Can a tech giant run UK train services?

[ACDC]

I was reading about how Amazon wants to send more stuff by rail.
Could Amazon tender to run a TOC? Or a hedgefund like BlackRock or Apollo Capital?
Just curious really.

 

[stevieinselby]

I was reading about how Amazon wants to send more stuff by rail.
Could Amazon tender to run a TOC? Or a hedgefund like BlackRock or Apollo Capital?
Just curious really.

No reason in theory why they couldn't have done, before the creation of GBR signalled the end to franchising, but it would be quite a departure from their usual business model. They would need to take on board a lot of expertise, but with enough financial backing behind them anyone could apply, there's just the question of whether they would be seen as credible candidates if they and their leadership team had no background in the rail sector.

 

[Crithylum]

I feel like this would be about transporting Amazon packages by rail, not humans.

 

[LNW-GW Joint]

There's a tendency for large-scale shippers to take over rail TOCs (and road interests) to expand their seamless logistics services.
MSC is busy expanding its reach into rail, and there's the recent acquisition of Freightliner Multimodal by CMA-CGM.
Amazon is a big player and would probably want to partner with a substantial rail operator - only DB Cargo comes to mind now Freightliner is spoken for.
DHL and UPS are other large global shippers which own airlines as well as road fleets, who might be interested in a rail option.

 

[styles]

Freight, absolutely. I'm sure Amazon could set up a FOC if they thought it would work for their logistics. It might work for the bulk FBA product shifting. Doubt it would do much for their Prime same/next day delivery model, which is very different to the sort of logistics run by e.g. Tesco on their rail operations.

I can't see them getting into the passenger business though. Not that they really could these days anyway - they'd have to be an open access operator given the GBR progress, and the future of open access operators remains a bit murky to be honest as it weakens the GBR offering, so who knows what the government will do with them in the future. Becoming an open access operator isn't something to do on a whim as a side project to an AI, cloud, and online retailing business. I mean they couldn't even make Amazon Fresh shops work in the UK, and that's something actually related to their existing business.

 

[Bletchleyite]

I'm not sure about Amazon, but Flix is basically a tech giant, not a bus company. Thus they get into rail by getting others to operate on their behalf under their brand.

It's not entirely out of the question, for example, that we could end up with them doing a deal with FirstGroup and thus the Lumo brand disappearing in favour of Flixtrain. I'm unaware of any plans for that now, but First do work with Flix in the coach arena so I wouldn't rule it out, and I doubt they are that strongly attached to what is a relatively generic brand in Lumo.

 

[styles]

I'm not sure about Amazon, but Flix is basically a tech giant, not a bus company. Thus they get into rail by getting others to operate on their behalf under their brand.

It's not entirely out of the question, for example, that we could end up with them doing a deal with FirstGroup and thus the Lumo brand disappearing in favour of Flixtrain. I'm unaware of any plans for that now, but First do work with Flix in the coach arena so I wouldn't rule it out.

I still suspect that's unlikely for a while.

The franchise operators are disappearing. There are only a few open access operators, and there's a bit of uncertainty about their future. Unless the government gives a firm commitment to retaining open access operators in the long term, I'd be surprised if there was much interest in buyouts for now.

 

[Bletchleyite]

I still suspect that's unlikely for a while.

The franchise operators are disappearing. There are only a few open access operators, and there's a bit of uncertainty about their future. Unless the government gives a firm commitment to retaining open access operators in the long term, I'd be surprised if there was much interest in buyouts for now.

I'm not suggesting Flix would buy Lumo. Flix doesn't work like that - it doesn't operate anything itself, it licences its brand and increases sales via its booking engine. It could be quite a sweet deal for First, who already work with them on coach travel.

 

[styles]

I'm not suggesting Flix would buy Lumo. Flix doesn't work like that - it doesn't operate anything itself, it licences its brand and increases sales via its booking engine. It could be quite a sweet deal for First, who already work with them on coach travel.

Is there a suggestion that the Flix brand or booking engine would be better than Lumo though? Lumo already appears to be a highly-successful operation. Hull Trains has one of the highest passenger satisfaction ratings of any passenger operator. Etc.

Sure, it could theoretically happen. I just can't see the business case for it, and the number of open access operators can be counted on one hand.

 

[JamesT]

I'm not suggesting Flix would buy Lumo. Flix doesn't work like that - it doesn't operate anything itself, it licences its brand and increases sales via its booking engine. It could be quite a sweet deal for First, who already work with them on coach travel.

So Flix would be more like Virgin then? Where they partnered with Stagecoach to run trains previously but had the advantage of Virgin's branding.

