WSMR to finish

[Daimler]

...but my argument is that one reason it may* have lost money was through having so many staff (55 employees for three return trips?) - running with just two employees per trip (and getting the "back office" functions done by ATW/Chiltern) would have brought the cost-base down and maybe made it profitable?

* - I say "may" because until we know all the facts I don't want to gossip about certain things

I don't know...I think on a journey of that duration some catering facilities as pretty much necessary for passengers to bother travelling - WSMR tried to make their money by offering a superior service on their direct train - if people weren't able to buy something to eat/drink on their (long!) journey to London, they may well have opted for the faster service, albeit with a change. I would be interested to know, though, how many members of staff were required on each service (I only ever saw four, as far as I can remember - driver, guard, and two buffet staff).

I think their best bet for making some money would have been stopping at the major West Midlands stations, where they may have attracted people from other services through (relatively) low prices and superior service. I wonder if too many of the people I saw on WSMR were travelling on very cheap advance tickets - stopping at the large towns/cities in the West Midlands may have given them additional 'turn up and go' custom.

Fundamentally, though, they were competing against subsidised services, so one does wonder if they could ever have succeeded - I do hope so, as if not, as I've said (more than once! ), it's a sad indictment of the way the railways were privatised - to see the costs of the railways rise dramatically as they were privatised, but without the supposed benefits of 'privatisation' really is most galling.

 

[tbtc]

Fundamentally, though, they were competing against subsidised services, so one does wonder if they could ever have succeeded

The same could be said of Hull Trains and Grand Central though, and they seem to have carved out a niche.

Though Hull Trains and Grand Central differ from WSMR in that (1) they run to decent sized cities (e.g. Hull = 258,700, Sunderland = 177,739, Wrexham = 42,576) and (2) that they didn't have quite so many staff (per train service).

Just wondering whether there was any middle-ground...

 

[Daimler]

The same could be said of Hull Trains and Grand Central though, and they seem to have carved out a niche.

Though Hull Trains and Grand Central differ from WSMR in that (1) they run to decent sized cities (e.g. Hull = 258,700, Sunderland = 177,739, Wrexham = 42,576) and (2) that they didn't have quite so many staff (per train service).

Just wondering whether there was any middle-ground...

Hmm...let's not forget that the East Coast route is one of the very few railways in the country that does make a profit, meaning that the franchise-holder has to pay a premium to the government, which makes things easier for any open-access operator.

Indeed, this is (I think, having seen many of your posts! ) a bugbear of yours, since on the ECML moderation of competition doesn't seem to play a major part, meaning that GC and Hull Trains can stop at Doncaster and York, abstracting revenue through ORCATS from the franchised operator, making its own business case less viable - despite being expected (unusually for a franchised operator) to make a profit.

I'm not saying that you don't have something of a point here when referring to the level of staff on WSMR, merely that the East Coast is an exception rather than the norm. Whether or not cutting staff would have solved all of WSMR's problems is another matter. Had they been allowed to be absorbed fully into Chiltern Railways, and run as an extension of Chiltern's new loco-hauled Birmingham services (something that we might hope will happen in the future!), then Shrewsbury and Wrexham services might have been viable. Whether they'd have made a 'real' profit is another matter, of course, since Chiltern is in receipt of subsidy from the government.

 

[swt_passenger]

Fundamentally, though, they were competing against subsidised services, so one does wonder if they could ever have succeeded...

That theory doesn't take into account that open access operators don't pay the same level of track access charges that franchised operators do.

It isn't as black and white as subsidised/non-subsidised, this was argued to death by GNER when GC were setting up, I think most of the correspondence is still on the ORR website.

 

[Failed Unit]

The same could be said of Hull Trains and Grand Central though, and they seem to have carved out a niche.

Though Hull Trains and Grand Central differ from WSMR in that (1) they run to decent sized cities (e.g. Hull = 258,700, Sunderland = 177,739, Wrexham = 42,576) and (2) that they didn't have quite so many staff (per train service).

Just wondering whether there was any middle-ground...

The other big difference is the speed even at 100mph HT wasn't much slower than changing at Doncaster. At 125 HT is always quicker. Same story for GC it is always the quickest service.

As a result they will get the premium fare business travel. Wsrc struggled with this element a high quality service but nearly 1 hour slower than via Birmingham which would be hard for many to justify.

 

[Daimler]

That theory doesn't take into account that open access operators don't pay the same level of track access charges that franchised operators do.

It isn't as black and white as subsidised/non-subsidised, this was argued to death by GNER when GC were setting up, I think most of the correspondence is still on the ORR website.

