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

[Tetchytyke]

Would you be able to predict the change in the economy that has taken place since VTEC was awarded?

What change in the economy? Brexit hasn't happened yet. Wages have been stagnant since 2007.

Lets not beat about the Bush. Stagecoach thought nobody would notice if they raised fares and cut staff, both on board and at stations. Turns out people did notice. The profitable first class leisure travel has dropped off a cliff on VTEC, to the extent that they're having to flog cheap upgrades on a grubby auction website (it was good of Simon Calder to give them a timely plug this week!). I wonder why?

 

[Tetchytyke]

Or that it's 90/10 Stagecoach to Virgin?

It wasn't 90/10 to Stagecoach when he was dressing up and showing off his Azuma to the ladies!

Talk about a fair-weather friend. No wonder Martin Griffiths looks like he's going to cry in his hostage video.

 

[Danfilm007]

I think you'll find it's SNCF.

That's the one!

Though as Tony Miles points out they are likely to get a significant amount of the £200m back through suing Network Rail for breach of contract and compensation.

That's the critical point - it's joint accountability. When these Line Partnerships come in, this can only become magnified. Can you imagine what could happen in a few years under these new contracts?

 

[Agent_Squash]

What change in the economy? Brexit hasn't happened yet. Wages have been stagnant since 2007.

Lets not beat about the Bush. Stagecoach thought nobody would notice if they raised fares and cut staff, both on board and at stations. Turns out people did notice. The profitable first class leisure travel has dropped off a cliff on VTEC, to the extent that they're having to flog cheap upgrades on a grubby auction website (it was good of Simon Calder to give them a timely plug this week!). I wonder why?

There have been failures on VTEC - no one is denying that. But to say that the economic situation has not changed is completely ignorant - for starters, the pound fell off a cliff and is only returning now to where it was before.

 

[LOL The Irony]

I can see Virgin buying out most if not all of Stagecoach's stake in Virgin Rail after this fiasco.

 

[Danfilm007]

What change in the economy? Brexit hasn't happened yet. Wages have been stagnant since 2007.

The pound having dropped significantly after the referendum, fuel prices increasing...

Lets not beat about the Bush. Stagecoach thought nobody would notice if they raised fares and cut staff, both on board and at stations. Turns out people did notice. The profitable first class leisure travel has dropped off a cliff on VTEC, to the extent that they're having to flog cheap upgrades on a grubby auction website (it was good of Simon Calder to give them a timely plug this week!). I wonder why?

No, they wouldn't. They wouldn't be one of the UK's biggest transport companies if they did. Maybe you disagree with the idea, but when you consider the amount of leisure travel - it's potentially a good marketing idea and a good customer service idea for the end user. Much like even Grayling has been hailing them for...

 

[Tetchytyke]

Though as Tony Miles points out they are likely to get a significant amount of the £200m back through suing Network Rail for breach of contract and compensation.

Doubt it, Network Rail have delivered what they *promised*. The PSU2 wasn't promised. It wasn't even in their funding settlement with DfT. See what the NAO are saying.

And a government that gives a second bailout to a failed private provider, well, let's see how that pans our politically. Especially when the Crapita crash comes.

 

[Danfilm007]

I can see Virgin buying out most if not all of Stagecoach's stake in Virgin Rail after this fiasco.

And on the cheap, too!

 

[neilm]

There have been failures on VTEC - no one is denying that. But to say that the economic situation has not changed is completely ignorant - for starters, the pound fell off a cliff and is only returning now to where it was before.

So who's fault is that? VTEC for not predicting that? DfT for there franchising system that requires bidders to bid far into the future when Bank of England and banks get wrong month after month?

 

[Timrud]

I see they have been given an extension on the West Coast.

Personally I'd strip them of that too

 

[Tetchytyke]

They wouldn't be one of the UK's biggest transport companies if they did. Maybe you disagree with the idea, but when you consider the amount of leisure travel - it's potentially a good marketing idea

They're big because they're bullies. Always have been, always will be. It bit them on the bum this time.

As for Seatfrog, it's a way of filling unsold seats at the last second. But it's a fire sale. A good business wouldn't have the empty seats. DOR didn't.

 

[LOL The Irony]

I can see Virgin buying out most if not all of Stagecoach's stake in Virgin Rail after this fiasco.

And on the cheap, too!

