First win Intercity West Coast franchise

[YorkshireRider]

Much the same as in any business enterprise anywhere, then. Nothing there to sway things one way or another, I would have thought.

I take your point but it does show a lack of confidence in their own figures and how much stress testing has gone into the financials of the bid.

 

[Oliver]

Mr O Tooles comments regarding what would happen in 5 years time or lack of them are a bit worrying, kind of admiting cuts in staff may have to happen if things don't go to plan

No-one can look ahead five years with any certainty. It would be more worrying if he had said "nothing can possibly go wrong". He didn't say no-one's job will change, he said (I paraphrase) that with growing numbers of passengers they would need to keep and grow the number of customer-facing staff.

 

[jon0844]

If everyone stopped using trains, EVERY rail operator including Virgin would be buggered and have to lay off staff.

Nobody can predict 5 years from now - yet I doubt usage will fall. Surely not even Virgin would suggest that people won't use the WCML merely because of a change of operator.

 

[Cliveblackpool]

No-one can look ahead five years with any certainty. It would be more worrying if he had said "nothing can possibly go wrong". He didn't say no-one's job will change, he said (I paraphrase) that with growing numbers of passengers they would need to keep and grow the number of customer-facing staff.

A railway should be looking 50 years ahead.
That's why it should be a Nationalized Company.

 

[ainsworth74]

A railway should be looking 50 years ahead.
That's why it should be a Nationalized Company.

So BR of the 1950s was able to indicate what level of staffing it would require in the 2000s?

There are some areas where it's possible to look far ahead particularly when it comes to infrastructure (hence HS2), however, it's I disagree that the railway (even if it was nationalised) can make forecasts on things like what level of staffing it will require fifty years later. What examples are there of BR taking a fifty year view of things?

 

[LNW-GW Joint]

What examples are there of BR taking a fifty year view of things?

Building Bletchley flyover?
Perth marshalling yard?
Closing the GC route?

 

[ainsworth74]

Building Bletchley flyover?

Isn't that the flyover that's barely used , that is only now being thought about for providing services and has been considered something of a white elephant for most of its life?

Perth marshalling yard?

No idea on that one specifically, but in general I do know BR built a lot of brand new marshalling yards as part of the Modernisation Plan, how many are still open and of those that are how many are getting any serious traffic?

Closing the GC route?

I'm unsure how this is an example of BR talking the long view? They closed a lot of railways so were those all examples of BR thinking fifty years ahead?

I don't think any of those three examples are shining beacons of long term planning. Though I'd be interested in hearing your reasoning as to why they are? Just to make sure we're on the same page I'm refuting the contention that BR a) took a fifty year view of the railway and further that b) they were actually successful when they tried to do so. I don't think having a nationalised railway suddenly means we could predict staffing levels fifty years out into the future (which is what I took Cliveblackpool to mean by his suggestion that the railway should be nationalised).

 

[snail]

What examples are there of BR taking a fifty year view of things?

Well, let's go back 50 years. There was a report in 1963 called The Reshaping of British Railways.

What an imaginative, forward-looking document that was... :roll:

 

[jon0844]

Anyone can look forward 5, 10, 20, 50, 100 years and make predictions - but I doubt many are going to be that accurate, especially when technologies that didn't exist at the time totally transform how people operate.

I mean, we're living in an age where - in theory - a lot of us could work from home and teleconference, but it hasn't happened for the most part. People want social contact, and those who do get to work from home probably travel around more for leisure.. and of course, now we have social media bringing everyone closer together, people are travelling far further to meet up with people etc.

Predicting a simple increase in passenger numbers, based on an increasing population, is probably one of the easier things to predict - but beyond that, how much is mere guesswork?

 

[Morgsie]

Well, let's go back 50 years. There was a report in 1963 called The Reshaping of British Railways.

What an imaginative, forward-looking document that was... :roll:

And the 1955 Modernization Plan

 

[LNW-GW Joint]

I don't think any of those three examples are shining beacons of long term planning. Though I'd be interested in hearing your reasoning as to why they are?

