RICHARD Bowker has resigned as chief executive of National Express Group — and its flagship East Coast inter-city rail service is being taken over by the Department for Transport until the franchise can be re-let.
News of Bowker’s resignation was given to the City shortly after seven o’clock this morning. Minutes later the Transport Secretary Lord Andrew Adonis went on BBC Radioi 4 to announce his department will take control of East Coast services.
He said all the NX East Coast staff would continue to be employed, that all tickets will be honoured and services will continue as normal.
It is not yet clear if the DfT will also take over responsibility for National Express’s two other franchises — East Anglia ands c2c. The normal rules are that if a company defaults on one franchise it must also hand back others, too.
Lord Adonis said the action resulted from underlying financial problems in the National Express Group.
"The government is not prepared to renegotiate rail franchises because I'm simply not prepared to bail out companies that are unable to meet their commitments," Transport Secretary Lord Adonis told BBC Radio 4’s Today programme.
Under the East Coast franchise National Express was contracted to pay premiums to the Government totalling £1.4 billion by 2015. But the present recession has depressed growth in the numbers of passengers travelling and led to others to trade down from First Class to standard tickets and cheaper fares.
Reports have suggested that National Express is likely to have lost around £20 million running the East Coast franchise in the first half of this year.
In a trading statement, National Express said that the "challenging economic environment" meant it was seeing fewer passengers on the East Coast Mainline, and "significant" levels of people downgrading from first class and full fares.
The last time a train operating franchise was taken back into public control followed Connex being sacked from running South Eastern. The action then was taken by the former Strategic Rail Authority — whose chief executive then was Richard Bowker. Later the franchise was re-advertised and let to Go-Via, which also now operates London Midland and last month was re-awarded the Southern franchise.
A Leeds-based customer services assistant for National Express East Coast, who also worked with GNER, the previous company running the East coast franchise,said: “We only heard about all this on the news this morning. Nobody from the company told us.
“We knew something was coming, but not as fast as this. It happened to GNER, and now to us.
“At least with the Government running us, we know our jobs are safe.”