Grand Union Trains bought by First Group?

[sh24]

Lumo is fairly cheap but more than cheerful. It's a perfectly competent and well run operation, with better standard seating than LNER.

 

[brad465]

Which is a shame as 222s are much needed as XC

There are definitely far better places they should be operating, XC and Scotrail being examples (even if not perfect). A DMU running 100% under wires is poor PR (and will only get worse), so I hope it is only a stop-gap solution.

 

[BlueLeanie]

Open Access is becoming another name for cheap and cheerful. Big shame IMHO.

Why a shame? I want cheap fares and a cheerful service.

If I want to sit in an airport lounge and sip champagne, scoff unlimited pie and mash, sandwiches and cake from the buffet whilst earning 40 tier points each way on BA domestic flight I can plan 11 months ahead, book a business class fare in a sale and do it for £160 return.

Otherwise I want to pay about £50-£75 each way for a domestic train with an M&S simply food handy for the departing station, and somewhere to store a 35*25*55 bag above my seat, and a small rucksack with my lunch and charger at my feet.

 

[CapitalStar378]

Is the point that Grand Union simply don't have the resources to start rail services without the backing that a larger transport company like First Group has? For all we know, Grand Union may have encountered barriers in trying to set up operations, that made their access rights theoretical rather than usable.


Was that approach going to be viable?

How much more are passengers going to be willing to pay for a higher level of on board service? Is your premise that an open access operator would provide better service and affordable fares

I imagine that 5 trains a day which are far superior internally to the competition, and at a good price, would all be full and they'd make a decent income. Especially when the incumbent is a low fare product with prices that don't match.

With Lumo we'll have another low fare product, but I guess at least the pricing should be more sensible. An off peak Pad- Cdf return on GWR is over £98 with very few advance fares available.

Am always going to be disappointed not to have got a good train offer on the south Wales route though, First class is not an option at double the price and a coffee, snack and a sandwich if you're lucky.

The only hope is that GBR improve the 800s at some point in the not too distant future.

 

[swt_passenger]

Which is a shame as 222s are much needed as XC

However there’s never been so much as a whisper of 222s to XC from any official source, has there?
I think regular suggestions made in these forums have no effect on decision making.

 

[The Planner]

There are definitely far better places they should be operating, XC and Scotrail being examples (even if not perfect). A DMU running 100% under wires is poor PR (and will only get worse), so I hope it is only a stop-gap solution.

If its going to get someone from A to B at a significant cost saving, I suspect people will quietly ignore the diesel under the wires bit

 

[BayPaul]

Which is a shame as 222s are much needed as XC

If XC (i.e. the DfT) want them, they should lease them! If they don't lease them, they can't expect them to remain available indefinitely.

 

[Chester1]

However there’s never been so much as a whisper of 222s to XC from any official source, has there?
I think regular suggestions made in these forums have no effect on decision making.

Some people seem to think it does!

The rail media have talked about 222s to ScotRail but that doesn't conflict with some going to Grand Union because 27 units are sufficient to meet both companies needs. It's clear that they are only a temporary solution for First to launch Grand Union and that 80X will take over in the medium term.

 

[Doctor Fegg]

I was under the impression the WSMR service is going to be operated with ex Avanti Alstom class 221s. Alstom will have a fleet of eight class 221s - the balance of the twelve going to XC

Alstom don't own the 221s, Beacon Rail do. Up to them who they lease them to, and maybe there'll be no other takers. But if I had several million pounds of Voyager sitting around, I would be tempted to look for a more realistic prospect than "We are going to make direct trains from Shrewsbury to London pay! It will be different this time, we promise!".

 

[Sly Old Fox]

Open Access is becoming another name for cheap and cheerful. Big shame IMHO.

Cheap and cheerful is what people choose. Time and time again people vote with their bank accounts. Lots of people want more but they won’t pay for it, so companies won’t offer it.

See also BA reducing services in economy.

 

[swt_passenger]

Some people seem to think it does!

The rail media have talked about 222s to ScotRail but that doesn't conflict with some going to Grand Union because 27 units are sufficient to meet both companies needs. It's clear that they are only a temporary solution for First to launch Grand Union and that 80X will take over in the medium term.

Is there any evidence First are going to use the Grand Union brand? I suggest they’ve bought the rights to the services and they won’t be “Grand” anything - if only to avoid confusion with Grand Central.

 

[Snow1964]

Is the point that Grand Union simply don't have the resources to start rail services without the backing that a larger transport company like First Group has? For all we know, Grand Union may have encountered barriers in trying to set up operations, that made their access rights theoretical rather than usable.

Regarding resources, it was a failure of the way privatisation was set up, that leaseco didn't need to keep say 5% of a fleet available for spot hire or month by month hire. So extra trains would be available if required.

There simply isn't any resources unless wait for someone else to offload trains, (and then leaseco often not interested unless commit to multiple years, much longer periods than can test the market). The alternative is new stock (but that means wait of 3+ years and a multi-year commitment that is longer than ORR usually grants open access rights for). So only big groups like First that have multiple open access and can shuffle fleets have a chance to start up a route.

