First win Intercity West Coast franchise

[Morgsie]

The reason why morale will be low at VT is that VT are doing their best to scare their current staff, I work for First and they aren't actually bad to work for and also get plenty of perks. The current VT management are scaremongering because they have nothing to lose as I'll bet first have a good management cull when they take over in December!

Actually Virgin are losing everything, No more Virgin presence in the Rail industry come December if DfT go ahead and sign the contract

 

[Wath Yard]

Actually Virgin is losing everything

Boo hoo! Seriously, who cares if Branson or Stagecoach shareholders are losing something? When it comes to franchises the following groups are important in descending order:

Passengers/Tax Payers
(big gap)
Staff
Enthusiast who care about the livery on trains
Someone whose Aunt once had her foot run over by a First bus driver
(big gap)
Branson and his ilk

 

[Aictos]

Similarly passengers used to Stagecoach's Goldline buses (leather seats etc) might find Magicbus services a bit of a step down, but Stagecoach are good at offering different levels of service to different markets (competing against themselves at times - e.g. the initial Megabus services in Scotland competed with existing Stagecoach coach routes like Edinburgh to St Andrews).

Can't judge a company by one part of the operation.

Exactly but isn't Virgin and their fanboy base doing exactly the opposite I mean come on it will still be the same trains, First won't suddenly decide to run 142s between Euston and Glasgow however attractive that might be!!!

I'm looking forward to welcoming West Coast staff to First, I will also be using them a lot more then I've ever done so from December

 

[RPI]

Actually Virgin are losing everything, No more Virgin presence in the Rail industry come December if DfT go ahead and sign the contract

Is that a violin I hear? Bransons a big boy in the real world, I'm sure he will survive.

 

[tbtc]

Actually Virgin are losing everything, No more Virgin presence in the Rail industry come December if DfT go ahead and sign the contract

They can't have ever imagined that this would happen when they applied for fixed term contracts int he rail industry...

 

[jon0844]

Too be fair I have been taken aback by all the pro VT support

I'm restricted in my comments but it seems that more people love VT than don't

Given how much Virgin has been asking people to sign the petition, plus celebs etc - is it actually that many?

How many followers does Stephen Fry have? They didn't all sign did they?

 

[Metroland]

So that means as long as you have good PR, you neednt offer a brilliant bid, and the service will never be improved? These people will eventually realise they are getting a good service from First, and will forget all about Virgin, because currently its mainly the PR causing all this.

Or it could be that people are worried that First have overbid and the service will deteriorate or some fares will be hiked to meet premium targets. Not helped by the general perception in polls, comments and interviews as well as railway industry surveys that First isn't as good as Virgin. And because their brand is weaker (and frankly less well known) this may limit their ability to attract customers and pay premiums.

All this was really well illustrated with National Express. People perceived the brand to be less worthy than GNER, they overbid, service deteriorated, which made the problem worse, margins crumbled and that franchise failed.

The problem is these deals have been done in secret, the process is not transparent, and the government of the day may be pushing an agenda that may make things worse for railway customers. Such as extracting the maximum amount of premium to cut overall railway subsidy because they are under pressure from lobby groups, people with political ideology, or factions within the government.

 

[junglejames]

Or it could be that people are worried that First have overbid and the service will deteriorate or some fares will be hiked to meet premium targets. Not helped by the general perception in polls, comments and interviews as well as railway industry surveys that First isn't as good as Virgin. And because their brand is weaker (and frankly less well known) this may limit their ability to attract customers and pay premiums.

All this was really well illustrated with National Express. People perceived the brand to be less worthy than GNER, they overbid, service deteriorated, which made the problem worse, margins crumbled and that franchise failed.

The problem is these deals have been done in secret, the process is not transparent, and the government of the day may be pushing an agenda that may make things worse for railway customers. Such as extracting the maximum amount of premium to cut overall railway subsidy because they are under pressure from lobby groups, people with political ideology, or factions within the government.

Yes some people do think First have overbid, thanks to Branson bleating on. However it cannot be proved, so is no reason to not award them the franchise.
The chance of people not travelling because of some odd perception that Virgin are better is unlikely to happen. Passengers will still travel. At the end of the day, it is only 110,000. Hardly a large number in the grand scheme of things. But even those 110,000 will travel, because most just think they are losing pendys, or are jumping on a bandwagon.

 

[WatcherZero]

According to Dft sources the Dft has been trying to stonewall a Virgin appeal by taking as long as possible and providing as little information as possible to its requests for clarification. The source alleges they are pursuing a stategy of trying to avoid providing enough detailed information on which to lodge an independent appeal hoping Virgin runs out of time.

 

[bnm]

According to Dft sources the Dft has been trying to stonewall a Virgin appeal by taking as long as possible and providing as little information as possible to its requests for clarification. The source alleges they are pursuing a stategy of trying to avoid providing enough detailed information on which to lodge an independent appeal hoping Virgin runs out of time.

