Franchise failures and more

[whhistle]

[Firsts] Great Western bid back in 2005, where they luckily had an escape clause.

Not sure why people take this view.

As I understood it: Franchises were awarded for a set number of years where a extension is normally offered for a further 2 or 3 years.
As I understood it, First chose not to take up the optional extension, which may have seemed strange as most if not all TOCs do. They said they wanted to secure the longer term franchise earlier to get on with investing sooner. That's understandable.

I understand the biggest franchise payments may have been loaded on to those extension years, but surely First would have been all paid up before the extension anyway? If not, that's the governments fault for not looking at their bid correctly.

I wouldn't say it's an escape clause or that First have done anything underhanded. They just wanted to secure a longer term contract sooner than a temporary one. Nothing wrong with that.

Happy to be corrected though.

 

[LNW-GW Joint]

Stagecoach had a rather similar approach to the South Western franchise.
They were offered a Direct Award at the end of their 2nd SWT term, but didn't like the financial terms so it went to a full bid which they lost to First/MTR.
At the time of the SWR award it seemed like a poor decision by Stagecoach.
I'm not so sure now.

Serco and Abellio are still earning decent money at the often-overlooked Merseyrail.
The 25-year concession lasts until 2028, although there is an interim review before then.
This is one of the most stable operations on the network, at least until the new Stadler trains arrive.
Maintenance of the existing train fleet is due to be taken over by Stadler.

 

[pdeaves]

Maintenance of the existing train fleet is due to be taken over by Stadler.

I believe it already has (possibly since October 2017).

 

[squizzler]

So the questions I ask of those who are way more 'in the know'.. are all these bad news stories leading to something larger and more unpleasant happening in the UK rail industry? This -feels- like a downward trend, and I can't help but wonder where these failures are taking the network in the future.

I am reminded of the saying "the darkest hour is just before the dawn".

So many projects which have been long in gestation are coming into fruition during the second half of this year (okay, now the first half of next year). Full-blown Crossrail and Thameslink, new strategic linkages in the northwest, electrification, not forgetting all those new trains etc.

The rail industry is, to us outsiders, an impenetrably complex ecosystem of public and private interests and as a consequence I suspect that today's news stories lag behind the present.

 

[HH]

Not sure why people take this view.

As I understood it: Franchises were awarded for a set number of years where a extension is normally offered for a further 2 or 3 years.
As I understood it, First chose not to take up the optional extension, which may have seemed strange as most if not all TOCs do. They said they wanted to secure the longer term franchise earlier to get on with investing sooner. That's understandable.

I understand the biggest franchise payments may have been loaded on to those extension years, but surely First would have been all paid up before the extension anyway? If not, that's the governments fault for not looking at their bid correctly.

I wouldn't say it's an escape clause or that First have done anything underhanded. They just wanted to secure a longer term contract sooner than a temporary one. Nothing wrong with that.

Happy to be corrected though.

Happy to correct you!

The 'escape clause' was an addition to the normal agreement that was negotiated in return for allowing a change from DfT side. It came in a lot earlier than the end of the contract and saved First a considerable amount of money. Extensions vary from franchise to franchise, usually from 6 months to 2 years, but that never came into play at FGW. The garbage about the long term contract is just that - garbage. They got out of paying the over-extended premiums that won them the bid in the first place!

 

[whhistle]

The 'escape clause' was an addition to the normal agreement that was negotiated in return for allowing a change from DfT side. It came in a lot earlier than the end of the contract and saved First a considerable amount of money.

Thanks, but only half explained. What "change" was there from the DfT side? When was that agreed? Why was it put in place?

From what I understood:
2005 - 2012 (+ optional 3 year extension) - original franchise.
2012 - 2013 - First said they didn't want the extension.
2013 - 2015 - Franchise competition cancelled. First awarded management contract.
2015 - 2019 - Management contract extended.
2020 - 2022 - Management contract extended again.

I don't have access to a timeline of old franchises but I certainly remember First stating they didn't want the optional extension around that time.

As I say, if First loaded larger premium payments into the last optional 3 years, and the DfT awarded them on that basis, more fool the DfT for assuming First would take up the extension. Admittedly, I can't think of another franchise that didn't, but I certainly wouldn't call it an "escape" clause.

 

[Whattraintoday]

Which TOC at the moment anyone reckon is on shakier ground, that this newly created OLR is poised to step in?

Northern or GTR would seem to be the most likely candidates.
Of course, the DfT are just getting their ducks in a row so they can take a franchise over if required, without overburdening the current OLR.

Timing-wise, the 'nationalising the praise' sweet spot for taking over Northern would probably be November, just before the first 195s & 331s enter service.
Much like ECML with the Azumas.
Not sure about GTR - it's not a conventional franchise so all bets are off.

 

[HH]

Thanks, but only half explained. What "change" was there from the DfT side? When was that agreed? Why was it put in place?

From what I understood:
2005 - 2012 (+ optional 3 year extension) - original franchise.
2012 - 2013 - First said they didn't want the extension.
2013 - 2015 - Franchise competition cancelled. First awarded management contract.
2015 - 2019 - Management contract extended.
2020 - 2022 - Management contract extended again.

The franchise started in April 2006. It was for 7+3. Normally extensions are only from DfT's side. The extension became optional for First as part of a changed agreement. I can no longer recall much about what First gave in return except that it was allowing DfT to rectify an error on their part; AFAIK it was never made public.

Really, there are significant similarities to WCML, where another DfT cock-up has given VT a nice free ride, unburdened by the worries of competition.