As I mentioned above, though, if I remember correctly GNER was paying a premium rather than receiving a subsidy at the time. I can't believe the reduced track access charges fully compensate for the subsidies received by TOCs, though. Nonetheless, that is an interesting point, and makes GC & HT's receipt of ORCATS revenue seem even more damaging to the East Coast operator expected to pay a premium to the government.

 

[CosherB]

I travelled WSMR 1st whenever it was a viable option (i.e. whenever I could spare the extra 2 hours to go London from Cheshire via Shrewsbury), and it was a truly excellent service. However, it wasn't very full on the occasions I used it and if that was typical then it's hard to see how it could pay its way.

Presumably it didn't pay its way, which is why DBS have pulled the plug on it.

Some have asked why it couldn't have stopped at other places such as Wolverhampton. The answer is that a frachisee (Virgin in that case) had taken on the franchise on the understanding that they had monopoly access to Wolverhampton. The government therefore cannot go back on that agreement and grant access to Wolverhampton to an open access operator (such as WSMR) once the franchise is let.

It was brave of WSMR to attempt to do what they did. But without higher passenger numbers it simply couldn't work.

 

[tbtc]

Hmm...let's not forget that the East Coast route is one of the very few railways in the country that does make a profit, meaning that the franchise-holder has to pay a premium to the government, which makes things easier for any open-access operator.

Indeed, this is (I think, having seen many of your posts! ) a bugbear of yours, since on the ECML moderation of competition doesn't seem to play a major part, meaning that GC and Hull Trains can stop at Doncaster and York, abstracting revenue through ORCATS from the franchised operator, making its own business case less viable - despite being expected (unusually for a franchised operator) to make a profit.

I'm not saying that you don't have something of a point here when referring to the level of staff on WSMR, merely that the East Coast is an exception rather than the norm. Whether or not cutting staff would have solved all of WSMR's problems is another matter. Had they been allowed to be absorbed fully into Chiltern Railways, and run as an extension of Chiltern's new loco-hauled Birmingham services (something that we might hope will happen in the future!), then Shrewsbury and Wrexham services might have been viable. Whether they'd have made a 'real' profit is another matter, of course, since Chiltern is in receipt of subsidy from the government.

I agree with you there, that's a very good post.

GNER certainly were paying a premium (I think NXEC stopped before they had to start paying money back), but I agree that the ECML is completely different. It's just hard to compare WSMR to anything else, given the few open access companies there are. I think that this may worry the Go Co-op people, since they are aiming for a similar marginal service (which doesn't serve any major city)

 

[37705]

No, it was much worse. It squandered millions on crap locomotives, marshalling yards and all sorts of stuff that never paid it's way. In contrast, this is a commercial operation which has cut its losses.
--- old post above --- --- new post below ---


And how does that 'respect' pay peoples wages? Or the fuel bill.

It's always easy to say someone should keep losing money when its not your money they're spending.

Regarding the latter, I am not saying that you can keep running a loss making service, if you are losing more and more each year. But what I am saying is, if DB owned W&S, and let's say DB make more money per year than W&S were losing, it would be a customer service winner to keep such a service running. And DB overall would still have been in profit. After all, the railways used to be about providing a public service. The consensus I keep hearing is that DB ditched it, irrelevant of whether or not they could have kept it going, because of that 2.8m loss last year.

 

[tbtc]

if DB owned W&S, and let's say DB make more money per year than W&S were losing, it would be a customer service winner to keep such a service running

Not sure about that.

If Chiltern/ATW have passengers crammed into two coach trains on busy routes, and are subsidising a loss-making four coach service elsewhere, wouldn't it be "customer service" to concentrate resources on the busier routes where the existing passengers are?

 

[37705]

Fair point. All I am trying to say, is that - going back to pre-Beeching BR days - railways were run as a public service. I am well aware that there are many who state the Beeching cuts were a necessary evil, but there are others that claim the closure of those lines have been felt ever since, and are a reason why the roads in those areas where public transport is poor are in danger of becoming ever more congested as people take to their cars.

 

[CosherB]

if DB owned W&S, and let's say DB make more money per year than W&S were losing, it would be a customer service winner to keep such a service running. And DB overall would still have been in profit. After all, the railways used to be about providing a public service. The consensus I keep hearing is that DB ditched it, irrelevant of whether or not they could have kept it going, because of that 2.8m loss last year.

37705, that's not how any business operates. Things that don't make money, and can't be made to make money, have to be chopped or they endanger the health of the entire company..

