First win Intercity West Coast franchise

Wolfie · 16 Aug 2012

DarloRich said:
The number of people taken in by the spin, media and PR management from Virgin is frankly incredible (yes that is quite a few of you on here!)

Well the City agree - First's share price plummeted 6% when the details of their bid were released. It seems the bid is based on massively optimistic estimates about future passenger number rises - echoes of the ECML anyone - but don't believe me, see the press eg:

http://www.whatinvestment.co.uk/tra...ast-win-risks-almost-certain-bankruptcy.thtml

RailUK Forums

Wath Yard · 16 Aug 2012

FirstGroup's shares have risen today, so perhaps after reflection and the hype dying down investors have decided it isn't such a bad bid. Or perhaps you simply can't tell anything at all by the movement of a share price over 1 day, especially when it has increased significantly since all the rumours of First winning emerged.

dvboy · 16 Aug 2012

Simon Calder of the Independent has worked out that First's first service on 9 December will be the 08:05 from Wolverhampton to London Euston.

Is he right?

387star · 16 Aug 2012

So at Preston station all you will see will be blue, purple and lilac

jon0844 · 16 Aug 2012

First seem to like challenging franchises, like FCC and FGW, which should mean they can do as good a job as anyone. Gone are the days of seeing them as a bus company as they're probably better at trains first, buses second.

Virgin wants an easy ride so should go for the c2c franchise if it wants to have a no-hassle gig in the future.

PR1Berske · 16 Aug 2012

ml said:
So at Preston station all you will see will be blue, purple and lilac

Well indeed, though don't discount an errant MerseyRail unit in bright yellow every now and then, they have been known.

hairyhandedfool · 16 Aug 2012

mallard said:
....Also, am I right in thinking that once First repaint the WC fleet, the only trains still in their original liveries will be Desiros (SWT/TPE/ScotRail), 172s, 379s and 395s?

Southern 171s? FCC 377s? GatEx 460s? Have all the c2c 357/2s been repainted? Didn't some Southern 377s arrive in Southern livery?

Lampshade · 16 Aug 2012

PR1Berske said:
Well indeed, though don't discount an errant MerseyRail unit in bright yellow every now and then, they have been known.

The Royal Mail 325s run through every now and again.

Pen Mill · 16 Aug 2012

35% utilisation

I've not been able to respond to all the replies on this but thanks for them, lots of good argument there even if I don't agree with all of it.

Where I was coming from was this :-when I saw the 35% figure I was completely gob-smacked . 3 trains for every one trainload of passengers , that's one heck of an expensive system !
I applaud First for pinpointing this for action , obviously to their benefit but for the public's too.
I think there has to be an awful lot of critical mass analysis to determine which services within the mix are being severely subsidised and there must be a good number and then take action from there.
First have also said that they are going to increase their publicity budget 10 fold and I hope this has an effect . I don't see mountains of would be additional passengers just waiting to jump on trains though.

I was involved on quotation & presentation teams for many years in the road haulage industry and realise just how important utilisation is for improving profitability.
If I'd told my boss that vehicle utilisation was 35% , he'd have "shot the messenger" IE me , there & then !

I'm surprised that the general consensus seems to be that the number is ok . I'd be interested to see how FGW or EC compares with this because it was a real eye opener for me.

Old Yard Dog · 16 Aug 2012

I won't be sad to see Virgin go.

When they first won the franchise, Richard Branson promised to bring airline service to his railway. I wrote back suggesting he should bring railway service to his airline instead.

In recent years we have seen

* customer hostile ticketing policies with the peak period lengthening year on year and inspectors who "fine" people hundreds of pounds for innocent mistakes

* a TOC which tells people not to travel with heavy luggage because there isn't space

* a TOC which doesn't operate late night trains from Euston

* claustrophobic Pendolinos introduced with tiny little windows and sloping sides which cut into your shoulder

* through services axed to destinations like Blackpool off the main line

* useless timetable leaflets which deny the existence of other operators or connecting services

* a serious reduction in the quality of the complimentary catering in first class, particularly off peak

* trains to the north-west crowded out by Milton Keynes commuters

* no direct connecting services (rail or road) from the WCML to Heathrow Airport and poorer connections to Gatwick

junglejames · 16 Aug 2012

SF-02 said:
The DfT have never looked favourable on one company owning too many big franchises whether a company makes the shortlist or not. It's risky, and if First do fail on west coast it would put other franchises in jeopardy too. Better to avoid such sticky situations. And it's unlikely First will go all out on West Coast now they are over-extending themselves (according to many) on west coast. Another high premium bid could kill the share price so they'd be tempted to go conservative. Good reason for the DfT to pick one of the others even if their plans could be terrible for the franchise.

