Heads up, this is a long post. Read time somewhere in the region of under 10 minutes. Sorry about that!
The more I think about this, the more respect for Virgin I gain about this particular venture. Whilst I'm not a Virgin fan boy or anything close to it, there's so many layers to what has just happened today and I think this is a game changer for the rail market. It's a massive political statement and also an attack on other West Coast operators. The main weapon they've used here is purely data and knowledge they've gained in 20 years.
I can't help but think of a more cynical plot behind this, but I could honestly be reading between the lines too much. If we look at this in detail in how they managed to potentially create this service and also what their motives are:
- They're in it for the long run, and no matter how many attempts you try to get rid of them from the West Coast they'll use any means possible to use this iconic and flagship line to continue making a profit in the Virgin Rail Group business.
- This is also a political statement to the DfT and trying to prove that their proposal for 'airline style' travelling experience (with compulsory reservations, no walk-on passengers) works that they submitted to the ORR a few weeks ago. This OA service effectively acts as a test-bed, and if this does work, they'll try push this agenda onto any future franchises they accumulate through the DfT - however short or long away that is.
- From running the franchise for 20 years they know that London to Liverpool has had insufficient capacity in recent times. Up until the latest timetable change, such a big city and region was only being serviced by 1 train an hour. They knew there was untapped demand and that running a service to Liverpool would make a killing in terms of revenue. I'm interested to see whether this demand will be sufficiently met as this new, current timetable has brought a new 1.5 trains an hour (very complex timetable introduced by WMT) going direct from London to Liverpool at £12 advance singles. The obvious advantage here is that Virgin has the direct route to Liverpool and won't go via Birmingham.
- However, this is also interesting because they've made a pledge to be the cheapest service in the market by at least 10% against all other operators. This means going from London to Liverpool is going to have to cost £10.80 on advance tickets if they want to compete with West Midlands Trains. I imagine this price for obvious reasons would work well and could sell like hot cakes, but will this cover the cost of operation? Will their supply meet demand?
- This is also another jab at West Midlands Trains, who are obviously their cheap and cheerful rivals and have been for 12 years. The two of them have been on political warfare for the past decade trying to compete with each other. They've seen immense success on their Trent Valley service and are taking measures to add capacity where possible (8-car trains instead of 4-cars, and rumours of a new Northampton to Crewe via Trent Valley service to make 2tph along the Trent Valley). This means demand is outweighing supply here and that Virgin Trains could effectively provide the shortfall in supply at a competitive price if they want price-savvy customers to take them seriously.
- They also have a strong hunch here that the application will be successful. The stations were chosen very carefully in this application. This is partially knowledge not just gained in-house, but also the fact that the original GNWR application from London to Blackpool North originally proposed calling at Nuneaton, Tamworth and Lichfield Trent Valley in 2015. This was approved by the ORR. However this fell through as they weren't able to source the stock needed to operate the service in time. When they did, it wasn't the anticipated 125mph stock and instead stock that was limited to 110mph. To compensate for the shortfall in speed and to maintain a competitive journey time they cut out the stops at Tamworth and Lichfield Trent Valley. Virgin know that it *should* be a shoe-in to get ORR approval for services to stop at Tamworth and Lichfield Trent Valley and pass the revenue abstraction on that front.
- The stations chosen also were carefully done to try and pass revenue abstraction too. Stopping at the likes of Milton Keynes or Crewe, whilst popular interchange stations, are probably nearly guaranteed to fail here. West Midlands Trains operates 3 trains an hour in and out of Crewe, of which two continue to London and Liverpool and Northern, albeit an indirect service, also operates 1 train an hour to Liverpool Lime Street. The WCP franchise holder will also have trains that stop at Crewe going to Liverpool and London. Nuneaton, Tamworth and Lichfield Trent Valley don't have a 'direct' service to Liverpool Lime Street outside of the peaks, although you can buy cheap advances (and even day returns) to go Liverpool from these stations. The inclusion of a Liverpool South Parkway call can act as an advocate for better connections to London and the Trent Valley (for which there is a 4h direct service to London or no direct service to the Trent Valley).
Milton Keynes is also to be serviced by the revised GNWR service and therefore would become a) more difficult to stay competitive whilst making a profit as there would be four providers from London. This could cause a loss to the OA service if they stop here at Milton Keynes. b) overkill, quite frankly. Supply is exceeding demand here.
- Alstom were included in this bid because they have a maintenance facility in London which is where I am presuming these trains will be maintained. They may also be able to supply some existing trains (class 180s anyone? ) and overhaul / maintain them for the first few years before swapping out to class 390s post-HS2. Given their good relationship in supplying and maintaining the Pendolino trains and also more recently during the rocky times helping out on the Southeastern bid, this is their way of retaliating and trying to cash in on the UK rail business. This will also help reduce the overhead costs when setting up this business, which is what may allow them to get away with making claims such as '10% cheaper than our competitors'.
Lots of political and brave business moves made here and it's actually very interesting to watch. I still maintain that it's unrealistic to see this launch in 2021 with the lack of capacity and suitable rolling stock but I genuinely am interested in seeing how this pans out and will listen closely to any developments made.