There is of course a valid case for things to operate unprofitably - most of the UK rail system, the NHS, the Police, Fire, Education - things a society needs but which don't make money. That's what taxes are for - we pay tax to the government, they in turn spend our money on providing the public services we need.

WSMR was not such a service. Only franchises are funded - and not all of them! Some franchisees who bid for profitable services pay the governmrnt for the right to run them. With others, which lose money but which the government considers should be provided for the good of society, the operator gets paid by the government to run the franchise. So effectively profitable francises subsidise unprofitable ones

Anyone who comes along later as an Open Acess Operator (like WSMR and Grand Central) cannot expect any payment from the state, as the state has already defined the services it is prepared to pay an operator to provide.

So the promoters of an Open Acess Operation have to ensure they can make enough in fares to at least cover their costs. WSMR couldn't.

 

[class 101]

The WSMR closure is proof plenty that 'Open Access' simply does not work. Adrian Vaughan is his book 'Railway Blunders' documents that the early companies found it to be unworkable. Todays railways are run by a few vast private companies heavily subsidised by the state. Private ownership seeks to establish a monopoly by squeezing out smaller would be competitors. This is what Virgin has done to WSMR by greatly restricting access to stations such as Wolverhampton. This made the operation unprofitable, the WSMR route around Virginland was like a railtour, interesting but contributing to it's demise.
WSMR gave what passengers wanted until the brutal reality of how privatisation actually works got in the way. No, the 'Free Market' does not work and never will despite what the ideologues tell us.

 

[Geezertronic]

This is what Virgin has done to WSMR by greatly restricting access to stations such as Wolverhampton. This made the operation unprofitable, the WSMR route around Virginland was like a railtour, interesting but contributing to it's demise.
WSMR gave what passengers wanted until the brutal reality of how privatisation actually works got in the way. No, the 'Free Market' does not work and never will despite what the ideologues tell us.

Replace the word Virgin with the DfT & Virginland with The Midlands and you're sentence is more than accurate then...

 

[DaveNewcastle]

One thing that puzzles me is the (almost) indecent haste in which WMSR's demise came about. OK, many posting on here will have been aware that the economics of the operation were, at best, marginal. However, when the end came, it was very sudden.

And so it must be. It is unlawful for a company to trade if it has not the means to pay for the goods and services it receives. To illustrate this, the moment that the last Pound in the bank is spent, it is unlawful even to pick up the phone to make a phone call (on a commercial credit account). There's nothing wrong with trading right up until that moment - but no further. [1986 Insolvency Act S.123]

Perhaps therefore it is the lack of expansion that restricted the success of WSMR as the single route had to bare the cost of the whole business, had they been able to merge with Arriva then the back office burden would not have been so great per seat sold but it wasn't to be.

It seems a strange thing that when the company was formed it didn't rely more on its share holders own existing back office functions rather than bringing them in house, although I suspect that much was reliant upon Chiltern, certainly it was a regular occurence even on Friday to see Chiltern staff on the trains denoted by their name badges. Maybe there was something else that prevented greater sharing of resources within the Chiltern/DB group of companies.

But why? To provide rail travel for charitable reasons, Yes, but to sustain the asset value of a group of Companies, No.
That would be commercially irreponsible, and on examining the Terms of Reference between Chiltern, DB and WSMR may even be unlawful. Certainly any Directors of those Companies would be expected to refuse such a proposal.

What upsets me about this situation is that it's all purely profit driven. Yes, you will say, you can't run a train service that runs at a loss, but surely the whole point of WSMR being part of DBS was that DBS, realising that they had a much loved train service under their wing, would have gained a lot of respect if they had kept it going. Surely you would use the profits gained elsewhere to cover the losses of WSMR? If somebody can explain that this would not have been possible, please advise - but I believe the merger with Chiltern in 2009 was partly done to try and achieve this.

Upsetting? yes, I agree.
All profit driven? well, almost.
Averting losses, definitely.
But, Using profits gained elsewhere to cover losses? No. (As above).
For a Charity, that might be consistent with the objectives in its its Constitution, but for a trading company then it would be irresponsible. Any 'profits' in this relatively unprofitable industry, will be needed to sustain its marginal excess of revenue over costs, all the moreso where those costs are subject to exceptional unpredictable liabilities and that revenue is subject to external factors, unpredictable freezes on operation and competition. Add to these the crippling cash flow disadvantages of finance costs and subsidies and you should, if you work though it all, come to the same conclusions as the Company's Directors came to. (and they will have had the benefit of continuing professional advice!).

