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Grand Union Trains Plans to run from London to Cardiff - Now rejected by ORR

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bastien

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If we're worried about paths on the GWML, a rule of '125mph or you're not coming in' would be a good start. Not that GWR can claim any high ground on that at the moment, what with all those IET sets running on diesel...
 

coppercapped

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So why did FirstGroup buy a vehicle that you thought was expensive with an open access service that requires low-cost operation? because it's actually not that expensive?
If a train is bought by a rolling stock leasing company (a ROSCO) for use by a train operating company (TOC) then the leasing payments made by the TOC have to be competitive with other rolling stock - new or used - supplied by the same or a different ROSCO. The TOC and the ROSCO can them make their own choices as to whether the trains are to be maintained by the TOC, by a contract maintenance company (which may be another TOC if it operates compatible stock) or by the manufacturer. In any event there is an element of competition in the process which should ensure a suitable solution is found. For stock procured in this way the TOC carries the financial risk that the train may not be available for service - and it may chose to carry the extra costs of service disruption because the alternative, for example buying a bigger fleet or reducing maintenance intervals, are more expensive.

In the case of the IEP procurement the DfT insisted that Hitachi/Agility carry all the risks - so one effect was that they purchased a larger fleet than one might expect so that as few diagrams as possible would be cancelled because of a set failure. The IEP contract with Agility Trains was made by the DfT with little or no input from the first operator (GWR) as has often been stated in this forum by people associated with GWR; the higher costs of train operation are purely the result of the DfT's position .
Taking the case of the GWR, very simply this could be seen as having an extra train over the normally anticipated requirement in each of the three depots that Agility operate in case a replacement is needed rapidly. If a TOC is prepared to carry the risk that a train might be cancelled then costs fall - at the expense of some disruption. In day to day terms it is similar to taking out car insurance - basic cover for injuries to third parties (that is people or property not belonging to the first two parties who are the car owner and the insurer), fire and theft so the car owner pays for damage repair to his vehicle to fully comprehensive insurance which includes damage repair. Third party, fire and theft is much cheaper than comprehensive insurance and the price for even this can vary depending on how much of any repair the owner is prepared to pay before the insurance pays the rest of the cost. The IEP contract puts all the risk on Agility Trains, so the fees for each diagram are high.

The high costs of IEP operation are not a direct reflection of the manufacturing cost of the train.
 

Wilts Wanderer

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The problem is Didcot to Swindon. Until that section is basically quadrupled, any prospective Open Access operators are wasting their time.
 

geoffk

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What does Corsham have to do with a London-Cardiff direct train?
No direct connection, but a train service calling there would be going to Swindon or beyond, and may also call at Wootton Bassett.

I agree about Didcot - Swindon quadrupling (Challow - Wantage Road is already four tracks, is it? A long time since I was down there.) Quadrupling to Wootton Bassett ideally.
 
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Glenn1969

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As has been stated upthread this service probably won't happen just like Ian Yeowart's other 10 blue sky thinking bids for OA rail services that were submitted under at least four different names in recent years
 

diffident

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As has been stated upthread this service probably won't happen just like Ian Yeowart's other 10 blue sky thinking bids for OA rail services that were submitted under at least four different names in recent years

To be fair, you can't fault the bloke for trying.

He certainly isn't giving up, which its got to be said, is quite an admirable quality and shows a determination to succeed against the odds, in an industry where commercial success is extremely restricted.
 

700007

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Whatever happened to open access services being "not primarily abstractive"? Grand Central and Hull Trains meet that criterion, as did the short-lived Wrexham & Shropshire operation. But Kings Cross - Edinburgh, Waterloo - Southampton and Paddington - Cardiff clearly do not, as they are 100% abstractive (OK apart from Severn Tunnel Junction). Nor does Euston - Blackpool now. Do we really want to fill up all the available slots with fast trains which offer nothing new, when on many parts of the network we need better local services (e.g. Newcastle - Berwick - Edinburgh) and more paths for freight? HS2 will free up paths, but not to Cardiff or Southampton, and not in the North-east. These Cardiff trains might be faster but how important is speed on a route with no airline competition?
In fair honesty, wasn't Euston to Blackpool conceived first before Virgin Trains started running their own sporadic service there? It was effectively Virgin retaliating quickly using spare resources, their money and power? They had the upper hand especially because it takes a lot of time for an OA service to start up, and Virgin could block any more growth of this OA service by snapping up spare paths they might have otherwise taken for the sake of it. Doesn't Virgin's Blackpool service operate on an Open Access basis (i.e not part of the service level agreement) anyways, but within the West Coast franchise?
 