And your source please?

 

[PR1Berske]

From the Telegraph:

"

By Nathalie Thomas


Sir Richard Branson has offered to run the West Coast line for free for several months if it would allow Parliament time to scrutinise the Government’s controversial decision to hand the franchise to FirstGroup on “unrealistic” grounds.

The entrepreneur, whose Virgin Trains has been operating the London to Scotland services for 15 years, has made a last-ditch appeal to the Government to delay signing a new 13-year contract with FirstGroup on Tuesday.

Justine Greening, Secretary of State for Transport, is also coming under pressure from the chair of the Transport Select Committee, Louise Ellman, to hold off awarding the new franchise until FirstGroup’s near £10bn bid can be investigated properly by MPs.

Sir Richard, who believes FirstGroup’s bid will lead to “almost certain bankruptcy”, is also pressing for an independent audit of the Department for Transport’s decision after analysts branded FirstGroup’s growth assumptions as “aggressive”, “risky” and “demanding”.

More than 100,000 members of the public have signed an online petition in protest at the prospect of FirstGroup taking over the franchise from Virgin Rail Group – a joint venture between Virgin Trains and Stagecoach – on December 9

Virgin believes the Government now has no excuse to avoid a parliamentary probe, as it will not cost ministers anything to delay the franchise by a couple of months.

“It is far better for MPs to have the chance to debate the issues, and question ministers on the detail before the decision is finalised. To assist in this process, there should be an independent audit of the DfT decision to ensure it has been based on correct criteria and reliable forecasting of customer numbers, revenue and payments to Government,” Sir Richard said in an opinion piece written for The Sunday Telegraph.

“If this process means extending the current franchise beyond December for a few months, I and my partners at Stagecoach would happily run the extended franchise on a not-for-profit basis, or donate profits to charity. We must ensure that this crucial decision is taken with all the facts correctly assessed and understood.”

Sir Richard accepts he has a “vested interest”, but added: “City analysts, politicians, media commentators and – most importantly – our many loyal customers have seized on this decision as outrageous, unjust and simply wrong.”

Ms Ellman has advocated delaying the contract “for a short while” so MPs on the Transport Select Committee can “address the concerns”.

Despite the public and political outcry, the DfT has so far resisted any pressure to postpone, saying: “Our published processes and criteria do not provide for a role in a live procurement exercise for the Transport Select Committee, which has not requested any kind of dialogue on this issue before now.”

George Muir, the former director-general of the Association of Train Operating Companies (Atoc), has also weighed into the debate, calling FirstGroup’s bid “extraordinary”.

Mr Muir, who was at Atoc for nine years, blamed the DfT for “encouraging gamesmanship” by accepting such a high offer.

FirstGroup assumes that the London to Scotland line will grow at a rate of 10.4pc a year, but a trading update from Stagecoach last week revealed the operation has experienced revenue growth of just 0.6pc since April.

John Lawson, transport analyst at Investec, said FirstGroup’s bid could prove to be “very profitable” if its assumptions are correct, but he warned the “stakes are high”.

“The top-line assumptions look punchy and leave little room for error,” Mr Lawson added in a note.

Tim O’Toole, chief executive of FirstGroup, last week said Sir Richard’s objections were nothing but “histrionics” and accused him of trying to make “outrageous” returns on the franchise at the expense of the taxpayer.

FirstGroup is also pressing ahead with three further franchise bids despite the outcry over West Coast.

 

[NSEFAN]

FFS this is getting ridiculous. If Branson et al wanted to run the WCML, then why did they sit on their backsides and not make a higher bid, as per the process in place? :roll:

Does he think that by throwing a tantrum in this way, he'll somehow get the WCML back and carry on in the same old way?

 

[Oliver]

Boo hoo! Seriously, who cares if Branson or Stagecoach shareholders are losing something? When it comes to franchises the following groups are important in descending order:

Passengers/Tax Payers
(big gap)
Staff
Enthusiast who care about the livery on trains
Someone whose Aunt once had her foot run over by a First bus driver
(big gap)
Branson and his ilk

I don't agree. It is important that TOCs are treated properly, e.g. that the franchising process is clear and administered properly. If not, companies will simply choose not to participate, leaving the market open for chancers, and the resultant services will be poorer. However, there will always be losers in a proper bidding process, and this time Virgin/Stagecoach lost. It's notable that only Beardie has throw his toys out of the pram. Souter has kept his counsel.

 

[Pen Mill]

It will be rather boring when it's all over.

No it won't it's boring now

 

[Whistler40145]

I agree. Glad when it's all over.

