Latest Rail News

15.08.12

Virgin ‘unlikely’ to bid again for rail franchise

Virgin’s founder Sir Richard Branson says it would be “extremely unlikely” that the company will bid for another franchise in the UK, having lost the West Coast and grown increasingly angry at the DfT’s rules and processes, which he has branded “insanity”.

He said trying to top FirstGroup’s £5.5bn bid – Virgin bid about £4.8bn in payments to the Government – would have risked “almost certain bankruptcy”.

From December this year, the operator will not control any rail franchises within the UK.

Ahead of the announcement, founder Richard Branson wrote to transport secretary Justine Greening to warn of the consequences of FirstGroup winning.

Sir Richard commented: “To have bid more would have involved dramatic cuts to customer quality and considerable fare rises which we were unwilling to entertain.

“We also did not want to risk letting everybody down with almost certain bankruptcy at some time during the franchise as happened to GNER and National Express who overbid on the East Coast mainline. Sadly the Government has chosen to take that risk with First Group and we only hope they will continue to drive dramatic improvements on this line for years to come without letting everybody down.”

He added that he was “immensely proud” of the “remarkable achievement” Virgin had delivered, but asserted that the Government was putting “unrealistic” bids ahead of service delivery and performance.

Sir Richard said: “These achievements have counted for little – as this is the fourth time that we have been out-bid in a rail tender. On the past three occasions, the winning operator has come nowhere close to delivering their promised plans and revenue, and has let the public and country down dramatically.

“Insanity is doing the same thing over and over again and expecting different results. When will the Department for Transport learn?”

The evaluation system for rail contracts was “flawed”, he said, and added: “It is extremely unlikely that we would bid again for a franchise. The process is too costly and uncertain, with our latest bid costing £14m. We have made realistic offers for the East Coast twice before which were rejected by the Department for Transport for completely unrealistic ones and therefore will have to think hard before embarking on another bid.”

Tony Collins, chief executive of Virgin Rail Group, said today: “Naturally, we are all very disappointed by today’s announcement. We had submitted a strong, deliverable bid with emphasis on customer service which would have produced strong growth over the life of the franchise resulting in significant benefits for the taxpayer through generous premium payments to Government.”

Tell us what you think – have your say below, or email us directly at opinion@railtechnologymagazine.com

Image copyright Richard Burdett used here under a Creative Commons Attribution 3.0 Unported licence.

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