Glenn1969

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Alliance's Blackpool service was approved 3 years ago and was supposed to have launched by now. There is still no sign of it happening yet Mr Yeowart has moved onto his next target already- Cardiff under another different name Grand Union
 

Clarence Yard

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The “not primarily abstractive” (NPA) test is still there for new applicants but it has never been a straight pass/fail if you do/don’t reach 0.3. The ORR takes in other considerations in making it’s judgement on who gets track access.

Right from the start of it’s operations Hull Trains has consistently said that it would pay a path charge for access and that others should as well. The ORR has historically viewed this as a barrier to entry and anyway NR could not get it’s route costing into such a shape to tell the ORR how much could legally (under the regs) be charged. Until now.

In this control period it has all changed. New OA applicants who want to operate “inter urban” services between stations classified as S1 and S1 or S2 (S1 and S2 = 15m and 10m punters a year respectively) and that are over 40 miles apart have to pay an Infrastructure Cost Charge (ICC) to NR which is set at £4 a train mile, at 2017/8 prices. The ICC is phased in over 5 years. Full details of all this are on the ORR website. There is a link into this in the track access section through the paper on charging, for those of you brave enough to delve into the detail.

The ICC has the effect of lowering the NPA threshold because the value of the ICC is taken off the abstraction value. Here is crude working example.

An operator wants to run 5 return trips a day for 300 days a year between an S1 station and an S2 station. They are 100 miles apart. So at £4 a train mile the ICC is £4K a day, £1.2m a year.

The proposed revenue from this service is £6m, of which £4.8m is abstracted from other operators. So without the ICC the NPA calculation is £1.2m/£4.8m = 0.25. But if you add the ICC into the equation it becomes £1.2m/(£4.8m-£1.2m ICC) = 0.33.

This is what Yeowart has realised.
 

ForTheLoveOf

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The “not primarily abstractive” (NPA) test is still there for new applicants but it has never been a straight pass/fail if you do/don’t reach 0.3. The ORR takes in other considerations in making it’s judgement on who gets track access.

Right from the start of it’s operations Hull Trains has consistently said that it would pay a path charge for access and that others should as well. The ORR has historically viewed this as a barrier to entry and anyway NR could not get it’s route costing into such a shape to tell the ORR how much could legally (under the regs) be charged. Until now.

In this control period it has all changed. New OA applicants who want to operate “inter urban” services between stations classified as S1 and S1 or S2 (S1 and S2 = 15m and 10m punters a year respectively) and that are over 40 miles apart have to pay an Infrastructure Cost Charge (ICC) to NR which is set at £4 a train mile, at 2017/8 prices. The ICC is phased in over 5 years. Full details of all this are on the ORR website. There is a link into this in the track access section through the paper on charging, for those of you brave enough to delve into the detail.

The ICC has the effect of lowering the NPA threshold because the value of the ICC is taken off the abstraction value. Here is crude working example.

An operator wants to run 5 return trips a day for 300 days a year between an S1 station and an S2 station. They are 100 miles apart. So at £4 a train mile the ICC is £4K a day, £1.2m a year.

The proposed revenue from this service is £6m, of which £4.8m is abstracted from other operators. So without the ICC the NPA calculation is £1.2m/£4.8m = 0.25. But if you add the ICC into the equation it becomes £1.2m/(£4.8m-£1.2m ICC) = 0.33.

This is what Yeowart has realised.
Very interesting; thank you. Is it the case that this new charge actually makes it easier to pass the NPA test?
 

