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

[ainsworth74]

I could be wrong but I don’t think he was for VTEC, I’m sure he was still MD of EMT until about three months before VTEC took over from EC.

That's what he told the recent select committee hearing. He wasn't involved in the bid and only joined the organisation during the mobilisation phase of the operation.

 

[SaveECRewards]

I could be wrong but I don’t think he was for VTEC, I’m sure he was still MD of EMT until about three months before VTEC took over from EC.

He confirmed that he was not part of the bid team when he was talking to the parliamentary committee recently. It was something I'd known for a long time as well. Back at the beginning of Save East Coast Rewards I mentioned it was the bid team that made the decision to scrap Rewards and go with Nectar, David had no say in the matter, basically he was handed the franchise and had to deal with the decisions the bid team made.

I was told by VTECs current marketing director, who held the role at VTWC before this, that the bid team consisted mostly external consultants with a few senior Stagecoach people thrown in. The bid team did have access to senior people from VTWC, EMT and SWT but they were doing their day job so weren't part of the bid team.

David Horne was announced MD of VTEC in December 2014 but stayed as MD of EMT up until the start of the VTEC franchise (presumably his replacement would have worked alongside him in January and February so he could spend some time preparing for the start of VTEC).

The franchise was done in a rush. The bid process was much shorter than usual and the time from the announcement of the winner to the start of the franchise was shorter than usual (cynical people would say it was to get it done before the 2015 general election).

 

[ainsworth74]

I was forwarded anonymously an email David Horne sent to VTEC staff, I've reproduced it here:

Thanks for that and thank you to your source. To all anonymous sources we're always grateful for what you can share

Though I see that they're still subjecting the staff to full strength internal propaganda

 

[Monty]

Thanks for that and thank you to your source. To all anonymous sources we're always grateful for what you can share

Though I see that they're still subjecting the staff to full strength internal propaganda

I find it hilarious that they feel the need to hire consultants from three different organisations to plan for the 'unlikely' (their words not mine) event of a Operator of Last Resort to take over. This is where your fare and tax money is going people..

 

[westv]

I'm disappointed that there was no mention of the sterling efforts of SaveECRewards in that leaked email.

 

[Bletchleyite]

I was forwarded anonymously an email David Horne sent to VTEC staff, I've reproduced it here: https://saveecrewards.co.uk/blog/email-vtec-staff

As I expected it seems like VTEC are fairly confident of continuing but there's going to be people from the consortium of advisors for the operator of last resort are going to be going around and asking questions.

Interesting and odd that he refers to Ernst & Young as if they were French!

 

[whhistle]

Ahh, yes, David Horne was involved with the mobilsation.
For some reason I'd linked them both together.

 

[SaveECRewards]

Interesting and odd that he refers to Ernst & Young as if they were French!

Ooh, I was sent a screenshot of the email. I used OCR to convert it to plain text. I've checked and, as expected, it's an ampersand. It's now updated.

Oddly enough it converted DfT to VT but I spotted that error!

I'm disappointed that there was no mention of the sterling efforts of SaveECRewards in that leaked email.

Finally I'd like to add that due to issues with our website we would like to thank SaveECRewards for producing a more functional version. From next week all requests for www.virgintrainseastcoast.com will be redirected to www.virgintrainseastcoast.uk

Hugs and kisses,
David

 

[MG11]

There's no mention on the Virgin website of any plans to end their franchise, which I thought there would have been, just to address all of the speculation in the media, BBC news ran a business report on it with Steph McGovern. I can envisage them finding a last minute resolution and VTEC retaining the franchise. It would not look very good for the DfT appointer to have two franchises on the same route handed back to public ownership. I imagine the DfT will be doing all they can to save face.

 

[SaveECRewards]

There's no mention on the Virgin website of any plans to end their franchise, which I thought there would have been, just to address all of the speculation in the media, BBC news ran a business report on it with Steph McGovern. I can envisage them finding a last minute resolution and VTEC retaining the franchise. It would not look very good for the DfT appointer to have two franchises on the same route handed back to public ownership. I imagine the DfT will be doing all they can to save face.

