Latest Rail News

12.05.16

ORR approves future VTEC and FirstGroup services on ECML

Virgin Trains East Coast (VTEC) and FirstGroup have been approved to run new train services on the East Coast Main Line (ECML), but Great North Eastern Railway Company Limited’s (GNER’s) applications have been rejected.

The Office of Rail and Road (ORR) said it had made its decision having carried out extensive consultation and analysis on the competing applications, which were submitted to the regulator last year.

The ORR’s decision means that VTEC, which Stagecoach has a 90% shareholding in, will be able to run new services between London and Edinburgh, Harrogate, Lincoln and Middlesbrough. These services formed part of VTEC’s successful bid for the ECML franchise, which started in March 2015 and is planned to run until at least 31 March 2023.

Before the new franchise started, Directly Operated Railways (DOR), a Department for Transport (DfT) controlled company, had run services on ECML since November 2009. And it was revealed in 2014, DOR had returned almost £217m to the taxpayer in premium and dividend payments.

Martin Griffiths, CEO of Stagecoach Group plc, said: “We are pleased that VTEC’s application has been approved by the ORR. Customers are at the heart of our extensive £140m investment plans to grow the East Coast franchise and provide a high quality, competitive alternative to air and road travel.

Virgin Azuma top

We look forward to the introduction of our new Virgin Azuma trains from 2018. In the meantime, we are continuing to deliver on our plans by cutting journey times, transforming on-board service, expanding the timetable, linking communities and making significant premium payments to Government.”

Open access services

FirstGroup has been granted approval to launch open access rail services between London, north east England and Edinburgh. The 10-year track access rights will enable the group's East Coast Trains Limited to begin operating five trains a day each way from London King’s Cross to Edinburgh, via intermediate stations at Stevenage, Newcastle and Morpeth, by 2021.

Tim O’Toole, CEO at FirstGroup, which recently took sole control of the TransPennine Express franchise, said: “I'm pleased that the ORR has granted track access rights for our unique low-cost service between London, the north east of England and Edinburgh.

“This is great news for passengers, as our new service will widen the choice of travel options between these cities and offer an attractive alternative to those available today.”

In its decision letter, the ORR said “we have approved the applications made by VTEC and FirstGroup to run new services between London and Edinburgh, Harrogate, Lincoln and Middlesbrough, though some access rights will have to start later than the applicants requested due to the timing of necessary enhancements”.

The new services will be introduced in stages over the coming years, in some cases once Network Rail completes a programme of work to increase track capacity.

The regulator added that it rejected GNER’s Edinburgh application because it deemed costs were likely to exceed benefits, and the Cleethorpes/West Yorkshire proposal “did not provide a strong basis for preferring any of these options over the others, in light of inevitable modelling uncertainties”.

A spokesperson for Alliance Rail Holdings said: “Alliance is naturally disappointed that its recent applications for new GNER services on the East Coast Main Line have been turned down by the ORR. This means the significant benefits that would have been delivered for many northern towns and cities has been lost, at least in the short term.

“We are pleased however that the ORR has recognised the benefits that further competition will bring, and we will re-visit our applications.”

John Larkinson, ORR’s director of railway markets and economics, said: “These new train services will give passengers more choice on services to Edinburgh and London and provide more frequent trains to towns and cities which are not so well served by rail today.

“We thank all the applicants, Network Rail and other participants for their thorough input and engagement throughout this process.”

871 Virgin East Coast

VTEC’s core existing timetable has been approved from December 2017 when the current access contract expires. In addition, VTEC has been granted firm rights for service extensions to Bradford, Lincoln and Harrogate from May 2019, and for Edinburgh and Middlesbrough from May 2021. Should capacity become available sooner, VTEC's additional rights for service extensions to Edinburgh could start from May 2019.

Reviewing ORR decision

Discussing the open access approval for FirstGroup, Griffiths, said: “With respect to the decision on open access between London and Edinburgh, we do not believe the granting of these services within a franchised system and without a level playing field is in the best interests of passengers, taxpayers or communities.

“We will assess the ORR decision and implications in detail and review our options.”

However, FirstGroup says that passengers on its new services will benefit from an average fare of less than £25, free Wi-Fi and on-board catering, all offered in one high-quality class of travel. The new service is designed to provide choice for passengers looking to travel between London, north east England and Scotland, and will encourage travellers to switch from air or coach travel to rail.

O’Toole said: “Now that our application has been approved and we have been granted rights we will implement the next steps to deliver our proposals which include discussions with Network Rail and rolling stock manufacturers.”

David Sidebottom, passenger director at the independent watchdog Transport Focus, and a regular contributor to RTM, added that passengers will welcome these extra services.

“More choice is a positive thing, especially as it can add pressure to keep prices low across all the operators on a route,” he said. “It’s important that the extra choice doesn’t lead to extra complexity on an already-confusing fares system, but overall the benefits of more services and potentially better-value fares are great news.”

The decision comes aft the Competition and Markets Authority called for increased competition in railway franchising, potentially including a licensing system in the future. It also suggested a greater role for open access operators on intercity routes.

Will Dunnett, managing director at Hull Trains, recently told RTM that the ORR’s decision to approve its application for extended track access until 2029 should act as a catalyst for further growth.

(Top image: c. Michael Day)

Comments

Huguenot   12/05/2016 at 10:01

The First Group open access decision is great news. I have always thought that Stevenage, an important railhead for the Home Counties, has been under-served by VTEC and its predecessors. We wait to see whether the First Group services will be permitted to serve any other stations than Newcastle, Morpeth and Edinburgh. Additional journey opportunities would become available if they could also stop at, say, Doncaster (as Hull Trains does), even if VTEC cried 'foul' due to potential revenue abstraction.

Morph   13/05/2016 at 12:23

First Group already serve Doncaster - remember Hull Trains is owned by First Group!

Huguenot   13/05/2016 at 12:58

Yes, Morph, but Hull Trains does not serve Stevenage. It used to, with at least one down and one up train a day, but no longer.

Mr M Allington   16/05/2016 at 06:50

Obviously not enough money in GNER's brown envelope to please the regulater. Ha joke railway. Just a cash cow for the few.

Andrew Gwilt   17/05/2016 at 20:59

I though that First Group was going to take over the East Coast franchises to be named as First East Coast. Or is Virgin Trains and First Group having to share the franchise together.

Jerry Alderson   19/05/2016 at 16:09

Why does RTM keep referring to "the independent watchdog Transport Focus"? TF is an arm of government. TF is 100% funded by government. Every single TF board member is appointed directly by one of the governments plus TfL. Its remit is defined by government. Occasionally it says something that the government wished was not said, but when has it evder directly criticised government policy?

David   19/05/2016 at 21:41

No Andrew. First are running their own open-access services.

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