TheLastMinute

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Unsurprisingly, the DfT agree with the majority opinion on here that the proposed Grand Union service would abstract considerable revenue from GWR and create significant performance issues.
Source: https://orr.gov.uk/__data/assets/pd...est-request-grand-union-trains-2019-03-27.pdf
Economic Equilibrium Test request from the Department for Transport in regard to the Great Western rail franchise

Thank you for your previous e-mail. I can now provide the information you require. Please treat this e-mail as a formal request for the application of the Economic Equilibrium Test.

The requesting entity is the Department for Transport, in its capacity as franchising authority (competent authority in respect of the terms of the guidance). The Department for Transport’s address is: 33 Horseferry Road London SW1P 4DR

I can confirm that I will be the person responsible for queries. My contact details are as follows: [Redacted]

As per my earlier e-mail, while the information available at this point is clearly only very high-level, it is our strong view that the proposed service would have a significant impact upon the economic equilibrium of one or more of Government’s rail franchises – chiefly upon the Great Western rail franchise. Our grounds for this are set out below, albeit only at a high level for the present time, reflecting the limited detail available on the specifics of the application.

1) The proposed service would only serve stations which are already served by the Great Western franchise. Of the proposed stations, only Severn Tunnel Junction does not, at present, have a direct service to London Paddington. We therefore consider it highly likely that the service will abstract considerable revenue from franchised services on key intercity flows, particularly London-Bristol and London-Cardiff.

2) The proposed service could give rise to significant performance issues on the line, arising not just from capacity constraints, but also from the use of Class 91 locomotives and 9 car sets with relatively poor acceleration characteristics compared to the wider proposed fleet-mix on the line. We consider that any decline in performance on the line as a result of the proposed service could have consequent implications for the revenue and economic stability of franchised services.

We have also, on the basis of the limited information available at present, identified a number of further potential concerns relating to the proposed service. However, we recognise that the current question of whether the Economic Equilibrium Test should be applied to the application represents only the first step in a wider consideration and decision-making process around the application. We believe that the grounds set out above represent sufficient evidence on this particular question and would welcome further engagement with you on this application in due course.

As stated above, our request is made in relation to the Great Western franchise. It is possible there may be further implications for other franchises, but on the basis of the information currently available regarding the proposed service, this is more difficult to identify at present. A copy of the public register copy of the Great Western franchise agreement is attached. Supporting documents relating to service level commitments are available online at https://www.gov.uk/government/publications/first-great-western

Department for Transport, 25 April 2019


Also Keolis Amey Operations have cited their concerns.
Source: https://orr.gov.uk/__data/assets/pd...est-request-grand-union-trains-2019-03-27.pdf
Keolis Amey Operations / Gweithrediadau Keolis Amey Limited, in regard to its Grant Agreement with the Welsh Government

This is KA’s response to ORR’s email of 27 March notifying parties of a proposed open access service, Grand Union, that may be subject to the Economic Equilibrium Test (“EET”).

KA requests that ORR carries out the EET on this proposal as we believe that the economic equilibrium of our Public Service Contract with Welsh Government (the Grant Agreement) risks being compromised. There will be operational impacts that have the potential to affect the cost base in accordance with the Grant Agreement. We have set out these concerns in this paper. We can provide the Grant Agreement on request.

Contact details
Keolis Amey Operations / Gweithrediadau Keolis Amey Limited (“KA”). Company number 11389531. [Redacted]

Potential operational impacts

Performance
GWR’s London to Paddington services caused us 891 delay minutes, and 2 cancellations, East of Cardiff last year. Extrapolating from this we can expect an additional 450 Network Rail delay minutes for each additional train per hour, as a
minimum.

We could also see additional performance impacts due to:
• Performance being worse than IET sets
• Additional stop at Severn Tunnel Jn
• Turnaround cleaning at Cardiff Central
• Shunting moves (cannot walk through a Cl.91 or a 10 car IET so need to come into Pt 1,2 or shunt via brickyard)
• Crowding on local services west of Cardiff should heavily discounted tickets encourage passengers to split their journey rather than take GWR service to Swansea
• Interaction with more trains in future timetables which could worsen performance on proposed additional services (see under Timetable below)
• Customer service and operational issues if Journey Planners encourage more passengers to change trains at Severn Tunnel Junction station, which has minimal facilities.

