FirstGroup vies with Virgin in west coast rail bidding war

[Monty]

Why would a new train capable of running through the Channel Tunnel, not be able to operate along the West Coast Main Line?

Number of reasons I suppose, there was a rule on the length of the trains and the method they were propelled (the trains were required to have powercars or a locomotive and not distributed traction you see on modern EMUs). However this has now been eased to allow DB and Eurostar to run ICE 3s/Velaro stock through the Chunnel. Loading gauge is also obviously a factor, the only passenger trains in existence that is certified for use in the UK, Chunnel and Europe are the Class 373s.

However it has occured to me that SNCF may have proposed they use the leased NoL sets for this possible service (a bit of a cheek since they lease them off us, though it would be nice to see them used on a service they were built for after nearly 20 years!) However I imagine what is non compliant is the bid not the stock, the Daft isn't interested in trains to europe it's interested in trains to Glasgow and Manchester (etc)!

 

[tbtc]

I'd be surprised if they did. The industry is a very leaky one. One of the remaining bidders for WC is on a final warning from DafT about publicising their plans for the upcoming franchise - it annoyed Marsham St greatly. If the Gruaniad was to reference their sources, I'd imagine lots of bricks in various tonnages would be released from height onto various parties.

There is a lot of hearsay rumbling around at the moment - some more believable than others, and some is certainly believed to be the case having been confirmed off the record by various companies involved with the bids.

Points of interest so far:

- one bidder proposed through trains to the continent.
- two bidders proposed to replace the 221s in 2016 using different products, one bidder wanted them to remain. The two remaining bidders have different ideas as to what should happen with the 221 fleet.
- one of the remaining bidders does advocate an almost complete withdrawal and downscaling of the current catering offer.
- neither of the remaining bidders proposed ordering additional cars to lengthen the remaining 390s to 11 cars.

- finally clarification is being sought for on many aspects of one of the bids, which is generally a good indication that the bid is favourable. If the railway journos and insiders are correct with their carpark watching, that bid is not that of the incumbent operator.

Usual disclaimers apply, if you want the info first hand then get chatting to the people in the know.

Very interesting.

I wonder whether, after many years of a privatised railway, bidders have little to differ on (since they know the revenue figures/ cost figures, so have little to "play with" to differentiate their bid) so are seeking some small cherry like a direct service to Paris, Shrewsbury or Blackpool* to try to stand out?

(* - not often you see those three mentioned in the same sentance)

 

[WelshBluebird]

Either way, what are the chances of FirstGroup getting both the WCML franchise and the Great Western franchise? I'd personally be surprised if they got both anyway.

 

[swt_passenger]

Either way, what are the chances of FirstGroup getting both the WCML franchise and the Great Western franchise? I'd personally be surprised if they got both anyway.

What's your reasoning then?

Hint: There are no competition issues.

 

[LNW-GW Joint]

The winner will not be determined by any of the whacky options or new destinations.
Price/premium for the core service (current timetable basically, with all the Pendos deployed) is the only factor.
Once the winner has emerged, they then discuss any options that the bidder has offered.

 

[island]

So, passengers are going to be against having more seats on a train? Given how many end up standing, I think he's misunderstanding what most passengers would rather have - given the choice between a better chance of a seat or a ****-poor cup of overpriced coffee and sandwich, I'd go for the seat any day - I can bring better quality, cheaper food with me.

Other than the first couple of off-peak evening services out of Euston, how many Virgin services are genuinely full and standing? I mean every single seat in either travel class occupied.

 

[tbtc]

The winner will not be determined by any of the whacky options or new destinations.
Price/premium for the core service (current timetable basically, with all the Pendos deployed) is the only factor.
Once the winner has emerged, they then discuss any options that the bidder has offered.

So why would bidders bother to list such "cherries"?

 

[LNW-GW Joint]

So why would bidders bother to list such "cherries"?

I'm only paraphrasing what the ITT says.
It simplifies the ranking of bids, and makes sure DfT gets its pound of flesh for the current service.
I'm sure we'll see a few "cherries" added into the final mix.

