C2C in Trouble?

Sad Sprinter · 10 Feb 2020

Looks like C2C might be the next franchise to fall:

https://www.railnews.co.uk/news/2020/02/10-franchise-crisis-deepens-with-20m.html

"THE franchise crisis appears to be deepening, with reports that c2c is the latest operator to slip into the red.

Trenitalia is said to have accrued debts of £20 million after forecasts of growth during last year proved to be too optimistic.

The Italian operator is now in talks with the Department for Transport, according to industry sources, which also claim that the DfT’s ‘Operator of Last Resort’ is on the alert."

That really just leaves GTR and GA and GWR as the last major franchises that seem to be safe, for now.

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Mikey C · 10 Feb 2020

So much for the European operators coming over to "make money at the expense of the British traveller" as some claimed!

Doomotron · 10 Feb 2020

Sad Sprinter said:
Looks like C2C might be the next franchise to fall:

https://www.railnews.co.uk/news/2020/02/10-franchise-crisis-deepens-with-20m.html

"THE franchise crisis appears to be deepening, with reports that c2c is the latest operator to slip into the red.

Trenitalia is said to have accrued debts of £20 million after forecasts of growth during last year proved to be too optimistic.

The Italian operator is now in talks with the Department for Transport, according to industry sources, which also claim that the DfT’s ‘Operator of Last Resort’ is on the alert."

That really just leaves GTR and GA and GWR as the last major franchises that seem to be safe, for now.

Nope, just GWR, Southeastern, probably EMR and GTR. Somehow the worst franchises in the country (GTR and SE) have turned themselves around and become one of the few that are viable. What a world we live in.

357 LTSRail · 10 Feb 2020

Doomotron said:
Nope, just GWR, Southeastern, probably EMR and GTR. Somehow the worst franchises in the country (GTR and SE) have turned themselves around and become one of the few that are viable. What a world we live in.

My understanding though is that they only really carry on by direct awards to Govia for Southeastern (same as FirstGroup with GWR) and a non-franchised, management contract for Govia Thameslink Railway. There seems to be very few franchises in a healthy state for both financials and performance at the moment. EMR and Avanti could be, but they are yet to prove themselves. Given First and Trenitalia's record as well as Abellio's, I'm sceptical already of those two to be honest.

Clayton · 10 Feb 2020

Sad Sprinter said:
Looks like C2C might be the next franchise to fall:

https://www.railnews.co.uk/news/2020/02/10-franchise-crisis-deepens-with-20m.html

"THE franchise crisis appears to be deepening, with reports that c2c is the latest operator to slip into the red.

Trenitalia is said to have accrued debts of £20 million after forecasts of growth during last year proved to be too optimistic.

The Italian operator is now in talks with the Department for Transport, according to industry sources, which also claim that the DfT’s ‘Operator of Last Resort’ is on the alert."

That really just leaves GTR and GA and GWR as the last major franchises that seem to be safe, for now.

How can it be in trouble? It’s practically a branch line, very simple anyway, and packed most of the time.

Horizon22 · 10 Feb 2020

Doomotron said:
Nope, just GWR, Southeastern, probably EMR and GTR. Somehow the worst franchises in the country (GTR and SE) have turned themselves around and become one of the few that are viable. What a world we live in.

SE is very much just getting by after 2+ years of direct awards with no current plan beyond April. Not sure how SE was ever one of the "worst in the country" recently though; you'd have to go back to Connex days for that.

357 LTSRail · 10 Feb 2020

Clayton said:
How can it be in trouble? It’s practically a branch line, very simple anyway, and packed most of the time.

Near enough the same problems virgin trains east coast had - ridiculously overambitious passenger growth forecasts that haven't been met, whilst payments to the government continue to rise.

Clayton · 10 Feb 2020

357 LTSRail said:
Near enough the same problems virgin trains east coast had - ridiculously overambitious passenger growth forecasts that haven't been met, whilst payments to the government continue to rise.

I bet a lot of their customers are working at home more. I’ve always found it a very good operation and the trains are much more frequent than when I was growing up in the area.

Samuel88 · 10 Feb 2020

I think now nationalisation will happen sooner rather than later simply due to the fact they’ll be no-one left to bid on the franchises...

Doomotron · 10 Feb 2020

Horizon22 said:
SE is very much just getting by after 2+ years of direct awards with no current plan beyond April. Not sure how SE was ever one of the "worst in the country" recently though; you'd have to go back to Connex days for that.

