Arriva wins UK's Cross Country rail franchise
Reuters: Jul 10, 2007
LONDON - British bus and train operator Arriva has won the competition to run the country's biggest rail franchise, Cross Country, winning out against Sir Richard Branson and Stagecoach's Virgin Rail, the current operator.
"The Cross Country network is the most extensive rail franchise in the UK," it said in a statement. "Stretching from Aberdeen to Penzance, and from Stansted to Cardiff, it covers around 1,500 route miles and calls at over 100 stations."
Arriva said the franchise would generate over 600 million pounds of revenues a year, including around 1 billion pounds of government subsidies spread across its eight-year lifetime from November.
Arriva said it would increase seating capacity by 35 percent during evening rush hour on its main routes by June 2009, and improve the ticketing system to allow passengers to print tickets at home.
Rail Minister Tom Harris said: "Not only are they delivering an even bigger increase in capacity than we asked for, they are doing it a year earlier than expected."
Arriva's subsidy comprises over one third of revenues in the first year, falling away to almost zero as services are expanded to generate higher sales.
Virgin Trains loses Cross Country rail franchise
Guardian Unlimited: July 10, 2007
Dan Milmo, transport correspondent
Sir Richard Branson's transport empire has suffered a rare reversal after his Virgin Trains business lost the Cross Country rail franchise.
Virgin Trains, which is co-owned by the Virgin Group and Stagecoach, has operated trains on Britain's longest rail route since 1997. That will come to an end later this year after the government said this morning that it had awarded the Penzance to Aberdeen franchise to Arriva, a relative newcomer in the UK rail industry.
Today's announcement confirmed two new pillars to the government's franchise policy: incumbents should make way for new operators; and the farepayer must shoulder a greater share of railway running costs through higher ticket prices.
Under the terms of the new eight-year contract, unregulated fares such as off-peak tickets could rise by as much as 60% over the life of the franchise. The ticket hike will help pay for 40 more carriages and 3,000 more seats on the new Cross Country service, although the franchise statement says it will squeeze more seats into the franchise's existing diesel fleet.
Despite the steep fare increases, the government will still pour a hefty subsidy into the route and has pledged to contribute £1bn over eight years. Despite the generous state contribution to the rail network of nearly £5bn annually, the British farepayer has matched it over the past year - contributing £4.8bn to the upkeep of the railways in 2006.
David Martin, Arriva chief executive, said the company, which also operates the Arriva Trains Wales franchise, was "delighted" with the win.
"The Cross Country network has many existing strengths but our stakeholder research has helped us to pinpoint important areas where we can improve the passenger experience and make the business more efficient," said Mr Martin. "Our proposals and substantial targeted investment will make rail travel more attractive and support growth in passenger numbers by increasing seating capacity."
Virgin Rail Group expressed surprise at the announcement, which came after weeks of rumours that Arriva had usurped Virgin Trains from one of its two rail franchises. Virgin also operates the west coast rail route, but will hand over the Cross Country franchise in November.
Tony Collins, VRG's chief executive, said: "We are understandably extremely disappointed at today's announcement and will be seeking an early meeting with the Department for Transport to understand why we were unsuccessful. Our bid was extremely competitive, built on our experience of operating the Cross Country franchise for the last ten years, during which time we almost doubled the number of passengers and increased performance to regularly exceed 90%."
The Cross Country announcement is the latest disappointment for incumbent franchise operators in recent months.
National Express has lost its foothold in the Midlands after failing to secure the redrawn east Midlands and West Midlands routes, which went to Stagecoach and Go-Ahead respectively. Both announcements were accompanied by the confirmation of sizeable unregulated fare hikes.
National Express also lost the Silverlink franchise recently to a consortium featuring the operator of Hong Kong's underground.
The next franchise announcement, expected imminently, is for the London to Edinburgh route.
Rail minister Tom Harris said: "We have secured an excellent deal with Arriva. Not only are they delivering an even bigger increase in capacity than we asked for, they are doing it a year earlier than expected."