Virgin and Stagecoach partner with SNCF

This from StockMarketWire.com...

Stagecoach Group and Virgin Group are joining forces with France high speed operator SNCF to bid for the West Coast Partnership rail franchise.

The government has announced that the West Coast Partnership franchise would run from 2019. 

It would include current West Coast services and the first few years of operation of High Speed 2 (HS2) services.

Stagecoach had a 50% share in the bid vehicle, West Coast Partnership Ltd, with a 30% share held by SNCF and the remaining 20% owned by Virgin. 

"It is envisaged that services under a successful bid would carry the Virgin brand," the companies said in a statement.

Let's parlez Franchise, indeed!

Virgin in denial over departure - Official

According to the Sunday Times, Richard Branson has gone off-shore. 

Has Beardie also taken all his webbies with him?

The forlorn picture of a recently departed VT director of communications still greets visitors to Virgin Trains' Media Room:

Eye understands it is not the first to flag this incongruous image with VT.

Evidently, Arthur is proving a hard act to follow, as predicted...

Leathley hits the DECC!

This from PR Week...

Virgin Trains' Arthur Leathley to fill long-vacant DECC comms role

The Department of Environment and Climate (DECC) change has hired Virgin Trains' Arthur Leathley as its director of comms.

Leathley will start in the coming weeks, having been comms director at Virgin Trains, where he has spent the past nine years heading the company’s media, political and internal comms operation, as well as customer relations.

A hard act to follow and for Virgin to replace!

All the best in your new role Arthur.

ORR makes overnight saving on access dispute process!

Good news for fans of Independent Economic Regulation!

This charming picture appeared in Thursday's Blackpool Gazette...

And it was accompanied by the following illuminating quotes from the ORR's very own Right Price....

“This petition will form part of the evidence in the process. I’d like to thank the readers of the Blackpool Gazette for their contribution to the On Track To The Capital campaign. This petition clearly shows how important the issue is to the people of Blackpool.

“ORR is currently considering the application from Virgin Trains for new services on the West Coast Main Line between Blackpool and London, this will include looking at the benefits new services may bring to passengers and whether they make best use of the limited capacity on the route.”

Fascinating.

Well done to the ORR for being quite so ahead of the game.

In fact so far ahead of the game, that it rather appears that the ORR's Chief Exec has forgotten that this dispute between Network Rail and Virgin over Blackpool and Shrewsbury paths is now subject to adjudication by the Access Disputes Committee.

As any fule kno the Access Dispute Committee "is responsible for the operation of the dispute resolution procedures that form part of all Access Agreements on the national network of Great Britain.". Of course if the ADC is unable to effect a resolution then the ORR may get involved.

No matter and Eye is sure that Professor Richard Butler, chairman of the ADC, will be generous in overlooking this apparent ORR parking of tanks on his lawn...

After all, who can resist getting their picture in the paper with so many MPs?

Virgin gets 23 month extension on ICWC franchise

So Virgin gets a 23 month extension to the InterCity West Coast franchise.

• Revenue and cost remains with DfT (so risk transfer went well then).

•  Virgin to get a guaranteed 1% of revenues under 'management contract'

• The mad midi franchise of two years that was to follow this extension will now not take place.

Here the DfT press release...

Virgin Trains to run improved West Coast services

Rail passengers will experience better services including 28,000 more seats a day under an agreement announced today for Virgin Trains to continue operating rail services on the West Coast Main Line.

The new franchise agreement will run for up to 23 months after which the West Coast Main Line will be let under a long-term franchise.

It coincides with the early completion of a Government-backed deal to roll out 106 new Pendolino carriages, providing passengers with four new 11-carriage trains and lengthening 31 existing trains from nine carriages to 11. A new hourly service between London and Glasgow will also be introduced.

Patrick McLoughlin said:

“We are determined to ensure not only that passengers continue to experience the same levels of service they have in the past, but that services improve. There will be a new hourly service linking Glasgow and London and we will also work with Virgin Trains to explore other service improvements.

