Abellio Scotrail Franchise to end early in March 2022

jagardner1984 · 1 Jan 2020

The Scotrail franchise is already the largest contract the SG put out to tender, this one was £7billion over ten years.

I read the BBC article as meaning their costs exceed income (from subsidy and passengers) by £10 million this year.

Presumably this is down to additional costs around new/refurbished rolling stock that they haven’t managed to recover from suppliers (and associated cancellations and fines).

I am sure they wonder how many Bi mode 4/5 car 802s Hitachi would have got into service by now, and the relative costs/benefits. Particularly as the next franchisee is probably going to have to handle the HSTs being properly end of life around 2030. Given where we are at environmentally and Glasgow’s aim to be net zero by 2030, I do think belching diesel fumes from by then 50 year old trains into the Queen Street concourse every hour will look somewhat out of place.

RailUK Forums

Energy · 1 Jan 2020

Does anyone think the ScotRail HSTs were a good idea? I think atleast the majority of people know they are at the end of their life and really shouldn't have be in put in service for another 10 years.

JonathanH · 1 Jan 2020

Energy said:
Does anyone think the ScotRail HSTs were a good idea? I think atleast the majority of people know they are at the end of their life and really shouldn't have be in put in service for another 10 years.

In theory they are a great idea - an interim fleet for 10 years which helps prove the market at what should be a cheaper cost than new stock paving the way for a fleet that will last for 40 years in 10 years time.

Highland37 · 1 Jan 2020

And that's the challenge. The theory and practice are not as connected as they should be. The theory has been carried along by a lot of nostalgia and been torpedoed by some awful management.

Fishplate84 · 1 Jan 2020

I do wonder what people expect any new operator to achieve that Abellio couldn't, especially if that operator is a direct TS concern. Abellio shareholders have take a £10m hit for providing the service that they have. They are motivated like any commercial company to make a profit and presumably are trying to do so by being as efficient as possible to operate at low cost but as creative as possible to drive ridership and revenue. Now they're being shown the door is the railway going to cost any less to run? Nope. It'll still cost what TS are paying in subsidy, plus ticket revenue, plus the £10m that Abellio are also subsidising through their loss which neither the customer or TS are having to pay now.

However they do it, TS are very likely to have to subsidise by the additional money Abellio were presumably asking for unless they re-specify the franchise to include fewer trains, fewer services, less staff and/or less station based services, or start to allow additional revenue like car park charging. I don't believe that another operator will somehow find additional customers and new revenue that easily, especially if it is a 'state run' option where the expectation will be even more freebie's, more marginal services, greater staff benefits and lower prices for everything, so it'll cost even more to run.

jagardner1984 · 1 Jan 2020

I suspect whilst they have said they will consider rationalisation, TS and the politicians want to avoid the short forming of the 0838 from East Kilbride being their direct problem at almost all costs.

It also begs the question whether in March 2022 the HST programme will finally be complete and reliable, and where the stages of various projects will be by then.

You do start to wonder how many other entities will want to enter the fray given the losses and the scapegoating from above in the past few months and years.

InOban · 1 Jan 2020

Surely much of the 'aweful management' which has afflicted the refurb program is within Angel Trains and Wabtec?
Clearly if they were a wonderful employer fewer traincrew wouldn't have left for other TOCs, who have had to be replaced with new trainees at great cost and considerable delay. And they seem to have a problem with their maintenance depots.

delt1c · 1 Jan 2020

How have the other Abelo franchises fared?

HH · 1 Jan 2020

Deltic1961 said:
Something in the way railways are delivered is seriously wrong if a company with Scotrail's ticket prices and passenger numbers can lose money.

ScotRail ticket prices are extremely cheap compared to the rest of the country and the trains are empty 90% of the time. I have travelled on many a service where I was the only passenger and on a ticket that was providing zero extra revenue to the operator. Some might be tempted to suggest that you don't have the faintest idea about the economics of running a railway.