A number of years ago they were voted the third worst in the country, after First Capital Connect and Southern.

Mikey C · 10 Feb 2020

Horizon22 said:
SE is very much just getting by after 2+ years of direct awards with no current plan beyond April. Not sure how SE was ever one of the "worst in the country" recently though; you'd have to go back to Connex days for that.

Which is why the franchise is relatively solvent, it hasn't moved to a new operator who bid on ludicrously optimistic projections...

Airline Man · 11 Feb 2020

I wonder how they come up with passenger growth forecasts? I used to do some of that for British Airways and a lot of it was educated guesswork. I shudder to think how rail companies work it out!

357 · 12 Feb 2020

Current franchise started in November 2014, National Express sold to Trenitalia just 27 months later.

Did National Express (who had run the line for many years) know something at the time?

dutchflyer · 12 Feb 2020

Coincidence then?
Tr-It is called Netinera on the continent and there are quite a few ditto contracts where they also fail miserably. Stated aim was at the beginning ´to gain experience once Tr-It itself goes over to franchising/contracting´ or whatever its called. With us in NL their latest mishap is Q-Buzz, buses and 1 trainline Dordrecht-Geldermalsen, taken over from Arriva 1yr+ 2month ago. Gossipping from those in the know in the industry all said they heavily overbid.
But from an outsiders view it now seems more as half of British Rail is somewhat in trouble or already in the state that a neutral institute manages it. Is there in fact then not a far more fundamental problem going on?

hwl · 12 Feb 2020

357 said:
Current franchise started in November 2014, National Express sold to Trenitalia just 27 months later.

Did National Express (who had run the line for many years) know something at the time?

Yes see the other previous thread:
https://www.railforums.co.uk/thread...ten-c2c-stations-–-tell-us-your-views.192546/

Carlisle · 12 Feb 2020

Doomotron said:
A number of years ago they were voted the third worst in the country, after First Capital Connect and Southern.

By who?, as I’m pretty sure it’s been widely & regularly acknowledged since its resignalling & fleet renewal as one of the most punctual & reliable uk rail operations

Journeyman · 12 Feb 2020

Airline Man said:
I wonder how they come up with passenger growth forecasts? I used to do some of that for British Airways and a lot of it was educated guesswork. I shudder to think how rail companies work it out!

I know what you mean. I recently worked for a consultancy company that was involved in both preparing and analysing franchise bids, and I was shocked by how crude it was. It's basically a case of coming up with something that looks plausible that you hope is better than everyone else's bid. That's about as scientific as it gets. It's a calculated gamble - the performance bond is the maximum amount you stand to lose, so how willing are you to risk it?

Journeyman · 12 Feb 2020

Doomotron said:
A number of years ago they were voted the third worst in the country, after First Capital Connect and Southern.

I think once a franchise gains a bad reputation, it's extremely hard to shift, but I use SouthEastern regularly, and I'm pretty impressed. Trains are kept in decent condition, they have nice comfortable Electrostars that are very pleasant to travel on, and performance is reasonably good. It's nothing spectacular, but they do get the basics right most of the time.

Edders23 · 12 Feb 2020

So they took a calculated business risk and it has not paid off................

.............TOUGH

They chose to bid for and accept the franchise now they are making a loss well that can be turned round if the management is up to the task

I really do get annoyed at this idea that it's alright to make a profit but if they start to lose money then they should be allowed to hand it back to DOT

Chris M · 12 Feb 2020

Edders23 said:
So they took a calculated business risk and it has not paid off................

.............TOUGH

They chose to bid for and accept the franchise now they are making a loss well that can be turned round if the management is up to the task

I really do get annoyed at this idea that it's alright to make a profit but if they start to lose money then they should be allowed to hand it back to DOT

Privatise the profit, Nationalise the loss is a standard way of thinking for many with a right-of-centre political outlook.

Doomotron · 12 Feb 2020

Carlisle said:
By who?, as I’m pretty sure it’s been widely & regularly acknowledged since its resignalling & fleet renewal as one of the most punctual & reliable uk rail operations

Pretty sure it was a passenger survey.

HH · 12 Feb 2020

National Express overbid for the c2c franchise; I said so at the time. Dean Finch pulled off another coup by flogging it to Trenitalia. He missed his calling.

