Who is allowed to bid for a franchise?

[thenorthern]

Carrying on from the thread about why the unions haven't bid for franchises I was wondering who is allowed to bid for a franchise and who isn't. As in could Manchester City Council bid for the Northern Franchise or could a charity bid for the franchise.

I am aware that despite it technically being an open auction only big transport companies will ever get a franchise.

 

[hwl]

Carrying on from the thread about why the unions haven't bid for franchises I was wondering who is allowed to bid for a franchise and who isn't. As in could Manchester City Council bid for the Northern Franchise or could a charity bid for the franchise.

I am aware that despite it technically being an open auction only big transport companies will ever get a franchise.

Bidders need to have passed pre-qualification and all the above will fail for financial reasons

 

[theageofthetra]

EU imposed rules mean that public sector bodies can't bid for rail franchises.

 

[Mag_seven]

EU imposed rules mean that public sector bodies can't bid for rail franchises.

So how come European state railways have been allowed to run franchises here then?

 

[jopsuk]

EU imposed rules mean that public sector bodies can't bid for rail franchises.

erm, (citation needed)

 

[LNW-GW Joint]

EU imposed rules mean that public sector bodies can't bid for rail franchises.

No.
The only stipulation is that infrastructure must be accounted for separately from operations, and that operations are periodically competed for (which we interpret as franchising).
Cross-border services are regulated by the EU (as opposed to national governments), much as air and ferry services are.
A level playing field must be established for new entrants, which means transparent access charges and a licensing regime (ie no closed shop).
Even SNCF/DB etc have only a limited licence to operate trains, and are both heading for a regional model.
Germany has public operators from one region running trains in another (not DB).
The rules were not "imposed", we voted for them (and to some degree invented them, as we were first into open access and franchising).
They are part of the single market legislation we were so keen on until yesterday.

There is nothing whatever in EU legislation to stop public bodies operating trains.
But they have to operate commercially and competitively.
Even SNCF and DB operate commercially, even if with massive government support, and are facing competition on all sides.

The reason we don't allow public sector bids was originally so that the entire industry would be out of public hands.
The expertise now sits with the franchise owners.
So there aren't any public sector operators, bar DRS (which is a creature of the nationalised nuclear industry, but is still a commercial TOC), and TfL which has no remit outside London.

To extrapolate further, if we stayed in the EU, and Labour "nationalised" its first franchise, it would still have to be competed in the open market.
Franchises can of course be changed and merged, to form larger operations, but they still would have to be commercial, not secret arms of the state like BR was.

 

[rebmcr]

How feasible/permissable would it be for (as an example) Manchester Airports Group to bid?

 

[BR67]

The criteria are here:
https://www.gov.uk/government/publications/rail-franchising-pqq-passport-documentation

As mentioned above, unions wouldn't meet the financial criteria, amongst others.

 

[AndrewP]

So how come European state railways have been allowed to run franchises here then?

Technically they don't they own companies that do - its a subtle difference but important non the less.

 

[LNW-GW Joint]

How feasible/permissable would it be for (as an example) Manchester Airports Group to bid?

No problem at all, but they would have to get the appropriate skills (as well as the right financial backing and approval by the "shareholders" (mostly GM local authorities)).
They would be in it for the profit, of course, like everybody else.
National Express recently sold c2c to Trenitalia.
They could just as easily have sold it to MAG as long as MAG had a franchise "passport" demonstrating they had the appropriate resources.

 

[thenorthern]

Regarding public ownership I think the EU rules just state that ownership of track and operation of trains should be separate and there should be a market for other operators to come into the market.

When the track operation and train operation were split in 1994 in theory John Major's government didn't need to sell off Railtrack Plc that owned the track however they did in 1996. A private Railtrack Plc however was doomed to failure as unlike train operators it wasn't franchised to offer the best deal for passengers and had no competition meaning the only way for it to make more money was to cut costs which isn't the best thing when you are dealing with safety.

Slightly off topic it would be interesting what would have happened with open access operators if British Rail had remained in public ownership. With the EU's First Rail Directive there wouldn't have been anything the British Government could have done to prevent open access operators and it wouldn't surprise me if under British Rail we would have had more open access operators given that the ones on the East Coast Main Line have come as a result of a timetable and service patten similar to British Rail and the amount of open access operators that Virgin Trains has prevented from operating over the years.