 

[rail-britain]

Either way, what are the chances of FirstGroup getting both the WCML franchise and the Great Western franchise? I'd personally be surprised if they got both anyway.

I had previously posted my prediction, and it is looking more certain now
However, there would only be an overlap for a short period
This was a clever strategy in order to exchange the West Coast franchise, and in turn free Virgin Group to bid more competively for the East Coast franchise

The main concern I would have is First Group being involved in three franchises which overlap and effectively remove all competition -
FTPE / West Coast : Preston to Edinburgh / Glasgow
FTPE / West Coast / ScotRail : Carlisle to Glasgow
However, this does make it easier to transfer the Scotland - Manchester routes back to West Coast, if they are not going to be included in the Northern franchise (which we know Virgin Group was not interested in, as they were transferred out of the West Coast franchise originally)

 

[tbtc]

I had previously posted my prediction, and it is looking more certain now
However, there would only be an overlap for a short period
This was a clever strategy in order to exchange the West Coast franchise, and in turn free Virgin Group to bid more competively for the East Coast franchise

The main concern I would have is First Group being involved in three franchises which overlap and effectively remove all competition -
FTPE / West Coast : Preston to Edinburgh / Glasgow
FTPE / West Coast / ScotRail : Carlisle to Glasgow
However, this does make it easier to transfer the Scotland - Manchester routes back to West Coast, if they are not going to be included in the Northern franchise (which we know Virgin Group was not interested in)

Why would that be a problem?

Virgin managed to run West Coast and Cross Country together for many years without anyone having a problem, yet any overlap nowadays suddenly gets seized on by enthusiasts as "anti competitive"

 

[Zoe]

Virgin managed to run West Coast and Cross Country together for many years without anyone having a problem, yet any overlap nowadays suddenly gets seized on by enthusiasts as "anti competitive"

Back in 2000 Virgin were one of the preferred bidders for the new East Coast franchise even though they still had West Coast until 2012. Had it not been for a change of strategy post Hatfield then they could have ended up winning it. I certainly don't remember anyone saying that they would't be allowed to hold both franchises. If it really wasn't allowed then I doubt they would have been considered a preferred bidder.

 

[tbtc]

Back in 2000 Virgin were one of the preferred bidders for the new East Coast franchise even though they still had West Coast until 2012. Had it not been for a change of strategy post Hatfield then they could have ended up winning it. I certainly don't remember anyone saying that they would't be allowed to hold both franchises. If it really wasn't allowed then I doubt they would even been considered a preferred bidder.

...and yet I still see plenty people saying that "operator X cannot get franchise Y because they already operate franchise Z"...

 

[Zoe]

...and yet I still see plenty people saying that "operator X cannot get franchise Y because they already operate franchise Z"...

It would be pointless to shortlist them though if there is no way they are going to be allowed the franchise.

 

[Masboroughlad]

Franchise bidding has changed enormously over the years...Pity we can't se some of the exciting (outlandish?!) bids that came aoround with the second round bids....

Arriva and Sea Containers bids for TP spring to mind

and who could forget Virgin wanting to rebuild the ECML as part of their bid.....

Now its all down to money. Somebody wanting to run a West Coast service to Shrewsbury or Huddersfield say, would be penalised!

Dare I say, it is a bit boring compared to how it used to be - stop selling hot food on baord and we can give the DfT an extra XX million pounds for example.

The customer is most definitely not the winner!

 

[FManc]

I'd be surprised if they did. The industry is a very leaky one. One of the remaining bidders for WC is on a final warning from DafT about publicising their plans for the upcoming franchise - it annoyed Marsham St greatly. If the Gruaniad was to reference their sources, I'd imagine lots of bricks in various tonnages would be released from height onto various parties.

There is a lot of hearsay rumbling around at the moment - some more believable than others, and some is certainly believed to be the case having been confirmed off the record by various companies involved with the bids.

Points of interest so far:

- one bidder proposed through trains to the continent.
- two bidders proposed to replace the 221s in 2016 using different products, one bidder wanted them to remain. The two remaining bidders have different ideas as to what should happen with the 221 fleet.
- one of the remaining bidders does advocate an almost complete withdrawal and downscaling of the current catering offer.
- neither of the remaining bidders proposed ordering additional cars to lengthen the remaining 390s to 11 cars.

