Future of Class 707

[DerekC]

Strikes me that this whole thread is based on supposition and assumption until we know what the plan actually is. Of course it's a good opportunity for a bit of DfT and RoSCo bashing, but then what isn't?

 

[NotATrainspott]

you can't honestly be that niave about the world - the ROSCO carries no risk.we will carry the costs of any changes directly or indirectly

ROSCOs can charge whatever they want to the TOCs. However, if they try to charge too much, they run the risk of another ROSCO coming in with a lower price and so they lose all of the business. Remember that it isn't just the big three ROSCOs (Eversholt, Porterbrook and Angel) anymore but a whole series of incomers. Even if all three ROSCOs collude to raise prices, all you need to do is find a bank looking for a safe return on investment and all three will lose out. This is the nature of a proper free market with proper competition.

If a ROSCO has a fleet of new trains that they can't lease out then they won't be able to pay back the cost of their finance. Whoever lent them the money to buy the trains in the first place is also taking on the risk. If, for instance, the high leasing charges of the 379s meant that no one took them on and it was cheaper to order new trains, then the TOCs wouldn't suffer at all as they can still get new trains. The ROSCO would have no option but to refinance the fleet so that its lease costs can drop back down to competitive levels. The initial lending bank would lose money, but again the risk of this is the price they pay for being able to earn interest and profit on the loan in the first place. Banks are always taking a risk by loaning out money but they'll do it if they find that overall, the interest and profit they get is enough to make it worth their while. Without the risk-reward factor, no capital investments would ever go ahead and economic progress would falter.

 

[DarloRich]

And what happens if the solution now adopted turns out to be more economic - for all parties - in the medium term over that selected by SWT under different circumstances? Why do you assume that it will cost the taxpayers or passengers more money than alternatives?

Cynicism is not a valid answer.

Neither is the naivety shown by you and other posters. Of course a deal will be done (and I have never suggested it won't) but the costs of any remedial work will pass to us. The toc and ROSCO won't wear the costs - you must see that! The the benefits of a cheaper deal won't be passed in to us either - surely you see that!

 

[DarloRich]

ROSCOs can charge whatever they want to the TOCs. However, if they try to charge too much, they run the risk of another ROSCO coming in with a lower price and so they lose all of the business. Remember that it isn't just the big three ROSCOs (Eversholt, Porterbrook and Angel) anymore but a whole series of incomers. Even if all three ROSCOs collude to raise prices, all you need to do is find a bank looking for a safe return on investment and all three will lose out. This is the nature of a proper free market with proper competition.

If a ROSCO has a fleet of new trains that they can't lease out then they won't be able to pay back the cost of their finance. Whoever lent them the money to buy the trains in the first place is also taking on the risk. If, for instance, the high leasing charges of the 379s meant that no one took them on and it was cheaper to order new trains, then the TOCs wouldn't suffer at all as they can still get new trains. The ROSCO would have no option but to refinance the fleet so that its lease costs can drop back down to competitive levels. The initial lending bank would lose money, but again the risk of this is the price they pay for being able to earn interest and profit on the loan in the first place. Banks are always taking a risk by loaning out money but they'll do it if they find that overall, the interest and profit they get is enough to make it worth their while. Without the risk-reward factor, no capital investments would ever go ahead and economic progress would falter.

But their economic model is one of a captive market - there is little choice and very short term requirements to fund vast capital investment. Yes a toc could refuse to pay lease costs but they have little choice if they want to run any trains!

In any event you wouldn't expect a ROSCO to build a fleet of trains on a speculative basis - THAT would be silly!

 

[455driver]

Wouldnt it be ironic if these were replaced with other units from the Desiro family!

 

[dgl]

Wouldnt it be ironic if these were replaced with other units from the Desiro family!

As I have said before although it would be ironic it would also be extremely sensible

 

[NotATrainspott]

But their economic model is one of a captive market - there is little choice and very short term requirements to fund vast capital investment. Yes a toc could refuse to pay lease costs but they have little choice if they want to run any trains!

In any event you wouldn't expect a ROSCO to build a fleet of trains on a speculative basis - THAT would be silly!

It's not a captive market if a TOC can go and buy from any other company. Angel, Porterbrook and Eversholt aren't the only game in town now. Basically any bank looking for a long term investment can finance a fleet. If they don't know how to manage trains, they can have the manufacturer maintain them on a day-to-day basis.

 

[HH]

It's not a captive market if a TOC can go and buy from any other company. Angel, Porterbrook and Eversholt aren't the only game in town now. Basically any bank looking for a long term investment can finance a fleet. If they don't know how to manage trains, they can have the manufacturer maintain them on a day-to-day basis.

Cha-ching! I've personally been involved in purchasing rolling stock and have spoken to several sources of finance outside the "big three". ROSCOs no longer have a guaranteed profit. The only naivety being shown in these parts is by the person that thinks they do!

 

[47802]

A little while back, didn't a Rosco order a speculative build of a load of Electrostars? That seemed to work OK, they aren't exactly sitting in sidings. Don't recall them getting any criticism, people probably thought it was a brilliant idea.