 

[tbtc]

Or it could be that people are worried that First have overbid and the service will deteriorate or some fares will be hiked to meet premium targets. Not helped by the general perception in polls, comments and interviews as well as railway industry surveys that First isn't as good as Virgin

Perception counts for a lot. But the PPM stats show that First are better at running a long distance TOC than Virgin are (despite Virgin having modern trains and an upgraded WCML to play with). Not that the 110,000 sheep will understand that...

 

[Whistler40145]

Do I detect a case of the mushroom syndrome?

 

[Hazlehead]

Jesus, Running for free? This stinks of desperation now. Any respect I had for the bearded one has now gone.

 

[Metroland]

I don't agree. It is important that TOCs are treated properly, e.g. that the franchising process is clear and administered properly. If not, companies will simply choose not to participate, leaving the market open for chancers, and the resultant services will be poorer.

Or Rail will simply be less attractive to private sector investment. No responsible company should be putting in bids in that are unrealistic, this will simply lead to investors taking flight or ultimately bankruptcy. The result is the tax payer picks up more of the bill, leading ultimately to the government pulling the plug. The debate has already started in some quarters about the value of highly subsidised branch lines and regional networks and why should London commuters and intercity passengers be subsidising lines in Lincolnshire. Of course we know the counter arguments about the value of networks. But if key intercity franchises keep failing, at some point or other the voices at the back of the hall are going to get louder.

I agree with the comments from George Muir - The DFT are promoting gamesmanship.

However, there will always be losers in a proper bidding process, and this time Virgin/Stagecoach lost. It's notable that only Beardie has throw his toys out of the pram. Souter has kept his counsel.

Maybe because, for now, Stagecoach wish to remain in the rail business, especially with lucrative franchises like SWT. Souter has complained in the passed about 'Toppy bids'.

What people should really be concerned about is this nugget of information.

"FirstGroup assumes that the London to Scotland line will grow at a rate of 10.4pc a year, but a trading update from Stagecoach last week revealed the operation has experienced revenue growth of just 0.6pc since April."

--- old post above --- --- new post below ---

Perception counts for a lot. But the PPM stats show that First are better at running a long distance TOC than Virgin are (despite Virgin having modern trains and an upgraded WCML to play with). Not that the 110,000 sheep will understand that...

PPM doesn't count for a lot because TOCs do not have full control over the performance of their franchise. Don't forget Virgin have sent people to Network rail, because many of the problems of the WCML are laid at their door.

http://www.networkrail.co.uk/news/2...perating-officer-is-seconded-to-Network-Rail/

 

[tbtc]

if key intercity franchises keep failing

How many have failed?

Two?

One of those (GNER) was more to do with problems at the parent company (Sea Containers) and Open Access operators, rather than necessarily overbidding.

The other (NXEC) wasn't even the highest bidder.

Everyone has accepted Branson's propaganda that First must have over-bid because they bid more than Virgin did.

Maybe First can be more efficient (in terms of back office work etc)? Maybe First were planning on taking lower profits out of the franchise? Who knows.

But the way that so many people assume that First's figures can't add up because they are offering more than Virgin shops how we all gobble up the propaganda.
--- old post above --- --- new post below ---

PPM doesn't count for a lot because TOCs do not have full control over the performance of their franchise

They don't have full control, no.

But its one benchmark of whether a TOC is doing well or not (how many trains they are managing to keep running, how well maintained they are, how reliable they are, what they will do as "plan B" when things start to go wrong...).

Since we don't know whether one premium is realistic or not over the rest of the decade, at least the PPM figures are a real guide to how good companies are.

 

[LNW-GW Joint]

But its one benchmark of whether a TOC is doing well or not (how many trains they are managing to keep running, how well maintained they are, how reliable they are, what they will do as "plan B" when things start to go wrong...).
Since we don't know whether one premium is realistic or not over the rest of the decade, at least the PPM figures are a real guide to how good companies are.

The PPM MAA for the three long-distance TOCs (VT, EC, FGW) are currently 85.5, 87.0, 90.7 respectively.
The FGW figures need the local trains removing for a proper comparison, and I expect it would then be similar to the other two.
Subjectively they all seem to have pretty good LDHS train performance (staffing, reliability, availability etc), unlike some local TOCs.
So the PPM figures are really a measure of how Network Rail is performing on each route.
There are probably more excuses on GW than the others, with all the upgrade work going on.
The WCML continues to fail too often, especially south of MK. Recovery always seems slow, and it's largely new kit.
The ECML also has repeated problems with its older kit, but they seem to recover better.
Basically, I wouldn't use PPM as a differentiator between these TOCs, more a reflection on NR's performance.
And First will take over just before the next blitz of WCML resignalling at Bletchley, so being in the PPM basement will soon be First's PR problem.

 

[davido39]

My point was that large corporations can own many businesses in many fields and the above do more than just make foods, owning lots of big name brands.