HH · 1 Jan 2020

InOban said:
Surely much of the 'aweful management' which has afflicted the refurb program is within Angel Trains and Wabtec?
Clearly if they were a wonderful employer fewer traincrew wouldn't have left for other TOCs, who have had to be replaced with new trainees at great cost and considerable delay. And they seem to have a problem with their maintenance depots.

There is some real rubbish posted in this thread. The only way that ScotRail could hang on to its traincrew is by paying considerably higher wages. Who is going to pick up the tab for that???

Deltic1961 · 1 Jan 2020

But letting them go has meant many many cancellations, lost fares and compensation. Add to that the cost of replacement buses and wider disruption. Same for all the "train faults" multiple of which happen every day.

If they had the correct amount of staff and maintained their fleet properly they maybe wouldn't have lost so much money.

Also if many trains are empty 90% of the time, why are they even running them?

Two sides to every coin.

InOban · 1 Jan 2020

They run the empty trains because they are a franchise commitment.

ChiefPlanner · 1 Jan 2020

HH said:
ScotRail ticket prices are extremely cheap compared to the rest of the country and the trains are empty 90% of the time. I have travelled on many a service where I was the only passenger and on a ticket that was providing zero extra revenue to the operator. Some might be tempted to suggest that you don't have the faintest idea about the economics of running a railway.

Were not fare increases limited to !% also.? - for what it's worth , my experience of travelling on Scottish services (partly work related) , was pretty (very even) - impressed with the cleanliness etc of the rolling stock , on board staff etc - and I have never had to stand on an internal service.

lordbusiness · 1 Jan 2020

I don't think any of the key players come out of this smelling of Roses. It will be interesting to see if anyone actually bids to take over post abellio ( First maybe).

Energy · 1 Jan 2020

lordbusiness said:
I don't think any of the key players come out of this smelling of Roses. It will be interesting to see if anyone actually bids to take over post abellio ( First maybe).

Stagecoach? They seem to be pretty popular

Nicholas Lewis · 1 Jan 2020

47271 said:
Have they really spent £475m of Abellio's money or have they spent £475m of public money? If it's the latter then it's time someone calls them out on the statement./

No they haven't its the owner of the stock, CALEDONIAN RAIL LEASING LIMITED, that has spent £475m, all Albelio spend is the annual leasing charge which isn't disclosed specifically for 385's. Technically, the government has spent £475m but financed it through off balance sheet financial engineering and perhaps the question is whether if it bought direct how much less it would have paid.

PG · 1 Jan 2020

Energy said:
Stagecoach? They seem to be pretty popular

There is the (not so) small matter of pension liabilities to be settled before Stagecoach would bid on a franchise again.

More may become clear after their court hearing later this month...

HH · 2 Jan 2020

Nicholas Lewis said:
No they haven't its the owner of the stock, CALEDONIAN RAIL LEASING LIMITED, that has spent £475m, all Albelio spend is the annual leasing charge which isn't disclosed specifically for 385's. Technically, the government has spent £475m but financed it through off balance sheet financial engineering and perhaps the question is whether if it bought direct how much less it would have paid.

What do you mean by "technically", because it's clearly not the dictionary definition?

The deal for the 385s is very advantageous for TS compared to most Rolling Stock deals; do you have any evidence that TS could have done better?

I do wish people wouldn't opine as if they were experts when they clearly don't have a clue.

tbtc · 2 Jan 2020

Energy said:
Stagecoach? They seem to be pretty popular

PG said:
There is the (not so) small matter of pension liabilities to be settled before Stagecoach would bid on a franchise again.

More may become clear after their court hearing later this month...

I can't see Stagecoach making long term changes to their widespread bus/coach network for the sake of the profits on a seven year train contract - looking at how hamstrung First were with their central belt bus network that was restricted/ frozen to meet the competition "concerns" about them operating ScotRail.

Whilst First had a few corridors where rail/bus competition was an issue, Stagecoach's extensive bus/coach operations from Stranraer to Thurso (inc their role in CityLink) would mean they'd have to flog off lots of bus operations (at a time when First/Arriva have struggled to sell depots at the price they wanted) or see their bus timetables frozen for seven years.

