The bid to run trains across the Øresund link between the Danish island of Zealand and the Swedish mainland will mark the first time that FirstGroup has sought to run rail services outside the UK.

The company's only existing non-UK business is in the US, where it runs school buses and provides some bus services for local authorities.

The competition between the two groups illustrates UK transport operators' growing interest in the continental European market for private companies to run rail and bus services. In the past five years, the market had been of interest only to Arriva among the five large quoted bus and train operators. This month Arriva said it was taking a 21.5 per cent stake in Portugal's family-owned Barraqueiro Group, the country's largest private transport operator, which runs bus, rail and tram services, for Euros 60m ($76.5m).

FirstGroup and Arriva are thought to be among a large pool of potential operators competing to operate the Øresund services.

FirstGroup's bid will be in conjunction with DSB, Denmark's state-owned train operator, which currently runs the service in a joint venture with SJ, its Swedish state-owned counterpart.

Other bidders are likely to include France's Veolia Transport - formerly known as Connex - and Hong Kong's MTR and SJ.

The contract is not due to be awarded until February next year and a new operator will take over only in August 2008.

See also:

British rail duo vie for Nordic link franchise

The Times: May 23, 2006
By Angela Jameson

FIRSTGROUP and Arriva, the train and bus groups, will compete to win a high-profile train franchise that carries passengers from Denmark to Sweden.

Both companies have pre-qualified for a competition to run services across the Oresund link between the Danish island of Zealand and the Swedish mainland.

This is the first time that FirstGroup, one of Britain?s most successful passenger train operators, has ventured into Europe, although it does run school buses and other bus services in the United States. Arriva has been operating two franchises in Denmark since 2003.

The companies are thought to be among about half a dozen train operators who will compete to run the franchise. Other bidders are likely to include Veolia, of France, previously known as Connex, MTR, of Hong Kong, and SJ, the Swedish state railway company. The train services will start in Helsinor, north of Copenhagen, run through Copenhagen airport and across the Oresund link - a bridge and tunnel opened in 2000 - to Malmo and on to Gothenburg, Karlskrona and Kalmar.

The franchise will begin in 2008 and will run for ten years. The turnover of the concession is understood to be about £100 million, but the winning operator will be paid for running a certain number of kilometres a year, rather than for taking passenger risk, as occurs in Britain.

FirstGroup is hoping to bid in conjunction with DSB, Denmark's state-owned train operator, which currently operates the service in a joint venture with SJ.

Arriva is the first private company to be awarded passenger rail franchises tendered by Denmark. The company's operations are in mid and north Jutland, on eight-year concessions, and cover 15 per cent of the network.

Arriva's success running train services in Germany, the Netherlands, Denmark and Sweden is thought to have encouraged FirstGroup to look more closely at the European market. This month Arriva said that it was taking a 21.5 per cent stake in Portugal's family-owned Barraqueiro Group, the country's largest private transport operator, which runs bus, rail and tram services.

There are hopes that the pace of liberalisation across Europe's railways will quicken in the next few years, creating more opportunties for British companies to bid for tenders.

National Express Group, which last year bought Alsa, Spain's leading bus and coach operator, has said that it is interested in the possibility for rail opportunties in Spain.

BRIDGE WORK
* The Oresund Link, one of Europe's largest infrastructure projects, opened almost six years ago. It took five years to build
* The ten-mile link, built with private finance, connects Copenhagen, the Danish capital, to Malmo, in Sweden
* Since the bridge opened, a ten-minute, high-speed train trip has replaced a one-hour ferry crossing. Cars and trains from Malmo cross a 4.8-mile (7.7km) two-level bridge, before descending into an underwater tunnel that emerges near Copenhagen airport
* The bridge is popular with Swedes who can cross the border to stock up on alcohol, which is cheaper in Denmark