Timetable
A new hourly service will create potential conflicts depending on the exact paths that Grand Union bids for. The key changes to the timetable on the South Wales Main Line (including both committed proposals and aspirations) are listed below.
• Dec 2020
o GWR’s higher frequency London-South Wales service starts in Dec 19 (a 3rd hourly train in the peaks).
• Future
o Ebbw half-hourly (May 2021, to/from Newport)
o Cardiff-Liverpool new service
o New stations between Cardiff and Severn Tunnel Junction (Cardiff East Parkway, Llanwern, Magor etc)

Cardiff Central station working
There will be one additional passenger arrival and one additional passenger departure per hour, with an unknown platform occupation time. This could put platform capacity at risk. It could require additional station staff to dispatch trains.

There may also be additional shunts to/from the Brickyard (as the only electrified turnback facility).

A review of station staffing and overall capacity of Cardiff Central would need to be carried out to identify and mitigate Safety and Performance risks.

Contingency planning
Additional services will require more difficult decisions to be made when Network Rail negotiates contingency arrangements between operators, and also amended timetables in the event of planned disruption. KA could be disadvantaged.

Recovery options for coupling to a Class 91 locomotive might be limited and so could
import risk.

Canton depot
It should be noted that Grand Union would not be able to make use of Canton unless/until Canton is electrified.

Keolis Amey Operations / Gweithrediadau Keolis Amey Limited, 26 April 2019

It's also worth noting that the Economic Equilibrium Test is a new test required by EU law as of this year. In addition to previous Not Primarily Abstractive and other tests, a Economic Equilibrium Test is completed on request. Its purpose is to ensure that an Open Access application won't have a substantial negative impact on the profitability of services operated under a Public Service Contract (i.e. a franchise operator) or the net cost for a competent authority (i.e. DfT). Not sure the Grand Union application would pass this test either, but ORR will now do a full EET as well as all the other previous tests.

Full details of the Economic Equilibrium Test is here.
 

swt_passenger

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Another thing I’ve just noticed again, is that the GU application (in post #1) is not actually a fully detailed track access application, it’s more of a “heads up” on this new “form OA” with only 2 pages, rather than the more typical “form P” with which track access applications are normally made...

So perhaps this sort of application is less worthy of the usual headlines anyway...
 

Jorge Da Silva

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In fair honesty, wasn't Euston to Blackpool conceived first before Virgin Trains started running their own sporadic service there? It was effectively Virgin retaliating quickly using spare resources, their money and power? They had the upper hand especially because it takes a lot of time for an OA service to start up, and Virgin could block any more growth of this OA service by snapping up spare paths they might have otherwise taken for the sake of it. Doesn't Virgin's Blackpool service operate on an Open Access basis (i.e not part of the service level agreement) anyways, but within the West Coast franchise?

Alliance's Blackpool service was approved 3 years ago and was supposed to have launched by now. There is still no sign of it happening yet Mr Yeowart has moved onto his next target already- Cardiff under another different name Grand Union

Blackpool was originally approved in 2015 but lapsed in June 2017 after failing to obtain the right rolling stock. They reapplied in late 2017 (for May 2019) and so did Virgin apply for 3 additional paths. Virgin was approved in April 2018 for a date of May 2018. GNWR won approved in Summer 2018 this time using 91's and Mark 4's. It was considered in the application that some revenue would be abstracted from Virgin however the company passed the test by outweighing the abstraction.
 

TheLastMinute

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So the train operator operating services on behalf of the Welsh Government has concerns about potential new services that have the support of the Welsh Government!
I would suggest that the support from the Welsh Government minster is merely political showboating while Keolis Amey are merely trying to protect their business model and is closer to the business reality of running a train service. After all, what has the minster got to lose by publicly supporting a small plucky small business promising of cheap peak-time seats for everyone vs. the big greedy corporate GWR who charge a less well-off people a fortune merely so they can make millions of pounds everyday to all go their their nasty rich shareholders. :(
 

diffident

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What I've always been astounded about is that the system is called the privatised railway. Yet, any sniff of competition is snubbed out at the first opportunity by the TOC's running to the DfT and ORR. The railway system is by no means private industry.

