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Virgin Trains faces competition on east coast mainline Virgin Trains faces competition on east coast mainline
(35 minutes later)
It is 2019, and the view along the east coast mainline is bittersweet for Sir Richard Branson. His Virgin-branded company still owns the rail franchise, won at the third time of trying in two decades.It is 2019, and the view along the east coast mainline is bittersweet for Sir Richard Branson. His Virgin-branded company still owns the rail franchise, won at the third time of trying in two decades.
A brand-new fleet of red trains chugs out dividends for the residents of Necker Island, years after Branson wrested the north’s state-run service from his enemies at the Department for Transport back in 2015. And there – streaking through the sunset, leaving other trains behind – is one of those tilting Pendolinos, the trains he championed in the face of industry scepticism. The flagship service, fitted out like an aeroplane, is racing to Edinburgh in record time. But there is something terribly wrong, the ageing knight realises: another company is operating the train.A brand-new fleet of red trains chugs out dividends for the residents of Necker Island, years after Branson wrested the north’s state-run service from his enemies at the Department for Transport back in 2015. And there – streaking through the sunset, leaving other trains behind – is one of those tilting Pendolinos, the trains he championed in the face of industry scepticism. The flagship service, fitted out like an aeroplane, is racing to Edinburgh in record time. But there is something terribly wrong, the ageing knight realises: another company is operating the train.
Rewind to 2015 and the decision that could make this cold-sweat vision a reality is imminent. After Virgin Trains, a joint venture between Branson and Stagecoach, took over East Coast trains in March, it would be natural to assume all the questions surrounding that turbulent franchise were sewn up. Two failed private operations, followed by five years in public hands, had ended with Virgin outbidding rival FirstGroup to secure the second of the two major north-south rail arteries.Rewind to 2015 and the decision that could make this cold-sweat vision a reality is imminent. After Virgin Trains, a joint venture between Branson and Stagecoach, took over East Coast trains in March, it would be natural to assume all the questions surrounding that turbulent franchise were sewn up. Two failed private operations, followed by five years in public hands, had ended with Virgin outbidding rival FirstGroup to secure the second of the two major north-south rail arteries.
Related: Stagecoach and Virgin joint-venture wins east coast mainline franchiseRelated: Stagecoach and Virgin joint-venture wins east coast mainline franchise
Yet now the industry regulator, the Office of Rail and Road (ORR), is set to give the go-ahead to one of three competing claims for additional services on the line from London to Edinburgh.Yet now the industry regulator, the Office of Rail and Road (ORR), is set to give the go-ahead to one of three competing claims for additional services on the line from London to Edinburgh.
One of these proposals is Virgin’s own plan for more trains, which it sees as the logical extension of its franchise and a key component of its successful bid. The second is an attempt by FirstGroup to muscle back in on the route with a low-fare Edinburgh-London shuttle stopping at Stevenage, Newcastle and Morpeth. And the third is the bold move from Alliance Rail Holdings to revive the GNER brand – which defaulted on the franchise in 2006 – and slash journey times between the English and Scottish capitals to 3hr 43min. This would be half an hour quicker than most trains.One of these proposals is Virgin’s own plan for more trains, which it sees as the logical extension of its franchise and a key component of its successful bid. The second is an attempt by FirstGroup to muscle back in on the route with a low-fare Edinburgh-London shuttle stopping at Stevenage, Newcastle and Morpeth. And the third is the bold move from Alliance Rail Holdings to revive the GNER brand – which defaulted on the franchise in 2006 – and slash journey times between the English and Scottish capitals to 3hr 43min. This would be half an hour quicker than most trains.
The FirstGroup and Alliance services would be run under an “open access” basis, meaning they do not require a contract or franchise agreement with the Department for Transport. To run open access services, operators must prove their plan would benefit the rail network and the country, would not duplicate existing services and would not rob the franchise holder of passengers.The FirstGroup and Alliance services would be run under an “open access” basis, meaning they do not require a contract or franchise agreement with the Department for Transport. To run open access services, operators must prove their plan would benefit the rail network and the country, would not duplicate existing services and would not rob the franchise holder of passengers.