Really can't see Stagecoach being interested (without even wondering about pensions or whether Abellio's problems are going to encourage/discourage other companies to bother making serious bids for the next franchise or whether the Scottish Government would even want to award it to a private operator)

HH · 2 Jan 2020

Deltic1961 said:
But letting them go has meant many many cancellations, lost fares and compensation. Add to that the cost of replacement buses and wider disruption. Same for all the "train faults" multiple of which happen every day.

If they had the correct amount of staff and maintained their fleet properly they maybe wouldn't have lost so much money.

Also if many trains are empty 90% of the time, why are they even running them?

Two sides to every coin.

Maintenance is a completely different issue, but exactly what should Abellio have done, that they weren't already doing, to make the trains more reliable? And how much would it have cost?

As far as traincrew are concerned, do you have the faintest idea of the wage gap between ScotRail and CrossCountry (say) at the start of the franchise and what it would have cost (with all the on costs) Abellio to match them?

HH · 2 Jan 2020

ChiefPlanner said:
Were not fare increases limited to !% also.? - for what it's worth , my experience of travelling on Scottish services (partly work related) , was pretty (very even) - impressed with the cleanliness etc of the rolling stock , on board staff etc - and I have never had to stand on an internal service.

I think ScotRail services are pretty good in general, although there is a problem with the infrastructure not having kept pace with the increase in services. Abellio have been guilty of over-optimism and I think they have a poor corporate culture, but people need to understand that when you run a franchise where the costs considerably outweigh the income it is extremely difficult to find extra money to pay for improvements.

PG · 2 Jan 2020

tbtc said:
I can't see Stagecoach making long term changes to their widespread bus/coach network for the sake of the profits on a seven year train contract - looking at how hamstrung First were with their central belt bus network that was restricted/ frozen to meet the competition "concerns" about them operating ScotRail.

Whilst First had a few corridors where rail/bus competition was an issue, Stagecoach's extensive bus/coach operations from Stranraer to Thurso (inc their role in CityLink) would mean they'd have to flog off lots of bus operations (at a time when First/Arriva have struggled to sell depots at the price they wanted) or see their bus timetables frozen for seven years.

Really can't see Stagecoach being interested (without even wondering about pensions or whether Abellio's problems are going to encourage/discourage other companies to bother making serious bids for the next franchise or whether the Scottish Government would even want to award it to a private operator)

You make a good point that the perceived effects on competition in the internal Scottish transport market and imposed counter measures may well deter any Stagecoach bid.

That said have Stagecoach ever bid for Scotrail in the past?

HH · 2 Jan 2020

PG said:
You make a good point that the perceived effects on competition in the internal Scottish transport market and imposed counter measures may well deter any Stagecoach bid.

That said have Stagecoach ever bid for Scotrail in the past?

Not the last two for certain.

PG · 2 Jan 2020

HH said:
Not the last two for certain.

Didn't bid at all or just didn't get shortlisted?

HH · 2 Jan 2020

PG said:
Didn't bid at all or just didn't get shortlisted?

From memory, they were not in the last pre-qual. I have a feeling that they were in the previous one, but withdrew, but I cannot find any documentary evidence of that. As has been noted, they do have a major competition problem.

Nicholas Lewis · 2 Jan 2020

HH said:
What do you mean by "technically", because it's clearly not the dictionary definition?

The deal for the 385s is very advantageous for TS compared to most Rolling Stock deals; do you have any evidence that TS could have done better?

I do wish people wouldn't opine as if they were experts when they clearly don't have a clue.

HH the original question posed by 47271 was had Abellio spent £475m of there own money and the answer is NO.

Im not challenging whether this was a good or bad leasing deal and will defer to your knowledge that it was compared to other recent rolling stock leasing arrangements. My open question was in the broader sense that providing finance this way comes at a cost and provides benefit and minimal risk to those arranging it (yes thats was business is), due the government guarantees on lease length irrespective of franchisee length, so if TS were allowed to raise finance they could potentially have done it more cost effectively.