I doubt the 707s are going to sit on the shelf for long...

Well yes however the C2C ones have only a 3 year lease, and the GWR ones I wonder what the lease is on those given it will be Re-franchised in the not too distant future. Plus up to now we haven't had that many spare EMU's but there will potentially be loads in a few years that are a relatively young age along with some heavily refurbished older units.

 

[tbtc]

A little while back, didn't a Rosco order a speculative build of a load of Electrostars? That seemed to work OK, they aren't exactly sitting in sidings. Don't recall them getting any criticism, people probably thought it was a brilliant idea.

I doubt the 707s are going to sit on the shelf for long...

There were also some 170s built "on spec", which were soon snapped up.

As for the rest of this thread, given the glut of EMUs that could be on the market in 2020-ish, I can't see how the ROSCO can charge over the top for them in future - there'll be plenty of other EMU fleets available, so we no longer have the sellers market that we've had. Ten years ago you could have stuck 10% on the leasing costs to recoup your investment, but there'll be hundreds of 100mph EMUs knocking about (by the time GA, Crossrail and Thameslink have new fleets).

Also, the cost of staff training and re-vinyling units is a drop in the ocean, compared to the millions of pounds that units cost. We seem to be good at focussing on the pennies here, rather than worrying about the pounds.

 

[coppercapped]

Neither is the naivety shown by you and other posters. Of course a deal will be done (and I have never suggested it won't) but the costs of any remedial work will pass to us. The toc and ROSCO won't wear the costs - you must see that! The the benefits of a cheaper deal won't be passed in to us either - surely you see that!

So, rather than answer the question I posed, you suggest that I am naïve. This approach suggests to me you have little to contribute and are simply broadcasting fear, uncertainty and doubt. That is not a constructive attitude.

What evidence do you have that the course of action proposed by First/MTR will be more expensive than that proposed by Stagecoach/SWT?

I will remind you that the Class 707s are also 25kV AC capable and the first two units are being tested under the wires now. Maybe, just maybe, the train builder and the ROSCO could see something like this occurring and so took action to protect their investment. All that needs to be added to the rest of the build is a pantograph, a length of cable, a transformer and a rectifier pack.

 

[43074]

What is the basis for there only being 18 442s?

The bid was prepared at the time it was assumed GTR was keeping 6 sets for the Eastbourne services... This has changed since but presumably the agreements with the ROSCO were for the lease on those 18 sets only.

 

[DarloRich]

It's not a captive market if a TOC can go and buy from any other company. Angel, Porterbrook and Eversholt aren't the only game in town now. Basically any bank looking for a long term investment can finance a fleet. If they don't know how to manage trains, they can have the manufacturer maintain them on a day-to-day basis.

Yes a Toc can go and buy elsewhere BUT not, often, on the required timescale and not, often, without DfT approval and support and backup.the practicalities of the market make it captive

 

[swt_passenger]

In any event you wouldn't expect a ROSCO to build a fleet of trains on a speculative basis - THAT would be silly!

But they have done, and within the last couple of years. At least 20 units were ordered with no known user.

 

[3141]

A little while back, didn't a Rosco order a speculative build of a load of Electrostars? That seemed to work OK, they aren't exactly sitting in sidings. Don't recall them getting any criticism, people probably thought it was a brilliant idea.

I doubt the 707s are going to sit on the shelf for long...

Yes, Porterbrook ordered 387s.

But they didn't order 707s. They looked at what might readily find a user. Possibly they also got a good price from Bombardier as the manufacturer was already building 387s for GTR and GWR.

I agree it's likely the 707s will find another user, but it may be necessary to spend money on them before they can, unlike the 387s Porterbrook ordered.

 

[HH]

Yes a Toc can go and buy elsewhere BUT not, often, on the required timescale and not, often, without DfT approval and support and backup.the practicalities of the market make it captive

What a load of tosh.

TOCs could buy units at any time; the reason that they usually agree things with DfT is that they don't wash their face in the franchise timeline and therefore will reduce the Premium; obviously this needs DfT approval. But then so does everything else in such circumstances, like station investment or RS refurbishment. And that certainly does not give ROSCOs carte blanche to charge what they like. DfT will take advice and look to get value for money or it will not agree.

Timescales are pretty much the same for any new train or for an order of more of existing type of unit, so everyone has a choice. Back at the start of privatisation, with a limited amount of stock, relatively few manufacturers and finance options then it was a seller's market. That has all changed, as can be seen by the deals done on GA & ScotRail and will be seen on the SWF.

 

[mwmbwls]

More questions than answers.

If toilets and franchise bids are the constraining factors - how many other franchises operate metro style no toilet-rolling stock that is in need of replacement? How many of these franchises are coming up to be rebid and when? At the end of the day is it not a ROSCO that will end up holding the baby - if so which one? Are 707's amenable to bi-mode conversion?

 

[Goldfish62]

Let's put one thing straight. Passenger benefits are not delayed. The Class 707s will still be delivered as per the original order; it's just that they will be replaced with even newer, and better specified, trains in 2020. From the passenger's point of view it's a win.