 

[LNW-GW Joint]

Slightly off topic it would be interesting what would have happened with open access operators if British Rail had remained in public ownership. With the EU's First Rail Directive there wouldn't have been anything the British Government could have done to prevent open access operators and it wouldn't surprise me if under British Rail we would have had more open access operators given that the ones on the East Coast Main Line have come as a result of a timetable and service patten similar to British Rail and the amount of open access operators that Virgin Trains has prevented from operating over the years.

Open access operators haven't been queuing up for the WCML since moderation of competition lapsed in 2012, and the DfT generally wants to protect its franchised income.
The one that is in prospect (Alliance) still hasn't ordered any stock to run its approved services to Blackpool.
There has never been any open access on the GWML or MML either, or the regions.
Partly that's down to lack of paths.
I doubt things will change in the next parliament, but there is the possibility of franchising out sets of paths rather than whole services - eg 2 operators doing Euston-Manchester on the WCML and sharing the paths and rolling stock.
But then there's HS2 complicating everything.

 

[rf_ioliver]

erm, (citation needed)

Daily Mail perhaps? /s

 

[Chester1]

No problem at all, but they would have to get the appropriate skills (as well as the right financial backing and approval by the "shareholders" (mostly GM local authorities).
They would be in it for the profit, of course, like everybody else.
National Express recently sold c2c to Trenitalia.
They could just as easily have sold it to MAG as long as MAG had a franchise "passport" demonstrating they had the appropriate resources.

I very much doubt MAG would ever be interested in a franchise. The private shareholders would view it as a conflict of interest for the councils. Its possible that at some point they could run an open access service to and from the Airport, especially after major infrastructure works. However, there is no prospect of it happening anytime soon because of the focus on giving as many stations as possible a direct service to the Airport. MAG also own Stansted, East Midlands and Bournemouth airports. Liverpool airport is half owned by the city council, Luton Airport is entirely owned by Luton Borough Council and Teeside airport is 11% owned by the 5 local councils and the new Tory metro mayor campaigned on a public sector take over of the airport. Out of these the mostly like to have a public sector owned train service is probably Stansted, even then I doubt it.

 

[jopsuk]

Daily Mail perhaps? /s

Well quite. If anything, the EU rules on franchising etc have been heavily influenced and modelled upon what the UK did in the early/mid 90s. As far as I can tell it is an area in which the UK inflicted the rules upon the EU (which then toned them down). Certain people seem to forget that as one of the largest countries in the EU we had massive influence over the EC.

 

[thenorthern]

Open access operators haven't been queuing up for the WCML since moderation of competition lapsed in 2012, and the DfT generally wants to protect its franchised income.
The one that is in prospect (Alliance) still hasn't ordered any stock to run its approved services to Blackpool.
There has never been any open access on the GWML or MML either, or the regions.
Partly that's down to lack of paths.
I doubt things will change in the next parliament, but there is the possibility of franchising out sets of paths rather than whole services - eg 2 operators doing Euston-Manchester on the WCML and sharing the paths and rolling stock.
But then there's HS2 complicating everything.

Its taken Alliance years to get an access agreement, there have been attempts to get a Bradford-Manchester-London service by Grand Central and Alliance.

First North Western tried to run a service to London which didn't last long and stopped in 2000 because of Virgin Trains competition.

Wrexham and Shropshire tried to introduce open access service but straight after it launched Virgin Trains introduced a Wrexham to London service that was faster and took away a lot of Wrexham and Shropshire revenue.

Finally Virgin Trains has re-introduced a Blackpool to London service which I presume is to retain the revenue that they would otherwise of lost if Alliance came in.

 

[Chester1]

Its taken Alliance years to get an access agreement, there have been attempts to get a Bradford-Manchester-London service by Grand Central and Alliance.

First North Western tried to run a service to London which didn't last long and stopped in 2000 because of Virgin Trains competition.

Wrexham and Shropshire tried to introduce open access service but straight after it launched Virgin Trains introduced a Wrexham to London service that was faster and took away a lot of Wrexham and Shropshire revenue.

Finally Virgin Trains has re-introduced a Blackpool to London service which I presume is to retain the revenue that they would otherwise of lost if Alliance came in.