Yes sorry, I was being tongue in cheek!
Bletchley looks like being useful after all - serendipitous rather than foresight.
Perth was such a bad investment it was never used.
The GC closure was inevitable at the time (and not really BR's fault), but how useful if would have been today.

I nearly put Crossrail in as an example of a decent 50-year view.
My perception is that it was a late 60s BR idea which will have taken 50 years by the time it comes to fruition in 2018.
However Wiki doesn't give BR the credit for this, describing it as a London/GLC thing. I'm not sure that is right.

 

[jon0844]

What about Thameslink? I think Jesus first mentioned it.

 

[Pen Mill]

Predicting a simple increase in passenger numbers, based on an increasing population, is probably one of the easier things to predict - but beyond that, how much is mere guesswork?

As a former management accountant in a transport company , the answer to that is "nearly all of it".
It's in the future ,how could it be anything else ?

Basically , you strike a baseline which is Today's known volumes,revenues & costs , then build in known factors , build in a few market indicators,energy & materials costs etc. ,build in inflation , build in commercial forecasts , scrap all that and spend the next few weeks trying to talk the CEO out of his fantasy numbers world !!

 

[6Gman]

Yes sorry, I was being tongue in cheek!
Bletchley looks like being useful after all - serendipitous rather than foresight.
Perth was such a bad investment it was never used.
The GC closure was inevitable at the time (and not really BR's fault), but how useful if would have been today.

I nearly put Crossrail in as an example of a decent 50-year view.
My perception is that it was a late 60s BR idea which will have taken 50 years by the time it comes to fruition in 2018.
However Wiki doesn't give BR the credit for this, describing it as a London/GLC thing. I'm not sure that is right.

I'm sure I've got photos of Perth Yard being used! But you're right on the principle - BR made a total hash of predicting the wagonload freight business and built yards that were either not justified, or in the wrong place.

Fiennes is very good on the subject.

 

[Morgsie]

Backbench Business Committee is discussing the e-petition next week

 

[ainsworth74]

Yes sorry, I was being tongue in cheek!

Ahh, sorry my humour sensor was clearly on the blink

 

[HSTEd]

I'm sure I've got photos of Perth Yard being used! But you're right on the principle - BR made a total hash of predicting the wagonload freight business and built yards that were either not justified, or in the wrong place.

Fiennes is very good on the subject.

I thought the reason the yards ended up not being used was the fact that it could not predict being relieved of its common carrier obligations?

It was not that there was no traffic, it was more that the traffic was not economical to carry and thus when they were no longer bound to carry it they stopped.

 

[Erniescooper]

As a former management accountant in a transport company , the answer to that is "nearly all of it".
It's in the future ,how could it be anything else ?

Basically , you strike a baseline which is Today's known volumes,revenues & costs , then build in known factors , build in a few market indicators,energy & materials costs etc. ,build in inflation , build in commercial forecasts , scrap all that and spend the next few weeks trying to talk the CEO out of his fantasy numbers world !!

It seems according Tony Collins at yesterdays TSC meeting that DaFT seem to be the worst at forcasting passenger numbers, they estimated 15 million extra passengers for Virgin during the Olympics and in the end only got a million.

My understanding of that derogation was they had to be identical, which is why the new sets were built with the obsolete entertainment system and then had that removed and Wifi installed once delivered. The word on the street is these baby Pendolinos will be quite different, a fixed coupler for a start, therefore the derogation will not apply.

My understanding as an employee of the company building the train is different.

 

[Stats]

It seems according Tony Collins at yesterdays TSC meeting that DaFT seem to be the worst at forcasting passenger numbers, they estimated 15 million extra passengers for Virgin during the Olympics and in the end only got a million.

It was revenue - According to Virgin DfT forecast £15m benefit to Virgin from the Olympics but it turned out to be £1m benefit. Virgin claimed that the number of passengers DfT forecasted that would be carried on Virgin trains during the Olympics could not be physically fitted on.

 

[EM2]

Virgin's Twitter team seems to think Voyagers will stay (for a while at least):

@virgintrains say they can provide increased service pattern with 21 Baby Pendos replacing 20 Voyagers. How on earth can they manage that?

