The thread about whether the rail demise of Virgin & Stagecoach negatively impacted the railway makes me also wonder about the opposite side of the coin. Have there been instances where, with the benefit of hindsight, it was probably a blessed relief not to have been successful in specific TOC bidding contests?
-
Our new ticketing site is now live! Using either this or the original site (both powered by TrainSplit) helps support the running of the forum with every ticket purchase! Find out more and ask any questions/give us feedback in this thread!
Any examples of where losing/failing to gain a TOC franchise proved to be a narrow escape?
- Thread starter GordonT
- Start date
- Status
Sponsor Post - registered members do not see these adverts; click here to register, or click here to log in
R
RailUK Forums
norbitonflyer
Established Member
Does the loss of the LTS franchise by the management buy-out team less than 24 hours before it was to have started in 1996 count? Because their ORCATS fiddle was discovered before the franchise went live it could be dealt with as an internal disciplinary matter within BR, whereas if it had continued after the franchise had become a separate company there might have been criminal charges. So a lucky escape for the MBO team, although they may not have seen it that way at the time.
Last edited:
A very good example.
Agent_Squash
Established Member
- Joined
- 22 Jul 2016
- Messages
- 1,245
The removal of all traces of Connex from the UK rail network was a blessing for all.
Not really as the liabilities & responsibilities appeared to be well understood by the lawyers & accountants working for the various bidders, NXEC confirmed that when they handed back the keys.
frediculous
Member
- Joined
- 23 May 2017
- Messages
- 111
I'm not aware of this story, is there somewhere where I could read more?
Apologies to admins if I've broken any protocols in transcribing this.
Rail sale scuppered by fraud probe
CHRISTIAN WOLMAR
Transport Correspondent: Friday 09 February 1996
The privatisation of the rail line which was the subject of a fraud inquiry has been halted following the dismissal of two managers from the board of the BR subsidiary running the line.
New bids are to be invited for the London, Tilbury and Southend line causing further embarrassment to the Government over its controversial rail privatisation programme.
Chris Kinchin-Smith, who headed the management buy- out team's bid for the line, and Roger Turner, his finance director, are to be redeployed to other parts of British Rail as a result of the completion of the investigation into the ticketing fraud which cost London Transport pounds 45,000 over a six-week period.
Their departure follows the suspension of five junior managers earlier this week and the resignation last Saturday of Colin Andrews, the commercial director, after the discovery of the fraud last week.
Enterprise Rail, the management buy-out team's bid for the franchise came within nine hours of being granted the franchise when Sir George Young, the Secretary of State for Transport, halted the transfer on Saturday night.
They were to have received pounds 29m annual subsidy to run services on the line in a 15-year deal involving the purchase of new trains.
The franchising director, Roger Salmon, will now be inviting bids from the other shortlisted bidders, thought to be two bus companies, Prism and Stagecoach, and GB, a team of rail experts. The new bidding will take several weeks, further delaying the franchising process which is already nearly two years behind its original schedule.
Ministers asked Mr Salmon to speed up the process in order to try to get all lines sold by the time of the next general election, but the fiasco over LTS will make Mr Salmon even more careful over how he allocates future franchises. Two companies, South West Trains and Great Western were handed over to private operators last weekend.
The decisive action by the BR board was inevitable after the inquiry confirmed that the fraud had taken place. Although neither of the two directors dismissed yesterday knew of the fraud, the board was thought to have been concerned at the lax financial management of the top team and at their slowness in reacting to the seriousness of the situation.
The fraud involved tickets being issued at one station and sold at another. Large numbers of season tickets with a London Transport Travelcard element were printed off at Fenchurch Street in central London and sold at Upminster in east London. This was advantageous to LTS because the company gets a greater proportion of revenue from tickets issued at Fenchurch Street than it does at Upminster.
It is thought the fraud could have been worth about pounds 1m over a year if plans to extend it to a second station, Barking, had materialised.
Sir George said last night: "Irregularities of this sort are totally unacceptable in either the public or the private sectors."
The Secretary of State welcomed the fact that systems put in place detected irregularities and that BR had taken decisive action. It is thought that while the fraud was discovered during the course of a routine audit, it was only thanks to the intervention of an employee who warned the auditors of the scam.
The collapse of the management buy-out also raises questions about the enormous pressures being faced by managers in the rail industry who are involved in such bids. They have to continue running the railway, negotiate the contractual agreements with Railtrack and other parts of the new structure and develop their management buy out bid.
Mr Kinchin-Smith was also hampered by having broken his leg in a skating accident late last year which immobilised him for several weeks. In virtually all the 25 train operating companies due to be franchised, management buy-out teams are expected to put in bids.
However, outside bidders have already been angered by the advantageous position of management teams who are in sole possession of large amounts of data and may be able to manipulate the figures in the same kind of ways as occurred at LTS.
pdeaves
Established Member
It's not specified in the article, but I understand that the fraud was carried out with the best intention of making the management buy out company buoyant, as opposed to personal gain for any individual. It's an interesting case.