It would be great if the DfT were open to competition on the rail network. The reason GWR don't want the competition is because they would be forced to up their game instead of what is becoming endemic in the UK rail system - corporate groups providing a bare-bones, as basic as is legally possible service in order to maximise their returns.

That is what the true sense of competition in business is. A better service, better value and more choice for the consumer driven through competition.
 

HowardGWR

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The reason GWR don't want the competition is because they would be forced to up their game instead of what is becoming endemic in the UK rail system - corporate groups providing a bare-bones, as basic as is legally possible service in order to maximise their returns.
GWR's proposed December timetable leads you to that conclusion does it? Bare bones?
 

diffident

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GWR's proposed December timetable leads you to that conclusion does it? Bare bones?

I fear you've taken my comments in a sense of the rail timetable, in which I wasn't commenting. My view here is of the corporate modus operandi in which GWR are and have been cutting out any costs they can in order to maximise returns, often to the detriment of the services they operate. An example of this on GWR is the RMT's long-standing campaign to "Bring Back the Buffet".

So, Bare Bones, yes. In relation to areas of customer service that is exactly what is happening.
 

Darandio

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I fear you've taken my comments in a sense of the rail timetable, in which I wasn't commenting. My view here is of the corporate modus operandi in which GWR are and have been cutting out any costs they can in order to maximise returns, often to the detriment of the services they operate. An example of this on GWR is the RMT's long-standing campaign to "Bring Back the Buffet".

So, Bare Bones, yes. In relation to areas of customer service that is exactly what is happening.

And the removal of the buffet was a DfT decision, was it not?
 

HowardGWR

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I fear you've taken my comments in a sense of the rail timetable, in which I wasn't commenting. My view here is of the corporate modus operandi in which GWR are and have been cutting out any costs they can in order to maximise returns, often to the detriment of the services they operate. An example of this on GWR is the RMT's long-standing campaign to "Bring Back the Buffet".

So, Bare Bones, yes. In relation to areas of customer service that is exactly what is happening.
Ah, I see. Could other examples perhaps be cited, as I don't find this one, on its own, very convincing.
 

Clarence Yard

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Another thing I’ve just noticed again, is that the GU application (in post #1) is not actually a fully detailed track access application, it’s more of a “heads up” on this new “form OA” with only 2 pages, rather than the more typical “form P” with which track access applications are normally made...

So perhaps this sort of application is less worthy of the usual headlines anyway...

This declaration form is to enable a request (from interested parties) for an Economic Equilibrium Test to be carried out, in accordance with the recent legislation. Interestingly, the transposition into UK law is currently only for a temporary period. It is expected to fall away for May 2021 and onwards when the ORR will fall back to it’s existing five stage test.
 

diffident

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And the removal of the buffet was a DfT decision, was it not?

It may well have been, and I commented earlier that the DfT are complicit in the shoddy handling of rail franchising and competition in the UK. Open Access operators should be encouraged to offer alternatives for the travelling public. I think the Wrexham & Shropshire operation is a great example, however hamstrung by its crazy routing. Virgin quickly countered by whacking in a Wrexham and Shrewsbury service. The product offered by W&S was still, in my opinion, superior. If it was allowed to operate on the WCML, I believe it would have been a success.
 

Caaardiff

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GWR currently has 34 direct trains Cardiff to London, with a journey time around 2hr6mins.
Cardiff currently has 29 coaches travelling to London each day - 17 National Express (From 0250 until 1915) / 12 Megabus and 30 coaches from London to Cardiff - 19 National Express & 11 Megabus (some may start/end at locations further West). Journey time varies between 3hr25 (Quickest Megabus) and just over 4 hours.
Flybe did operate 2x daily return flights from Cardiff Airport to London City, which although proved popular with business, didn't get chance to grow it's passenger numbers and with APD was cited as uneconomical for the Airline to run, so was scrapped. Journey time was 40 mins CWL-LCY (Not accounting for Airport check-in time etc)
Using tomorrow (Monday) as an example:
- Coach prices are varying between £10-21 each way on both coach companies, so about £30-50 return depending on time, and a guaranteed seat, but longer journey time.
- GWR prices vary but peak services are £242 return, with off-peak being between £95-£120.