Rail operators never seem to mention their franchise is ending or in this case at risk of early termination. The only exception I remember was when East Coast was handing over to VTEC (and that's presumably because it was government owned and they wanted to sell it). The end of the GNER franchise was really weird, they launched their brand new website and booking engine less than two weeks before the franchise was due to end and be replaced by NXEC (this was presumably due to delays in development and presumably the project was commissioned prior to GNER hitting difficulties). There was also no mention of NXEC ceasing operations on their website, it was just a case of one day they were there and the next day East Coast had replaced them and loads of signs around the place assuring people it was business as usual.

I have mixed feelings. When the news that the franchise was cut short was announced in 2020 I was quite happy if VTEC was able to negotiate more affordable terms as long as they reversed their cutbacks and learnt the lessons of 2017. Now it's come to light that they knew there was trouble from almost the start I'm thinking it's best that they're replaced as long as a smooth handover is made. A new operator could even offer to keep on members of the senior team if they think they're right for the job, I even include David Horne in this - the reason being is I don't know how much he is to blame for the mess, I know he wasn't responsible for the bid and as for the website I've been told that it was Stagecoach pushing the new booking engine and it was effectively forced on VTEC (not sure why they didn't try it on a less high profile franchise like EMT first) so that just leaves the catering lottery and they seemed to be starting to address that towards the end of the year.

Again I'm in two minds about the Virgin brand. The way they implemented it causes so much confusion and even costs people money (e.g. booking VTEC on 'Virgin Trains' and not getting the free WiFi, or not being aware of an East Coast sale due to booking on the VT site) not to mention the delays in dealing with complaints if you send it to the wrong one. This, however, is easily solved (I doubt many people sent complaints about First TransPennine Express to First Great Western when First used to brand all their trains) by putting West Coast clearly on all the West Coast points of contact and adding East and West Coast to their Twitter icons.

On the other hand getting rid of the Virgin brand even if Stagecoach continues to run it might keep both sides happy. Virgin will avoid the embarrassment of being associated with a failing franchise if it hits more trouble and to the general public who think VTEC is run single handedly by Richard Branson they can give the impression that they're not a soft touch with Virgin.

 

[route101]

I think it should be EastCoast trains , with no virgin branding , loads of people thinks its the same virgin trains as west coast . Indeed i think virgin should be dropped on the west coast too .

 

[SaveECRewards]

I think it should be EastCoast trains , with no virgin branding , loads of people thinks its the same virgin trains as west coast . Indeed i think virgin should be dropped on the west coast too .

East Coast Trains in Stagecoach style (like EMT/SWT) or restore the generic brand that DOR created? I'd like to see each line have its own brand that's used regardless of who's running it, if that happens then they need to design an identity for the line, after all the EC look was deliberately minimal to provide a blank canvas for the next operator to apply their look.

 

[DenmarkRail]

East Coast Trains in Stagecoach style (like EMT/SWT) or restore the generic brand that DOR created? I'd like to see each line have its own brand that's used regardless of who's running it, if that happens then they need to design an identity for the line, after all the EC look was deliberately minimal to provide a blank canvas for the next operator to apply their look.

If all lines had a generic brand, it would be boring, and there would be no fun in the operation. Virgin West have done amazing through mobilising a good brand

 

[TT-ONR-NRN]

I think it should be EastCoast trains , with no virgin branding , loads of people thinks its the same virgin trains as west coast . Indeed i think virgin should be dropped on the west coast too .

Oh yeah? And then what would you want? Drop the Arriva name off of ATW and just call it Trains Wales so they don’t confuse it with the buses? Just call British Airways “Airways” so they don’t confuse it with British Gas? The Virgin logo should definitely remain - people just need to have a bit of common sense.