If First fail on a franchise or 2, then DOR take over. The DFT arent going to worry if First go tits up. They just take over the franchise. So I still cant see that as a reason. Id stil back First group from GW. By all accounts, since the change in management, they have done a very good job. Plus right now, First are obviously a prefered choice.
You could be right, but I still dont think it makes a difference. I expect First to win FGW again.

MK Tom · 16 Aug 2012

Old Yard Dog said:
I won't be sad to see Virgin go.

When they first won the franchise, Richard Branson promised to bring airline service to his railway. I wrote back suggesting he should bring railway service to his airline instead.

In recent years we have seen

* customer hostile ticketing policies with the peak period lengthening year on year and inspectors who "fine" people hundreds of pounds for innocent mistakes

* a TOC which tells people not to travel with heavy luggage because there isn't space

* a TOC which doesn't operate late night trains from Euston

* claustrophobic Pendolinos introduced with tiny little windows and sloping sides which cut into your shoulder

* through services axed to destinations like Blackpool off the main line

* useless timetable leaflets which deny the existence of other operators or connecting services

* a serious reduction in the quality of the complimentary catering in first class, particularly off peak

* trains to the north-west crowded out by Milton Keynes commuters

* no direct connecting services (rail or road) from the WCML to Heathrow Airport and poorer connections to Gatwick

Pretty much agree with all of this, except I'd say trains from Milton Keynes sacrificed for north-west commuters. Something First are promising to address.

My sole concern about First winning is their financial situation. I don't have confidence that they can keep their heads above the water with their current debt and poor shareholder confidence. But if they can, then I think they'll do a much better job with the franchise than Virgin did. Virgin had great goals and the WCML upgrade has been an excellent thing and I have respect for that and I have respect for Branson and Virgin Group in other areas, but my WCML experience has definitely deteriorated since Intercity days in terms of comfort, timekeeping and service to MK (especially connections from here to the north).

snail · 16 Aug 2012

Old Yard Dog said:
In recent years we have seen

* customer hostile ticketing policies with the peak period lengthening year on year and inspectors who "fine" people hundreds of pounds for innocent mistakes

* a TOC which tells people not to travel with heavy luggage because there isn't space

* a TOC which doesn't operate late night trains from Euston

* claustrophobic Pendolinos introduced with tiny little windows and sloping sides which cut into your shoulder

* through services axed to destinations like Blackpool off the main line

* useless timetable leaflets which deny the existence of other operators or connecting services

* a serious reduction in the quality of the complimentary catering in first class, particularly off peak

* trains to the north-west crowded out by Milton Keynes commuters

* no direct connecting services (rail or road) from the WCML to Heathrow Airport and poorer connections to Gatwick

How much are you expecting First to change? Their attitude to ticketing seems much more severe than Virgin and the Pendos are staying - if anything we are getting more of them. You may get a late train or two and a service to Blackpool but don't expect much else.

Were the Pendos a Virgin idea, or were SRA/DfT involved? I know the '106 extra carriages' touted as an improvement are nothing to do with First.

387star · 16 Aug 2012

Will First keep the low density carriage in the 221s and will it make use of the two unused coaches

WatcherZero · 16 Aug 2012

Pen Mill said:
35% utilisation

I've not been able to respond to all the replies on this but thanks for them, lots of good argument there even if I don't agree with all of it.

Where I was coming from was this :-when I saw the 35% figure I was completely gob-smacked . 3 trains for every one trainload of passengers , that's one heck of an expensive system !
I applaud First for pinpointing this for action , obviously to their benefit but for the public's too.
I think there has to be an awful lot of critical mass analysis to determine which services within the mix are being severely subsidised and there must be a good number and then take action from there.
First have also said that they are going to increase their publicity budget 10 fold and I hope this has an effect . I don't see mountains of would be additional passengers just waiting to jump on trains though.

I was involved on quotation & presentation teams for many years in the road haulage industry and realise just how important utilisation is for improving profitability.
If I'd told my boss that vehicle utilisation was 35% , he'd have "shot the messenger" IE me , there & then !

I'm surprised that the general consensus seems to be that the number is ok . I'd be interested to see how FGW or EC compares with this because it was a real eye opener for me.

No ones bothered because its not an unreasonable figure. As pointed out British Rail averaged 36%. 20% of more of the trains capacity would be standing and you dont want people standing all the way from London to Edinburgh do you? So say 80% is the maximum comfortable loading, you cant have that at every single station. If a train set off from the first station with an 80% loading there would be no room for other passengers to board at later stations. At every station you will have people getting on and getting off but the peak loading should occur around the midpoint of the journey.