I wonder if there was any way of keeping going?

If you assume that WSMR's fifty five staff had to be paid for by three return journeys a day then the maths looks bad.

But what if WSMR had cut back to basics, just a driver and conductor on each service (like the vast majority of trains in the UK), no restaurant, nothing fancy. Would they have been able to keep a direct train service from Shropshire to London going? Would a "basic" WSMR service to London be better than nothing?

I'm sure that all such options would have been considered and calculated. What we have to add are the exceptionally high Access Charges, not just the track-access charges often discussed on here, but also Station Access charges, Depot Access Charges and Finance costs - these would remain, in fact one of the most suicidal thing that any trading company can do is to contract (become smaller, not legal Contracts!); that tends to reduce revenue immediately while leaving the costs of finance and many other long-term liabilities running at the previous (high) level!

 

[class 101]

The WSMR closure is proof plenty that 'Open Access' simply does not work. Adrian Vaughan is his book 'Railway Blunders' documents that the early companies found it to be unworkable. Todays railways are run by a few vast private companies heavily subsidised by the state. Private ownership seeks to establish a monopoly by squeezing out smaller would be competitors. This is what Virgin has done to WSMR by greatly restricting access to stations such as Wolverhampton. This made the operation unprofitable, the WSMR route around Virginland was like a railtour, interesting but contributing to it's demise.
WSMR gave what passengers wanted until the brutal reality of how privatisation actually works got in the way. No, the 'Free Market' does not work and never will despite what the ideologues tell us.

 

[37705]

Does have anybody have any idea then, why (and I quote from Wikipedia) "the operating rights were handed to Chiltern Railways". Why did Chiltern get involved if it was performing so badly? Did they just hope it would start to turn a profit?

 

[yorkie]

The WSMR closure is proof plenty that 'Open Access' simply does not work.

No it isn't. Under different circumstances WSMR could have flourished. I could counter your argument by saying that Grand Central North East route is proof aplenty that 'Open Access' simply does work! Despite various blunders, and having to change their pricing model and the fact I may never step foot in a GC train again (as I can't afford to; a single on GC is four times the price I typically pay EC), GC trains are full and standing room only at busy times (at non-busy times they still aren't empty and still get plenty of ORCATS revenue).
--- old post above --- --- new post below ---

Does have anybody have any idea then, why (and I quote from Wikipedia) "the operating rights were handed to Chiltern Railways". Why did Chiltern get involved if it was performing so badly? Did they just hope it would start to turn a profit?

Can't remember exactly but it was reported here a while ago that it WSMR was sharing a management team with Chiltern, for efficiency reasons. It made sense. Chiltern were always "involved" as a sister company from the start, so your question doesn't really make sense!

 

[Daimler]

No it isn't. Under different circumstances WSMR could have flourished. I could counter your argument by saying that Grand Central North East route is proof aplenty that 'Open Access' simply does work! Despite various blunders, and having to change their pricing model and the fact I may never step foot in a GC train again (as I can't afford to; a single on GC is four times the price I typically pay EC), GC trains are full and standing room only at busy times (at non-busy times they still aren't empty and still get plenty of ORCATS revenue).

The East Coast is rather the exception to the rule, though, as has been discussed above. Of course, I suppose that's precisely why open access has worked there! Elsewhere, though, and with the barriers that Wrexham & Shropshire had to try and surmount, I'm not so sure - particularly in the vast majority of the network that sees franchised services receiving subsidy.

I hope I'm wrong, because open access is one of the few truly good things that privatisation should be producing.

 

[CosherB]

This is what Virgin has done to WSMR by greatly restricting access to stations such as Wolverhampton.

Absolutely not! As I stated in my post above, it was a condition of Virgin's franchise that they and they alone had access to Wolverhampton. It's that condition in the franchise that prevents anyone else having access!

How could the DfT grant WSMR access to Wolverhampton when they'd already let a franchise to Virgin that guarenteed Virgin sole access?

 

[87 027]

I always travelled on WSMR on the occasions I had to travel between London and Telford on business. Indeed I was on the service last Monday, without any hint of what was to come later in the week. For me the slightly longer journey time was offset by being able to get more work done on the train, especially through not having to connect at Birmingham or Wolverhampton. Now I suppose I'll have to go back to the draughty wait for a tatty Sprinter to complete the journey.

Sadly however I never saw that many other people using WSMR for business travel, so sudden as the end was I wasn't that surprised. I for one will miss this service.