 

[FQTV]

There was also no mention of NXEC ceasing operations on their website, it was just a case of one day they were there and the next day East Coast had replaced them and loads of signs around the place assuring people it was business as usual.

Coincidentally:

To reassure, Stagecoach Group and Virgin Group as shareholders have made it clear that commitments to customers, colleagues and the Government will be honoured.

So what do I need to do?

Nothing, it is business as usual.

 

[route101]

Oh yeah? And then what would you want? Drop the Arriva name off of ATW and just call it Trains Wales so they don’t confuse it with the buses? Just call British Airways “Airways” so they don’t confuse it with British Gas? The Virgin logo should definitely remain - people just need to have a bit of common sense.

Id keep the geographical reference , Scotrail is simple and effect .Northern , Merseyrail .
No id keep BA as it is . When the franchise is up the Virgin logo will go if its a new operator.

 

[43096]

If all lines had a generic brand, it would be boring, and there would be no fun in the operation. Virgin West have done amazing through mobilising a good brand

It's a train service, not a kid's comedy show.

 

[xotGD]

Yesterday there were no seat reservations on my VTEC service. This prompted one group of passengers to launch a tirade against Branson. I decided not to bother advising them of the ownership structure of the franchise.

 

[TT-ONR-NRN]

It's a train service, not a kid's comedy show.

That is true actually. But the Virgin logo just seems to work.

 

[SaveECRewards]

Oh yeah? And then what would you want? Drop the Arriva name off of ATW and just call it Trains Wales so they don’t confuse it with the buses? Just call British Airways “Airways” so they don’t confuse it with British Gas? The Virgin logo should definitely remain - people just need to have a bit of common sense.

Well there won't be any Arriva in the next ATW franchise, but bus company specific brands are vanishing. FGW is now GWR, FTPE is now TPE, etc. First time Arriva ran Northern it was Arriva Trains Northern, their new franchise is just Northern. Abellio Greater Anglia is back to just Greater Anglia. Govia have never used Govia/Go-Ahead in their public facing brands.

It's Virgin that need to apply the common sense. Having two separate franchises with different policies but calling them both 'Virgin Trains' is asking for confusion. All they needed to do was add West Coast to the VTWC brand from the beginning. When VTEC first launched you had Virgin Trains and Virgin Trains East Coast (at the beginning they kept the East Coast bit in their announcements and all press releases), so people, understandably, thought Virgin Trains was the master franchise and Virgin Trains East Coast was a division within that franchise. To 'simplify' things they removed East Coast from below the Virgin Trains logo, they started using Virgin Trains on all the announcements, the official guidance was then to add 'on their east coast routes' when referring to anything VTEC specific. This still causes confusion as in many places VTWC just identify as 'Virgin Trains' such as the booking engine (the redirect to VTEC only works in a subset of scenarios confusing things further).

 

[pt_mad]

I was forwarded anonymously an email David Horne sent to VTEC staff, I've reproduced it here: https://saveecrewards.co.uk/blog/email-vtec-staff

As I expected it seems like VTEC are fairly confident of continuing but there's going to be people from the consortium of advisors for the operator of last resort are going to be going around and asking questions.

Does the wording on this email not suggest DOR are poised to take over? Where it says representives of the operator of last resort may be visiting the stations. Surely this means they have been assigned something on this franchise? SNC lavelin are mentioned who were basically DOR from last time and if they're being consulted by the DFT what does that suggest?

If these people are going to be visiting stations does this not basically say the franchise is transferring? as bidders from other organisations don't normally visit stations unless they are incoming. Especially not in a scenario where the existing franchisee is telling employees they can talk to their representatives (DOR) openly if they visit.

 

[Chrism20]

Does the wording on this email not suggest DOR are poised to take over? Where it says representives of the operator of last resort may be visiting the stations. Surely this means they have been assigned something on this franchise? SNC lavelin are mentioned who were basically DOR from last time and if they're being consulted by the DFT what does that suggest?