Hi the new Pendos would be in addition to the Voyagers, which we would move onto other non-electrified routes

Er, Sir Richard said yesterday that you would have a 100% Pendolino fleet...and your recent press releases suggest the same.

Some would be kept for non-electrified lines and phased out later

 

[jon0844]

Once you begin the spin...

Sent from my Nexus 7 using Tapatalk 2

 

[tbtc]

So Virgin write a press release that criticises First for keeping the Voyager fleet, then, erm, admits that they'd have done the same if they won?

 

[IanXC]

Once you begin the spin...

Eventually you get dizzy and fall over?

 

[HH]

Questions that didn't get asked:

To Branson:
If you are taking a 7% profit and First a 5% profit, then would you agree that even if you had bid the same amount of revenue then First would have comfortably won the franchise?

To First:
You say that you are moving average seat occupancy from 35% to 45-50%, an increase of around 50% allowing for your extra trains. Your published figures for growth are a 5.8% CAGR, which is an increase of over 100% in passengers. How do you square these numbers?

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Yes, but faced it with a more realistic bid which had been stressed stress tested for exactly the economic situation that came along.

I find that very hard to believe. Do you have the numbers to prove this claim?

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'Our deliverability scores were close, very close, about 40 to 60' - Thats a 50% score difference!

You misheard. Both scores were in the 60% region. As he said, there was very little difference.

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First have only been able to secure the £190m loan guarentee for three years. Thats a pretty bad banking facility, normally you would have a facility from a consortium of banks that lasted the length of the franchise, Are first having cash troubles?

Another hearing problem. As O'Toole said, these sort of facilities are time-limited. If you have an overdraft facility you should know that.

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Pretty damning, Virgin sent the Dft a list questions and asked for feedback on both theirs and Firsts bids, the only response they have had back is two pages of A4.

This is not only the way it is for all bidders, it is the way it has always been. The winner gets even less. More detailed feedback only comes later, after contracts have been signed.

Not ideal from a bidder's perspective, but I can't recall either him or VT complaining about it previously.

 

[WatcherZero]

these sort of facilities are time-limited. If you have an overdraft facility you should know that.

These facilties for companies are much much longer than 3 years normally, he evaded the question over duration by saying a time limit is normal. My overdraft is upto £1400 with a £5 a month fee if you go over that, it has no time limit and I have had it for 11 years so no idea what you are talking about on that front. However 3 years is a pretty short time frame for example Angel Trains has a 9 year banking facility http://www.angeltrains.co.uk/_common/updateable/documents/79aa6c17-5404-4311-a299-93dfc8097fad.pdf, if they fail to renew it they would have to hand the franchise back.

You misheard. Both scores were in the 60% region. As he said, there was very little difference.

As far as I hear he didnt say percentage, however even if he did 40-60% is still a large difference.

This is not only the way it is for all bidders, it is the way it has always been. The winner gets even less. More detailed feedback only comes later, after contracts have been signed.

First Chairman himself said that Virgin as the loser should have recieved a detailed breakdown of their scoring so that they could decide whether to appeal before the appeal deadline or not, the Appeal route Virgin took was standard and laid down in the tender process the same as First themselves have previously used, when they recieved more detailed information from the Dft on exactly how the scores were reached they accepted the decision. Its also standard to release this information after a 2006 appeal to the Information Commisioner said the Dft had to release financial information about the South West Trains bids and was wrong to argue exemption for financial information. The Government appealed the decision but dropped the appeal. Now who was the runner up on that franchise competition....

 

[wijit]

The bottom line is; Can First can quantify their figures?
Then the same has to be asked of Virgin.
Just from a personal view, I'd have Virgin, but I'll be happy with anyone who can sustain a good service at a reasonable price and on time!

 

[LNW-GW Joint]

So Virgin write a press release that criticises First for keeping the Voyager fleet, then, erm, admits that they'd have done the same if they won?

If you say you'll "keep the Voyagers" after 2016, the Rosco just goes to sleep and cashes in for the next 9 years.
An element of doubt does wonders for competition.