Go-Op is having to effectively take trains from a scrap line as an alternative way of getting rolling stock resources. Workable for local service, but not for bi-mode intercity requirements.
Not exactly encouraging a new entrant.

 

[Chester1]

Is there any evidence First are going to use the Grand Union brand? I suggest they’ve bought the rights to the services and they won’t be “Grand” anything - if only to avoid confusion with Grand Central.

The company is now called First Rail Stirling Limited. In the absence of an announcement over the brand name its easiest to just keep calling it Grand Union.

 

[Adrian1980uk]

Regarding resources, it was a failure of the way privatisation was set up, that leaseco didn't need to keep say 5% of a fleet available for spot hire or month by month hire. So extra trains would be available if required.

There simply isn't any resources unless wait for someone else to offload trains, (and then leaseco often not interested unless commit to multiple years, much longer periods than can test the market). The alternative is new stock (but that means wait of 3+ years and a multi-year commitment that is longer than ORR usually grants open access rights for). So only big groups like First that have multiple open access and can shuffle fleets have a chance to start up a route.

Go-Op is having to effectively take trains from a scrap line as an alternative way of getting rolling stock resources. Workable for local service, but not for bi-mode intercity requirements.
Not exactly encouraging a new entrant.

This is the real problem but if more open access is around there might end up a market for spot lease and ROSCOs Will take advantage.

You've hit the nail on the head though, nothing the ORR in open access or the DfT giving franchises are long enough for returns on investments that the private market is happy with.

 

[Clarence Yard]

Grand Union is definitely not going to be used! The working assumption is currently Lumo. Indeed, the application form (P) for the Paignton service has “First Rail Wales and Western Limited, t/a Lumo” on it.

Lumo is expected to be the brand name for all the “one class” FG OA operations.

 

[coppercapped]

One would assume that the track access payments total less than the fare revenue from the trains being operated, hence the venture being profitable. So it follows that the greater benefit to the ‘nationalised’ railway would in fact be to simply carry those same passengers on its own services, no?

Whilst going back through this thread I noticed that I hadn’t commented on this point and I think I should have done, although the conversation has moved on in the meantime! It looks to me as if you have assumed that the track access payments are the only cost incurred by the train operator. The equation being ‘if fare income is greater than track access payments then the business is profitable’.

As you know there are many other costs incurred in train operation and whether the venture is profitable or not can only be determined after all these costs have been accounted for. The ‘benefit’ for the operator, whether nationalised or private, is the margin (profit) after all these costs have been covered.

These costs cover such items as the wages and salaries of the staff directly employed by the train operator, fuel, maintenance and spare parts, leasing and hire costs, insurances and so on. I am sure that there are others.

There are also the fixed and variable charges levied by the infrastructure owner to allow the trains to run on its network. With some reduction allowed in the first few years of a open access operator starting its services all these charges have to be paid by both private and ‘nationalised’ train operators and in this context the infrastructure owner is already nationalised.

It appears that you make the error of assuming the cost structures of a state-controlled train operator are the same as those of an open access train operator. This is not necessarily true and if the cost base is lower then, for the same income, the margin after all the costs have been paid will be larger.

As for the argument that this margin/profit when paid out is lost to the industry then I can only point out that all payments to staff are ‘lost to the industry’ and these are much, much larger. Unless of course the staff make all their purchases from the ‘company store’ and don’t pay mortgages or rent to anyone other than ‘the railway’…! Or go the Spain on holiday. To give some ideas of the numbers involved, for the financial year 2022-23 total operating income was just over £9,000 million. Staff costs make up more than a third of this and exceed both access charges and rolling stock costs. Total dividends paid by all the franchised operators (excluding those run by the Operator of Last Resort) over this period was £76 million. Dividends made up some 0.8% of the total income.

 

[Chester1]

Grand Union is definitely not going to be used! The working assumption is currently Lumo. Indeed, the application form (P) for the Paignton service has “First Rail Wales and Western Limited, t/a Lumo” on it.

Lumo is expected to be the brand name for all the “one class” FG OA operations.

So is it one class for:

London - Edinburgh / Glasgow
London - Stirling
London - Carmarthen
London - Paignton

Two class:

London - Hull
London - Sheffield

What is the difference in markets with the last two that they can support a first class coach?

 

[philthetube]

Regarding resources, it was a failure of the way privatisation was set up, that leaseco didn't need to keep say 5% of a fleet available for spot hire or month by month hire. So extra trains would be available if required.

There simply isn't any resources unless wait for someone else to offload trains, (and then leaseco often not interested unless commit to multiple years, much longer periods than can test the market). The alternative is new stock (but that means wait of 3+ years and a multi-year commitment that is longer than ORR usually grants open access rights for). So only big groups like First that have multiple open access and can shuffle fleets have a chance to start up a route.