And I can also see Stagecoach being told to eff off by Virgin (and possibly SNCF).

 

[Danfilm007]

I see they have been given an extension on the West Coast.

Personally I'd strip them of that too

Why? They are compliant of that contract, different ownership/management structure - why do it out of spite when it is illegal?

 

[Agent_Squash]

I see they have been given an extension on the West Coast.

Personally I'd strip them of that too

Why? It's majority Virgin on the West Coast (51/49) compared to majority Stagecoach on the East Coast (90/10) - and VTWC isn't exactly failing is it?

 

[Danfilm007]

They're big because they're bullies. Always have been, always will be. It bit them on the bum this time.

As for Seatfrog, it's a way of filling unsold seats at the last second. But it's a fire sale. A good business wouldn't have the empty seats. DOR didn't.

They're big because they're good business people. Shrewd? Yes. Has it hit them before? Yes. You have to risk it, but by the same token, they are being much more amicable than they have been.

Seatfrog - of course it is, but it's worked for others very successfully before? DOR might not have but VTEC have more services to sort, etc...

 

[Marklund]

There have been failures on VTEC - no one is denying that. But to say that the economic situation has not changed is completely ignorant - for starters, the pound fell off a cliff and is only returning now to where it was before.

That's why you don't go "All In" in a contract, in case the cards turn against you.
It's up to Virgin and Stagecoach to put in a bid that would cover that eventuality, but they decided against that, and put in an over-optimistic bid to win the franchise.
That's come at a cost, which IMHO, should preclude them from running another.

Virgin's reputation took a battering when it sued the NHS, this probably isn't as bad, but the Virgin brand has little or no value these days.

 

[SaveECRewards]

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

I stuck it on YouTube in case Stagecoach take it down and in the hope more people can discover it via YouTube search:

(note to mods: I had included this as a link, but it has embedded it, which wasn't my intention, can you turn it back into a link?)

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...).

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

There seems to be a bunch of people recently keep repeating the myth that EC wasn't innovative. But it has to be remembered as well as Rewards being probably the best implemented travel loyalty scheme in the UK, they also introduced a complimentary catering offering that was better than the west coast had (although I'd still have preferred keeping the restaurants), they had quite good marketing ('Feel at home' was a good ad campaign), the timetable changes I think were planned before the nationalisation of EC but they did successfully deliver them.

I think when he says new website he means new booking engine, I often call it the new website. I wonder what will happen to the booking engine... who 'owns' it? (Stagecoach or the VTEC franchise). I can't believe he'd mention the app as a good thing.

The autocue reading is horrific.

Someone commented that it looked like he was a hostage forced to read from a script with the person behind the camera holding a gun

http://www.bbc.co.uk/news/business-42945709

I am not surprised; the way they are treating both customers and staff alike is atrocious. The management of the company is abysmal at times.

I know several people who are fed up of working for them, and say the culture is all wrong from the very top. I feel for them.

As a customer, I've also been mistreated and lied to repeatedly by the company, and I know of several others who have. Their customer service is abysmal.

You can't run a successful company by increasing prices, reducing quality and treating staff and passengers like crap. It just does not work. Good riddance to the rotten management.

It was also entirely foreseeable that this would happen as the premium payments were never going to be sustainable. The only surprise is that it's happened sooner than expected.

I agree with all what you said. I noticed in 2017 staff morale was starting to drop and I've had various people who work for VTEC DM me semi-anonymously (as in I don't know their real names but obviously their Twitter IDs) and they've not had good things to say about the management, some people actually say they preferred NXEC as those who work for VTEC have had to put up with the patronising 'everything is awesome' nonsense.

It all went wrong when they got rid of Rewards.

You may be joking but I'm sure it played a part in passenger numbers, although in 2015 and 2016 I thought VTEC were doing a great job except for the loyalty scheme (then last year we had the 'catering lottery' where you didn't know whether there'd be the advertised catering on-board which is when the service was going downhill). It became obvious that VTEC took their highest spending customers for granted, not just with the loyalty scheme but with things like the lounge passes they sometimes emailed as a surprise to customers.

One of the key markets for VTEC is Edinburgh to London. If you have to travel every week for business and your company has a standard/economy only travel policy then flying would be more attractive as flying regularly gets you lounge access and other benefits whereas, without rewards, you could spend a fortune in standard class travel and might never get lounge access.

