Virgin Trains East Coast franchise to end 24 June 2018 and is temporarily re-nationalised

[ainsworth74]

This thread is for discussing the situation on the East Coast. There is already a thread running here for those wishing to speculate about the West Coast franchise.

Thanks!

 

[IanXC]

...at the negotiating table the DfT have granted them (VTEC) some leeway but got them to take on some infrastructure responsibility themselves.

I'm not sure quite what you're getting at here. VTEC have taken on no new responsibilities.

 

[Class 170101]

to up the ante and actually start delivering the improvents,obviously the GWR fiasco has put the whole company in problems and a recruitment programme of qualified engineers should take place from a worldwide platform.

Brexit has seen / will see to that I'm afraid.

 

[Bornin1980s]

Guess this puts paid to the Middlesbrough service. I don't understand why it was wanted anyway, with the Transpennine service to York and Grand Central from Eaglescliff.

 

[Domh245]

Grayling has been setting out plans for what is happening to VTEC going forward. The DfT is currently assessing two options, either a direct award to VTEC on a not-for-profit basis, or either an "operator of last resort" - but no decision made yet.

 

[plcd1]

Grayling just announced to the House of Commons that the Stagecoach / Virgin franchise will run out of money in a few months. A key financial covenant has been breached. He has not yet determined what the successor arrangements will be. He says the franchise will keep running but appraisal of options for running the services until the "Partnership" can be put in place is now underway. He

He has said "Virgin got their sums wrong" and that steps have been taken to avoid overbidding on future franchises.

First option - Stagecoach keep going but presumably on management contract but "not for profit" and short term. Extra benefits would have to be forthcoming
Second option - Operator of last resort (back to DOR)

So yet again the East Coast has become a franchising nightmare.

Stagecoach cannot be banned from operating future franchises or current ones - based on legal advice the DfT has received. Grayling is completely wedded to the privatised railway concept and kept going on about how Stagecoach's errors have cost it £200m and also that the franchise remains profitable.

 

[DenmarkRail]

What is an 'operator of last resort'? Gov run?

 

[Darandio]

What is an 'operator of last resort'? Gov run?

Yeah, reactivate Directly Operated Railways. They are sat there waiting on standby, got fireman poles and everything.

 

[cf111]

What is an 'operator of last resort'? Gov run?

Sort of. The government hived off Directly Operated Railways to a group of consultants after East Coast became VTEC. While this is a Wikipedia page, it does have citations; https://en.wikipedia.org/wiki/Directly_Operated_Railways#Demise

I think that this government will do everything in their power to keep Stagecoach running this franchise in some form. The current system, as far as the East Coast Mainline goes, clearly does not operate as it should do because every single private operator has collapsed, although I concede in the case of GNER it was the parent company that actually went under and not GNER in its own right.

 

[DenmarkRail]

I really wonder what is wrong with the ECML... It is just sad that a good operation, is left to die like Virgin will.

 

[LNW-GW Joint]

What is an 'operator of last resort'? Gov run?

They are consultants contracted to DfT to step in to run franchises where needed, prior to refranchising.
The firm responsible is SNC Lavelin, a company based in Derby, and used to be Interfleet (ex-BR).
http://www.snclavalin.com/en/market-services/infrastructure/rail-transit/
http://www.snclavalin-railandtransit.com/en-int
Essentially they wll run a management contract for as long as DfT requires (for a fat fee).
The previous DfT group, DOR, which ran East Coast after National Express pulled out, has been disbanded.