It was very likely that Virgin would launch a daily service to anywhere Alliance was granted paths so Alliance's behaviour doesn't make sense. They spent years and millions of pounds on gaining paths and then fell at the next hurdle. Surely they had a Plan A and a Plan B for obtaining tilting trains at a reasonable price?! As I have said before if they couldnt agree a reasonable price for new tilting trains they could have even chose to lease new stock for CrossCountry, taken 5 or 6 Voyagers and reinstalled their tilting kit.

 

[rf_ioliver]

Well quite. If anything, the EU rules on franchising etc have been heavily influenced and modelled upon what the UK did in the early/mid 90s. As far as I can tell it is an area in which the UK inflicted the rules upon the EU (which then toned them down). Certain people seem to forget that as one of the largest countries in the EU we had massive influence over the EC.

Tomorrow's headline: EU Bureaucrats *steal* BRITISH LAWS as well as jobs.

Actually I was looking for the amount of state ownership of Finnish Railways as a comparison, but the company structure gets *complicated* ... anyway, VR is effectively state owned*, running on state owned infrastructure

*for some suitable definition of "state owned"

t.

Ian

 

[rebmcr]

I very much doubt MAG would ever be interested in a franchise. The private shareholders would view it as a conflict of interest for the councils. Its possible that at some point they could run an open access service to and from the Airport, especially after major infrastructure works. However, there is no prospect of it happening anytime soon because of the focus on giving as many stations as possible a direct service to the Airport. MAG also own Stansted, East Midlands and Bournemouth airports. Liverpool airport is half owned by the city council, Luton Airport is entirely owned by Luton Borough Council and Teeside airport is 11% owned by the 5 local councils and the new Tory metro mayor campaigned on a public sector take over of the airport. Out of these the mostly like to have a public sector owned train service is probably Stansted, even then I doubt it.

MAG wouldn't have to be interested in order to serve the Airport. That's like saying DB would not be interested in UK franchising because none of the routes serve Berlin.

It's just a potential business opportunity that is uniquely available only to established transport companies with large cashflows.

 

[LNW-GW Joint]

Finally Virgin Trains has re-introduced a Blackpool to London service which I presume is to retain the revenue that they would otherwise of lost if Alliance came in.

The DfT asked them to introduce the service to Blackpool (and to Shrewsbury) as part of the direct award, and they are now part of the franchise spec.
However those rights expire with the current direct award (2019).
What you call Virgin prevention of open access is because of the original (1997-2012) franchise agreement with the DfT, not VT being predatory.
FNW closed its Euston services because it was broke, and the services never made any sense (2-car 158s running the length of the WCML?).

 

[thenorthern]

However those rights expire with the current direct award (2019).
What you call Virgin prevention of open access is because of the original (1997-2012) franchise agreement with the DfT, not VT being predatory.
FNW closed its Euston services because it was broke, and the services never made any sense (2-car 158s running the length of the WCML?).

First North Western had Class 322 trains operating the journey for a while which at the time wasn't much slower than the Class 86/87/90 trains that Virgin Trains used at the time as the West Coast Line Speed at the time was 110 mph. Plus London Midland manage to operate slow trains from Crewe and Stoke-on-Trent to London with no problems.

I am told the real reason why First North Western failed was because Virgin Trains offered cut price fares which made First North Western no be able to compete. Also the paths to London weren't that great as they meant a long wait at Tamworth.

Ironically though about 3 years after First North Western ended the London services the West Coast Main Line was largely shut for upgrade work to install the TASS for the Pendos which meant that many passengers had to use the Project Rio Midland Mainline service which took 3 hours.

 

[LNW-GW Joint]

I am told the real reason why First North Western failed was because Virgin Trains offered cut price fares which made First North Western no be able to compete. Also the paths to London weren't that great as they meant a long wait at Tamworth.