 

[Bletchleyite]

So Flix would be more like Virgin then? Where they partnered with Stagecoach to run trains previously but had the advantage of Virgin's branding.

That's sort of how they work, yes - effectively franchising in an actual business sense of the word rather than the TOC sense which wasn't really franchising.

 

[The Pelican]

It's worth remembering that tech companies do sometimes make strange efforts to get into peculiar industries which they then fairly quickly leave again- in particular, Amazon and Google both made huge efforts to get into videogames (the Amazon MMO, Google Stadia) which both went nowhere. So it's not impossible one of them might have tried to run an open access company.

 

[styles]

It's worth remembering that tech companies do sometimes make strange efforts to get into peculiar industries which they then fairly quickly leave again- in particular, Amazon and Google both made huge efforts to get into videogames (the Amazon MMO, Google Stadia) which both went nowhere. So it's not impossible one of them might have tried to run an open access company.

I'm not sure a tech company getting involved in a tech industry is really comparable to a tech company getting involved in passenger transport?

It's not impossible, you're right, but I don't think there's any indication Amazon want to get involved in UK rail services as it's just so far away from what they do. Freight, possibly, but even then I think unlikely as they appear to be working more towards drones, autonomous road vehicles, etc to enhance their delivery lead times.

Flix, as @Bletchleyite mentions, is a transport company, and wouldn't be unreasonable getting involved in other transport. I think it's unlikely given the market and political positions, but it would be plausible. I can't see Amazon starting a TOC though. That's just so far out of their normal remit.

 

[Peter Mugridge]

In this sort of instance, wouldn't Amazon or whoever find the easiest way would be to buy out one of the small scale freight operating companies that already has a licence and some rolling stock, such as Varamis, clear their debts, overhaul the rolling stock, whatever - so they can resume operations with a guaranteed ( e.g.Amazon ) trunk haul load pretty quickly?

Starting from scratch would be a very much more difficult prospect and would be a while new ball game.

 

[The exile]

I can't see them getting into the passenger business though. Not that they really could these days anyway - they'd have to be an open access operator given the GBR progress, and the future of open access operators remains a bit murky to be honest as it weakens the GBR offering, so who knows what the government will do with them in the future. Becoming an open access operator isn't something to do on a whim as a side project to an AI, cloud, and online retailing business.

The one area where it might be a match is some kind of "bucket shop" passenger operation piggy backing on middle to long distance passenger parcels trains (perhaps overnight - where there is potentially a gap in the market) - though they would need to circumvent the fact that their distributions centres and the general public don't mix!

Edited to correct blooper!

 

[styles]

The one area where it might be a match is some kind of "bucket shop" passenger operation piggy backing on middle to long distance passenger trains (perhaps overnight - where there is potentially a gap in the market) - though they would need to circumvent the fact that their distributions centres and the general public don't mix!

Oh don't get me wrong, I think the rail network at night has huge scope including both passenger and freight which is not being realised.

I am just unconvinced that Amazon would convince the government to allow this.

 

[NCT]

In this sort of instance, wouldn't Amazon or whoever find the easiest way would be to buy out one of the small scale freight operating companies that already has a licence and some rolling stock, such as Varamis, clear their debts, overhaul the rolling stock, whatever - so they can resume operations with a guaranteed ( e.g.Amazon ) trunk haul load pretty quickly?

Starting from scratch would be a very much more difficult prospect and would be a while new ball game.

This does seem plausible.

 

[43096]

I'm not suggesting Flix would buy Lumo. Flix doesn't work like that - it doesn't operate anything itself, it licences its brand and increases sales via its booking engine. It could be quite a sweet deal for First, who already work with them on coach travel.

It will be interesting to see if that changes with Flix now that they have committed to buying 30 new trains from Talgo (and locomotives to haul them from Siemens). I wouldn't be surprised if there is a sale-and-lease-back deal done with a ROSCO, though.

 

[The Pelican]

I think the scheme, whoever funded it, would have ended up looking a lot like LUMO- it would have aimed at capturing new-to-rail markets on mainline railways, had odd distinctive branding, used whatever the standard rolling stock for the mainstream Intercity franchise was, and only worked if it came in at the same time as major problems with the mainstream operator. It would be fairly weird, but sucessful Google phones and emails (and unsucessful Augmented Reality googles, the Google circles social network etc) also seemed pretty weird at the time.

Not sure it would have worked in the long run- best bet seems like a company like Uber or another car operator trying to advertise themselves as a general transport solution across multiple modes, and taking a loss on rail to promote their cab operations. What they would have found out was that, because your name would be next to disruption announcements, running a franchise would generate at least as much negative as positive publicity...