The proposal must add to the overall revenue generated on the route. Given that the rail industry and government has been banging the drum for building a new north-south high-speed rail route by stressing the dearth of capacity on existing tracks, squeezing in more trains might sound a tall order.The proposal must add to the overall revenue generated on the route. Given that the rail industry and government has been banging the drum for building a new north-south high-speed rail route by stressing the dearth of capacity on existing tracks, squeezing in more trains might sound a tall order.
But Alliance, a team of five people based near York railway station, has the experience: it set up Grand Central, which runs trains from London to Bradford and Sunderland. And it has got Network Rail to agree in principle that there is enough room on the east coast line for new services.But Alliance, a team of five people based near York railway station, has the experience: it set up Grand Central, which runs trains from London to Bradford and Sunderland. And it has got Network Rail to agree in principle that there is enough room on the east coast line for new services.
Veteran railwayman Ian Yeowart, the managing director of Alliance, has been developing plans for new open access services on the privatised railway. He said: “The DfT’s whole life is spent trying to make sure no one can find any space on the network.”Veteran railwayman Ian Yeowart, the managing director of Alliance, has been developing plans for new open access services on the privatised railway. He said: “The DfT’s whole life is spent trying to make sure no one can find any space on the network.”
The idea of open access is a remnant of the initial vision for privatisation under John Major’s government, which was swiftly disabused of the notion that the whole railway could run on such a basis. Franchising, critics have long stressed, only really offers competition at the time of bidding, if at all. After that, a franchise owner has an effective monopoly on their route for years. Open access injects more of the free market Conservatives normally espouse, although applications have so far only been approved under a Labour government.The idea of open access is a remnant of the initial vision for privatisation under John Major’s government, which was swiftly disabused of the notion that the whole railway could run on such a basis. Franchising, critics have long stressed, only really offers competition at the time of bidding, if at all. After that, a franchise owner has an effective monopoly on their route for years. Open access injects more of the free market Conservatives normally espouse, although applications have so far only been approved under a Labour government.
The ORR will decide on the east coast applicants next month: well-placed insiders note that capacity is tight, but the regulators are persuaded that open access competition is good for producing lower fares and more services. One said: “Typically, where it exists, passenger satisfaction is higher on both the open access service and the incumbent [franchise holder’s] service.”The ORR will decide on the east coast applicants next month: well-placed insiders note that capacity is tight, but the regulators are persuaded that open access competition is good for producing lower fares and more services. One said: “Typically, where it exists, passenger satisfaction is higher on both the open access service and the incumbent [franchise holder’s] service.”
As well as Grand Central, there is one other highly rated open access service on the east coast line: Hull Trains, operated by First. But these operations focus on offering value fares and direct services from London to towns slightly off the main thoroughfare. The FirstGroup proposal, and particularly Alliance’s blistering Pendolino plan, both seek to outperform the franchise holder squarely on the flagship route. As well as Grand Central, there is one other highly rated open access service on the east coast line: Hull Trains, operated by First. Its focus is offering value fares and direct services from London to towns slightly off the main thoroughfare. The FirstGroup proposal, and particularly Alliance’s blistering Pendolino plan, both seek to outperform the franchise holder squarely on the flagship route.
Clearly, that has implications for Virgin Trains East Coast and the premiums it has promised to pay to the Treasury. It will come down to whether the challengers can demonstrate their plans would not take revenue off Virgin (and by extension, the taxpayer). Clearly, that has implications for Virgin Trains East Coast and the premiums it has promised to pay to the Treasury. It will come down to whether the challengers can demonstrate their plans would not take revenue from Virgin (and by extension, the taxpayer).
Both, though, argue that their plan is to encourage taking people off planes and putting them on trains. FirstGroup wants to run a budget airline-style service, cutting costs with a simple, one-size-fits-all class of travel. Both, though, argue that their plan is to encourage people away from planes and onto trains. FirstGroup wants to run a budget airline-style service, cutting costs with a simple, one-size-fits-all class of travel.
