East Midlands rail franchise awarded as Stagecoach disqualified

Cornelia Mascio
Aprile 14, 2019

A Department for Transport spokesman said: "Stagecoach is an experienced bidder and fully aware of the rules of franchise competitions".

DfT said Stagecoach had proposed significant changes to the commercial terms for the three contracts, leading to bids which envisaged "a significantly different deal to the ones on offer".

Dominic Booth, Managing Director of Abellio UK, said: "Abellio is proud to have been selected as the Winning Bidder for the East Midlands franchise".

The DfT claimed Stagecoach "breached established rules" and insisted the company is "responsible for their own disqualification".

Keith Williams, chairman of the Rail Review, said the way train companies are contracted to run services is "no longer delivering clear benefits".

'Passengers will benefit from the provision of free wifi throughout the franchise, both on-trains and at stations, and a significant uplift to the current ticketing system, with the introduction of smart, flexible ticketing options, including to provide better value for those who travel regularly but less than 5 days a week, as well as improved ticket-buying facilities and nine newly staffed stations.

"We believe strongly that the private sector should not be expected to accept material risks it can not control and manage", Chief Executive Officer Martin Griffiths said in a statement.

Analysis shows 60 per cent of rail journeys will be on trains operated by overseas companies or governments once Abellio starts running the East Midlands route.

Abellio will take over the East Midlands franchise, which includes the lines from Sheffield to London, Leeds, Liverpool, Manchester and Derby, from August 18 this year and its contract will run until 2027.

The issue centres on the allocation of financial risk associated with the industry-wide Railways Pensions Scheme.

The pensions row means a joint bid for the West Coast Partnership by Stagecoach, Virgin and SNCF has been barred.

Mr Griffiths said he was "extremely concerned" at the DfT's decision, given that it had "full knowledge of these bids for a lengthy period".

But with the Pensions Regulator calculating that the United Kingdom rail industry needs an additional £5-6bn to plug the pensions shortfall, Branson has pointed to the massive risk involved and the possibility of handing over a blank cheque.

Virgin trains will cease running its West Coast service between London and the north, in March 2020.

"This is more evidence that the current franchising model is not fit for goal, a view which has already been expressed by Keith Williams, who is leading the independent review of the rail system".

A Virgin Trains spokesperson said: "We're very disappointed by the DfT's unexpected decision".

"We've led the industry for more than 20 years with our ground-breaking innovations, such as automatic delay repay, and award-winning customer service".

Richard Branson says he is prepared to let his company Virgin Trains disappear from the United Kingdom rail industry after more than 20 years following the news that its partner Stagecoach was disallowed from three franchise bids.

Stagecoach had been bidding for this franchise independently.

Abellio already runs a number of train services in the United Kingdom, including West Midlands Trains and Greater Anglia.

The decision on a new operator on the West Coast franchise is due to be made in June.

Stagecoach's East Coast franchise was renationalised past year following poor performance and mounting losses.

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