 

[Chafford1]

Some interesting snippets from the uk railways site:

Tony Miles Er - except that industry sources now say (and told me this before Christmas) that having seen Chiltern's "Evergreen 3" proposals and the risk involved in the project DB immediately tried to get out of many contracts and asked Network Rail if it would fund it and take the financial risk off Chiltern. NR said "no". I was told last night that at this point DB then turned its focus on the WSMR situation... Had DB been fully in charge of Chiltern when Evergreen 3 was being negotiated I suspect it would have pulled the plug unless the risk was removed.

Tony Miles Whilst we all know the decision has come from Arriva (DB) and not the "Chiltern" side of things (and it is a very sad time - I paid a tribute to WSMR and its staff at the Modern Railways 4th Friday event
yesterday) you can't actually ignore payments to DB for loco and stock hire - it is a basic function of any business - even trading within sub-groups - that there is a cost of using any assets and this has to be done at more that "cost price".

The loss made is the loss that was made - and certainly the cost of using the DB-owned coaches was much less than WSMR paid for the use of the Cargo-D coaches - and so clearly the internal charging was at a lower price than the "commercial rate".

Arriva people probably are very pleased - and Adrian Shooter was very professional in not passing the blame to them, even though he must have been tempted to, but looking at the losses they claimed to have made I think that even if the rolling stock had been leased by DB (67s) and DB Regio at absolute cost price the company wouldn't have been in profit. Of course DB back in Germany is becoming a bit of a financial liability at the moment and certainly the use of state money to subsidise a UK operation would not be allowed under EU rules - so the loss will have had to be accounted for within the UK business AND it is absolutely fobidden to use franchised TOC money to support an Open Access operation and any whiff of this in the Arriva/Chiltern/DB Regio/DB accounts would lead to some pretty speedy legal action.

darkprince66 I should also add that despite what some may think, there is more to this than meets the eye, there certainly were an element of dark forces at work. I know more than many, and certainly more than I should, I have quite a few contacts from within. And I'm not only talking WSMR. This goes way higher than that. Someone somewhere will eventually break the silence...

 

[37705]

My query about the Chiltern links are that W&S were open access, Chiltern weren't. So, if Open Access companies are subject to closure if they don't turn a profit, this means that W&S could have merged with anybody and would still have gone bust. From what I can gather, Chiltern were NOT involved from day 1 - this was why the Banbury stops were pick up/set down only, to avoid conflict with the Chiltern operations. Assuming I am correct (and I think I am), then what difference did the changing of the operating rights actually make?

 

[Geezertronic]

My query about the Chiltern links are that W&S were open access, Chiltern weren't. So, if Open Access companies are subject to closure if they don't turn a profit, this means that W&S could have merged with anybody and would still have gone bust. From what I can gather, Chiltern were NOT involved from day 1 - this was why the Banbury stops were pick up/set down only, to avoid conflict with the Chiltern operations. Assuming I am correct (and I think I am), then what difference did the changing of the operating rights actually make?

From what I understand, WSMR did not go bust...

 

[Railjet]

From what I understand, WSMR did not go bust...

Well, technically not, but in reality it has.

It hasn't technically gone bust because although DB has pulled the plug - so there are no more funds available - it has agreed to pay off WSMR's existing liabilities. It is not compelled to do this, but has done so at least in part, no doubt - with an eye on its future operations in the UK - to keep in with the regulator.

 

[yorkie]

From what I can gather, Chiltern were NOT involved from day 1

Weren't they? Who did WSMR's train planning then? :-?

this was why the Banbury stops were pick up/set down only, to avoid conflict with the Chiltern operations.

Was it? Nothing to do with the DfT then? :-?

 

[37705]

As somebody who does not work in the railways, I won't admit to knowing how the ins and outs of private companies work. But this is the press release from September 2009 that was used to "plug" the Chiltern links:

http://www.wrexhamandshropshire.co.uk/news-item.php?id=75

It suggests that W&S were not part of the Chiltern business beforehand. All I am trying to work out is why this change (Sept 09) took place, what it actually meant to W&S, and why it didn't stop the plug from being pulled.

 

[martinsh]

It's a bit like Man United. Millions in debt, but kept afloat by backers and winning trophies. Could you imagine it if they said, "Fergie, we can't stay in debt anymore, so we are going to sell all your players. And then close the club.".

One can but dream !!

 

[merlodlliw]

someone better tell Nat Rail, our favourite railway is still on their boards as running the ups.

Bob

 

[The Planner]

someone better tell Nat Rail, our favourite railway is still on their boards as running the ups.

Bob

We only found out on friday too, so the cancellations may not have filtered down yet.