HS2

23.06.16

West Midlands franchise bid down to two companies as MTR withdraws

MTR Corporation West Midlands has unexpectedly withdrawn its bid to take over the West Midlands rail franchise.

The company, a subsidiary of the Hong-Kong based MTR, was among three shortlisted bidders announced in April. Its decision to withdraw it now means the bidding competition is down to just two companies.

The remaining bidders are the existing operator London Midland, owned by Govia, and West Midlands Trains, owned by Abellio with East Japan Railway Company and Mitsui & Co Ltd as minority partners.

MTR is not officially commenting on the decision. However, it recently announced that it is entering into a joint venture with First Group to bid against Stagecoach for the South Western franchise.

MTR also jointly operated London Overground Rail Operations, which jointly operated London Overground until Arriva took over the franchise earlier this year.

The Department for Transport has previously said that it prefers at least three bidders for rail franchises, so the fact that two major franchises now have just two bidders risks undermining its commitment to greater competition in the rail industry.

A Department for Transport spokesperson said: “We are fully committed to our ambitious plan for the West Midlands.”

They declined to comment specifically on the MTR decision, saying it was “a commercial matter”.

In its recent submission to the Transport Select Committee’s inquiry on rail franchising, the Rail Delivery Group warned that franchise bidders could be discouraged by the costs of the process, which can now reach as much as £10m.

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