Sir Richard Branson’s bid for the West Coast Mainline has been rejected by the government, leaving rail operator FirstGroup to run one of the most profitable lines in Britain.
FirstGroup are the UK’s largest rail operator, and won the bid after reportedly offering up to half a billion pounds annually which is £100,000 more than Virgin’s rumoured bid.
Sir Richard said that the decision was “extremely disappointing”. He went on to say: “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.”
FirstGroup will take control of the line until 2026, and said that they were delighted with the news.The franchise have plans to make improvements to the quality and frequency of the line services to hopefully attract most passengers and to allow for growth comparable to other intercity franchises in the UK.
FirstGroup hope to create good returns for shareholders and to live up to the Government’s significant investment of £9 billion in the railway.
Tim O’Toole, Chief Exectutive of FirstGroup announced that the franchise will reduce journey times, introduce more direct services, improve ticketing and train interiors as well as delivering station upgrades and better food services.
He commented: “We are delighted to be selected by Government to operate this unique railway which connects communities across the country and plays a vital role in the UK’s economic growth.
“Our bid also delivers value for taxpayers by returning premiums to the Government underpinned by sustainable growth in passenger numbers and revenues from the utilisation of significant available capacity.
“The new franchise will provide an economic return for our shareholders and is value enhancing from day one.
“We look forward to bringing an exciting mix of innovation, and customer and service improvements to InterCity West Coast and creating a better railway for all.”
The CEO also announced that the group hope to take on more staff and provide them with long term opportunities.
FirstGroup has said that it will deliver a £5.5 billion net return to the Government over the franchise term.
Rail Unions have shown their opposition to FirstGroup’s takeover, vowing to protest against the changes after saying that it will affect jobs, increase fare prices and cut back on catering.
This morning, Secretary of rail union RMT, Bob Crow, said: “RMT will work with MP’s and communities along the West Coast route to stop the savage assault on staffing levels and budgets that we expect to be at the core of this new franchise arrangement.
“The new First West Coast deal in an exercise in casino franchising that lays bare the whole sordid enterprise which is rail privatisation.
“First pulled the pin on the Great Western route to dodge £800 million in payments due to the British taxpayer and here they are just months later in control of the West Coast InterCity route. The highly-political award of this contract turns the UK rail industry into a global laughing stock and the British taxpayer will be rightly outraged.”
Corin Taylor, Senior Economic Adviser at the Institute of Directors, added: “Businesses will be watching FirstGroup’s performance closely. The contract will only be a success if passengers get the extra seats, faster journey times and smart ticketing that has been promised.
“As with all rail franchises, we hope that the train operating company will be able to fulfilthe pledges of their bid and provide an improved service for passengers.”