“I am also extremely pleased that passengers will benefit from up to 28,000 more seats daily thanks to the delivery of 106 new Pendolino carriages onto the West Coast Main Line which has happened on budget and ahead of schedule.”

Passengers travelling on Virgin Trains will also find it easier to claim compensation if their train is severely delayed thanks to plans for Virgin Trains to introduce an improved Passenger’s Charter incorporating a Delay Repay scheme from 1 April 2013, subject to agreement.

Notes to Editors

1. The 23 month franchise will run from 9 December 2012 until 9 November 2014 after which the West Coast Main Line will be let under a long-term franchise. The Department for Transport (DfT) will be able to shorten this period by up to six months if a subsequent franchise can be let on a shorter timescale.

2. The franchise will operate as a management contract with both revenue and cost risk being borne by the DfT. In return Virgin Rail Group (VRG) will receive a margin of 1% on revenue for operating services. The franchise also makes a provision for the DfT and VRG to agree revised commercial terms that would see VRG take greater revenue and cost risk in the period to 9 November 2014.

3. The 106 Pendolino carriages project has been delivered on budget and ahead of schedule and has resulted from a successful collaboration between the Department for Transport, Virgin Trains, Alstom, Angel Trains and Network Rail.


- ENDS -

Virgin set to get extension as DOR deactivated

This from the Department for Transport...

Department for Transport to negotiate with Virgin on temporary operation of West Coast rail services

The Department for Transport will negotiate with Virgin Rail Group for them to continue providing rail services on the West Coast Main Line for a temporary period.

The current franchise is due to expire on 9 December after which it is the government’s intention that Virgin remain as operator for a short period – expected to be between 9 and 13 months – while a competition is run for an interim franchise agreement. This interim agreement, which would be open to any bidders, will then run until the new long term West Coast franchise is ready to commence.

The government believes that this is the best way to ensure services are maintained and that there is no impact on passengers.

Transport Secretary Patrick McLoughlin said:

    “The cancellation of the InterCity West Coast franchise is deeply regrettable and I apologise to the bidders involved and the taxpayer who have a right to expect better.

    “My priority now is to fix the problem and the first step is to take urgent action to ensure that on the 9 December services continue to run to the same standard and passengers are not affected.

    “I believe Virgin remaining as operator for a short period of time is the best way to do this and my officials and I will be working flat out to make this happen.”

On 3 October the previous competition to run trains on this line was cancelled following the discovery of significant technical flaws in the way the franchise process was conducted.

The department also paused the on-going franchise programme including live competitions on Essex Thameside, Great Western and Thameslink and set up two independent reviews into what went wrong with the West Coast competition and the wider DfT rail franchise programme.
 
Notes to editors

• The Transport Secretary has ordered two independent reviews:
• The first will be an urgent independent examination into the lessons to be learned from the department’s handling of West Coast competition. Conducted by independent advisers and overseen by Centrica chief executive Sam Laidlaw and former PricewaterhouseCoopers strategy chairman Ed Smith, both DfT non-executive directors, this review will look as soon as possible at what happened and why with a view to delivering an initial report by the end of October.
• The second independent review will be undertaken by Eurostar chairman Richard Brown CBE, and examine the wider rail franchising programme. It will look in detail at whether changes are needed to the way risk is assessed and to the bidding and evaluation processes, and at how to get the other franchise competitions back on track as soon as possible. This will report back by the end of December.

ENDS

UPDATE: This from Directly Operated Railways...

Taxpayers will be relieved to know that we are not so much deactivated, as waiting in the wings! 

DfT found not fit for purpose as ICWC bid collapses

This, sorry release, from the DfT...

West Coast Main Line franchise competition cancelled

Transport Secretary Patrick McLoughlin has today announced that the competition to run trains on the West Coast Main Line has been cancelled following the discovery of significant technical flaws in the way the franchise process was conducted.

