FirstGroup vies with Virgin in west coast rail bidding war

[Class377/5]

I don't think it is wise to consider the figures in absolute terms.

The "margin" may be say £350m, in which case First are offering "twice" as much relatively than Virgin.

I was working on average to show that there wasn't much in it and that First bad, Virgin good stance wasn't what the leaked figures (which we're all discussing) lead the poster who I was replying to to believe.

 

[David10]

Both Abellio and MTR Corporation are relative newcomers to the UK rail industry, yet they have both been awarded franchises. I don’t recall that the Go Ahead Group were awarded/bid for anything in the original round of franchising either, yet they now operate a number of franchises.

Abellio has operated Merseyrail since 2003 and Northern since 2004 in partnership with Serco, so hardly inexperienced. Go-Ahead was a partner in the original Thameslink and Thames Trains franchises.

 

[sprinterguy]

Abellio has operated Merseyrail since 2003 and Northern since 2004 in partnership with Serco, so hardly inexperienced.

My point was that they had zero experience of operating in the UK rail industry prior to gaining the Merseyrail and Northern franchises. Nothing to do with the present West Coast bidding.

 

[krisk]

Roll on Tuesday

 

[cle]

See one thing I can't understand is the view point First = 'massive' staff cuts, Virgin = good.

First are offering £7bn over 14 years or £500m per year

Virgin are offering £6bn over 14 years or £428m per year

These figures are based on the leak stuff but if First have to do massive pay cuts to achieve the £500m, I doubt that Virgin wouldn't be looking to do the same just not quite as much. Maybe 'large' staff cuts then?

Does that include contingency/planning for redundancy? Or would that come out of First's profit?

 

[Skimble19]

Ah ok, crikey - i didn't realise they'd done that much then! You can see why First were so keen to catch Mark Hopwood then.

I must admit that he seems to be one of the best managers out there, in all the interviews he's done he always comes across as down to earth and extremely passionate about what he does.. You get the feeling that to him it's more than "just a job" like certain other managers!

 

[tbtc]

Does that include contingency/planning for redundancy? Or would that come out of First's profit?

Peanuts, in the grand scheme of things, considering how most staff are going to be retained by whoever wins the franchise and many of those who lose their positions will only be contracted up until the end of the current franchise.

That is debatable. Anytime fares on the WCML are already buckling under the pressure of continual rises. Standard Class Seasons are regulated, and the SOR:7DS ratio is reaching equilibrium on many flows (whereas under BR and at the start of the franchise it was more like 4:1).

For example, Crewe to Milton Keynes. SOR £152. 7DS £152.40. Also Stoke to London Euston. SOR £246. 7DS £305.10.

Whilst there is nothing to stop VT or First increasing Anytime fares above the level of a 7DS (for which fare increases are limited by those set by the government, and for which any huge rises would provoke outrage among commuters), people would simply switch to using season tickets, which is perfectly legitimate. (Also, whilst I can't confirm this, I don't believe TOCs are allowed to withdraw 7DS fares which have always been available).

With regard to the FORs, when you consider the plummeting numbers of First Class passengers in recent years, to increase these fares by 50% or 100% would make no business sense whatsoever, especially if there was a reduced level of service.

Well if we assume/ expect that a winning First bid would mean squeezing more money out of the franchise than the current Virgin deal (which pays a much lower premium to the Treasury) then any winning Virgin bid is going to have to make most of the same cuts/squeezings.

Maybe the way forward would be to cut the number of First Class carriages to accommodate more cheap seats? If the First Class numbers have plummeted so much then there's little need for three coaches on each Pendolini.

 

[All Line Rover]

Maybe the way forward would be to cut the number of First Class carriages to accommodate more cheap seats? If the First Class numbers have plummeted so much then there's little need for three coaches on each Pendolini.

Four. A Standard Premium has been mooted for one of the four carriages, which might work.

 

[ainsworth74]

A Standard Premium has been mooted for one of the four carriages, which might work.

Seems logical, certainly on quieter services. You could market it as offering a bigger/comfortable seat, free wi-fi and perhaps complementary tea/coffee/soft drink/water. You could even offer the alcoholic drinks, sandwiches and whatnot for sale at seat. Either way it strikes me that it would be silly not to at least consider something like that.

