09.08.12
FirstGroup win could lead to rail fare increases
Train operator FirstGroup is set to win the west coast rail franchise, with a higher bid than competitor Virgin Rail, reports indicate.
This could lead to fare rises from 2020, insiders fear.
The Department for Transport has highlighted Tuesday as the provisional date for declaring the winner of the West Coast Main Line franchise. FirstGroup has bid an estimated £6.5-7bn for the 14-year contract, and rival bidders Abellio, Keolis/SNCF and Virgin Rail are no longer in the running, it has been speculated.
Virgin Rail currently owns the franchise and pays around £160m to the DfT in premium payments each year. FirstGroup’s bid would see payments of around £500m a year.
Industry insiders believe that as the line will be at capacity by 2020, it will no longer be possible to increase revenue by carrying more passengers. This could mean significant fare rises.
Founder of Virgin Rail, Richard Branson said in a recent letter to the transport secretary, Justine Greening that the only way FirstGroup can meet the premium payments is to “drastically cut the quality of services”.
Unions fear that the deal could lead to job cuts and other changes to staff terms.
The DfT is said to be considering a cross-default clause in the contract, which would see FirstGroup lose its other rail contracts if it were to renege on the West Coast deal.
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