NWT (GW Holdings) didn't get their numbers right and had a £1m black hole in the franchise after the first couple of years (with poor performance on its core routes).
They would have pulled the Euston services anyway as they were not part of the minimum franchise spec.
They never did send the promised trains from North Wales to Euston.
Stopping patterns were constrained to "regional" stations, and the frequency from Blackpool/Rochdale/MIA was very low.
In terms of capacity, they never offered more than about 5% of the number of VT services on the WCML.
Yes, they did run 322s from Man Airport for a year or so, but there were not many takers.
Eventually they were basically told to concentrate on their core franchise routes.
By the time FNW (having bought out GWH and therefore GWT and NWT) ordered the 175s they had dropped all plans to run to London, and in any case had no spare stock.
Today, paths out of Euston are like gold dust, and LM had to develop 110mph running to operate its fast services.

 

[U-Bahnfreund]

No.
The only stipulation is that infrastructure must be accounted for separately from operations, and that operations are periodically competed for (which we interpret as franchising).

Going a bit off-topic here: why are there no competitions in e.g. Belgium, then. They have NMBS/SNCB/NGBE for all domestic trains, only high-speed services to the Netherlands, Germany, France and the UK are run by other companies (DB, SNCF, Thalys and eurostar that is).

 

[LNW-GW Joint]

Going a bit off-topic here: why are there no competitions in e.g. Belgium, then. They have NMBS/SNCB/NGBE for all domestic trains, only high-speed services to the Netherlands, Germany, France and the UK are run by other companies (DB, SNCF, Thalys and eurostar that is).

The incumbents are all on notice that they will have to compete for operation at some point in the future.
In the Netherlands the NS monopoly expires in 2023 I think.
They all then have to allow domestic open access and new entrants.
All part of the EU Fourth Railway Package.
I don't know the specific situation in Belgium, but the same rules are supposed to apply.
It's much the same in Germany where regional services are now competed for, but DB has a near-monopoly of long-distance services for a limited period.

 

[goblinuser]

Going a bit off-topic here: why are there no competitions in e.g. Belgium, then. They have NMBS/SNCB/NGBE for all domestic trains, only high-speed services to the Netherlands, Germany, France and the UK are run by other companies (DB, SNCF, Thalys and eurostar that is).

In the UK the open and fair tender process is upheld as it should be with no preference for local operators, but across the continent the tender process is sometimes a box ticking exercise only to choose the state or local company in the end.

 

[LNW-GW Joint]

In the UK the open and fair tender process is upheld as it should be with no preference for local operators, but across the continent the tender process is sometimes a box ticking exercise only to choose the state or local company in the end.

This is evidence of NS facing at least some competition, from Arriva:
http://www.railwaygazette.com/news/...arriva-operating-contract-to-be-extended.html

NETHERLANDS: The Province of Gelderland is to exercise an option for Arriva to continue to operate the Achterhoek – Rivierenland package of rail and bus services for a further five years. The extension will run from 2020 until December 2025.
The Achterhoek – Rivierenland contract covers regional passenger services on the Apeldoorn – Zutphen, Zutphen – Winterswijk – Arnhem and Arnhem – Tiel lines, as well as local bus routes

And of opening up TER routes in France to competition from 2024:
http://www.railwaygazette.com/news/...ns-sound-out-sncf-competitors.html?sword_list[]=sncf&no_cache=1

FRANCE: The body which represents the regions of France says that there is a ‘strong appetite’ amongst potential bidders for contracts to operate TER passenger services currently provided by SNCF, which are expected to be opened up to competition around 2024

 

[U-Bahnfreund]

This is evidence of NS facing at least some competition, from Arriva:
http://www.railwaygazette.com/news/...arriva-operating-contract-to-be-extended.html

Well, private railways in the Netherlands have been around for years. NS only holds the Hoofdrailnet (HRN) ‘main railway network′, which consists of all the Intercity services and the regional services (‘Sprinters’) in the Randstad region. Apart from this and the Alphen a/d Rijn – Gouda service, all train services in the Netherlands will be operated by private operators from December 2017 (the Zwolle–Kampen and Zwolle–Enschede services are currently NS as well, but will be Syntus from 10 December).

 

[cuccir]

The thread reminds me of this story from 2013 of BigJig Toys' application...

A few months back it was highly publicised that the West Coast Main Line was in disarray. First it was awarded to FirstGroup and then taken away…and then we were told Virgin were going to run on the line until 2014.

Well we wrote a letter to Transport Minister, Patrick McLoughlin to see if our bid for the West Coast Main Line was any better... Well today – a few months later, we got a response

I can't copy the images of the letters which are in the article, but both are pretty funny.