 

[tbtc]

Four. A Standard Premium has been mooted for one of the four carriages, which might work.

Sorry, four.

But First Class is becoming a luxury as many companies (including the large one that I work for) won't pay for it on expenses. You can travel first class to get a tenner's worth of free food/drink, but the marginal cost of upgrading is a lot more than that ten pounds.

I presume that both First and Virgin are bidding on the basis that fewer and fewer people will pay the full price of First Class tickets.

 

[Class377/5]

Does that include contingency/planning for redundancy? Or would that come out of First's profit?

Considering I'm quoting this leak, not sure how you expect me to know.

Considering the figures are for both Virgin and First the question should be will it come out of either's profit.

One I was making is poster seems to think Virgin are ok to get £6bn figure where as they think First is bad for getting a £7bn over a 14yr period. Seems very unfair point to make.

 

[Yourang]

First have bid a crazy amount. I just cannot see how they will deliver the revenue growth. It must be close to double figure percentages per year, every year! Long distance is running at about 6-7% at the moment. you only need one bad year and the cumulative effects on a long 15 year franchise mean you are in trouble very quickly. NatEx all over again. I worked there, it was awful.

But they have won, and it will be announced next week apparently. I worry for my job and my colleagues, I'm a TM. Morale is not good at the moment. I seem to choose the wrong places to work!

Expect Virgin to challenge the decision legally and to dump all the advance fares for the first weeks of the new franchise (xmas and new year) - deals to be had! This will straightaway reduce first's revenue.

Also...

I happened upon this below link whilst looking for a hobby store on my visit to the States - First have registered a company name for 'horizon trains'. Further investigation shows they have domain names too and a trademark.

http://companycheck.co.uk/company/07939526

 

[YorkshireRider]

Four. A Standard Premium has been mooted for one of the four carriages, which might work.

You have to be careful with that policy however, the idea of this would be to temp people out of standard but what you dont want is to temp people out of first class, i cant see it happening myself.

 

[David10]

You have to be careful with that policy however, the idea of this would be to temp people out of standard but what you dont want is to temp people out of first class, i cant see it happening myself.

Maybe more like Coach D on Virgin's Voyagers, seats arranged in bays of 4 around a table but standard class seating.

 

[Wath Yard]

Virgin might only be gone for a year anyway, surely they'd put everything into trying to get East Coast if they lose this?

I don't see it if East Coast becomes a multi-purpose franchise, as all the signs are pointing it to go.

Even if East Coast stays as is, anybody hoping for a Virgin comeback is likely to be disappointed. They last won a franchise in 1997, and since then their record has been something like 0/4.
--- old post above --- --- new post below ---

Hi all.

I currently side within VT and thought i'd share my views with you all. My thoughts and views are from a rail employ and not a customer.

Up until the recent articles that have been released we (all VT staff) were very much looking forward to hearing VT were going to get the franchise. However, since this information came out its put massive doubts in our minds.

I was talking with someone who is high up with the exec's and he said he is basically worried. Mr B wouldnt be writting to J.Greening direct if he didt have real concerns - I guess hes correct, its sounds feasable.

With regards to VT 'pulling the rug from the bid team' - They were brought into the company with one goal, and that was to put together a successful bid. Once the bid has been submitted to the DFT then theres nothing anyone can do. They were all aware when they accepted their fixed term contracts they wouldnt stay with the company after the bid was sent, so to say VT sacked them all isnt correct.

I left TPE to be with VT because back then VT were the rail company of choice. High profile, good wages, excellent salary. It had everything. I've been here for a long time now and love it.

It would be a huge shame should VT lose the franchise, but I guess thats what happens in business/franchise.

From what information I can gather First are going to keep the onboard shop but make huge cuts to the catering teams. At present on any breakfast service you have 1 in the shop and upto 7 working in 1st class. 1 Service Manager, CSAs and 1 Chef. There are around 850 catering staff.

Under First they propose to have 1 on the shop and upto 3 max in 1st class dependant on the service they are working, (Pendolinos). Voyagers will remain 2 staff, 1 in the shop 1 in 1st. Everyone will be paid a CSA rate of paid, greatly reduced from what they currently get paid.