I doubt the bids are framed in quite such absolute terms.
They will probably just talk about number of trains, or just seats, frequencies and journey times.
First haven't committed to new Pendolinos, for instance.

 

[IanXC]

These facilties for companies are much much longer than 3 years normally, he evaded the question over duration by saying a time limit is normal. My overdraft is upto £1400 with a £5 a month fee if you go over that, it has no time limit and I have had it for 11 years so no idea what you are talking about on that front. However 3 years is a pretty short time frame for example Angel Trains has a 9 year banking facility http://www.angeltrains.co.uk/_common/updateable/documents/79aa6c17-5404-4311-a299-93dfc8097fad.pdf, if they fail to renew it they would have to hand the franchise back.

A time limit is normal for all facilities - if your overdraft is not subject to annual review yet, it will be soon! The FSA now requires banks to regularly review the level of facility provided to a customer to ensure the lender is acting responsibly.

For all we know First may have an existing group wide facility which allows for these kinds of new requirements to be added, and that the group wide facility is up for renewal 3 years into the WC franchise.

 

[HH]

These facilties for companies are much much longer than 3 years normally, he evaded the question over duration by saying a time limit is normal. My overdraft is upto £1400 with a £5 a month fee if you go over that, it has no time limit and I have had it for 11 years so no idea what you are talking about on that front. However 3 years is a pretty short time frame for example Angel Trains has a 9 year banking facility

I quote from the Angel document: "The new Senior bank financing comprises a £850m loan with 9 relationship banks, split into a 5-year and 7-year facilities." In any case, Angel is a completely different business, with all loans against fixed assets (the trains). First may also feel that they will get a better deal in three years time. As far as overdrafts are concerned, mine is larger and I've had it for longer. Still, it is for a limited time, it has to be; it just gets automatically renewed if you've been a good boy/girl. You will have been sent notices about this, maybe just a sentence on your bank statement, unless your bank is incompetent; you probably just didn't read them.

As far as I hear he didnt say percentage, however even if he did 40-60% is still a large difference.

Nobody scored 40%. The bid wouldn't be deemed deliverable. As I understand it, First scored over 60%. Please refrain from posting incorrect information.

First Chairman himself said that Virgin as the loser should have recieved a detailed breakdown of their scoring so that they could decide whether to appeal before the appeal deadline or not, the Appeal route Virgin took was standard and laid down in the tender process the same as First themselves have previously used, when they recieved more detailed information from the Dft on exactly how the scores were reached they accepted the decision. Its also standard to release this information after a 2006 appeal to the Information Commisioner said the Dft had to release financial information about the South West Trains bids and was wrong to argue exemption for financial information. The Government appealed the decision but dropped the appeal. Now who was the runner up on that franchise competition....

Once again your post is misleading. What O'Toole said was due was what Virgin, and the other losing bidders, received, which is a breakdown by plan of their scores, and a comparison with the winner (note that the winner doesn't get to see any other bidder's scores, so if anyone was complaining it should be First). They also get a comparison of the value of their premium compared to the winner. This is no different on the ICWC bid than it has been on any other bid for the last 10 years at least.

More detailed information only comes later, as I said, however financial information has already been released into the public domain - the information requested by that appeal was the NPV of the bids of the unsuccessful bidders. There is no way that full financial information will be made available, it is commercially sensitive.

 

[jon0844]

A time limit is normal for all facilities - if your overdraft is not subject to annual review yet, it will be soon! The FSA now requires banks to regularly review the level of facility provided to a customer to ensure the lender is acting responsibly.

I'm with Lloyds and I've had my overdraft (£3,500) for ten years or so. If I log on to my Internet banking account I can see that it is up for review every single year - and I've seen that for as long as I can remember.

Just because it has continued every year without any questions being asked (clearly the bank has its internal scoring system do doesn't need to) doesn't mean that every single year there has been a chance that for whatever reason they opt to reduce/remove it. It could be for other reasons than my credit status, such as a change of policy on overdrafts for all accounts or something.