The decision means that the Department for Transport (DfT) will no longer be awarding a franchise contract to run the West Coast service when the current franchise expires on December 9. It is consequently no longer contesting the judicial review sought by Virgin Trains Ltd in the High Court.

The flaws uncovered relate to the way the procurement was conducted by department officials. An announcement will be made later today concerning the suspension of staff while an investigation takes place.

The Government is resolving urgently the future arrangements for operation of the West Coast and will ensure that train services continue uninterrupted. Mr McLoughlin stressed today that passengers will continue to be served by the same trains and frontline staff.

The Transport Secretary has also:

• Ordered two independent reviews to be undertaken urgently: the first into what went wrong with the West Coast competition and the lessons to be learned, the second into the wider DfT rail franchise programme, both overseen by leading business figures;
• Asked officials to examine the options for the operation of the West Coast service after December 9, taking into account procurement and competition law;
• Paused all the other outstanding franchise competitions (Great Western, Essex Thameside and Thameslink) pending the independent reviews which are designed to ensure future competitions are robust and deliver best value for passengers and tax payers.

Mr McLoughlin said:

    “I have had to cancel the competition for the running of the West Coast franchise because of deeply regrettable and completely unacceptable mistakes made by my department in the way it managed the process.

    “A detailed examination by my officials into what happened has revealed these flaws and means it is no longer possible to award a new franchise on the basis of the competition that was held.

    “I have ordered two independent reviews to look urgently and thoroughly into the matter so that we know what exactly happened and how we can make sure our rail franchise programme is fit for purpose.”

He added:

    “West Coast passengers can rest assured that while we seek urgently to resolve the future arrangements the trains that run now will continue to run, with the same drivers, the same staff and timetables as planned. The tickets that people have booked will continue to be valid and passengers will be able to make their journeys as planned.”

DfT permanent secretary Philip Rutnam said:

    “The errors exposed by our investigation are deeply concerning. They show a lack of good process and a lack of proper quality assurance.

    “I am determined to identify exactly what went wrong and why, and to put these things right so that we never find ourselves in this position again.”

The first independent review will be an urgent independent examination into the lessons to be learned from the Department’s handling of this competition. Conducted by independent advisers and overseen by Centrica chief executive Sam Laidlaw and former PricewaterhouseCoopers strategy chairman Ed Smith, both DfT non-executive directors, this review will look as soon as possible at what happened and why with a view to delivering an initial report by the end of October.

The second independent review will be undertaken by Eurostar chairman Richard Brown CBE, and examine the wider rail franchising programme. It will look in detail at whether changes are needed to the way risk is assessed and to the bidding and evaluation processes, and at how to get the other franchise competitions back on track as soon as possible. This will report back by the end of December.

Evidence of significant flaws in the Department’s approach emerged while officials were undertaking very detailed evidence-gathering in preparation for legal proceedings in the High Court.

These flaws stem from the way the level of risk in the bids was evaluated. Mistakes were made in the way in which inflation and passenger numbers were taken into account, and how much money bidders were then asked to guarantee as a result.

The Department cannot be confident that these flaws would not have changed the outcome of the competition or that any of the four bidders would not have chosen to submit different offers.

The DfT has spoken to the four bidding companies to inform them of the flaws that the Department discovered. The DfT will reimburse their bid costs and has assured them that a fresh competition will be started as soon as the lessons of this episode are learned.
 
Notes to Editors

•     Richard Brown, the chairman of Eurostar, is a former chief executive of Eurostar and previously commercial director and a main board director of National Express Group, where he set up its UK Trains Division, at the time the largest UK passenger franchise operator. He has spent 35 years in the transport industry and was a director of British Rail’s Intercity Division before privatisation.
•     Sam Laidlaw has been chief executive of energy company Centrica since July 2006 and has been a non-executive director of HSBC Holdings Plc since January 2008. He has been the lead non-executive board member of the Department for Transport since December 2010 and is also a member of the UK Prime Minister’s Business Advisory Group.
•     Ed Smith is a non-executive board member of the Department for Transport and was formerly chairman of strategy for PricewaterhouseCoopers, deputy chairman of the Higher Education Funding Council for England, as well as chair of their Leadership, Governance and Management Strategic Advisory Committee.