- finally clarification is being sought for on many aspects of one of the bids, which is generally a good indication that the bid is favourable. If the railway journos and insiders are correct with their carpark watching, that bid is not that of the incumbent operator.

Usual disclaimers apply, if you want the info first hand then get chatting to the people in the know.

I've also heard the same being said about Virgin ie currently in in-depth convos with the DfT on a number of matters. I personally think passengers have come to expect catering especially in first-class. If the food offer is drastically reduced there will be uproar.

 

[ainsworth74]

Or you could perhaps suggest that franchise bids are becoming more realistic...

 

[Zoe]

Or you could perhaps suggest that franchise bids are becoming more realistic...

Or that the SRA and DfT didn't allow the bidders as much freedom as OPRAF.

 

[rail-britain]

Why would that be a problem?
Virgin managed to run West Coast and Cross Country together for many years without anyone having a problem, yet any overlap nowadays suddenly gets seized on by enthusiasts as "anti competitive"

DfT have made it very clear now that this would not happen again, due to a change of policy
There can be overlap for up to a maximum 5 years, and consider other bids "unfavourably"

However the original franchise process was flawed as it was hoped each franchise would have its own unique operator, but that never happened
Furthermore, this has greatly reduced over the last few years

 

[Zoe]

DfT have made it very clear now that this would not happen again, due to a change of policy

I have not seen any reference to a change in policy but if indeed there has been then the winner of the West Coast franchise should not even make the shortlist for East Coast as they would hold both for more than five years at the same time. It would also prevent the winner of Great Western or East Coast from winning the next Cross Country franchise.

 

[Clip]

Partial corroboration of the Guardian story has come from Alstom with them confirming the catering options being discussed.

Are you sure? Because the last time we discussed this on here with the dedicated story regarding the catering Alstom said in the story that they had not discussed anything with the RMT

HERE

Though admittedly i have not read the story after my contribution.

Have they now come out and said differently to their original statement?

 

[rail-britain]

I have not seen any reference to a change in policy but if indeed there has been then the winner of the West Coast franchise should not even make the shortlist for East Coast as they would hold both for more than five years at the same time

There would not be any such issue as these routes serve very different markets and only overlap at five stations

 

[Zoe]

There would not be any such issue as these routes serve very different markets and only overlap at five stations

In that case then Virgin would not be prevented from winning both West Coast and East Coast? It could also be argued the Cross Country/Great Western and Cross Country/East Coast serve different markets so any change in policy would seem to have very little effect as not many TOCs serve the same markets as others.

 

[HH]

I've never *ever* heard of any competition issues except for the following:

1. You own other transport serving the same locations (eg buses).
2. You get too large a share of the overall market - however this is somewhat nebulous and arguably no owning group should want too large a share of the market as it puts too many eggs in one basket.

Anyway AFAIK there are no problems with either Virgin running both EC & WC, or First running WC & GW. And that position has not changed.
--- old post above --- --- new post below ---

Very interesting.

I wonder whether, after many years of a privatised railway, bidders have little to differ on (since they know the revenue figures/ cost figures, so have little to "play with" to differentiate their bid) so are seeking some small cherry like a direct service to Paris, Shrewsbury or Blackpool* to try to stand out?

The difference will have been in the extras (any of the above could be made to pay IMO, but would DfT believe the underlying assumptions?) and the attitude towards risk & reward - i.e. what level you wanted to set your profit margin at to allow for downturns in the economy etc. (which could be quite sizeable). Note that it's enirely possible that the winning bidder will already be looking at a nasty shortfall by the time it starts the franchise, given what's happened to the economy.

From what has been said on this bid I would suggest that the two leading bidders were quite close in terms of "price", and went through more than one stage to decide the winner. It will be interesting to see at what level they pitched at (I'm guessing at >£10bn Nominal for the full 15 years), and what plans they have.