 

[Morgsie]

Was just on the BBC News 6pm and Grayling has 2 options which are Operator of Last Resort renationalise like DOR or not for profit contract. Stagecoach can bid on other rail franchises

 

[KashmireHawker]

Martin Griffiths of Stagecoach has wanted to share "The real story of Virgin Trains East Coast", by this 6 minute, 1 second video...

https://players.brightcove.net/1555966121001/default_default/index.html?videoId=5726503939001

 

[gavin]

The truth on the VTEC franchise £800million paid by the group so far admit passenger forecast was wrong and lost £200million so far

@stagecoachgroup

Stagecoach Group Chief Executive Martin Griffiths on the true story about Virgin Trains East Coast http://www.stagecoach.com/virgin-trains-east-coast-the-real-story/ … @Virgin_TrainsEC @Virgin

Article now on the BBC

Stagecoach will lose the East Coast Mainline rail franchise earlier than expected after the government said the operator had "got its numbers wrong".Transport Secretary Chris Grayling said Stagecoach would only continue running the London to Edinburgh line for "a small number of months". The contract, originally due to end in 2023, has already been cut short once. Mr Grayling said day-to-day operation of the line - run in conjunction with Virgin Trains - would be unaffected. Speaking in the House of Commons, he said Stagecoach was set to lose about £200m, equating to more than 20% of its total market value.

 

[ainsworth74]

Chris Grayling's statement is on Parliament TV if anyone is interested in watching.

 

[cf111]

The truth on the VTEC franchise £800million paid by the group so far admit passenger forecast was wrong and lost £200million so far

Is "revolutionarise" from the same dictionary as "awesomer"?

 

[ainsworth74]

An article has now appeared on BBC News:

Stagecoach will lose the East Coast Mainline rail franchise earlier than expected after the government said the operator had "got its numbers wrong".

Transport Secretary Chris Grayling said Stagecoach would only continue running the London to Edinburgh line for "a small number of months".

The contract, originally due to end in 2023, has already been cut short once.

Mr Grayling said day-to-day operation of the line - run in conjunction with Virgin Trains - would be unaffected.

Speaking in the House of Commons, he said Stagecoach was set to lose about £200m, equating to more than 20% of its total market value.

But he said there was "no question of a bailout" for the company.

Mr Grayling said he was urgently seeking a successor arrangement but had not yet decided which company would be awarded the franchise.

He said Stagecoach would be allowed to continue operating the franchise on a short-term and not-for-profit basis.

East Coast Mainline could be brought back under government control as one of the options for maintaining the service.

Mr Grayling also said there were no legal grounds to prevent Stagecoach from bidding for current or future franchises.

And he announced that Virgin and Stagecoach had won an extension to operate the West Coast Mainline rail franchise.

Virgin and Stagecoach will now operate the London to Glasgow service from 1 April 2018 until potentially 31 March 2020.

 

[Darandio]

It's a shame Martin Griffiths started that 'truth' video with claims of improvement such as a 'better on board journeys with first class catering' and 'new website and smartphone app'.

I'm sure many here would agree that none of those have been particularly successful.

 

[Marklund]

It's a shame Martin Griffiths started that 'truth' video with claims of improvement such as a 'better on board journeys with first class catering' and 'new website and smartphone app'.

I'm sure many here would agree that none of those have been particularly successful.

Yes, defining "better" is very subjective. Marketing fluff in my humble opinion.
I know that in my eyes, the DOR EC offering was better than S/V ECs. Prices as well as on board service.

 

[JaJaWa]

It's a shame Martin Griffiths started that 'truth' video with claims of improvement such as a 'better on board journeys with first class catering' and 'new website and smartphone app'.

I'm sure many here would agree that none of those have been particularly successful.

Quite misleading of him – the new website was delivered by East Coast in its final days. The booking engine was replaced by Virgin Trains East Coast but hasn't been popular – neither has their app which just links to the website and averages 1 out of 5 stars.

He says they've delivered a lot more than East Coast but EC did the first complete timetable overhaul (Eureka), introduced Rewards, introduced free First Class catering, (even introduced the new website...).

Chris Grayling's statement is on Parliament TV if anyone is interested in watching.

Confirmed as 'a very small number of months' left for Virgin Trains East Coast there.