Frankly, a disgrace.

Virgin gets its day in court!

So purveyors of popcorn are in for a bumper month of sales!

Last Friday saw a pre-hearing for Virgin's application for a Judicial Review into the process behind the InterCity West Coast franchise award.

M'learned friends are expected to square up in court on the 17th or 18th of this month, with legal debates expected to last a number of days.

Hopefully all interested parties will remember that this Thursday is the cut off point for submitting evidence...

UPDATE: This from Steve Strong...

As no doubt the wheels of Justice will take many months to turn, DOR must now be a shoe-in for running InterCity West Coast from the 9th December.

Unless of course the newly emboldened ORR objects... 

First accepts Virgin best - Official

Happy news for the franchising zealots of Great Minster House (Sid and Dorris Bonkers)!

With the 'risk transfer' model of franchising subject to increasing ridicule for failing both fare and taxpayers, the mandarins of Marsham Street must have been looking forward to yesterday's Business Traveller magazine awards.

At a glitzy lunchtime event at Kensington's Royal Garden hotel, hosted by no less a figure than the polymath Sir Trevor McDonald, the keenly competed for 'Best UK Domestic Train Service' award went to errr... Beardie Rail.

Alas, and for the sixth year running!

As this doesn't quite fit the DfT's narrative on the West Coast franchise expect this accolade to go unremarked upon by either officials or ministers.

And to compound Marsham Street's joy, the award itself was sponsored by First Great Western!

UPDATE: This from Mrs AP Tis...

I understand that First Group are applying for a judicial review of the decision to award the prize to Virgin Trains.

Griffiths to be Stagecoach CEO

This from Reuters...

Stagecoach also said its chief executive Brian Souter would stand down and become the company's chairman in May 2013, replacing George Mathewson who is retiring. Martin Griffiths, the company's finance director, will take over as chief executive, the company said.

Nothing yet on what Stagecoach thinks of Virgin Trains' campaign to get the InterCity West Coast franchise decision overturned.

Virgin Trains is 49% owned by Stagecoach.
 

An exciting Eye poll on VirginTrains' use of Twitter

As previously covered on Eye...

Beardie Rail has been using the @VirginTrains twitter account to encourage passengers and followers to sign an on-line Number 10 petition.

The petition asks the government to "reconsider" the award of the InterCity West Coast franchise to First Group.

Virgin Rail Group and Richard Branson have made clear that "a member of the public completely independent of Virgin has set up" this petition.

So. What is your view of this approach?

Sour grapes or listening to your customers.

You decide in Eye's exciting new survey (see right)!

ICWC bid spat exposes industry's immaturity

The InterCity West Coast franchise excitement continues...

Both First and Virgin have continued trading blows on-line and through the media over the last couple of days.

Sir Richard Branson took to his blog on Friday to say:

The Government may as well have auctioned the West Coast Main Line on eBay: “Roll up, roll up for the Great Train Sale! Highest bidder wins. Doesn’t matter when you pay, 10 years or 15 years time will do.

“We don’t mind how much debt your company has. Deliverability not an issue. Quality not a factor. Redundancies not a problem. Roll up, roll up.”

It would have saved everyone a lot of time and effort and the taxpayer lots of money...

A member of the public completely independent of Virgin has set up an e-petition calling for the government to reconsider the West Coast Main Line franchise decision

If you want to join them and let the Government know your thoughts, we urge you to sign the independent e-petition.

A call to action that @VirginTrain's own twitter account took to heart:

Amusing to think that in December this renamed account will be tweeting on behalf of First Group! 

