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

[Tetchytyke]

It's no great surprise that GNER were well regarded when they basically did nothing but continue as-was with a bit of blue paint? There was not even an interior refresh.

The MKIVs didn't need an interior refresh at the beginning, and at the end they were getting the Mallard refurbishment.

The HSTs did get a full interior refresh, with the gentle browns and fake wood replacing the garish orange chevrons.

Not even GNER, widely regarded as a highly well run early franchise?

I did mention GNER MkI elsewhere on the thread, so yes. Although how they ended does taint the rest of it a bit.

 

[Darandio]

The failure to meet target over delays, infrastructure failurs of signalling and wires in 2016 and and 2017 were appealing. Reputational damage and the consequential loss of discretionary tral.

You still haven't given any of the contractual obligations that haven't yet been delivered.

 

[swt_passenger]

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

Before DfT activated DOR it had no staff. It was also populated by a group of consultants on retainer from DfT. Not much has really changed.

 

[TUC]

It's no great surprise that GNER were well regarded when they basically did nothing but continue as-was with a bit of blue paint? There was not even an interior refresh.

Excellent customer service with smartly turned out staff, still regarded as the best of any of the ECML franchisees and a distinct step up from what BR had been offering.

 

[Bletchleyite]

Excellent customer service

I assume you never travelled Standard, then? They were known for good service to people with First Open tickets (no Advances back then so First Class was highly expensive), they looked down their nose at anything else including Weekend First.

 

[TUC]

One does get the feeling that some people here as just against franchising per second because they believe that public transport should be state operated. I have to question that assumption. Food is even more essential than transport and no one is suggesting the state operates supermarkets.

 

[Bletchleyite]

One does get the feeling that some people here as just against franchising per second because they believe that public transport should be state operated. I have to question that assumption. Food is even more essential than transport and no one is suggesting the state operates supermarkets.

I think there is a view, which at times I share, that the State should operate all natural monopolies because it avoids the issue of sham competition (there is and can viably be no true competition on the railway except on a few very limited routes). Food supply isn't a natural monopoly; there's very little to stop you opening a new Asda next to the existing Tesco provided there is land, which there generally is in some form even if it involves buying existing properties of some kind for demolition. And similarly there is nothing to stop the majority of people (primarily drivers, but public transport and taxis are also an option) from going to another town for shopping purposes.

Whereas if you want to travel from London to Oxford by train, you've got GWR or GWR. There are the coaches, but they serve a slightly different market, and most routes don't have that level of provision anyway.

 

[XCTurbostar]

Whereas if you want to travel from London to Oxford by train, you've got GWR or GWR.

Chiltern?

 

[Tetchytyke]

One does get the feeling that some people here as just against franchising per second because they believe that public transport should be state operated.

I don't care whose name is on the train so long as the train is on time and at a good price. We wouldn't have a railway network if it wasn't for initial private enterprise.

The truth is that the franchising model has consistently and persistently failed to deliver either of these two essential things. The fact is that Chiltern or GNER (but only GNER MkI) are the exceptions, not the rule.

I do not understand how anyone can look at the franchising system and think "gee, this is really providing excellent value to the taxpayer".

The initial franchises were let in a rush and so many of them failed. Changes were made to improve the tendering process, but we still just got failure and corporate larceny. Yet more changes were made, to no effect. How long do we leave it before we accept that it isn't the SRA, or the Franchising Director, or the ORR, or the DfT, who are to blame, but the entire system? 25 years?

 

[MG11]

I will be sad to see Stagecoach lose it, as I like the company and I love what they've done with East Midlands Trains. It seems Sc/Virgin were over optomistic in the bidding process, and sadly that has led to a deterioration.

 

[cuccir]

The failure seems to have two reasons - overly optimistic promised payments to the treasury, and failure to achieve expected revenue.

The first does seem to be an inherent flaw in the franchising system, and the DfT has to take responsibility here too. If we are to keep private franchises for our InterCity lines - and it's worth pointing out that most similar European countries don't follow this model - then there needs to be something done to avoid this happening.

The second seems to be a more direct failure in the specific case of Stagecoach/Virgin. I think they thought that both business and leisure travel on the route were more robust than it was, and it wouldn't surprise me if market research had lead them to that (incorrect) conclusion. My suspicion is that the removal of East Coast Rewards is in and of itself not as important as some on here have made it out to be, but I am sure that alongside difficulties in providing the first class service, and rises in Advance ticket prices, that it is part of a set of circumstances that have led to the business travel market up the East Coast performing less well than predicted. Alongside this, I think that they've also operated under the assumption that things like Beam and free WiFi will encourage leisure travellers, even where prices have gone up. Again, I can see how focus groups or consultations might have supported this assertion; but either they've raised prices too high, or people's behaviours haven't matched what they said they'd do. Alongside this, circumstantial factors - increased terrorist threat, Corbyn-traingate, misguided branding, wider damage to the Virgin brand - have hit them; none in and of themselves enough to sink a franchise, but enough to do fatal damage to a struggling business perhaps.

