Disappointed Virgin to surrender West Coast

FIRSTGROUP has won the next Intercity West Coast franchise, ending fifteen years of operation on the route by Virgin. The announcement may trigger a new controversy, because reports have suggested that Virgin could challenge the decision. The company has said that it is 'disappointed' to have lost the competition.

The winning bid, worth £5.5 billion, is lower than sources had been suggesting. It had been thought that First had offered as much as £7 billion.

The DfT said First West Coast Limited will introduce 11 new six-car electric trains which will boost capacity on the Birmingham to Scotland route. New services are planned from Blackpool, Telford, Shrewsbury and Bolton to London. First West Coast will also cut the cost of its ‘Standard Anytime’ fares by an average of 15 per cent within the first two years.

First said it will refurbish the Pendolino and Voyagers with new seats throughout and improved luggage space. It is also promising to 'enhance' catering with improved at-seat service, although no details have been given. However, First West Coast's managing director Richard Parry has denied speculation that the shop areas on Pendolinos are to be removed to allow more seats.

The contract will start on 9 December this year and last for a minimum of 13 years and four months, with a provision to extend it to 15 years.

First West Coast has provided £10 million of Shareholder Capital, a £45 million Performance bond agreement and a subordinated loan of £190 million. There is also a Season Ticket bond of around £5 million and a £15 million Parent Company Guarantee.

Rail minister Theresa Villiers said: “This new franchise will deliver big improvements for passengers, with more seats and plans for more services. Targets to meet on passenger satisfaction will be introduced for the first time in an InterCity rail franchise and passengers will also benefit from smart ticketing and from investment in stations.

“The West Coast is the first of the new longer franchises to be let by the Coalition which has helped us secure real benefits for passengers by encouraging First West Coast Limited to invest in the future of the service.”

Virgin Rail Group chief executive Tony Collins said: “Naturally, we are all very disappointed by today’s announcement.  We had submitted a strong, deliverable bid with emphasis on customer service which would have produced strong growth over the life of the franchise resulting in significant benefits for the taxpayer through generous premium payments to Government.

"Our efforts for the remaining four months of the current franchise will be to continue to offer a high quality service to our customers, who we would like to thank for their loyalty over the past 15 years, and hand over a healthy and efficient franchise to the new operator on 9 December.”

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