Or consider Serco, from rubbish collection to managing traffic lights to running the DLR.

In other words, what they do in one subsidiary is not necessarily relevant to another. The VT supporters are trying to slate First based on its bus operations when they're doing just fine in rail and the people running buses aren't running the trains.

I hardly think introducing Pacer units to The West Country had the people cheering First, granted Sprinters have now replaced the Pacers bur after Regional Railways Introducing Pacers, or Skippers as the locals called them only to withdraw them and ship them down to the North West/North East because of the tight curves and gradients and some people being sick do to the bouncing. And the HST having less room and some people actually describing them as cattle trucks!

How First won the contract I have no idea as they have had to close bus depots due to massive dept's, Ok someone mentioned on this thread that the government investigated First's finances and asked how they were going to run the 14 year franchise and apparently First took out a bank loan for the franchise and it would be the banks responsibility if First faltered! so does that mean if First pull out of the franchise West Coast would be managed by a bank?

And I can't justify your argument on judging First by it's bus operations. Stagecoach have both bus and rail operations and manage to still innovate in their bus operation. First on the other hand seem to have lost ground with their bus operation. Maybe because their concentrating to much in the rail business. And unfortunately a company will be judged on all their operations specially the general public who after all First are serving but seem to be treating as unimportant!

 

[F Great Eastern]

Are Virgin paying a premium now or are they getting a subsidy.

The reason I ask is if it's the former, then Branson offering to run the line for 'free' seems to suggest he will actually be better off as running for free will lead him into a better cash situation than having to pay the government to run the line....

 

[David10]

One of those (GNER) was more to do with problems at the parent company (Sea Containers) and Open Access operators, rather than necessarily overbidding.

The presence of Open Access Operators was really just a smokescreen, Hull Trains were around before the franchise was relet and the impact Grand Central was going to have was overstated. GNER's problem was that it overbid, something like 30% more than anyone else. It also came up with some lame excuses like because Network Rail got its act together, delay compensation receipts dropped.

Ultimately it was Sea Containers not being willing to stump up an enhanced bond that saw the keys handed back in 2006. This was before the recession hit and GNER was still losing money, so even without Sea Containers hitting the skids, failure was inevitable.
--- old post above --- --- new post below ---

Are Virgin paying a premium now or are they getting a subsidy.

I believe that under the franchise extension Virgin were to pay a premium, but expected to be receiving revenue support from Day 1.

If the franchise cannot be handed over in December it would probably go onto a management contract with the DfT receiving the revenue and Virgin being reimbursed for costs + a management fee. The DfT could award it to Virgin or bring it in house like it did with East Coast, neither being desirable.

 

[rail-britain]

Jesus, Running for free? This stinks of desperation now. Any respect I had for the bearded one has now gone.

I couldn't contain my laughter when I read this (running the franchise beyond its expiry, either at no-cost or with the profits going to charity)

Firstly, I have never heard of any government contract having this applied

If First Group agreed to postponing the signing of contracts and the franchise was extended, this suggests Virgin Rail Group would be more confident of having the decision reversed
Again, it is almost of unheard of of such a contract being reversed and awarded to another party, in such cases the process recommences
As advised previously, there is already a process in place for that (using DOR)

The Virgin marketing machine has stooped to new lows now...

Nextly, if First Group were left in limbo, what would the financial implications be?
I assume they would be entitled to operating costs, as defined in the contract
Equally, the contract is a fixed term, so a new contract would be required
The original ITT advises that a contract must be signed by a specific date, there is no provision for delay

 

[krisk]

Given how much Virgin has been asking people to sign the petition, plus celebs etc - is it actually that many?

How many followers does Stephen Fry have? They didn't all sign did they?

Let me explain. In normal circumstances when following the twitter feed it feels as though everyone is against VT and many want to complain. Yet since this announcement so many people have come out supporting VT

 

[tbtc]

Given that Virgin employ a number of people on fixed term contracts which expire in December 2012, how on earth do they propose to continue the franchise "for a few more months"? Hope that these people will sign contract extensions for a limited period? Train up people to replace those unwilling to stick around for a few more weeks? Bonkers.

The whole thing is as sad as watching a spurned spouse promising that they can change if only they are given one more chance... desperate.

 

[Whistler40145]

I think Virgin should stop trying to cling on & get real.

 

[Cliveblackpool]

Spurned spouse! Clutching at straws!!
It is simply business and a lot of money at stake!!
Hopefully improvements will be made to future bidding for running a TOC.
Stupid parameters in place.
Choice should be who has the best operating plan, and provide the best service for the public.
Second a sound deal for the taxpayer.
Having improved rail services can benefit communities immensely - far more than the DfT rake off!

 

[Whistler40145]

Is the farcical bidding process down to the current Government?