--
Edit
The irony is that I don't think their (standard class) service has been that bad. As a commuter up the ECML and a traveller of longer distances every couple of months, my perception is that over the last 5 years - ie, both with East Coast and VTEC - we've had a pretty decent increase in the number and speed of services. Certainly, I have now more, faster and (in my experience) less heavily loaded trains when wanting to travel to/from London. And my commute is remarkably punctual, with seating also available on >95% of journeys, and it's almost other TOCs who fall down on that front, not VTEC.

 

[SaveECRewards]

Indeed they don't. However frequent traveller schemes, set up to reward regular customers, are well known to encourage repeat custom. Airlines, never companies to give something away for free, understand this with their frequent flyer schemes.

It's a commercial decision whether you do a frequent traveller scheme or not. But don't act surprised if your frequent travellers decide to be a bit less frequent if there's nothing in it for them.

Exactly. British Airways would scrap their frequent flyer scheme immediately if they thought it wasn't increasing business for them. ALL previous East Coast operators (GNER, National Express and DOR East Coast) had a decent loyalty scheme, VTEC was the exception. Now they complain they couldn't meet passenger targets. I've noticed that the flights from Newcastle to Heathrow (all BA) seemed a lot busier when I used them last year, and many people were exiting the airport when they arrived (meaning they were flying point to point) rather than going to flight connections.

I assume you never travelled Standard, then? They were known for good service to people with First Open tickets (no Advances back then so First Class was highly expensive), they looked down their nose at anything else including Weekend First.

Absolute nonsense! I got my love of train travel starting with GNER standard class. Then I discovered weekend first and had excellent service, then on weekdays I discovered the restaurants. Although first advance tickets were very limited (there was a leisure first ticket that required a Saturday night away) you could enjoy the comfort of first class and get an excellent meal by using the restaurant that almost all weekday trains had. They're the only operator that had more restaurant trains than BR did.

Back at the beginning first class was expensive on all operators. Online booking hadn't begun at this point and enough companies were willing to pay full fare (which was a lot more reasonable than it is now, but still expensive) so the market at the time didn't need cheaper first class tickets.

For standard class passengers GNER improved the catering (branded GO EAT), they also ensured that every train had both a buffet and trolley service (something VTEC are not very good at). On a weekend, the weekend first offering was better than other operators, it was basically the same as the weekday offering except for no restaurant. You still got at seat service.

 

[swt_passenger]

Hopefully the latest stupid name for rolling stock, “Azuma”, might now be consigned to history, preferably by DfT instruction.

 

[Chrism20]

I assume you never travelled Standard, then? They were known for good service to people with First Open tickets (no Advances back then so First Class was highly expensive), they looked down their nose at anything else including Weekend First.

I can’t agree with any of that. Service in both classes significantly improved under GNER from what I remember.

 

[LNW-GW Joint]

Some of the "promised upgrades" were cut a long time ago from CP5, others were never in CP5, and whether they will happen at all depends on the funding agreement for CP6.
How any of this is a failing of Network Rail is quite beyond me.
Still, a company that can't answer back are a convenient whipping boy for Messrs Grayling and Griffiths. "It wasn't me Guv". But of course.

It was a failing of NR because they blew the enhancement budget on GW and other electrification projects, leading to cutback on everything else.
Not the fault of LNE Route, agreed, but it still meant they couldn't give VTEC the access rights they had been promised by DfT.

 

[SaveECRewards]

The failure seems to have two reasons - overly optimistic promised payments to the treasury, and failure to achieve expected revenue.

The first does seem to be an inherent flaw in the franchising system, and the DfT has to take responsibility here too. If we are to keep private franchises for our InterCity lines - and it's worth pointing out that most similar European countries don't follow this model - then there needs to be something done to avoid this happening.

The second seems to be a more direct failure in the specific case of Stagecoach/Virgin. I think they thought that both business and leisure travel on the route were more robust than it was, and it wouldn't surprise me if market research had lead them to that (incorrect) conclusion. My suspicion is that the removal of East Coast Rewards is in and of itself not as important as some on here have made it out to be, but I am sure that alongside difficulties in providing the first class service, and rises in Advance ticket prices, that it is part of a set of circumstances that have led to the business travel market up the East Coast performing less well than predicted. Alongside this, I think that they've also operated under the assumption that things like Beam and free WiFi will encourage leisure travellers, even where prices have gone up. Again, I can see how focus groups or consultations might have supported this assertion; but either they've raised prices too high, or people's behaviours haven't matched what they said they'd do. Alongside this, circumstantial factors - increased terrorist threat, Corbyn-traingate, misguided branding, wider damage to the Virgin brand - have hit them; none in and of themselves enough to sink a franchise, but enough to do fatal damage to a struggling business perhaps.