Such are the paradoxes of the franchising system.

Meanwhile Tim O'Toole in Saturday's Daily Mail accused Beardie of being a bad loser:

‘Branson has lost and he is off the field now,’ he said. ‘What he is saying is simply not true. We are not going to be cutting staff – staff levels will be about the same.

‘But there are two things which are particularly outrageous. Had he won, he was planning to cut twice as much as he said we would have cut. And if he had won with his bid, he would have made a huge amount of money. Maybe that explains his hysteria.’

Whilst the main protagonists continued playing Punch and Judy across the broadsheets on Sunday, it now looks as if the National Audit Office and Transport Select Committee will be scrutinizing the bids.

According to Alistair Osborne in today's Telegraph:

Margaret Hodge, PAC chairman, said she was concerned that, following bid fiascos on the East Coast line, the Department for Transport (DfT) had been “over-optimistic about passenger numbers and economic growth”.

“There is no evidence to us that the DfT has changed its spots on any of this,” she said. “It would probably be legitimate for us to look at the process they have engaged in on this bid.”

Whilst this all adds greatly to the general gaiety of the nation, is it anyway to run a railway?

Tony Collins video statement to Virgin staff

That is all.

Virgin statement on IC West Coast franchise

This from Virgin...

Statement: from Sir Richard Branson, Founder Virgin Group

Following the DFT's decision to award the West Coast Mainline franchise to FirstGroup, Sir Richard Branson, founder of Virgin Group,  said:

“The Government decision to award the West Coast Main Line Franchise to FirstGroup is extremely disappointing for Virgin, and for our staff that have worked so hard to transform this railway over the last 15 years.  We submitted a strong and deliverable bid based on improving customers’ experience, increased investment and sustained innovation. To have bid more would have involved dramatic cuts to customer quality and considerable fare rises which we were unwilling to entertain.

“We also did not want to risk letting everybody down with almost certain bankruptcy at some time during the franchise as happened to GNER and National Express who overbid on the East Coast mainline. Sadly the Government has chosen to take that risk with First Group and we only hope they will continue to drive dramatic improvements on this line for years to come without letting everybody down.

“We won the franchise in 1997 with an agenda to change radically the way people viewed and used the train. At the time the track was run-down, staff demoralised, the service riddled with delays and reliant on heavy subsidies. We set hugely challenging targets to dramatically speed up journey times with modern tilting trains, increase the frequency of the service, improve the on-board experience; as well as double passenger numbers and return the line to profit.

“We were told it was "Mission Impossible" and our plans were laughed at by critics. However 15 years later, despite continued problems with the track, we have achieved our targets. Passenger numbers have more than doubled to over 30 million, the fastest growth in the UK and world leading. We have the highest customer satisfaction of any long distance franchise operator and dominate the air/rail market between London and Manchester. It has been a remarkable achievement by an outstanding team who have successfully delivered on our promises.

“I am immensely proud of our staff for turning the West Coast line from a heavily loss-making operation into one that will return the taxpayer billions in the years to come.  Last year we paid a net premium of £160 million to the taxpayer and have created a franchise worth more than £6 billion which is hugely valuable to the country.

“These achievements have counted for little – as this is the fourth time that we have been out-bid in a rail tender. 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. In the case of the East Coast Main line, both winners – 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?

Interestingly before Virgin took over the West Coast there were more passengers using the East Coast than the West Coast. Now there are 12 million fewer.
 
“Under our stewardship, the West Coast Mainline has been transformed from a public liability into a valuable asset for the UK, worth many billions of pounds.  The service is a British success story and one to put up against rail companies around the world. It is a great shame that such a strong track record has been discounted in the evaluation process for one of the UK’s most important infrastructure assets. The country's passengers, taxpayers and the West Coast employees deserve better.