If these people are going to be visiting stations does this not basically say the franchise is transferring? as bidders from other organisations don't normally visit stations unless they are incoming. Especially not in a scenario where the existing franchisee is telling employees they can talk to their representatives (DOR) openly if they visit.

I'd say it's more to make some preparations should the government not be able to agree suitable management terms with Virgin/Stagecoach.

In theory when it comes to the point that the money runs out if Virgin/Stagecoach don't like what the government is offering they could theoretically walk away leaving nothing in place to take over hence the visits from the so called operator of last resorts.

 

[pt_mad]

I'd say it's more to make some preparations should the government not be able to agree suitable management terms with Virgin/Stagecoach.

In theory when it comes to the point that the money runs out if Virgin/Stagecoach don't like what the government is offering they could theoretically walk away leaving nothing in place to take over hence the visits from the so called operator of last resorts.

I can tell you for sure though in a lot of cases where a franchise has been due to change in the past or may be due to change, the outgoing company usually instructs employees not to talk to any representives should they visit stations, and to advise them to go through only proper head office channels for any information including verbal chats. And not to allow then access to non public areas.

The DFT must be paying SNC Lavelin for their services so surely they have been appointed on some basis? A regular franchise would not bring in rival bidders and allow then access to stations or employees unless it was sure they were taking over from my understanding.


To be fair I am quite surprised the email quoted didn't say something along the lines of please ensure you pass on our great VT standards of service to any DOR representatives and feel free to express your passion for our core VT brand and values.
Surely won't do VT any favours if any employees tell DOR that they feel unmotivated, are fed of Virgin hype, feel customers have been let down or that numbers in 1st have dropped or feel that things have gone down hill since VT took over (should this be the way any of them feel).

 

[LNW-GW Joint]

I'd call it due diligence by the DfT, an audit to check that the franchise position is the same as VTEC has reported.
I don't think it says anything about the SoS's intentions.
A management contract will have new terms and (probably) a new service specification, and maybe with external oversight by DfT consultants.

 

[Chrism20]

I can tell you for sure though in a lot of cases where a franchise has been due to change in the past or may be due to change, the outgoing company usually instructs employees not to talk to any representives should they visit stations, and to advise them to go through only proper head office channels for any information including verbal chats. And not to allow then access to non public areas.

The DFT must be paying SNC Lavelin for their services so surely they have been appointed on some basis? A regular franchise would not bring in rival bidders and allow then access to stations or employees unless it was sure they were taking over from my understanding.


To be fair I am quite surprised the email quoted didn't say something along the lines of please ensure you pass on our great VT standards of service to any DOR representatives and feel free to express your passion for our core VT brand and values.
Surely won't do VT any favours if any employees tell DOR that they feel unmotivated, are fed of Virgin hype, feel customers have been let down or that numbers in 1st have dropped or feel that things have gone down hill since VT took over (should this be the way any of them feel).

I think the difference here is that it wasn't due to change and VTEC although they are saying they are losing money etc etc don't particularly want to be the outgoing company.

There is no benefit to VTEC if these people come in and hit a brick wall then go back to the DFT and say they are being difficult.

As @LNW-GW Joint mentions I think it is more a case of due diligence incase an agreement can't be made with Stagecoach/Virgin. I'd be surprised if they aren't allowed to continue though. There is probably far more to this than we are getting told or will ever know.

 

[pt_mad]

I'd call it due diligence by the DfT, an audit to check that the franchise position is the same as VTEC has reported.
I don't think it says anything about the SoS's intentions.
A management contract will have new terms and (probably) a new service specification. and maybe with external oversight by DfT consultants.

What I am getting at is if a new version of DOR has been appointed as consultants, as seems to be alluded to in that email, then it's not simply the usual case of hand out a direct award to Stagecoach Virgin and be done with it. DOR are being given inside access. Looks like they will be visiting premises and talking to employees. So this really suggests that it is a serious possibility DOR could be appointed and may not now be 'a last resort' in the fact that they have access to the franchise for inspection so to speak.

