will deliver more than 28,000 extra daily seats.