Jozhua
Established Member
- Joined
- 6 Jan 2019
- Messages
- 1,859
So considering Northern has recently fallen into public hands, alongside LNER, I wonder whether companies will continue to bid for future franchises. Scotrail under Abellio is also having it's franchise stripped early, in 2022.
The tender for EMR ended up resulting in one bidder and was handed by default to Abellio, due to a refusal of Stagecoach to accept pension liabilities.
Franchises are becoming a riskier venture and more recent ones have struggled to make money. Arriva claims to have not profited from the duration of the Northern franchise, although I'm unsure if this is 100% true. Scotrail also lost around £10m over a 15 month period.
I wonder whether the fact bidders will be becoming fewer and further between is pushing the government to review the franchise system entirely. I highly doubt any company would bid for the Northern franchise as is.
As I can tell, the following reasons make franchises untenable:
The tender for EMR ended up resulting in one bidder and was handed by default to Abellio, due to a refusal of Stagecoach to accept pension liabilities.
Franchises are becoming a riskier venture and more recent ones have struggled to make money. Arriva claims to have not profited from the duration of the Northern franchise, although I'm unsure if this is 100% true. Scotrail also lost around £10m over a 15 month period.
I wonder whether the fact bidders will be becoming fewer and further between is pushing the government to review the franchise system entirely. I highly doubt any company would bid for the Northern franchise as is.
As I can tell, the following reasons make franchises untenable:
- DfT cannot be relied on to deliver planned infrastructure improvements, needed for service improvements specified in franchise contract.
- Businesses refuse to take on pension liabilities.
- Franchise tenders requiring DOO will cause almost immediate problems with unions and workers.
- Subsidies are reduced significantly, or the DfT expects to see quite high re-payments. Higher passenger numbers have to be dealt with on the same operational budgets.