“Based on the current flawed system, it is extremely unlikely that we would bid again for a franchise.  The process is too costly and uncertain, with our latest bid costing £14 million. We have made realistic offers for the East Coast twice before which were rejected by the Department for Transport for completely unrealistic ones and therefore will have to think hard before embarking on another bid.

“Our amazing staff have been the driving force behind the West Coast Main Line’s transformation and I am sure that for the last months of the contract they will all continue to run the high quality service that has helped win us many awards and attract millions more customers to rail.”

Virgin's view of Barbielino and Eastern Promise

Clearly confusion reigns over today's exciting announcement from Directly Operated Railways about plans to operate 'Barbielinos' on the ECML.

Virgin were clearly unsighted on DOR's plans as this statement, released yesterday afternoon, by Virgin Rail Group reveals

"We have no knowledge of any plans to use new Pendolinos on East Coast and have not been asked for any advice. The new Pendolinos were ordered for the West Coast based upon a robust business case and are due to start arriving in the UK later this year.

“As has already been reported, we have made a proposal to the DfT to seek an extension to our West Coast Franchise and one of the many benefits would be to assist the DfT with the tricky integration of new vehicles and offering options to put the new 11-car trains into revenue earning service earlier than previously envisaged, to provide maximum capacity before and during the Olympic Games in 2012.

“We cannot go into too much detail as this is still a matter between us and the DfT, but we can confirm broadly that our plans are to put the first new Class 390 on Scotland - Birmingham services in 2011, of which many are now full and standing (nearly half of all trains on Fridays and Sundays). Then we would extend the trains to London, restoring some direct Milton Keynes - Scotland links, and free-up a Super Voyager to start a new service linking Manchester with Heathrow ( Hayes ). Another set would also enable hourly London - Glasgow services throughout the day by the end of 2011.

“Furthermore, we have developed a new business case that pays for the placing of an order for another 42 vehicles, at no additional cost to Government. This would bring the complete Pendolino fleet of 56 trains up to 11-car with 2 additional standard class coaches per set.

“We are sure the DfT will not dismiss out of hand our revenue earning proposals over an experiment on the East Coast and we are just waiting to discuss our proposals in more detail.

"Given the record rates of growth we seeing on our West Coast services (three times higher than the East Coast) we really need to get the trains and cars into service as soon as possible to handle the growing passenger numbers without worsening overcrowding."

Eye understands that the DfT press office were also unaware of the DOR release until it popped into their inboxes this morning.

Not bad considering that DOR is part of the Department for Transport.

Three Railway Eye cheers for joined up government!

UPDATE: This from Our Man at 222 Marylebone Road...

Virgin say: “We are sure the DfT will not dismiss out of hand our revenue earning proposals over an experiment on the East Coast and we are just waiting to discuss our proposals in more detail."

Virgin mean: 'We put in our proposals yonks ago and from the deafening silence it's pretty clear that DfT Rail is continuing its vendetta against us despite the change of government.'

UPDATE: This from Jumbo...

Is there any circumstance in which Virgin could resist telling us how good they are?

With investment of over £10 billion on the West Coast, and a massive increase in the train service, it is no wonder that growth is three times higher than on the East Coast.

Still with all their exciting plans, no doubt the DfT can expect Virgin to offer lots of lovely lolly in premium payments in the near future.

But is it too soon to tell Sir Roy McNulty?

UPDATE: Ithuriel responds to Jumbo...

As any fule kno, DfT Rail felt that it had been taken to the cleaners by those nasty capitalists at Virgin when the revised West Coast franchise deal was struck.

Virgin even sweet-talked the gullible civil servants into early eligibility for revenue support under cap and collar (Like those public spirited entrepreneurs at First Group?. Ed).

But despite Virgin's worst efforts, ridership and revenue is booming, so that it is all cap and no collar on the West coast and the public purse is taking 80% of earnings over the revenue profile in the revised franchise agreement.

Meanwhile East Coast is still relying on the collar.

Clearly DfT Rail believes that no commercial good deed should go unpunished