The WCML RUS has a breakdown of train loadings at each station on the journey and you could get a better understanding of how demand ebbs and flows along the route. The only alternative of course if you wanted 100% loading at all points would be to vary the length of the train at every station. The loadings peak demand will vary a lot on the route based on the area it passes through but for a simpler basis look at a commuter service:

Station 1 10% loading
Station 2 20% loading
Station 3 50% loading
Station 4 70% loading
Station 5 terminate

Now the peak loading is 70% but the average loading is just 37.5%, you could try and attract more passenger between say station 1 and station 3 to boost the average loading but if you blanket lowered fares and got a load more people trying to get to station 5 then it would become overcrowded.

MidnightFlyer · 16 Aug 2012

Old Yard Dog said:
* customer hostile ticketing policies with the peak period lengthening year on year and inspectors who "fine" people hundreds of pounds for innocent mistakes

* a TOC which tells people not to travel with heavy luggage because there isn't space

* claustrophobic Pendolinos introduced with tiny little windows and sloping sides which cut into your shoulder

* useless timetable leaflets which deny the existence of other operators or connecting services

* no direct connecting services (rail or road) from the WCML to Heathrow Airport and poorer connections to Gatwick

In defence of these, in order:

- Which makes sense, the amount of people you see moving house (literally!) by train is unreal, unlike EC and FGW et al they don't have the luxury of a massive dedicated luggage van, though TBF the provision in carriages is quite poor.

- The small windows which I believe played a massive part in the Lambrigg crash not being more serious, I dread to think how many would have perished if the windows were the size they are on say HSTs, that and the seats I think saved a good few lives.

- As don't, for example, East Coast, CrossCountry (apart from EMT services via Oakham, all 3 a day of them). However London Midland's 1 timetable shows every service (VT or LM or Southern) that calls at Watford Jn, MKC and Rugby and stations to New St and Crewe / Stoke, meaning Virgin doesn't have to. I think this is fairer actually, as the majority of their passengers (Virgin) are heading further north and don't really care about local trains in the south.

- The dedicated bus from Watford Jn to Heathrow was stopped in 2009 I seem to recall, it was literally carrying fresh air and three people in its last months. The direct Gatwick service from Watford Jn ended in 2009, replaced by a MKC-South Croydon train. It was removed from the XC network after Virgin years there, it went under Arriva.

Pen Mill · 16 Aug 2012

WatcherZero said:
No ones bothered because its not an unreasonable figure.

You miss my point entirely , First don't think it's reasonable and see it as a prime target for growth :-
Their words not mine

Significant growth potential from a unique railway
Significant opportunity to drive further growth through more rolling stock, new services, marketing and improved yield management
A unique and strong position fully rebuilt mainline with substantial capacity
Has received £9bn of Government investment to increase capacity and network reliability
Introduction of complete train fleet replacement in 2004 with 570 new vehicles
106 new Pendolinocarriages in 2012 creating 28,000 extra seats
Seat occupancy only 35% following this capacity increase.
Franchise achieved revenue CAGR of 10.2% over last 10 years despite limited incentive from revenue share/support in the 5 years to March 2012
Marketing spend to increase tenfold >£20m per annum (versus recent spend)
6

WatcherZero · 16 Aug 2012

Pen Mill said:
You miss my point entirely , First don't think it's reasonable and see it as a prime target for growth :-
Their words not mine

Significant growth potential from a unique railway
•Significant opportunity to drive further growth through more rolling stock, new services, marketing and improved yield management
•A unique and strong position –fully rebuilt mainline with substantial capacity
–Has received £9bn of Government investment to increase capacity and network reliability
–Introduction of complete train fleet replacement in 2004 with 570 new vehicles
–106 new Pendolinocarriages in 2012 creating 28,000 extra seats
–Seat occupancy only 35% following this capacity increase.
•Franchise achieved revenue CAGR of 10.2% over last 10 years –despite limited incentive from revenue share/support in the 5 years to March 2012
•Marketing spend to increase tenfold >£20m per annum (versus recent spend)
6

Their claiming they can get a 10.4% increase in revenue every year, its not that realistic just spin to make their bid look good. I bet you every bidder said the same thing. At that rate the trains would be full by 2016 and they would have to be raising fares 10% a year in every year after that to meet their franchise payments.

Go back and read my post again and try and wrap your head around the concept.

Badger · 16 Aug 2012

On the pendelinos having sloped sides, it's a tilting train. Any TOC which introduced tilting trains would have sloping sides. Can't fault Virgin on things like that.