One would think the DFT could do their own audit as on other occasions during a franchise re-let for example. DOR wouldnt be needed if Arriva Wales were given a last minute 18 month direct award for example. It reads here more like its a prepare for a serious plan of possible takeover by Lavelin (DOR) that is ready for the go on x date should the DFT choose that in a month or two months whatever.

So can't we comfortably assume that the normal stance of hand them out a straightforward direct award for 2 years has been deemed non appropriate? As DOR would not need any inside access for this to happen. DOR are in there checking things out so they're preparing for something surely.

If Virgin East coast could be reasonably saved with a 24 month direct award then i presume that new DOR consultants would not have been needed to be assembled and appointed.

 

[w1bbl3]

Under the contract as published VTEC have to notify the DfT/SoS within 24 hours of becoming aware or reasonably aware of a "event of default".

What defines these types of event is then helpfully listed out insolvency being one. It must be noted that the company doesn't need to insolvent to trigger an event of default but just needs to be aware that it will become such a point in the future. In the case of VTEC this would have been at the point the stagecoach rail board notified VTEC that they wouldn't be providing further top up payments from group funds to cover the franchise operating losses.

In reading through the public contract the operator has an obligation to assist in the orderly transition as instructed by the SoS in a termination event, this I expect the contract clause that the DfT are using to obligate VTEC to be fully open with DOR. The contract appears to be worded such that an notifying of event of default is followed by termination if no remedial plan can be agreed, remediation would as worded be a plan to still achieve the contract conditions e.g. premium payments.

As far as I can see VTEC have notified the DfT of an event of default, the SoS has then notified VTEC that their contract as is will be terminated, beyond this the DfT have two options 1. agree a new direct award contract with VTEC on new (different) conditions, 2. appoint DOR to take over. Under option 1 this isn't case of VTEC continuing but a new contract being placed with the same existing company, in all intents a new franchise agreement.

As other posters have suggested I can't really see why DfT would have appointed DOR to inspect the franchise now unless the negotiations have reached a point where the DfT representativeness reasonably expect that it might not be possible to conclude a direct award with VTEC and thus need to ensure service continuity.

 

[ainsworth74]

What I am getting at is if a new version of DOR has been appointed as consultants, as seems to be alluded to in that email, then it's not simply the usual case of hand out a direct award to Stagecoach Virgin and be done with it.

Yes but usually the circumstances for giving a direct award aren't that the franchisee is in danger of failing and therefore the 'Operator of Last Resort' is not normally required. Previously when they've been unable to agree a direct award it would switch to a full franchise competition with the incumbent running the operation until that's concluded (see SWT). Whereas in this scenario the reason for a direct award (or whatever Virgin/Stagecoach continuing to operate the franchise would look like) is that if an agreement cannot be reached then the franchise will fail. The DfT therefore has to ensure that it can smoothly transition from the incumbent to the new management team in the very real possibility of being unable to come to an agreement.

 

[LNW-GW Joint]

As I see it, the previous EC default situation concentrated on continuing the existing service level with a new operator, and little else.
This time it is complicated by the big service development plans the franchise had.
The DfT has to rework the franchise plans so that the future financial performance is acceptable, whoever is in charge of it.
The consultants may be doing just that.

 

[ainsworth74]

As I see it, the previous EC default situation concentrated on continuing the existing service level with a new operator, and little else.
This time it is complicated by the big service development plans the franchise had.
The DfT has to rework the franchise plans so that the future financial performance is acceptable, whoever is in charge of it.
The consultants may be doing just that.

Yes that's also a very good point thinking about it. I suppose NXEC were working on the 'Eureka' timetable which did shake things up and East Coast then had to deliver but it was nothing like on the scale of what we're supposed to be seeing in the coming year or two and all that whilst also introducing a brand new fleet of trains.