That of course is the objective view but there's a clear preference on this thread to be on the outrage bus instead.

 

[notlob.divad]

In any event you wouldn't expect a ROSCO to build a fleet of trains on a speculative basis - THAT would be silly!

Why not? Isn't that in essence what vivarail are doing. Ok they are repurposing units but the outcome is the same . Speculative creation of a product in the hope of attracting interest.

 

[43096]

However it is viewed, it is an inefficient use of resources, no matter who the financial losers are - just another example of the fractured strategy on the railways today.

Absolutely correct.

Anyone who thinks otherwise is at best naive. The end result could well be more expensive trains as the ROSCOs price in increased risk. The 707s were the result of a mid/end of franchise capacity increase - don't expect new trains in that position to be easily funded in the future. Any sensible financier will want some serious guarantees on future use.

I really don't get the "it's someone else's money so it doesn't matter" attitude. Why is it acceptable to waste money? The SWT franchise is full of such examples: 455 re-traction, 458 5-car conversions and the 707s, all of which look like being chucked away. To be blunt, it is utterly unacceptable.

 

[coppercapped]

More questions than answers.

If toilets and franchise bids are the constraining factors - how many other franchises operate metro style no toilet-rolling stock that is in need of replacement? How many of these franchises are coming up to be rebid and when? At the end of the day is it not a ROSCO that will end up holding the baby - if so which one? Are 707's amenable to bi-mode conversion?

See my post #191.

 

[HH]

Absolutely correct.

Anyone who thinks otherwise is at best naive. The end result could well be more expensive trains as the ROSCOs price in increased risk. The 707s were the result of a mid/end of franchise capacity increase - don't expect new trains in that position to be easily funded in the future. Any sensible financier will want some serious guarantees on future use.

I really don't get the "it's someone else's money so it doesn't matter" attitude. Why is it acceptable to waste money? The SWT franchise is full of such examples: 455 re-traction, 458 5-car conversions and the 707s, all of which look like being chucked away. To be blunt, it is utterly unacceptable.

The same nonsense keeps getting trotted out. As I keep pointing out, DfT have stopped issuing section 54s, so the ROSCOs were fully aware of the risks and have already priced them in. Maybe they got the level of risk wrong, but maybe not - we don't know that there is no future for the 707s, 455s or 458s; this is all supposition. The 455s are over 30 years old, so the ROSCOs have already done very well from them.

Maybe mid-term deals will be affected, but that doesn't mean that the ROSCOs will simply be able to charge what they like. There are other finance options and new stock is always an alternative.

There might have been some waste, but this is a wasteful society, with huge amounts of food thrown out daily and people changing their cars every couple of years even though the current one is perfectly adequate. In any case, the waste here is by DfT, when they decided to spend so much money late in the franchise and that goes back to the West Coast fiasco.

First/MTR made a sensible decision using the cards they were dealt. Enough of the faux outrage.

 

[swt_passenger]

In addition to the previous reply by coppercapped, the original 707 introduction thread contains a link to the 707 passing through the Thameslink route to Hornsey for tests, on AC power:

There are pictures here of the 707s at City Thameslink:

https://twitter.com/Clinnick1/status/844083583669231616

 

[Feathers44]

The same nonsense keeps getting trotted out.

As do the same dismissive replies. Think what you like, but to some of us this looks quite wasteful. I'm quite happy for you to believe otherwise but only time will tell who's right.

 

[HH]

As do the same dismissive replies. Think what you like, but to some of us this looks quite wasteful. I'm quite happy for you to believe otherwise but only time will tell who's right.

My point has been several times that only time will tell if it's wasteful, therefore I will be proved right regardless of what happens. The 'apocalypse now' sayers on the other hand, can only be right if the stock is sold for scrap.

 

[cjmillsnun]

So, rather than answer the question I posed, you suggest that I am naïve. This approach suggests to me you have little to contribute and are simply broadcasting fear, uncertainty and doubt. That is not a constructive attitude.

What evidence do you have that the course of action proposed by First/MTR will be more expensive than that proposed by Stagecoach/SWT?

I will remind you that the Class 707s are also 25kV AC capable and the first two units are being tested under the wires now. Maybe, just maybe, the train builder and the ROSCO could see something like this occurring and so took action to protect their investment. All that needs to be added to the rest of the build is a pantograph, a length of cable, a transformer and a rectifier pack.

The cable may already be fitted.

 

[pompeyfan]

Paul Clifton (BBC South transport) has said on his twitter it's expected to cost £15m to make each unit AC able. That's a staggering amount!

 

[D365]

Paul Clifton (BBC South transport) has said on his twitter it's expected to cost £15m to make each unit AC able. That's a staggering amount!

Err...

 

[joshy.fre_2003]

I would say Northern could have them, but were already getting a bit of new stock, they'd be good for 319 replacement however. Perhaps, sigh, southern could have them..

 

[NotATrainspott]

Paul Clifton (BBC South transport) has said on his twitter it's expected to cost £15m to make each unit AC able. That's a staggering amount!

Each unit would have cost less than £15m to build.