Zoe · 16 Aug 2012

Badger said:
On the pendelinos having sloped sides, it's a tilting train. Any TOC which introduced tilting trains would have sloping sides. Can't fault Virgin on things like that.

Indeed, the mark 4 coaches are tilt profile and I don't see many people complaining about that.

Pen Mill · 16 Aug 2012

WatcherZero said:
Go back and read my post again and try and wrap your head around the concept.

I never had any problem with that concept . However there are massive management opportunities there to drive more through the equipment and I mean CAPITAL massive .
These figures may be acceptable on off peak commuter services where many trips a day are possible but on long distance journeys EG London-Glasgow where you may get 3 single trips from a set in a day they would be a disaster, I think , in fact I don't think you would do it unless the Dft said so and even then I'd challenge their thinking.

tbtc · 16 Aug 2012

Wath Yard said:
Many people also state that Virgin is the best service they travel on

The impressive thing is how people still think this when the performance figures have been pretty poor for a long time (despite the brand new fleet and the WCML upgrade - compared to other longer distance TOCs running 1970s trains on lines that haven't had the money thrown at them that the WCML has over the past decade).

Pen Mill said:
35% utilisation

I've not been able to respond to all the replies on this but thanks for them, lots of good argument there even if I don't agree with all of it.

Where I was coming from was this :-when I saw the 35% figure I was completely gob-smacked . 3 trains for every one trainload of passengers , that's one heck of an expensive system !
I applaud First for pinpointing this for action , obviously to their benefit but for the public's too.
I think there has to be an awful lot of critical mass analysis to determine which services within the mix are being severely subsidised and there must be a good number and then take action from there.
First have also said that they are going to increase their publicity budget 10 fold and I hope this has an effect . I don't see mountains of would be additional passengers just waiting to jump on trains though.

I was involved on quotation & presentation teams for many years in the road haulage industry and realise just how important utilisation is for improving profitability.
If I'd told my boss that vehicle utilisation was 35% , he'd have "shot the messenger" IE me , there & then !

I'm surprised that the general consensus seems to be that the number is ok . I'd be interested to see how FGW or EC compares with this because it was a real eye opener for me.

Two points to make here - hotel rooms have an occupancy rate of something like 70%, most things in life have spare capacity to deal with the busiest days. The problem is that you need to try to provide a balance between meeting the peak demand and not having silly overcapacity at other times (twelve coach EMUs on off peak Network South East services).

But secondly, and more importantly, trains fill up and empty over a journey. The same seat might see someone from London heading to Coventry and then a local journey from Birmingham to Wolverhampton. Or one full priced Manchester - London ticket might "pay" for that seat to be empty on the next northbound service (compared to an advanced ticket south and an advanced ticket north). To sell all the "spare" seats might involve having to sell a lot of strange times (like encouraging people to leave London early in the morning) or over fairly "odd" (e.g. if you have a service busy from London to Milton Keynes and busy from Stoke to Manchester then are you going to sell many cheap tickets from Milton Keynes to Stoke to plug the "gap"? Or Stafford to Runcorn tickets on the "quiet" middle part of the London - Liverpool service?

Pen Mill · 16 Aug 2012

tbtc said:
The impressive thing is how people still think this when the performance figures have been pretty poor for a long time (despite the brand new fleet and the WCML upgrade - compared to other longer distance TOCs running 1970s trains on lines that haven't had the money thrown at them that the WCML has over the past decade).

Two points to make here - hotel rooms have an occupancy rate of something like 70%, most things in life have spare capacity to deal with the busiest days. The problem is that you need to try to provide a balance between meeting the peak demand and not having silly overcapacity at other times (twelve coach EMUs on off peak Network South East services).

But secondly, and more importantly, trains fill up and empty over a journey. The same seat might see someone from London heading to Coventry and then a local journey from Birmingham to Wolverhampton. Or one full priced Manchester - London ticket might "pay" for that seat to be empty on the next northbound service (compared to an advanced ticket south and an advanced ticket north). To sell all the "spare" seats might involve having to sell a lot of strange times (like encouraging people to leave London early in the morning) or over fairly "odd" (e.g. if you have a service busy from London to Milton Keynes and busy from Stoke to Manchester then are you going to sell many cheap tickets from Milton Keynes to Stoke to plug the "gap"? Or Stafford to Runcorn tickets on the "quiet" middle part of the London - Liverpool service?

So what is "normal" or "good" seat occupancy ?

Mr Watcher Zero , the 10.4% to which First refer has run at 10.2% under Virgin for 10 years according to First's document so not only is it reasonable , nothing less would be acceptable.