There's been a fairly noticeable change to peoples living arrangements, with many people leaving London and moving further out to Bristol and even back to Wales. The displacement of Londoners to Bristol has driven up living and property costs in the area, meaning people from Bristol have decided to relocate to South East Wales where property and living costs are much cheaper. Mainly in the Chepstow/Newport areas, but also Cardiff. This trend is likely to continue to happen for some time and trains are often busy on this route, so any additional capacity would be welcomed, and I'm sure many would pay for an improved service on the route, especially if they can get a guaranteed seat and save a bit of time with quicker journey times.
GWR may lose out on passengers to/from South Wales, but it would free up seats for the likes of Swindon, Didcot and Reading.
 

jimm

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GWR currently has 34 direct trains Cardiff to London, with a journey time around 2hr6mins.

The number of GWR services is about to increase, with a third train per hour in the peaks, and the typical journey time from London to Cardiff for the South Wales trains that don't call at Didcot being cut to around 1hr 50mins - so much for Grand Union cutting the journey time by 20 minutes.
 

tiptoptaff

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His proposed "fast" stopping pattern is exactly what will occur on the additional peak skip stops, obviously omitting Severn Tunnel. How he thinks he can beat GWR journey times with stock that can't match performance is beyond me.

The local press angle was clever. WoL is full of shoddy, poorly researched misinformation regarding rail services in South Wales. The public think this is a definite going to happen, and any failure will be greedy corporate GWR, rather than the industry knowledge that Ian Yeowart couldn't start a Hornby railway, let alone a real one
 

coppercapped

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The “not primarily abstractive” (NPA) test is still there for new applicants but it has never been a straight pass/fail if you do/don’t reach 0.3. The ORR takes in other considerations in making it’s judgement on who gets track access.

Right from the start of it’s operations Hull Trains has consistently said that it would pay a path charge for access and that others should as well. The ORR has historically viewed this as a barrier to entry and anyway NR could not get it’s route costing into such a shape to tell the ORR how much could legally (under the regs) be charged. Until now.

In this control period it has all changed. New OA applicants who want to operate “inter urban” services between stations classified as S1 and S1 or S2 (S1 and S2 = 15m and 10m punters a year respectively) and that are over 40 miles apart have to pay an Infrastructure Cost Charge (ICC) to NR which is set at £4 a train mile, at 2017/8 prices. The ICC is phased in over 5 years. Full details of all this are on the ORR website. There is a link into this in the track access section through the paper on charging, for those of you brave enough to delve into the detail.

The ICC has the effect of lowering the NPA threshold because the value of the ICC is taken off the abstraction value. Here is crude working example.

An operator wants to run 5 return trips a day for 300 days a year between an S1 station and an S2 station. They are 100 miles apart. So at £4 a train mile the ICC is £4K a day, £1.2m a year.

The proposed revenue from this service is £6m, of which £4.8m is abstracted from other operators. So without the ICC the NPA calculation is £1.2m/£4.8m = 0.25. But if you add the ICC into the equation it becomes £1.2m/(£4.8m-£1.2m ICC) = 0.33.

This is what Yeowart has realised.
Thank you very much for this clear description of the current position. Out of personal interest I had been following developments in the past but rather lost track of the details two or three years ago.
I can see the DfT, and its ORR lap-dog, fighting this proposal as far as it can. It really won't want its micro-management of the GWR's equipment to be shown up by older stock with cushioned seats...!
 

Mitchell Hurd

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I agree with post #39 in that a Class 91 instead of a DVT would be better basically. Assuming that will be the case, a Mark 4 could be converted for luggage and bike spaces like 5 Class 153's are for Scotrail.
 
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