 

[Tetchytyke]

they are being much more amicable than they have been.

And that's why I think this talk of "broken promises" is horse dung. Brian didn't become a billionaire by rolling over and having his tummy tickled. I doubt he's mellowed in his old age. I certainly doubt his sister has.

If he's leaving without a fight, it's because he doesn't have a leg to stand on. He overbid. Simple, really.

 

[jayah]

Why? It's majority Virgin on the West Coast (51/49) compared to majority Stagecoach on the East Coast (90/10) - and VTWC isn't exactly failing is it?

It isn't exactly succeeding either.

Long overdue for a bit of competition given they won a 15 year deal in 1997, ran under those terms for 5 years and are now on year 16 of a management contract.

 

[Agent_Squash]

That's why you don't go "All In" in a contract, in case the cards turn against you.
It's up to Virgin and Stagecoach to put in a bid that would cover that eventuality, but they decided against that, and put in an over-optimistic bid to win the franchise.
That's come at a cost, which IMHO, should preclude them from running another.

Virgin's reputation took a battering when it sued the NHS, this probably isn't as bad, but the Virgin brand has little or no value these days.

I've been told that apparently Virgin Trains are privatising the NHS according to teachers at my school...

VTEC has £160 million in 'insurance' according to the Stagecoach video - the rest of the losses were supposedly on the books of the DfT. Virgin/Stagecoach have run several franchises without issue before; why should overbidding on one prevent them from ever bidding again?

 

[jayah]

Doubt it, Network Rail have delivered what they *promised*. The PSU2 wasn't promised. It wasn't even in their funding settlement with DfT. See what the NAO are saying.

And a government that gives a second bailout to a failed private provider, well, let's see how that pans our politically. Especially when the Crapita crash comes.

Given they have breached their franchise well ahead of any upgrade, can they really claim the franchise failed because of NR?

 

[Marklund]

As for Seatfrog, it's a way of filling unsold seats at the last second. But it's a fire sale. A good business wouldn't have the empty seats. DOR didn't.

DOR had rewards that filled the seat. Passengers feeling the benefits from rewards are often likely to be return customers.
Seatfrog doesn't encourage much reward, and is too convoluted.

 

[jayah]

We could see another new livery on the 91s yet!!

They will need to work on increasing the gauge clearance on the ECML!

 

[Marklund]

Virgin/Stagecoach have run several franchises without issue before; why should overbidding on one prevent them from ever bidding again?

Why not?

 

[Agent_Squash]

Why not?

Because you reduce competition and possibly investment in the industry? National Express wasn't prohibited from bidding after NXEC collapsed - why should Virgin (who was there in name only) and Stagecoach?

 

[centraltrains]

Well that Hornby model of the Virgin/Hitachi 800 is certainly going to be even more pointless now lol

 

[TUC]

There have been failures on VTEC - no one is denying that. But to say that the economic situation has not changed is completely ignorant - for starters, the pound fell off a cliff and is only returning now to where it was before.

And in what way does that make any difference to the average VTEC passenger's travel plans?

 

[Tetchytyke]

It became obvious that VTEC took their highest spending customers for granted,

I'd agree with that. I used to spend a *lot* of money on EC when I worked in London and had a partner up here. VTEC came along and the rewards for my spending dried up. Nectar points are worthless.

What really did it for me was my girlfriend, who spent slightly less than me, getting rewards by VTEC that I was never offered. What a way to reward custom.

The Rewards scheme was pretty close to an airline scheme, and it rewarded the high spenders. You got back what you put in. And it was at a marginal cost.

Seatwave, though? Really? How does that reward or encourage the high spenders?

 

[neilm]

I've been told that apparently Virgin Trains are privatising the NHS according to teachers at my school...

VTEC has £160 million in 'insurance' according to the Stagecoach video - the rest of the losses were supposedly on the books of the DfT. Virgin/Stagecoach have run several franchises without issue before; why should overbidding on one prevent them from ever bidding again?

Because they are a business which has failed to honour a contract. Happy to take the profits when they are there but as soon as there is a loss they do a runner because they can.

 

[Agent_Squash]

And in what way does that make any difference to the average VTEC passenger's travel plans?

They may not have as much money to spend, which can make them not wish to travel. Some of VTECs price rises haven't helped either, but it's a variety of factors.