Alliance is planning a variety of classes – including a first class with private pods and seats that turn into the kind of flat beds more commonly found at the front of a transatlantic flight. Yeowart claims even these will be priced lower than the current walkup first class fare on East Coast. Alliance is planning a variety of classes – including first class with private pods and seats that turn into the kind of flat beds more commonly found at the front of a transatlantic flight. Yeowart claims even these will be cheaper than East Coast’s current last-minute first-class fare.
Virgin, which apparently considered using the Pendolino trains that run on its west coast franchise, is quietly sceptical that the line can accommodate the trains without huge investment in upgrading the track.Virgin, which apparently considered using the Pendolino trains that run on its west coast franchise, is quietly sceptical that the line can accommodate the trains without huge investment in upgrading the track.
Related: First Virgin Trains East Coast service leaves LondonRelated: First Virgin Trains East Coast service leaves London
But Alliance – now a subsidiary of Arriva, owned by German giant Deutsche Bahn – says it is prepared to stump up £300m of its money to see it work. Yeowart says that the trains would run faster than the 3hr 45min high speed rail planners said would convince people to take the train rather than the plane across Britain. That means Alliance can offer a version of the north-south HS2 rail project. “This is an opportunity for the taxpayer to get the benefits of HS2 without spending any money,” Yeowart said. But Alliance – now a subsidiary of Arriva, owned by German giant Deutsche Bahn – says it is prepared to stump up £300m of its money to see it work. Yeowart says that the trains would run faster than the 3hr 45min high-speed rail planners said would convince people to take a train rather than a plane across Britain. That means Alliance can offer a version of the north-south HS2 rail project. “This is an opportunity for the taxpayer to get the benefits of HS2 without spending any money,” Yeowart said.
While the official Branson ethos has always been pro-competition, Virgin has reservations about the rival proposals. A Virgin Trains East Coast spokesman said: “Our plans would enable us to introduce hundreds of extra services per week, make millions more seats available and create many faster journey times and better connectivity across the UK, including serving new or emerging markets such as Harrogate, Middlesbrough, Bradford and Lincoln. We do not believe the open access proposals would be compatible with our significant timetable enhancements and the delivery of the full programme of planned customer and community benefits which has been agreed with the DfT.”While the official Branson ethos has always been pro-competition, Virgin has reservations about the rival proposals. A Virgin Trains East Coast spokesman said: “Our plans would enable us to introduce hundreds of extra services per week, make millions more seats available and create many faster journey times and better connectivity across the UK, including serving new or emerging markets such as Harrogate, Middlesbrough, Bradford and Lincoln. We do not believe the open access proposals would be compatible with our significant timetable enhancements and the delivery of the full programme of planned customer and community benefits which has been agreed with the DfT.”
Yeowart, who is also competing with Virgin over the west coast London to Blackpool line, said: “It’s difficult for Virgin. In most markets they’re the little guy, arguing for competition. In this they’re the big guy.”Yeowart, who is also competing with Virgin over the west coast London to Blackpool line, said: “It’s difficult for Virgin. In most markets they’re the little guy, arguing for competition. In this they’re the big guy.”
As recent franchising showdowns have proved, the Branson-Stagecoach combination is a formidable opponent, after reversing the DfT’s decision to strip it of the west coast contract in 2012. But Yeowart remains hopeful the regulator will plump for his ambitious plan: “It would be the fastest ever train between London and Scotland, at no cost to the taxpayer, promoting competition – in a normal world, what’s the problem?”As recent franchising showdowns have proved, the Branson-Stagecoach combination is a formidable opponent, after reversing the DfT’s decision to strip it of the west coast contract in 2012. But Yeowart remains hopeful the regulator will plump for his ambitious plan: “It would be the fastest ever train between London and Scotland, at no cost to the taxpayer, promoting competition – in a normal world, what’s the problem?”