February 06, 2018

Virgin wins direct-award contract for West Coast Main Line

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Virgin Trains operates services from London to Birmingham, Manchester, Liverpool, Holyhead and Glasgow on the West Coast Main Line. Virgin Trains operates services from London to Birmingham, Manchester, Liverpool, Holyhead and Glasgow on the West Coast Main Line.

BRITAIN’s secretary of state for transport, Mr Chris Grayling, announced in parliament on February 5 that negotiations have been completed with Virgin Trains West Coast, a 51:49 joint venture between Virgin and Stagecoach, for a direct-award contract to continue operating inter-city services on the West Coast Main Line (WCML) for one year from April 1 with an option for a one-year extension.

Stagecoach says passengers will benefit from a package of improvements, including:
• introduction of free WiFi on Pendolino trains
• all ticket machines to offer contactless payment
• improvements to stations and trains
• extra help and improved accessibility for passenger at stations
• better passenger information during disruption, and
• new apprenticeships.

“The contract includes substantial planned premium payments to the Department for Transport (DfT) as well as revenue and profit share arrangements with the DfT,” Stagecoach says. “Virgin Rail Group expects to make a modest profit margin under the franchise.”

Explaining the background to the decision to award the contract, Grayling told parliament: “In December 2016, we set out our plans to award the West Coast Partnership - the franchise that will deliver the first passenger services on HS2. In that announcement, we made clear our intention to agree a short direct award with the incumbent to allow us the time necessary to design the West Coast Partnership.”

In June 2017, the Department for Transport (DfT) shortlisted three bidders for the West Coast Partnership (WCP) franchise to operate inter-city services on the West Coast Main Line from April 2019 and design and run initial High Speed 2 (HS2) services between London and Birmingham from 2026. The bidders comprise First Trenitalia West Coast, a joint venture between MTR Corporation and Guangshen Railway Company, and a joint venture between Stagecoach Group, Virgin Holdings, and French National Railways (SNCF).

Grayling explained the rational for awarding the contract to Virgin Trains West Coast, when the Virgin Trains East Coast franchise faces early termination. “Let me be clear, the East Coast and West Coast franchises should not be confused,” Grayling said. “As with the East Coast, the operator is meeting all its financial obligations, but the West Coast franchise has a completely different corporate structure, where Virgin Trains is the majority shareholder.

“As set out 14 months ago, this is a sensible bridge between the existing contract and the West Coast Partnership – and once that partnership is ready this direct award will cease to exist.

“Virgin has transformed the West Coast from a poorly-performing service requiring a subsidy of over £75 million a year to the franchise with one of the highest passenger satisfaction rates, at 91%, and returning over £200 million per year to the taxpayer.”