This is something I don't understand.
The trains on XC are busy, the fares on XC are high, yet the franchise is loss making and there's no scope for longer trains?
Obviously some things about XC make it expensive to run (lots of small depots etc), but you'd think that it had scope for longer trains.
My own view is that both VT and Arriva have made a mess with their pricing on XC. This, i believe, is largely due to the mixed traffic flows which make it difficult to create a meaningful and workable strategy that allows maximum revenue yield from short distance commuters, middle distance business and leisure travellers, and the occasional long distance passenger.
Add to this the introduction of the various time restrictions, which seem to operate on the basis that passengers are too dull to find ways around them by splitting etc, and it seems quite likely to me that the pricing managers at XC expected to greatly increase revenue (mostly from the shorter distance travellers) and that this simply hasn't happened as forecast.
There's also the fact that the pricing has forced people on to alternative routes (where they exist), such as my favourite ATW to Manchester than TPE /Northern for destination in the north of England and Scotland. For many flows, it's also more attractive to travel via London, both in terms of speed and comfort. This must also have had an effect on revenue.
In short, packed XC trains are most likely full to bursting with people mostly doing short journeys for which XC does not receive as much money as they expected to when they took on the franchise.