Nicholas Lewis · 2 Jan 2020

delt1c said:
How have the other Abelo franchises fared?

From companies house reports Anglia was breakeven, and WMT and MerseyRail Electrics made good profits but be aware these relate to 2018 FY as accounts aren't posted on companies house til at least six months after the year end and sometimes longer. Its fair to say overall Abellio did OK out of UK rail franchises in 2018 but 2019 wont be known about for circa 9 months.

tbtc · 2 Jan 2020

PG said:
You make a good point that the perceived effects on competition in the internal Scottish transport market and imposed counter measures may well deter any Stagecoach bid.

That said have Stagecoach ever bid for Scotrail in the past?

HH said:
Not the last two for certain.

PG said:
Didn't bid at all or just didn't get shortlisted?

I don't know if Stagecoach have ever even considered a bid (only that they weren't shortlisted for the last couple, as discussed above) - personally, I think that a Stagecoach-run ScotRail would improve integration (but, whilst we all like the idea of integration in theory, the minute things are integrated, people complain about lack of "competition").

We saw National Express divest their "Caledonian Express" operations (in order to run the original ScotRail franchise - lack of suburban railways around Dundee meant that there was never any problem with them continuing to operate Tayside)

We saw First have their network/mileage in the central belt tied up as part of competition restrictions, when they operated the franchise

And then you've got to consider that Stagecoach run a lot more services which compete with trains, from Stranraer to Thurso, they'd either have to accept huge restrictions on their operations (and Stagecoach are a company who seem to like the potential for creative changes, rather than prescriptive management contracts), or they'd have to flog off large chunks of bus operation (at a time when First/Arriva have struggled to get a good price for their bus operations) for the sake of a seven year train contract - I can't see them being interested.

I think Stagecoach would be good, in theory, but I suppose that a lot of the next franchise will depend more on relations with Holyrood than actually doing much interesting with the operations, given that the timetable is pretty much fixed, the fleet is pretty much fixed (given the large number of modern EMUs and old HSTs introduced recently)... there's not going to be much scope for a new franchise to innovate (just stick with the fixed timetable/rolling stock, adopt a Steady As She Goes approach, try to improve industrial relations and staffing... but there'll be no major announcement about huge new investments in new trains or additional seats or new services or whatever).

^^ and that's assuming that Holyrood will want to let it to a private company ^^

delt1c · 2 Jan 2020

Nicholas Lewis said:
From companies house reports Anglia was breakeven, and WMT and MerseyRail Electrics made good profits but be aware these relate to 2018 FY as accounts aren't posted on companies house til at least six months after the year end and sometimes longer. Its fair to say overall Abellio did OK out of UK rail franchises in 2018 but 2019 wont be known about for circa 9 months.

Was referring to the level and quality of service to the Customer not to profits taken

HH · 2 Jan 2020

Nicholas Lewis said:
HH the original question posed by 47271 was had Abellio spent £475m of there own money and the answer is NO.

Im not challenging whether this was a good or bad leasing deal and will defer to your knowledge that it was compared to other recent rolling stock leasing arrangements. My open question was in the broader sense that providing finance this way comes at a cost and provides benefit and minimal risk to those arranging it (yes thats was business is), due the government guarantees on lease length irrespective of franchisee length, so if TS were allowed to raise finance they could potentially have done it more cost effectively.

Actually the Abellio Financing deal is not the normal ROSCO one, being at a much better interest rate and with the option for TS to buy the stock for a nominal fee at the end of the lease. It was partly able to get such a good deal due to TS agreeing to commit to the stock, something DfT is no longer doing. However, TS, being a government department, has to work under restrictions regarding finance that do not apply to Abellio, so I suspect that it would not have gotten such a good deal directly, let alone a better one. I'm not a government financing expert, so cannot say for certain, but DfT's RS deals have not been amazing value.

Abellio Scotrail Franchise to end early in March 2022

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