--
Edit
The irony is that I don't think their (standard class) service has been that bad. As a commuter up the ECML and a traveller of longer distances every couple of months, my perception is that over the last 5 years - ie, both with East Coast and VTEC - we've had a pretty decent increase in the number and speed of services. Certainly, I have now more, faster and (in my experience) less heavily loaded trains when wanting to travel to/from London. And my commute is remarkably punctual, with seating also available on >95% of journeys, and it's almost other TOCs who fall down on that front, not VTEC.

The removal of East Coast Rewards did have an impact on my travel but it ONLY did so significantly when other areas deteriorated. In 2015 and 2016 I was a regular traveller despite not having East Coast Rewards but was still reasonably happy as I got a decent on-board product and enjoyed travelling by train a lot more than I did flying.

It was in 2017 when the service declined that I started travelling by train less. I didn't want to pay a significant amount for a Friday evening first class ticket when there was a significant chance I'd not get the advertised catering. I could fly for less money and thanks to by frequent flyer status would have access to the BA lounges with complimentary food and alcohol. When service is good I'm happy to pay more for the train, particularly if it's an evening meal (chef) train. But I don't want to sit on the train for 3+ hours with just a James Martin sandwich in a box.

Rewards would make me more forgiving. If the service was not delivered at least I'd know that my ticket went towards getting me a free one later.

Remember if Rewards didn't increase the amount of customers then British Airways would have surely closed down their scheme by now. National Express also had a great opportunity to close down the loyalty scheme when they ran East Coast but they decided to keep it going.

If you look at the DOR annual statements it also shows East Coast Rewards did help boost sales.

Hopefully the latest stupid name for rolling stock, “Azuma”, might now be consigned to history, preferably by DfT instruction.

Worryingly I've heard people on Twitter ask if this means that the East Coast is no longer going to get Azumas. The general public fall for the marketing that these government ordered trains were ordered and owned by the Virgin Group. Just like in 2012 some people were scared the Pendolinos were going to be replaced by FGW HSTs and Pacers!

 

[thenorthern]

Doesn't this latest episode show that maybe something is wrong at the DfT rather than the train companies as its the 3rd franchised operator in a row on the East Coast Main Line to have their franchise ended early.

 

[TUC]

I think there is a view, which at times I share, that the State should operate all natural monopolies because it avoids the issue of sham competition (there is and can viably be no true competition on the railway except on a few very limited routes). Food supply isn't a natural monopoly; there's very little to stop you opening a new Asda next to the existing Tesco provided there is land, which there generally is in some form even if it involves buying existing properties of some kind for demolition. And similarly there is nothing to stop the majority of people (primarily drivers, but public transport and taxis are also an option) from going to another town for shopping purposes.

Whereas if you want to travel from London to Oxford by train, you've got GWR or GWR. There are the coaches, but they serve a slightly different market, and most routes don't have that level of provision anyway.

Isn't the ECML itself a very good example of where competition has served passengers well?

 

[SaveECRewards]

I can’t agree with any of that. Service in both classes significantly improved under GNER from what I remember.

You remember correctly. In the north east Virgin Trains (CrossCountry) was generally considered inferior to GNER. It would be great to see the brand resurrected as long as the service quality was close enough to be considered GNER standard.

Two things I can see different in a modern GNER - I suspect the uniforms would not have hats and I can't imagine the restaurant returning however much I'd like it to. I knew when East Coast made first class complimentary in 2011 it would be extremely difficult for a new operator to go back to the restaurant model on that route as now people consider free food as part of the first class product. So now I'm happy as long as they continue to provide a chef cooked evening meal service.

 

[hwl]

It was a failing of NR because they blew the enhancement budget on GW and other electrification projects, leading to cutback on everything else.
Not the fault of LNE Route, agreed, but it still meant they couldn't give VTEC the access rights they had been promised by DfT.

A decent chunk of the VTEC proposed improvements were always CP6 projects (not deferred) and DfT are currently still deciding what they want to pay for in CP6. The May 2019 timetable change relied on original CP6 schemes being completed 6 weeks into CP6...
DfT are responsible for a large part of the mess

 

[LNW-GW Joint]

You still haven't given any of the contractual obligations that haven't yet been delivered.

Paths to support the VTEC expansion plans.
I couldn't tell you which ones.

 

[cuccir]

Rewards would make me more forgiving. If the service was not delivered at least I'd know that my ticket went towards getting me a free one later.