I have'nt leaked any pay information, its for all to see on the careers website but Service Managers are paid in excess of £31,000 a year, Assistant Service Managers in excess of £28,000 a year, Chefs about £26,000 and CSAs upto £26,000 a year dependant on location. (higher pay in London). Obviously all pro-rotated pay (but figures above based on 41hr week).

It may take time for these changes to come into effect, anything upto 12 months. Imagine how much money they would save from all that?!

To give you an idea there are currently around 120 staff across all departments which have fixed term contracts that expire on 8th December 2012. I very much think they will instantly be gone under First.

VT are the first rail company in the UK (to my knowledge) which employ weekend casual staff, there isnt many, but they will also go, as would the purpose built recruitment centre.

As you can see theres a lot of people who would be effected by a potential takeover from First. To say we are worried is an understatment.

I just hope the DFT make the right choice.

Just my 10p to add to the conversation.

Regards,

A very worried TM and ex caterer.

Although as a regular passenger I have been far from impressed with what Virgin has done, and even less impressed with the fare rises on unregulated tickets and extension of peak times and am glad to see them go, I have to say the above does make me have quite a lot of sympathy for the staff involved.

However, it also possibly includes a few clues as to why First might succeed. Costs have got out of hand - just look at the total wages for staff on one train! Virgin are interested in making money and their public image. First, on the other hand, are mainly just in it for the money. Cutting costs affects a company's public image, therefore Virgin were always going to be less likely to do so, but if First do it aggressively they could make some serious cut in costs, and over 14 years that could go a long way towards the differences in the bids.

 

[455driver]

Staff numbers as of December 2010 are available to view here. Almost 1200 onboard staff (2/3 catering sounds about right), over 500 drivers (imagine how much that must cost! hock, over 800 station staff and almost 500 other staff. Shedding 500 catering staff would, in an instant, eliminate almost 20% of the workforce.

Is that all?
SWT have over 1200 drivers!

 

[fgwrich]

Tweet from Rodger Ford:

Roger Ford‏@Captain_Deltic

Not forgetting a thank you to sirs Brian and Richard for the free ice cream. Commiserations over the loss of West Coast.

https://twitter.com/Captain_Deltic/status/233684280780402688

So, is the game now fully over then?

Is that all?
SWT have over 1200 drivers!

And increasing!

 

[Yourang]

Yes. Firstgroup horizon trains have won.

 

[HawkeyeTheNoo]

Yes. Firstgroup horizon trains have won.

Nothing about this on the DFT's own site so grateful if you could confirm where this info has come from! Cheers

 

[Yourang]

A1 sources. Will be announced next week. Much of what dan Milmo says in the guardian is correct. Frogs and clogs have been out for ages. Virgin will likely challenge.

 

[whhistle]

Given First Group's track record, expect grubby, graffiti-daubed Pendolinos with dirty seats and the same smelly toilets in gradually fading Virgin livery until its accountants decide to hand back the keys to the franchise two thirds of the way through.

What a load of old rubbish.

First Capital Connect is a regional operator, so cannot be used as a comparison.

I find First get their new livery out pretty quickly compared with the likes of East Coast. If you really want a regional operator to compare to then look at ye olde Central Trains, which had units in Regional Railways livery.

Plus, from the business side, they simply exercised their right to hand back their franchise early. Still don't understand why people blame First when it was agreed they could?
Furthermore, First have been leaders in many aspects of railways. Were they not the first company to use ATPWS? The first to get their HST's re-engined? Perhaps not, I'm not sure on that.

Not particularly protecting First just not saying things aren't as bad as you made out.

Some things that have been said to me I can not relay on here as it would be a breach of confidently.

Ohh, so you're playing the "I know something you don't know" game :roll:
Remember, you're not the only Virgin Trains staff member here, or indeed TOC employee. But it's hard to ignore the evidence that points to First having already been chosen.

As someone else pointed out, First have yet to comment on all this. Perhaps they are playing to the rules unlike other interested parties.

But as another member asked, why do you keep saying the same thing... "wait and see", "no one knows anything yet", "all just rumours" - it's not exactly adding to the thread :/

The VT bid is also massive and there will have to be cuts and revenue increases left, right and centre regardless of the colour of the train.

At last! Someone who has realised Virgin's significant increase from their current £160m per year to very nearly the same as what First would have to pay.
Virgin will do the same as First, it's just they (Virgin) have shouted about how First will do it. They are likely to fall flat on their face in the end.