I expect that the question could be quite subjective; "I'm glad company X didn't win franchise Y because I don't like X and think they would have done a rotten job".
frediculous
Member
- Joined
- 23 May 2017
- Messages
- 111
Really interesting, thanks for posting it
I think with hindsight Stagecoach might have been worse off had their bid (or more likely bids?) for the ScotRail franchise succeeded. The competition authorities would likely have required that their substantial bus and coach provision in Scotland be significantly weakened in order to reduce the extent of perceived monopoly provision and longer-term business performance may have suffered in consequence.
I'm not at all sure that this makes it any more justifiable, not least because the individual managers no doubt expected to benefit individually financially from an (apparently) buoyant company. It is depressing that this behaviour seems to have accompanied privatisation over the years like a bad smell.
Agent_Squash
Established Member
- Joined
- 22 Jul 2016
- Messages
- 1,245
It was Stagecoach, and they weren’t best pleased that it went out to tender again in the first place…
And probably most of the passengers soon went from being deliriously happy at seeing the back of Stagecoach to come back Stagecoach all is forgiven.
Bertie the bus
Established Member
- Joined
- 15 Aug 2014
- Messages
- 3,007
Especially when you consider what happens to many management buyouts. They are snapped up by larger companies and the managers make a mint.
Eyersey468
Established Member
- Joined
- 14 Sep 2018
- Messages
- 2,367
Sorry for my ignorance what is ORCATS?
ScottGallagher
Member
- Joined
- 9 Dec 2012
- Messages
- 726
At least for the earlier disrupted years, whoever missed on what is GTR and the 2016 incarnation of Northern.
Does anyone remember off hand who the losing bidders were?
Does anyone remember off hand who the losing bidders were?
"Operational Research Computerised Allocation of Tickets to Services"
In simple terms, a system for sharing ticket revenue if a ticket can be used on more than one operator.
Based on some searching I find the following:
Northern (2016)
Arriva - win
- Abellio, Govia
GTR (originally 2012, then 2014 before multiple extensions)
Govia - win
- Abellio, FirstGroup, MTR and Stagecoach
Corrections gratefully received.
Last edited:
Eyersey468
Established Member
- Joined
- 14 Sep 2018
- Messages
- 2,367
Thanks @AngusH
Was Operation Princess a Virgin specific failure, or would anyone have done that?
Purely my opinion but from memory Operation Princess was a toxic mix of technical issues with the then new Voyager fleet, capacity issues on the trains and on the infrastructure and an insufficiently robust timetable plan. I think after the initial trauma and chaos some of the weaker extremities of the original network design were ditched and performance recovered. There was some continued criticism of overcrowding on single 4-car Voyagers and the pervading "toilet smell" which often raised its head. Another operator would have avoided many of the Operation Princess problems but may well have been criticised for being too "plain vanilla" and outdated.
Snow1964
Established Member
There were other parts of Operation Princess that were quickly dropped, there was supposed to be some speeded up services by using differential speed limits eg on selected sections between Leamington Spa and Southampton. Without the speeding up some of the daytime turnarounds couldn’t be comfortably reached so some services got shortened at their extremities. Another was more seats (there was a plan for growth, and it would have involved adding a sixth coach as traffic built up, coach E, even now voyagers have coaches A, B, C, D, F as coach E never got built).
But as GordonT says, the alternative would probably have been more of the same, a mixed fleet ever since the Government stopped BR from buying more HSTs for cross country in early 1980s
thenorthern
Established Member
- Joined
- 27 May 2013
- Messages
- 4,247
How much of the franchise bids are actually published?
I know with the ITV Franchise bids a lot of their proposals were published most notably in 1991 it was revealed how much in premiums each company would pay was published which showed why Thames Television lost to Carlton Television.
I know with the ITV Franchise bids a lot of their proposals were published most notably in 1991 it was revealed how much in premiums each company would pay was published which showed why Thames Television lost to Carlton Television.
OT but in that case the process was rigged to ensure Thames wouldn't win as Thatcher got annoyed that they had done a program not showing her in a very good light, an apology from her to the head of TV-AM that got published in a newspaper after they also lost out proved that.
thenorthern
Established Member
- Joined
- 27 May 2013
- Messages
- 4,247
Sort of there were other reasons most notably Thames Television saw the other companies as rivals and didn't work well with them. Most notably it saw LWT as a rival and refused to promote LWT shows and work with LWT on other things such as news. It also had relatively poor industrial relations and was prone to strikes which is bad for the viewer.
In simple terms many of the reasons Thames lost was for the same reason railway companies lose franchises. Poor industrial relations and acting snobbish.
I’ve not heard of any rail franchise being officially lost or withdrawn due to poor industrial relations.
At one point the DfT seemed almost to be encouraging TOCs to give the unions a kicking did it not? I expect that most bidders would have routinely included a significant amount within their bid to cover revenue loss from any likely skirmishes.
- Status