Trenitalia no longer want to be in the UK market; unfortunately for them they won't find any mugs to pass it on to, so they're trying to minimise their losses. I cannot see any reason for DfT to play ball, and one very good reason why they should not - it would set an expensive precedent.

Regarding SE, I wonder if their improvement coincides with the arrival of David Statham as MD. They're not perfect, but they're certainly better than they used to be.

ScottGallagher · 12 Feb 2020

HH said:
National Express overbid for the c2c franchise; I said so at the time. Dean Finch pulled off another coup by flogging it to Trenitalia. He missed his calling.

Trenitalia no longer want to be in the UK market; unfortunately for them they won't find any mugs to pass it on to, so they're trying to minimise their losses. I cannot see any reason for DfT to play ball, and one very good reason why they should not - it would set an expensive precedent.

Regarding SE, I wonder if their improvement coincides with the arrival of David Statham as MD. They're not perfect, but they're certainly better than they used to be.

What could that mean for the partnership with First on the West Coast if Trenitalia no longer want to be in the UK, can they stay handcuffed to First for the long term who are not exactly in a great position either.

43066 · 13 Feb 2020

Carlisle said:
By who?, as I’m pretty sure it’s been widely & regularly acknowledged since its resignalling & fleet renewal as one of the most punctual & reliable uk rail operations

There was a country-wide passenger survey undertaken, as far as I recall.

SE get a pretty tough reception generally from the travelling public, considering they don’t perform that badly at all across punctuality metrics, etc. Their network is quite badly affected by anti social behaviour due to the areas it serves. They were also impacted heavily by the London Bridge upgrade works, and the Thameslink Programme, which didn’t help.

When you say fleet renewal, other than the cascaded GTR 377s, the last new stock SE received was the 376s, circa 2004.

Alteran Ancient · 13 Feb 2020

43066 said:
When you say fleet renewal, other than the cascaded GTR 377s, the last new stock SE received was the 376s, circa 2004.

Don't forget they also had the 395s back in 2009. But the HS service tends to operate relatively independently of the rest of SE's operations.

Regardless, the bulk of their metro and suburban fleets still consist of Networkers. The 465/9s have done fairly well, but many of the others are getting into a very sorry state. And the 376s that bolster the metro are arguably just a grim - not having had even a lick of paint or a refresh since their introduction 15 years ago. South East London has not been a kind mistress.

But regarding C2C, I definitely share the sentiment of "Huh? But it's such a simple operation! How can it possibly be in trouble?" - and then I remembered that National Express flogged it to Trenitalia whilst mid-franchise. So perhaps Trenitalia have massively dropped the ball somewhere?

HH · 13 Feb 2020

ScottGallagher said:
What could that mean for the partnership with First on the West Coast if Trenitalia no longer want to be in the UK, can they stay handcuffed to First for the long term who are not exactly in a great position either.

They are probably stuck with that, so are probably praying it won't be a disaster. You'd hope they stopped First from over-bidding again, but we'll have to wait and see on that.

Sebastian O · 13 Feb 2020

So what’s occurring to the SE franchise from April, DOR?

43066 · 13 Feb 2020

Alteran Ancient said:
Don't forget they also had the 395s back in 2009. But the HS service tends to operate relatively independently of the rest of SE's operations.

Ah yes of course - schoolboy error there. Was thinking of the “classic” network, which is relatively segregated, as you say.

EDIT: the “first class” section on some of the 465/9s is an absolute disgrace, and incredibly scruffy. Worse, of course, since these units have started doing a lot more metro work.

HH · 13 Feb 2020

Class43 said:
So what’s occurring to the SE franchise from April, DOR?

No another DA. And after that, another.

Meerkat · 13 Feb 2020

Edders23 said:
So they took a calculated business risk and it has not paid off................

.............TOUGH

They chose to bid for and accept the franchise now they are making a loss well that can be turned round if the management is up to the task

I really do get annoyed at this idea that it's alright to make a profit but if they start to lose money then they should be allowed to hand it back to DOT

From the start they offer the DfT money to have a chance of making a profit against the risk of making an effectively top limited loss. That’s the contract as agreed by the DfT- they don’t run away shirking their responsibilities.
There is so much politicised misinformation and misunderstanding around franchises. The use of “failing” to imply the service is collapsing rather than just the franchisee losing money, the allegations that franchisees only make profit etc etc

C2C in Trouble?

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