Remember if Rewards didn't increase the amount of customers then British Airways would have surely closed down their scheme by now. National Express also had a great opportunity to close down the loyalty scheme when they ran East Coast but they decided to keep it going.

If you look at the DOR annual statements it also shows East Coast Rewards did help boost sales.

I think we're agreeing; the loss of the rewards scheme was not a cause in and of itself, but intersected with poorer service and worse fares overall to hit in particular the recurring business market.

 

[Chrism20]

You remember correctly. In the north east Virgin Trains (CrossCountry) was generally considered inferior to GNER. It would be great to see the brand resurrected as long as the service quality was close enough to be considered GNER standard.

Two things I can see different in a modern GNER - I suspect the uniforms would not have hats and I can't imagine the restaurant returning however much I'd like it to. I knew when East Coast made first class complimentary in 2011 it would be extremely difficult for a new operator to go back to the restaurant model on that route as now people consider free food as part of the first class product. So now I'm happy as long as they continue to provide a chef cooked evening meal service.

GNER was definitely far superior to VTXC in almost every way of that there was no doubt and due to this on the east side of the uk virgin wasn’t seen as the darling of the rail industry like it was by some on the west coast.

My honest opinion was when they came in they thought EC was like WC twenty years ago. I feel they thought they could come in introduce new trains, better frequencies etc and look like they had revived something that was dying.

The problem was what they inherited wasn’t dying, the line from a business perspective was in good health, moral was high, a timetable recast which delivered significant improvements had been done recently and the rolling stock was in reasonably good nick - yes it was getting on a bit but reliability was decent.

In short when the service started to deteriorate the excuses such as the new trains are coming and everything will be better with Azuma didn’t work because what was there wasn’t knackered. It was the soft product that was failing rather than the hard one.

Sadly I think the restaurant is gone. The only hope would be if first won and they thought they could replicate the Pullman

 

[Bletchleyite]

Isn't the ECML itself a very good example of where competition has served passengers well?

I don't think it is. There is sort-of competition to Edinburgh itself and price competition for short distance commuters, but most people aren't going all the way.

If you mean GC, a few short trains a day to destinations primarily not abstractive barely count. Indeed, unless competition is allowed to *be* abstractive it will never work to a great extent. The whole point of competition is that it *is* abstractive, i.e. unless the incumbent ups their game they lose financially.

 

[quantinghome]

Who actually runs the railway? DfT, NR, VTEC? These different organisations are unable to work together to coordinate the deployment of new trains, a new timetable and new infrastructure. How long did it take 'inefficient state owned' BR in the 1970s to design the IC125 from scratch, roll out a new timetable and make the necessary infrastructure upgrades on both the GW and EC main lines? It's obvious that all parts of the railway need to come under a single, integrated, organisation. The franchising system serves no purpose, apart from serving an ideological commitment of 'private sector always runs things best'. The theory has been tested to destruction.

 

[AlterEgo]

Isn't the ECML itself a very good example of where competition has served passengers well?

It depends.

Grand Central and Hull Trains both have an attractive proposition. But they haven’t forced standards up with respect to the franchised operator.

VTEC’s first class for example is the absolute nadir of Premium service on the ECML for as long as I’ve been alive. It’s really poor.

 

[quantinghome]

One does get the feeling that some people here as just against franchising per second because they believe that public transport should be state operated. I have to question that assumption. Food is even more essential than transport and no one is suggesting the state operates supermarkets.

Food production in the UK has been state-subsidised since WWII, having learned the lesson that it's not a good idea to have 75% of essential food imported when shipping lanes can be blockaded.

Back to your point, it's a non-sequitur. Look at the rest of the world. The overwhelming majority of countries have a private food distribution system (even if production has some element of subsidy). The overwhelming majority of countries also have a state owned passenger railway network (where it exists). I'm not saying we have to do exactly the same as everyone else, but where there is a near-universal trend to do something in a certain way, I think that tells us something.

 

[Matt Taylor]

I assume you never travelled Standard, then? They were known for good service to people with First Open tickets (no Advances back then so First Class was highly expensive), they looked down their nose at anything else including Weekend First.

Not quite correct, advance purchase fares were available not just in GNER days but also as far back as BR under the name APEX (advance purchase excursion).

 

[BRX]

To me it seems the issues are more to do with the way the overall system works (and how well it's funded by the state) rather than the ownership of the various parts.

Franchising seems to work pretty well in the case of London buses. It's essentially invisible to the passenger, and the overall system is tightly controlled by TfL. I think I'd like to see the railways run on a similar basis.

 

[Bletchleyite]

Not quite correct, advance purchase fares were available not just in GNER days but also as far back as BR under the name APEX (advance purchase excursion).

Not First Class ones. In BR days, APEX/SuperApex/Advance/SuperAdvance were Standard only.