RichmondCommu · 16 Aug 2012

tbtc said:
The impressive thing is how people still think this when the performance figures have been pretty poor for a long time (despite the brand new fleet and the WCML upgrade - compared to other longer distance TOCs running 1970s trains on lines that haven't had the money thrown at them that the WCML has over the past decade).

But surely much of that has to be down to Network Rail? I can't recall the last time a Virgin train which I intended to catch was cancelled.

Failed Unit · 16 Aug 2012

RichmondCommu said:
But surely much of that has to be down to Network Rail? I can't recall the last time a Virgin train which I intended to catch was cancelled.

It happens of course, but both the ECML and WCML most of the problems are down to network rail.

I haven't gone through all the post here, but I remember people saying the First had made a massive mistake with Great Western, the franchise wouldn't work, etc, etc. I know the DFT cutback on the rolling stock helped the get a better deal once this had to be reversed but FGW hasn't dragged them under.

It will be nice to see the stations actaully get some investment!

But as for Virgin won't miss them lets hope the improvements come along. But it certainly is a big gamble.

HH · 16 Aug 2012

WatcherZero said:
Their claiming they can get a 10.4% increase in revenue every year, its not that realistic just spin to make their bid look good. I bet you every bidder said the same thing. At that rate the trains would be full by 2016 and they would have to be raising fares 10% a year in every year after that to meet their franchise payments.

That is just not true. Virgin came second and bid 8.5%. Other bidders must have been lower still (from my reading Virgin didn't take out much cost, so they could only have been second on revenue).

According to First's figures 5.8% p.a. comes from growth and 1.7% from increased "yield", which is revenue protection, yield management and new products. That leaves 2.9% which must be from price rises, and that will be net of lost custom. In the long run then prices will go up roughly in line with inflation - the 15% taken out on Anytime fares (and first class from Tim O'Toole said on the radio) is probably offset by DfT-specified, over RPI increases on regulated fares.

The key figure here is the 5.8%. Although Virgin hasn't given the breakdown of their 8.5%, I've spoken to a revenue expert from a rival bid. They regard the number as very racy, especially given that First have not promised much investment. Only time will tell, but there may be a clue in a story in today's City AM - First have apparently stated that their exposure is £265m maximum.

tbtc · 16 Aug 2012

Pen Mill said:
So what is "normal" or "good" seat occupancy ?

By the sounds of it, things are little changed since BR days. My understanding was that yield management had helped, but then Virgin do have a lot of First Class seats empty for much of the day that must skew their "occupancy" figures a little.

Presumably figures for "local" TOCs are higher, since routes are shorter and they can shorten trains off-peak.

but TOCs are obviously very reluctant to publish these kind of figures.

RichmondCommu said:
But surely much of that has to be down to Network Rail? I can't recall the last time a Virgin train which I intended to catch was cancelled.

True, but there have been plenty of infrastructure problems on other big routes (like the ECML wires). I'd have expected Virgin (with new trains and upgraded WCML) to have much better figures than East Coast/ FGW for long distance trains

HH · 16 Aug 2012

Failed Unit said:
It will be nice to see the stations actaully get some investment!

You obviously missed my earlier post. First have taken over NR's maintenance/renewal responsibilities on this franchise, which means that their £28m investment isn't very much at all. I've been told that nearly £20m of it was earmarked by NR for two large renewals, and there must be a host of smaller amounts. My reading is that over 15 years there's not a great deal going to change except for the addition of 21 new gatelines...

junglejames · 16 Aug 2012

Zoe said:
Indeed, the mark 4 coaches are tilt profile and I don't see many people complaining about that.

Thats because Mk4s are fine.
The problem with Pendys isnt the tilt profile. Itrs the fact they are EMUs, and the fact they are aluminium. Thats what causes the cramped interior.

HH · 16 Aug 2012

tbtc said:
True, but there have been plenty of infrastructure problems on other big routes (like the ECML wires). I'd have expected Virgin (with new trains and upgraded WCML) to have much better figures than East Coast/ FGW for long distance trains

I agree. Virgin's figures are not very good at all considering the new infrastructure, the new trains, that they pay for union peace, and the fact that every light gets turned to green. They prefer to spend the money on marketing, and it seems to work for them...
--- old post above --- --- new post below ---

RichmondCommu said:
But surely much of that has to be down to Network Rail? I can't recall the last time a Virgin train which I intended to catch was cancelled.

Train maintenance is carried out by the manufacturer. Virgin have paid extra so that they have a contract which virtually guarantees they have the right number of trains each day. You might think that translates into higher prices.

First win Intercity West Coast franchise

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