Reminds me of Bombardier statement that they will have to cut hundreds of jobs because they were not awarded a contract, yet the fact they were going to make the cuts anyway escapes most people. The same thing is happening here.

Although this section of my reply has been suggested before by other peoples.

I am definitely siding with the Virgin camp on this one - there doesn't seem to be any real benefit in First's proposals - less boots on the ground in First, massive staff cuts everywhere... Virgin are certainly on the "good guy" side at the moment in my mind!

But as others have stated, how do you know Virgin aren't going to make the same sorts of cuts as First. Virgin have simply shouted about how First "will have to" make the cuts, yet Virgin will too.

Yes. Firstgroup horizon trains have won.

Without an official source or any source for that matter, this post is useless.

 

[Ferret]

Virgin will likely challenge.

On what grounds?!

 

[Wath Yard]

But as others have stated, how do you know Virgin aren't going to make the same sorts of cuts as First. Virgin have simply shouted about how First "will have to" make the cuts, yet Virgin will too.

It just shows the gullibility of some people. An entrepreneur claims he is the best person to operate a service - no #### Sherlock!

It doesn't help when the general media have turned Branson into some kind of consumer champion and the railway media are entirely uncritical of anything Virgin Trains do. Though, I would have thought the Virgin Atlantic/BA price fixing scandal should have opened people's eyes a bit.

 

[spyontheinside]

Even more stories in the news today about first getting it. Looks to be correct.

Do FirstGroup have a final salary pension scheme? VT do, so will it transfer? :roll:

 

[Ferret]

Do FirstGroup have a final salary pension scheme? VT do, so will it transfer? :roll:

I suppose that will be subject to negotiations between RMT/ASLEF reps and the new management!

 

[spyontheinside]

Should I get registered with a union ASAP then?

So, whats this Horizon Trains Limited, is this the potential new name?

I feel so sorry for a lot of other staff right now. There are families currently working for VT (catering) which both husband and wife work here. It would be devestating for them all to go.

 

[Ferret]

I'll be amazed if Catering goes completely. Even as railway staff myself, I've always felt that West Coast had too many staff on board, I guess we'll see in due course what the winning bidder's plans will be. Best wishes to all at West Coast in these uncertain times - the only thing I'll say is that at this stage, there have only been rumours and conjecture spread around. Wait for concrete info from the new Management team (or existing management!) before going into a panic!

 

[spyontheinside]

Is that all?
SWT have over 1200 drivers!

+ VT drivers have just got a pay increase to a basic 63k. Which I cannot understand at this time of the franchise. RMT/ASLEF for ya'.
--- old post above --- --- new post below ---
Very true Ferret. Roll on tuesday...or whatever day they decide to change it to. Next week hopefully! + agreed, cant see there being no catering, but 300 tops is a useable figure.

 

[All Line Rover]

So, whats this Horizon Trains Limited, is this the potential new name?

A legal name, probably. Just like Virgin Trains has a legal name of West Coast Trains Ltd.
--- old post above --- --- new post below ---

+ VT drivers have just got a pay increase to a basic 63k. Which I cannot understand at this time of the franchise. RMT/ASLEF for ya'.

That is astonishing.

 

[swt_passenger]

I suppose that will be subject to negotiations between RMT/ASLEF reps and the new management!

All the TOCs use the same pension scheme don't they? They have separately ring-fenced accounts for their own section, but whatever the West Coast Trains section is will just get transferred to whoever takes over the franchise.

So it shouldn't require any TU negotiations as such - it is dealt with in the franchise ITT:

The Franchisee will become the Designated Employer for the active, retired and deferred members of the current shared cost sections of the Railways Pension Scheme (“RPS”) as defined below:
West Coast Trains Limited Shared Cost Section
Bidders are required to set out their approach to managing the existing pension scheme from the start of the franchise period with all assumptions clearly stated.
Subject to meeting their obligations under the RPS, at the end of the Franchise Period the Franchisee shall have no responsibility for any deficit in the scheme (other than contributions due and payable before and at the end of the Franchise Period by the Franchisee) and have no right to benefit from any surplus which may exist in the relevant section.

Very similar text is in the GW franchise ITT.