 

[LNW-GW Joint]

Chris Grayling's statement to parliament:
https://www.gov.uk/government/speec...-west-coast-and-east-midlands-rail-franchises
Excerpt of the key actions:

At this stage, one of the options is to consider the possibility of Stagecoach continuing to operate services on the East Coast under a very strictly designed and short-term arrangement. The current management has a strong record of customer service and to rule out their involvement now would go against the principles I set out above.

However, given the circumstances in which the government is having to step in to protect passengers on this line, I am only prepared to consider this option on the basis that the franchise would be operated on a short-term, not-for-profit basis. The only acceptable financial reward for Stagecoach would be received at the end of the contract and only in return for clearly specified passenger benefits being delivered. The company cannot be allowed to continue running this franchise and making a profit given what has happened. They got their sums wrong and they will pay the price for that – not the taxpayer.

The alternative option is that the East Coast franchise would be directly operated by the Department for Transport through an Operator of Last Resort. My department will subject this option to the same rigorous assessment to establish whether it will deliver value for money for taxpayers and protect the interests of passengers. This option is currently on the table and will be selected if the assessment that I have set out determines that it offers a better deal for passengers and taxpayers than the alternative.

 

[Marklund]

Confirmed as 'a very small number of months' left for Virgin Trains East Coast there.

At least the vinyls will peel off easily enough back to East Coast...

 

[jcc]

Martin Griffiths of Stagecoach has wanted to share "The real story of Virgin Trains East Coast", by this 6 minute, 1 second video...

https://players.brightcove.net/1555966121001/default_default/index.html?videoId=5726503939001

The autocue reading is horrific.

 

[cjp]

To anyone who thinks that the nearly £200 million that Stagecoach will lose is insignificant, let me put it into some context. The combined profit of every single train operator in the country was only £271 million last year. The loss equates to over 20% of Stagecoach’s total market value. So it is a significant amount of money by any measure,.

Is it me but if the railways were not privatised would this £271m not have come into the countries coffers?
And are Stagecoach "too big to fail"? And if not let them go to the wall

 

[jyte]

Jesus christ....

Could this see the return of DOR?

 

[Tetchytyke]

It's a shame Martin Griffiths started that 'truth' video

You could have left it at that, really.

The truth is he's a big Stagecoach shareholder who will benefit the most from Failing Grayling's Big Beardy Bailout. Which isn't a bailout. Even though Stagecoach will get to keep their hands on the franchise despite not paying their promises. But it's not a bailout.

 

[JaJaWa]

Is it me but if the railways were not privatised would this £271m not have come into the countries coffers?
And are Stagecoach "too big to fail"? And if not let them go to the wall

Doesn't sound huge – what's that on a turnover of? A quick Google then suggests the water companies (also mentioned then by Grayling) make £2.06 billion profit.

 

[AlexNL]

And are Stagecoach "too big to fail"? And if not let them go to the wall

A few years ago you would've probably said that about National Express, when they still had c2c, NXEA and NXEC. And look where they are now - out of the UK rail industry.

Apart from Stagecoach, parties like Arriva, First, Abellio, Govia and MTR are still interested in the UK's rail market. Stagecoach definitely is not too big to fail.

 

[ainsworth74]

And are Stagecoach "too big to fail"? And if not let them go to the wall

How are going to let them go to the 'wall'? As far as I'm aware Stagecoach aren't about to 'fail' so the only way to let anything go to the wall would be for the VTEC franchise to run out of money and therefore stop running trains which would seem like a poor outcome for passengers and staff versus dealing with the issue in advance by either renegotiating or getting the operator of last resort in.

Could this see the return of DOR?

DOR themselves don't exist anymore but the DfT still has consults on the books available to step in as 'operator of last resort' should it be required and Grayling has said that it's one of the options being looked at.

 

[Tetchytyke]

Doesn't sound huge – what's that on a turnover of?

£200m? It's about a quarter of what Souter's paid to himself in dividends in the last decade...