James Moore: FirstGroup’s figures aren’t very impressive: check the small print
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Version 0 of 1. FirstGroup’s shares are in demand, and no wonder. The company has just won a four-year £68m extension to its operation of the profitable Great Western line between London and Oxford, Bristol and the West Country. The group, clearly cock-a-hoop, trumpeted the deal in a Stock Exchange announcement full of numbers about how much it intends to invest, and how many new seats it will install for its long-suffering commuters to fight over. They were duly noted by investors, who pushed the price of the shares up anyway because they know who will be the winners from the deal. Clue: it isn’t the passengers. Here’s why: the headline says there will be 16 per cent more seats in and out of London Paddington at peak time. This will be accomplished, I am told by the company, by the introduction of new and longer trains by 1 April 2019, when the franchise comes to an end (although there’s an option for an extra year). The Government, and all those involved in rail franchising, needs First to make a fuss about this. One of the supposed benefits of rail privatisation was that there would be competition for franchises such as this, and that it would lead to improved services. Lots of unhappy commuters crammed into full-to-bursting trains wonder when they’ll see the benefits. First Great Western has received an extension despite generating more complaints about delays on social media than any other operator. And consumer group Which? has First Great Western in a lowly 16th place out of 20 rail operators with a customer score of just 47 per cent. The best of it is, if you cast a jaundiced eye over the numbers First is touting, they’re not anything like as impressive as the company seems to be claiming. In the notes to editors at the bottom of First’s press release, it crows about a 25 per cent increase in passenger numbers since 2006. That is indeed quite an achievement in a period which included the most severe recession since the Wall Street Crash. But with the economy now humming, you’d expect First to be able to at least maintain that, if not increase it. Network Rail, which looks after the tracks, has, for example, been projecting growth in passenger journeys of nearly 20 per cent between 2014 and 2020. That’s nationwide, of course. Within that there will be areas where growth is more sluggish and areas where it’s faster. You’d expect an economically important route into the capital to be in the latter category. In other words, far from relieving the pressure on trains coming into, or heading out of, Paddington, the 16 per cent increase in seats might not even be enough to cope with the growth in passenger numbers on the Great Western line. If you’re stuck on an overcrowded commuter train now, it may well be that you ain’t seen nothing yet. But, hey, at least you’ll be able to surf the net on your iPhone with the free wi-fi that’s promised, while you’re struggling to breathe. |