Go-Op is having to effectively take trains from a scrap line as an alternative way of getting rolling stock resources. Workable for local service, but not for bi-mode intercity requirements.
Not exactly encouraging a new entrant.

for this to be done 5% of stock would have had to be withdrawn from service upon privatisation.

 

[Snow1964]

for this to be done 5% of stock would have had to be withdrawn from service upon privatisation.

I was more thinking that the ex BR stock they inherited should not have been 100% scrapped, but some held back in case of potential use or service growth. Held few years as reserve (usable, not in cold storage) Rather than taken out of service when still in use

 

[Clarence Yard]

What is the difference in markets with the last two that they can support a first class coach?

First Class has always been a key part of the HT business plan. They can price in the value of a through journey and the first class service offer and get a good yield from it.

 

[YorkRailFan]

The company is now called First Rail Stirling Limited. In the absence of an announcement over the brand name its easiest to just keep calling it Grand Union.

Does First have the rights to the "Grand Union" name? As I understand it, First has acquired GU's London-Camarthen and London-Stirling rights. But, Grand Union themselves are still pushing ahead with their Cardiff-Edinburgh service.

 

[Chester1]

Does First have the rights to the "Grand Union" name? As I understand it, First has acquired GU's London-Camarthen and London-Stirling rights. But, Grand Union themselves are still pushing ahead with their Cardiff-Edinburgh service.

Probably not. We are in an awkward phase were the old name has been dropped and the intended name isn't widely known and easily confused with the existing Lumo service.

 

[Towers]

Whilst going back through this thread I noticed that I hadn’t commented on this point and I think I should have done, although the conversation has moved on in the meantime! It looks to me as if you have assumed that the track access payments are the only cost incurred by the train operator. The equation being ‘if fare income is greater than track access payments then the business is profitable’.

As you know there are many other costs incurred in train operation and whether the venture is profitable or not can only be determined after all these costs have been accounted for. The ‘benefit’ for the operator, whether nationalised or private, is the margin (profit) after all these costs have been covered.

These costs cover such items as the wages and salaries of the staff directly employed by the train operator, fuel, maintenance and spare parts, leasing and hire costs, insurances and so on. I am sure that there are others.

There are also the fixed and variable charges levied by the infrastructure owner to allow the trains to run on its network. With some reduction allowed in the first few years of a open access operator starting its services all these charges have to be paid by both private and ‘nationalised’ train operators and in this context the infrastructure owner is already nationalised.

It appears that you make the error of assuming the cost structures of a state-controlled train operator are the same as those of an open access train operator. This is not necessarily true and if the cost base is lower then, for the same income, the margin after all the costs have been paid will be larger.

As for the argument that this margin/profit when paid out is lost to the industry then I can only point out that all payments to staff are ‘lost to the industry’ and these are much, much larger. Unless of course the staff make all their purchases from the ‘company store’ and don’t pay mortgages or rent to anyone other than ‘the railway’…! Or go the Spain on holiday. To give some ideas of the numbers involved, for the financial year 2022-23 total operating income was just over £9,000 million. Staff costs make up more than a third of this and exceed both access charges and rolling stock costs. Total dividends paid by all the franchised operators (excluding those run by the Operator of Last Resort) over this period was £76 million. Dividends made up some 0.8% of the total income.

I can only say thank you for such a comprehensive and well informed response!

 

[Masbroughlad]

So will Mr Yeowart have his eyes on other opportunities to set up and sell or will he kick back, put his slippers on and count his money?

I'd like to think he'll look at other options, but somehow, I think he'll call it a day!

 

[Ashley Hill]

Is there a market for that many services to and from Paignton? Out of season these trains are pretty quiet. Will First operate these Lumo services instead of First owned GWR Pad-Paignton services or alongside them in competition with themselves?

 

[JonathanH]

Is there a market for that many services to and from Paignton? Out of season these trains are pretty quiet. Will First operate these Lumo services instead of First owned GWR Pad-Paignton services or alongside them in competition with themselves?

GWR is unlikely to be operated by First Group by the time these services could start.

 

[Ashley Hill]

GWR is unlikely to be operated by First Group by the time these services could start.

I suppose so,it just seems such a random destination to operate such a service. Especially when there’s only a seasonal demand.

 

[Towers]

I suppose so,it just seems such a random destination to operate such a service. Especially when there’s only a seasonal demand.

That’s how OA works though, surely; the desired market will be between Paddington and whatever the intermediate stops are - Exeter will feature, presumably?

 

[signed]

I suppose so,it just seems such a random destination to operate such a service. Especially when there’s only a seasonal demand.

Creating demand that doesn't exist is the goal of OA/Low-Cost airlines, so that's not really surprising

 

[A S Leib]

That’s how OA works though, surely; the desired market will be between Paddington and whatever the intermediate stops are - Exeter will feature, presumably?

I'd hope Taunton as well, given that Salisbury / Waterloo can't be easily used as a cheaper alternative to GWR like it can for Bristol and Exeter. I don't know if that would make it too abstractive.