 

[BestWestern]

I've never *ever* heard of any competition issues except for the following:

1. You own other transport serving the same locations (eg buses).
2. You get too large a share of the overall market - however this is somewhat nebulous and arguably no owning group should want too large a share of the market as it puts too many eggs in one basket.

Anyway AFAIK there are no problems with either Virgin running both EC & WC, or First running WC & GW. And that position has not changed.

Some interesting points. An obvious thing to mention would be the competition issue regarding buses etc; First operate nearly all local bus services throughout Bristol & Bath which doesn't appear to be an issue, and there are many similar scenarios elsewhere no doubt, for example Go Ahead with Brighton & Hove/Southern, Stagecoach with SWT at places such as Andover & Basingstoke etc etc. As for the large share of overall market, surely First would be approaching domination if they were to hold both GW and WC, as well as Hull Trains, TPE & Scotrail

 

[WatcherZero]

Are you sure? Because the last time we discussed this on here with the dedicated story regarding the catering Alstom said in the story that they had not discussed anything with the RMT

HERE

Though admittedly i have not read the story after my contribution.

Have they now come out and said differently to their original statement?

They have said that they have discussed altering the layout with all four bidders including reduction of catering facilities, some alterations more drastic than others but wont name names.

 

[pemma]

So when will the winning bidder be announced, opposed to all the speculation?

 

[Pumbaa]

13th August.
--- old post above --- --- new post below ---

I've never *ever* heard of any competition issues except for the following:

1. You own other transport serving the same locations (eg buses).
2. You get too large a share of the overall market - however this is somewhat nebulous and arguably no owning group should want too large a share of the market as it puts too many eggs in one basket.

Anyway AFAIK there are no problems with either Virgin running both EC & WC, or First running WC & GW. And that position has not changed.

That is my understanding. The nearest we've ever got to any anti-competition issues was First being awarded the Scotrail franchise in (2004?) when it was referred to either OFT or Comp Comm, on the basis that First had the majority of bus share in the central belt, plus trains = anti-competitive.

In the end, nothing happened. More enthusiast wibble re competition as per usual.

 

[sprinterguy]

- one of the remaining bidders does advocate an almost complete withdrawal and downscaling of the current catering offer.
- neither of the remaining bidders proposed ordering additional cars to lengthen the remaining 390s to 11 cars.

A bidder who advocates "almost complete withdrawal and downscaling" of the West Coast catering offer is one of the leaders in the race for the WC franchise, and there are no aspirations from any bidders to lengthen the remainder of the Pendolinos to 11-car : The next fifteen years of the West Coast franchise we are going to be lumbered with looks bleak from where I'm standing.

Although I should probably reserve judgement until the winning bidder is announced in a months' time and their policies become clearer. I'll be disappointed if Virgin do not retain the franchise though (Assuming that it is not them proposing to downgrade the catering service).

 

[FManc]

A bidder who advocates "almost complete withdrawal and downscaling" of the West Coast catering offer is one of the leaders in the race for the WC franchise, and there are no aspirations from any bidders to lengthen the remainder of the Pendolinos to 11-car : The next fifteen years of the West Coast franchise we are going to be lumbered with looks bleak from where I'm standing.

Although I should probably reserve judgement until the winning bidder is announced in a months' time and their policies become clearer. I'll be disappointed if Virgin do not retain the franchise though (Assuming that it is not them proposing to downgrade the catering service).

I personally think people are now used to/expect catering and I imagine there will be uproar if the catering was reduced drastically especially in First Class. It would be a massive shame imo.

 

[tbtc]

DfT have made it very clear now that this would not happen again, due to a change of policy
There can be overlap for up to a maximum 5 years, and consider other bids "unfavourably"

However the original franchise process was flawed as it was hoped each franchise would have its own unique operator, but that never happened
Furthermore, this has greatly reduced over the last few years

I'd be interested to read more about this DfT policy that says you cannot own parallel TOCs for more than five years (especially as changes to franchise boundaries have eliminated "competition" in terms of having just one main operator at Liverpool Street/ Paddington and the future plan to merge Thameslink services with Southern services)...